Document:

Exhibit 10.1

 

EXECUTIVE TRANSITION EMPLOYMENT AGREEMENT

 

This Executive Transition Employment
Agreement (the “Agreement”) is entered into between
Frederick “Rick” Stroupe, an individual (“Executive”),
and Symmetricom, Inc., (the “Company”),
effective as of June 30, 2005 (the “Effective Date”).

 

1.                                                                                       Effective
Date.

 

This Agreement shall be effective as of the Effective Date and shall
supersede any prior employment agreement(s) between Executive and the Company, including,
but not limited to, that certain Change of Control Agreement dated February 8,
2002 between Executive and the Company.

 

2.                                                                                       Part-Time
Transition Employment.

 

During
the two (2) year period commencing on the Effective Date (the “Part-Time Employment Period”),
Executive will continue to be employed by the Company in a part-time capacity at
a base salary of $150,000 per year. 
During the Part-Time Employment Period, Executive shall report to the
Company’s Chief Executive Officer.  Unless
determined by the Company in its sole discretion, Executive’s employment by the
Company hereunder shall terminate on July 1, 2007.

 

3.                                                                                       Duties.

 

During the Part-Time Employment Period, Executive shall have such
duties and responsibilities as are assigned him by the Company.  During the Part-Time Employment Period Executive
shall continue to be provided with necessary office space, voicemail access,
email access and such other support as the Chief Executive Officer may
determine in good faith is necessary for Executive’s satisfactory performance
of his duties hereunder.

 

4.                                                                                       Restricted
Stock and Stock Options.

 

Executive’s currently outstanding options to purchase shares of the
Company’s common stock which are vested and exercisable as of the Effective
Date shall continue to be exercisable until the earlier of: (a) July 1,
2007, (b) ninety (90) days following the termination of Executive’s
employment for any reason other than death or disability or (c) six (6) months
following the termination of Executive’s employment due to death or disability,
as such term is defined in Section 7.1, below. All of Executive’s stock
options which are unvested as of the Effective Date shall terminate and cease
to be exercisable as of the Effective Date.

 

During the Part-Time Employment Period, all of Executive’s restricted shares
of Company common stock held by Executive as of the Effective Date will vest upon
the attainment of the performance goals and in accordance with the vesting schedule as
set forth in the pertinent restricted stock agreement.  All of Executive’s restricted stock which
remains unvested as of the termination of Executive’s employment for any reason
shall be forfeited to the Company upon such date.

 

 

5.                                                                                       Benefits.

 

During the Part-Time Employment Period, Executive
shall be eligible to participate in any employee benefit plans or programs,
including but not limited to group medical, dental, and vision benefits, life
and disability insurance benefits, long term care insurance, and other
programs, maintained or established by the Company to the same extent as other
executive employees of the Company, subject to the generally applicable terms
and conditions of the plan or program in question and the determination of any
committee administering such plan or program; provided, however, Executive
shall not be entitled to any additional grants of stock options or restricted
stock.  Following Executive’s termination
of employment, Executive will be eligible for extended group health plan
coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (“COBRA”)
and comparable state law.

 

6.                                                                                       Confidential
Information.

 

During the Part-Time
Employment Period and as applicable thereafter, Executive shall abide by the
terms of any confidentiality agreement with the Company.

 

7.                                                                                       Termination
of Employment.

 

7.1           Termination Due to Death or
Disability or by the Company Without Cause.

 

If at any time during the Part-Time Employment Period, Executive’s
employment terminates as a result of death or disability (as defined under the
Company’s long-term disability policy as may be amended from time to time) or
the Company terminates the employment of Executive other than for Cause, then
Executive or his estate shall receive the following: (a) Executive (or his
estate) shall continue to receive the base salary, as described in Section 2,
until July 1, 2007; (b) all of Executive’s vested stock options, as
described in Section 4, shall remain exercisable until the earlier of (i) July 1,
2007, (ii) ninety (90) days following the date of such termination or (iii) six
(6) months following the date of such termination in the event of
termination due to death or disability; (c) all of Executive’s then
unvested restricted stock shall immediately be forfeited to the Company and (d) Executive
shall be paid any accrued but unpaid vacation.

 

7.2           Termination
by the Company With Cause.

 

Prior to July 1, 2007, the Company may terminate this Agreement
and the employment of Executive at any time for Cause.  In such event, Executive’s employment shall
terminate as of the date specified in writing by the Company.  As of such termination date, Executive shall
receive no further compensation from the Company, but shall be entitled to the
following: (a) Executive’s vested stock options, as described in Section 4,
shall remain exercisable until the earlier of (i) July 1, 2007 or (ii) ninety
(90) days following the date of such termination, (b) all of Executive’s
then unvested restricted stock shall immediately be forfeited to the Company
and (c) Executive shall be paid any accrued but unpaid vacation.  For purposes of this Agreement, the term “Cause” means:
(a) theft, dishonesty or falsification of any employment

 

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or Company records; (b) malicious or
reckless disclosure of the Company’s confidential or proprietary information; (c) commission
of any immoral or illegal act or any gross or willful misconduct; (d) the
failure or refusal by Executive to work diligently to perform tasks or achieve
goals reasonably requested by the Company; and/or (e) the act of Executive
being employed by or consulting with a company, entity or individual determined
to be a competitor of the Company, as determined by the Company’s Board of
Directors, in its sole discretion.

 

7.3           Termination
by the Executive.

 

If at any time during the Part-Time Employment Period, Executive shall voluntarily
terminate his employment, then Executive shall receive no further compensation
from the Company as of the date of such resignation, but shall be entitled to the
following: (a) Executive’s vested stock options, as described in Section 4,
shall remain exercisable until the earlier of (i) July 1, 2007 or (ii) ninety
(90) days following the date of such termination, (b) all of Executive’s
then unvested restricted stock shall immediately be forfeited to the Company and
(c) Executive shall be paid any accrued but unpaid vacation.

 

8.                                                                                       Release.

 

Notwithstanding
anything herein to the contrary, Executive’s right to receive any of the
payments or other compensation to be made to Executive pursuant to this Agreement,
including any base salary during the term of this Agreement, shall be
contingent on Executive providing to the Company (and failing to revoke) a full
and complete general release in the form attached hereto as Exhibit A-1
(the “Initial
Release”) prior to the Effective Date.

 

9.                                                                                       Written
Amendment or Modification.

 

This Agreement may not be
changed, altered, modified, or amended, except by a writing signed by Executive
and the Chief Executive Officer expressly referring to this Agreement and
acknowledging that it is changing, altering, modifying or amending the
Agreement.

 

10.                                                                                 Successors
and Assigns.

 

This Agreement shall be
binding upon Executive’s heirs, executors, administrators and other legal
representatives and will be binding on and inure to the benefit of the Company,
its successors and assigns.  This
Agreement is specific to Executive and may not be assigned.

 

11.                                                                                 Waiver.

 

No waiver by either party of
any condition or provision of this Agreement shall be considered a waiver of
any other condition or provision or a waiver of the same condition or provision
at another time.

 

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12.                                                                                 Entire
Agreement.

 

This Agreement (including the Exhibits hereto)
contains the entire agreement and understanding between the Company and
Executive relating to the subject matters herein and supersedes all prior or
contemporaneous discussions and agreements between the parties.

 

13.                                                                                 Governing
Law; Consent to Personal Jurisdiction.

 

This Agreement shall be
governed by the laws of the State of California, without regard to the choice
of law provisions of California. 
Executive expressly consents to personal jurisdiction in the state and
federal courts located in California for any lawsuit arising from or relating
to this Agreement, without regard to his then-current residence or domicile.

 

14.                                                                                 Severability.

 

The invalidity or
unenforceability of one or more provisions of this Agreement shall not affect
the validity or enforceability of any other provision hereof, which shall
remain in full force and effect to the maximum extent of the law.

 

15.                                                                                 Counterparts.

 

This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument.

 

16.                                                                                 Indemnification.

 

The Company shall indemnify
and hold Executive harmless for any conduct within the course and scope of his
duties as an employee of the Company, consistent with the Company’s obligations
under California and Delaware law and the Company’s corporate governing
documents.

 

4

 

IN WITNESS WHEREOF, each of
the parties has executed this Agreement, in the case of the Company by its duly
authorized officer, as of the day and year first above written.

 

 

	
  SYMMETRICOM, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Thomas Steipp

  	
   

  	
  Date:

  	
  June 9,

  	
  2005

  	
   

  
	
   

  	
  Thomas Steipp

  	
   

  	
   

  
	
  Title: 

  	
  Chief Executive Officer,
  Symmetricom, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXECUTIVE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/Frederick Stroupe

  	
   

  	
  Date:

  	
  June 9, 

  	
  , 2005

  	
   

  
	
  Frederick “Rick” Stroupe

  	
   

  	
   

  
										

 

* * * * *

 

5

 

Exhibit A-1

 

INITIAL

 

Release And Waiver Of Claims

 

In
exchange for entering into the Executive Transition Employment Agreement to
which this form is attached and agreeing to make the payments described
thereunder, I hereby furnish Symmetricom, Inc. (the “Company”) with the following release and
waiver:

 

I,
Frederick “Rick” Stroupe, hereby release, and forever discharge, the Company,
its officers, directors, agents, employees, stockholders, successors, assigns,
parents, subsidiaries and affiliates, of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys’ fees,
damages, indemnities and obligations of every kind and nature, in law, equity,
or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising prior to and including the execution date of this Release
with respect to any claims relating to my employment and the termination of my
employment, including but not limited to, claims pursuant to any federal, state
or local law relating to employment, including, but not limited to,
discrimination claims, claims under California statute or ordinance and the
federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”),
or claims for wrongful termination, breach of the covenant of good faith and
fair dealing, contract claims, tort claims, and wage or benefit claims,
including but not limited to, claims for salary, bonuses, commissions, stock,
stock options, vacation pay, fringe benefits, severance pay or any form of
compensation.

 

I
acknowledge that my employment shall terminate on July 1, 2007, if not
terminated earlier by me or the Company.

 

I
also acknowledge that I have read and understand Section 1542 of the
California Civil Code which reads as follows: 
“A general release does not extend to
claims which the creditor does not know or suspect to exist in his or her favor
at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.”  I hereby expressly waive and relinquish all
rights and benefits under that section or common law principles of similar
effect.

 

I
also acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this waiver and release is knowing and
voluntary, and that the consideration given for this waiver and release is in
addition to anything of value to which I was already entitled as an employee of
the Company.  I further acknowledge that
I have been advised, as required by the Older Workers Benefit Protection Act,
that:  (a) the waiver and release
granted herein does not relate to claims which may arise after this agreement
is executed; (b) I should consult with an attorney prior to executing this
agreement (although I may choose voluntarily not to do so); (c) I have
twenty-one (21) days from the date I receive this agreement, in which to
consider this agreement (although I may choose voluntarily to execute this
agreement earlier); (d) I have seven (7) days following the execution
of this agreement to revoke my consent to the agreement; and (e) this
agreement shall not be effective until the seven (7) day revocation period
has expired.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Frederick
  “Rick” Stroupe

  

 

6Exhibit 10.1

 

CASCADE
CORPORATION

 

STOCK
APPRECIATION RIGHTS PLAN

 

1.                                      Purposes.

 

This Plan is intended to
enable Cascade Corporation (the “Corporation”) to recognize the contribution of
executives of the Corporation and its subsidiaries to the Corporation’s
success, to provide them incentives to enhance the Corporation’s business
prospects and to recognize their role and that of the Board of Directors (the “Board”)
in increasing value over the long term.

 

2.                                      Effective
Date and Duration of Plan.

 

(a)  Effective Date.  The Plan shall become effective upon approval
by the shareholders of the Corporation

 

(b)  Duration. 
No stock appreciation rights may be granted under the Plan after May 31,
2013. However, the Plan shall continue in effect until all rights issued under
the Plan have been exercised or have expired. The Board may suspend or
terminate the Plan at any time, except with respect to outstanding stock
appreciation rights. Termination shall not affect any outstanding stock
appreciation rights, or the forfeitability of rights granted under the Plan.

 

3.                                      Administration.

 

The Plan shall be
administered by the Compensation Committee of the Board. The Committee shall
have full power and authority, subject to the provisions of the Plan, to:

 

(a)                                  Designate
employee participants;

 

(b)                                 Determine
the amount and other terms and conditions of awards of stock appreciation
rights to employees, such determinations to be subject to Board approval in the
case of grants to officers of the Corporation, and those terms and conditions
of stock appreciation rights awarded to non-employee members of the Board of
Directors which are not stated in Section 10 of the Plan..

 

(c)                                  Adopt
and amend rules and regulations relating to administration of the Plan,
advance the lapse of any waiting period, accelerate any exercise date, and make
all other determinations in the judgment of the Committee necessary or
desirable for the administration of the Plan.

 

Decisions of the
Committee as to interpretation of, and rights granted pursuant to, the Plan and
any related agreement shall be final. The Committee in its sole discretion may
correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any related agreement.

 

4.                                      Eligibility.

 

The Committee may from
time to time grant stock appreciation rights (“Rights”) to such key executive
employees of the Corporation (“Participants”) or of any subsidiary as the
Committee may deem eligible.

 

5.                                      Rights/Share
Limitation.

 

(a)                                  A
Right is a right granted under the Plan which enables the holder to receive at
the time of exercise an amount, payable solely in the form of Cascade
Corporation common shares valued at Fair Market Value, equal to the difference
between the Fair Market Value of a single common share of Cascade Corporation
stock and the Base Price of a single common share of Cascade Corporation stock.

 

(b)                                 In
no event shall more than 750,000 Cascade Corporation common shares, as adjusted
by the Committee to reflect proportionately any recapitalization,
reclassification, stock split, combination of shares, or dividend payable in
shares in connection with Cascade Corporation common shares be issued pursuant
to the Plan.

 

1

 

(c)                                  In
no event shall more than 100,000 Cascade Corporation shares, as adjusted by the
Committee to reflect proportionately any recapitalization, reclassification,
stock split, combination of shares, or dividend payable in shares in connection
with Cascade Corporation common shares, be issued to any one individual
pursuant to the exercise of Rights granted to such individual under the Plan in
a single fiscal year.

 

6.                                      Required
Terms and Conditions of Rights.

 

The Committee may grant
Rights under the Plan, subject to such rules, terms, and conditions as the Committee
prescribes in accordance with the provisions of the Plan, including the
following:

 

(a)  Base Price.  The Base Price of each Right shall be
established by the Committee and may not be less than the Fair Market Value of
a common share of Cascade Corporation common stock on the date the grant is
made.

 

(b)  Fair Market Value.  The Fair Market Value of a common share of
Cascade Corporation common stock means the closing price quoted on the New York
Stock Exchange or, if shares are not listed on that exchange, the primary
trading venue for Corporation shares, as reported in the Wall Street Journal on
the date of grant or exercise, as the case may be, or if the shares did not
trade that date, on the last prior date on which the shares were traded.

 

(c)  Maximum Term of Right.  A Right shall be exercisable during such
period of time as the Committee may specify, provided that no Right shall be
exercisable after the expiration of 10 years from the date on which it is
granted.

 

(d)  Installment Exercise Limitations.  Each grant of Rights shall generally become
exercisable in equal cumulative annual installments over such period as the
Committee may establish, except to the extent that other terms of exercise are
specifically provided by other terms of the Plan. The Committee shall have
discretion to establish vesting periods and limitations on amounts to be
realized upon exercise in connection with grants it may make.

 

(e)  Termination of Employment.

 

(i)  Death.If a
Participant dies while entitled to exercise Rights granted under this Plan,
such Rights may be exercised for a period of one year after the Participant’s
death. Rights not exercisable at the time of death, and Rights not exercised
during the period provided by this subparagraph, will expire. In the event of a
Participant’s death, Rights exercisable as of the date of the Participant’s
death may be exercised by such beneficiary as the Participant may have
designated in writing in a manner determined by the Committee. In the absence
of such a designation, the Participant’s estate shall have the right to
exercise such Rights.

 

(ii)  Retirement.If
a Participant terminates employment after age 62 under circumstances which the
Committee in its sole discretion deems equivalent to retirement, any Rights the
Participant was entitled to exercise at the date of retirement may be exercised
for a period of one year following retirement. Rights not exercisable at the
time of retirement, and Rights not exercised during the period provided by this
subparagraph, will expire. The provisions of this subparagraph (ii) shall
apply also to retirements due to physical or mental disability which the
Committee determines is of such a nature as to prevent further performance of
job duties. Should a retired Participant die while entitled to exercise Rights,
the provisions of subparagraph (i) above shall apply to the exercise of
such Rights, which may be exercised for a period of one year following the
Participant’s death.

 

(iii)  Other
Termination of Employment—Not For Cause.Should a Participant cease to be
employed by the Corporation or its subsidiaries for reasons other than Death or
Retirement, any Rights the Participant was entitled to exercise at the date of
termination may be exercised for a period of 90 days following termination
or, if longer, until 30 days have elapsed following the public
dissemination of the Corporation’s financial results for the first fiscal
period ending after the termination of the Participant’s employment. Rights not
exercisable at the time of termination, and Rights not exercised during such 90-day
or extended period, shall expire. Should a terminated Participant die while
entitled to exercise Rights, the provisions of subparagraph (i) above
shall apply to the exercise of such Rights, which may be exercised for a period
of one year following the Participant’s death. The rights granted by this
subparagraph (iii) shall not apply to a Participant who is terminated for
Cause, or whom the Committee determines in its sole discretion has entered into
competition with the Corporation.

 

(iv)  Termination
for Cause.Participants whose employment is terminated for (A) willful
failure to perform reasonable directives of the Corporation’s management; (B) use
of alcohol or illegal drugs which interferes with the Participant’s performance
of duties in the judgment of the Corporation’s management; (C) dishonesty
affecting the

 

2

 

Corporation or any
related entity or conviction of a felony or any crime involving fraud or misrepresentation;
(D) gross negligence or willful misconduct resulting in substantial loss
to the Corporation, damage to the Corporation’s reputation, or theft,
embezzlement or similar loss to the Corporation; or (E) other conduct
which the Committee in its sole discretion determines sufficiently harmful to
the interests of the Corporation to constitute cause for termination shall
forfeit all outstanding Rights awarded under this Plan.

 

(f)  Acceleration of Vesting.  The Committee shall have discretion to provide
in an individual Participant’s grant agreement for the exercise of all or a
portion of Rights granted to the Participant which would not otherwise be
exercisable, in the event of the Participant’s Death or Retirement.

 

(g)  Exercise.

 

(i)  Subject to subparagraph
(v) of this paragraph (g), the Committee shall establish the time or
times for exercise of Rights.

 

(ii)  Each Right
shall entitle the holder, upon exercise, to receive from the Corporation an
amount equal in value to the excess of the Fair Market Value on the date of
exercise of one Right over its Base Price. Such amount shall be payable solely
in the form of Cascade Corporation common shares valued at Fair Market Value.
No Right shall be exercisable at a time that the amount determined under this
Subsection is negative. No fractional shares shall be issued as payment
hereunder.

 

(iv)  The
Corporation shall make no payment hereunder prior to taking steps necessary to
assure that it will receive from a participant who has exercised a Right
amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements, including social security and other normal
withholdings.

 

(v)  Rights may be
exercised only during the 30-day period following the third business day after
public dissemination of the Corporation’s financial results for any fiscal
quarter or for its fiscal year.

 

(h)  Non-Transferability.  During a Participant’s lifetime, Rights shall
be exercisable only by the Participant, the Participant’s payee pursuant to a
valid order by a domestic relations court with jurisdiction, or by a legally
designated guardian or conservator. With the Committee’s prior consent, a
Participant may transfer Rights to a trust for his or her benefit established
for estate planning purposes.

 

7.                                      Changes
in Capital Structure, Mergers, Etc..

 

(a)  Change in Capital Structure.  If the outstanding shares of Common Stock of
the Corporation are hereafter increased, decreased or changed into or exchanged
for a different number or kind of shares of the Corporation or of another
corporation by reason of any recapitalization, reclassification, stock split,
combination of shares or dividend payable in shares, the Committee shall make
appropriate adjustments in the price and number of outstanding Rights or portions
thereof then unexercised, so that the participant’s proportionate interest
before and after the occurrence of the event is maintained; provided, however,
that this Section 7(a) shall not apply with respect to transactions
referred to in Section 7(b). Any such adjustment made by the Committee
shall be conclusive.

 

(b)  Reorganization or Liquidation.

 

(i)  Cash, Stock or
Other Property for Stock.Except as provided in Section 7(b)(ii), upon a
merger, consolidation, reorganization, plan of exchange or liquidation
involving the Corporation, as a result of which the shareholders of the
Corporation receive cash, stock or other property in exchange for or in
connection with their Common Stock (any such transaction to be referred to in
this Section 7 as an “Accelerating Event”), any Right granted hereunder
shall terminate, except as specified in the first sentence of Section 7(b)(ii),
but the employee shall have the right during the 30-day period immediately
prior to any such Accelerating Event to elect to exercise Rights awarded him or
her, in whole or in part, without any limitation on exercisability; provided,
however, that such exercise shall be deemed to occur immediately prior to such
Accelerating Event and shall be contingent upon the occurrence of such
Accelerating Event.

 

(ii)  Stock for
Stock.If the shareholders of the Corporation receive capital stock of another
Corporation (“Exchange Stock”) in exchange for their Common Stock in any
transaction involving a merger, consolidation,

 

3

 

reorganization, or plan
of exchange, all Rights granted hereunder shall be converted into stock
appreciation rights and awards measured by the Exchange Stock, unless the
Committee, in its sole discretion, determines that any or all such Rights shall
not be converted, but instead shall terminate in accordance with the provisions
of Section 7(b)(i) The amount and price of converted Rights shall be
determined by adjusting the amount and price of the Rights or other awards
granted hereunder to take into account the relative values of the Exchange
Stock and Corporation’s common shares in the transaction.

 

(iii)  Mergers,
Acquisitions, Etc.The Committee may also grant Rights, with terms, conditions
and provisions that vary from those specified in the Plan if such awards are
granted in substitution for, or in connection with the assumption of, stock
appreciation rights awarded by another Corporation and assumed or otherwise
agreed to be provided for by the Corporation pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation to which the
Corporation or a parent or subsidiary Corporation of the Corporation is a
party.

 

8.                                      Amendment
of Plan.

 

The Board may modify or
amend the Plan in such respects as it deems advisable because of changes in the
law while the Plan is in effect or for any other reason; provided, however,
that the maximum number of shares which may be issued under the Plan may be
increased, and the provisions of Paragraph 10 may be modified, only upon
approval by the shareholders of the Corporation. No change in an award already
granted shall be made without the written consent of the holder of such award.

 

9.                                      Employment
and Service Rights.

 

Nothing in the Plan or
any award pursuant to the Plan shall (a) confer upon any employee any
right to be continued in the employment of the Corporation or any parent or
subsidiary Corporation of the Corporation or interfere in any way with the
right of the Corporation or any subsidiary of the Corporation by whom such
employee is employed to terminate such employee’s employment at any time, for
any reason, with or without cause, or increase or decrease such employee’s
compensation or benefits; or (b) confer upon any person engaged by the
Corporation or any parent or subsidiary Corporation of the Corporation any
right to be retained or employed by the Corporation or any parent or subsidiary
Corporation of the Corporation or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Corporation or any subsidiary of the Corporation.

 

10.                               Participation
by Directors

 

Each non-employee
director of the Corporation shall be awarded 5,000 Rights upon the later of the
approval of this Plan by the shareholders or the election of the director to
the Board of Directors by the shareholders and 2,700 additional Rights
following each subsequent annual meeting of the shareholders. Awards of Rights to
directors shall vest and become exercisable 25% after one year and 25%
following each year of director service thereafter. Such awards shall be
subject to the provisions of this Plan in all other respects. All Rights
granted to a director shall be exercisable upon the director’s death or
reaching of the mandatory retirement age established for directors, whether or
not they would otherwise be subject to exercise.

 

11.                               Rights
as a Shareholder.

 

The recipient of any
award under the Plan shall have no rights as a shareholder with respect to any
Right, and except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights issued to shareholders. Shares
issued pursuant to the Plan may bear such restrictions on sale or other
transfer as counsel to the Corporation may determine are required under
securities or other applicable laws.

 

12.                               Governing
Law.

 

The provisions of this
Plan shall be governed by and interpreted in accordance with the laws of the
State of Oregon.

 

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