Document:

BP - x1-55263 - Imperial Industries, Inc. - Exhibit 10.1

Exhibit 10.1

IMPERIAL INDUSTRIES, INC.

2006 STOCK AWARD AND INCENTIVE PLAN

1.

Purpose.  The purpose of this 2006 Stock Award and Incentive Plan (the "Plan") is to aid Imperial Industries, Inc., a Delaware corporation (together with its successors and assigns, the "Company"), in attracting, retaining, motivating and rewarding employees and non-employee directors of the Company or its subsidiaries or affiliates, to provide for equitable and competitive compensation opportunities, to recognize individual contributions and reward achievement of Company goals, and promote the creation of long-term value for stockholders by closely aligning the interests of Participants with those of stockholders.  The Plan authorizes stock-based and cash-based incentives for Participants.  

2.  

Definitions.  In addition to the terms defined in Section 1 above and elsewhere in the Plan, the following capitalized terms used in the Plan have the respective meanings set forth in this Section: 

(a) 

"Annual Incentive Award" means a type of Performance Award granted to a Participant under Section 7(c) representing a conditional right to receive cash, Stock or other Awards or payments, as determined by the Committee, based on performance in a performance period of one fiscal year or a portion thereof.  

(b) 

"Annual Limit" shall have the meaning specified in Section 5(b).  

(c) 

"Award" means any Option, SAR, Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive Award, together with any related right or interest, granted to a Participant under the Plan.  

(d) 

"Beneficiary" means the legal representatives of the Participant's estate entitled by will or the laws of descent and distribution to receive the benefits under a Participant's Award upon a Participant's death, provided that, if and to the extent authorized by the Committee, a Participant may be permitted to designate a Beneficiary, in which case the "Beneficiary" instead will be the person, persons, trust or trusts (if any are then surviving) which have been designated by the Participant in his or her most recent written and duly filed beneficiary designation to receive the benefits specified under the Participant's Award upon such Participant's death.  Unless otherwise determined by the Committee, any designation of a Beneficiary other than a Participant's spouse shall be subject to the written consent of such spouse.  

(e) 

"Board" means the Company's Board of Directors.  

(f) 

"Change in Control" and related terms have the meanings specified in Section 9.  

(g) 

"Code" means the Internal Revenue Code of 1986, as amended.  References to any provision of the Code or regulation thereunder shall include any successor provisions and regulations, and reference to regulations includes any applicable guidance or pronouncement of the Department of the Treasury and Internal Revenue Service.  

(h) 

"Committee" means the Compensation and Stock Option Committee of the Board, the composition and governance of which is established in the Committee's Charter as approved 

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from time to time by the Board and subject to other corporate governance documents of the Company.  No action of the Committee shall be void or deemed to be without authority due to the failure of any member, at the time the action was taken, to meet any qualification standard set forth in the Committee Charter or this Plan.  The full Board may perform any function of the Committee hereunder (except to the extent limited under applicable Nasdaq Marketplace Rules), in which case the term "Committee" shall refer to the Board.  

(i) 

"Covered Employee" means an Eligible Person who is a Covered Employee as specified in Section 11(j).  

(j) 

"Deferred Stock" means a right, granted under this Plan, to receive Stock or other Awards or a combination thereof at the end of a specified deferral period.  

(k) 

"Dividend Equivalent" means a right, granted under this Plan, to receive cash, Stock, other Awards or other property equal in value to all or a specified portion of the dividends paid with respect to a specified number of shares of Stock.

(l) 

"Effective Date" means the effective date specified in Section 11(q).  

(m) 

"Eligible Person" has the meaning specified in Section 5.  

(n) 

"Exchange Act" means the Securities Exchange Act of 1934, as amended.  References to any provision of the Exchange Act or rule (including a proposed rule) thereunder shall include any successor provisions and rules.  

(o) 

"Fair Market Value" means the fair market value of Stock, Awards or other property as determined in good faith by the Committee or under procedures established by the Committee.  Unless otherwise determined by the Committee, the Fair Market Value of Stock shall be the closing price per share of Stock reported on a consolidated basis for securities listed on the principal stock exchange or market on which Stock is traded on the day immediately preceding the day as of which such value is being determined or, if there is no sale on that day, then on the last previous day on which a sale was reported.  Fair Market Value relating to the exercise price or base price of any Non-409A Option or SAR shall conform to requirements under Code Section 409A.  

(p)

"409A Awards" means Awards that constitute a deferral of compensation under Code Section 409A and regulations thereunder.  "Non-409A Awards" means Awards other than 409A Awards.  Although the Committee retains authority under the Plan to grant Options, SARs and Restricted Stock on terms that will qualify those Awards as 409A Awards, Options, SARs, and Restricted Stock are intended to be Non-409A Awards unless otherwise expressly specified by the Committee.  

(q)

"Full-Value Award" means Awards relating to Stock other than either Options and SARs that are treated as exercisable solely for Stock under applicable accounting rules or Awards for which the Participant pays the intrinsic value directly or by forgoing a right to receive a cash payment from the Company; provided, however, that the Committee may designate any Option or SAR (including those previously granted but excluding any ISO) as "Full-Value Awards" for purposes of the Plan.  References to a "Full-Value Award" under a Preexisting Plan mean an award of a type that would be a Full-Value Award if granted under the Plan.  

(r) 

"Incentive Stock Option" or "ISO" means any Option designated as an incentive stock option within the meaning of Code Section 422 and qualifying thereunder.  

(s) 

"Option" means a right to purchase Stock granted under Section 6(b).  

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(t) 

"Other Stock-Based Awards" means Awards granted to a Participant under Section 6(h).  

(u) 

"Participant" means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.  

(v) 

"Performance Award" means a conditional right, granted to a Participant under Sections 6(i) and 7, to receive cash, Stock or other Awards or payments.  

(w) 

"Preexisting Plan" means the Company’s 1999 Employee Stock Option Plan.  

(x) 

"Restricted Stock" means Stock granted under this Plan which is subject to certain restrictions and to a risk of forfeiture.  

(y) 

"Stock" means the Company's Common Stock, par value $0.01 per share, and any other equity securities of the Company that may be substituted or resubstituted for Stock pursuant to Section 11(c).  

(z) 

"Stock Appreciation Rights" or "SAR" means a right granted to a Participant under Section 6(c).  

3.  

Administration.  

(a) 

Authority of the Committee.  The Plan shall be administered by the Committee, which shall have full and final authority, in each case subject to and consistent with the provisions of the Plan, to select Eligible Persons to become Participants; to grant Awards; to determine the type and number of Awards, the dates on which Awards may be exercised and on which the risk of forfeiture or deferral period relating to Awards shall lapse or terminate, the acceleration of any such dates, the expiration date of any Award, whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Stock, other Awards, or other property, and other terms and conditions of, and all other matters relating to, Awards; to prescribe documents evidencing or setting terms of Awards (such Award documents need not be identical for each Participant or each Award), amendments thereto, and rules and regulations for the administration of the Plan and amendments thereto; to construe and interpret the Plan and Award documents and correct defects, supply omissions or reconcile inconsistencies therein; and to make all other decisions and determinations as the Committee may deem necessary or advisable for the administration of the Plan.  Decisions of the Committee with respect to the administration and interpretation of the Plan shall be final, conclusive, and binding upon all persons interested in the Plan, including Participants, Beneficiaries, transferees under Section 11(b) and other persons claiming rights from or through a Participant, and stockholders.  The foregoing notwithstanding, the Board shall perform the functions of the Committee for purposes of granting Awards under the Plan to non-employee directors (the functions of the Committee with respect to other aspects of non-employee director awards is not exclusive to the Board, however).  

(b) 

Manner of Exercise of Committee Authority.  The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee.  The Committee may act through subcommittees, including for purposes of perfecting exemptions under Rule 16b-3 or qualifying Awards under Code Section 162(m) as performance-based compensation, in which case the subcommittee shall be subject to and have authority under the charter applicable to the Committee, and the acts of the subcommittee shall be deemed to be acts of the Committee hereunder.  The Committee may delegate to officers or managers of the Company or any subsidiary or affiliate, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine, to the extent (i) that such delegation will not result in the loss 

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of an exemption under Rule 16b-3(d) for Awards granted to Participants subject to Section 16 of the Exchange Act in respect of the Company and will not cause Awards intended to qualify as "performance-based compensation" under Code Section 162(m) to fail to so qualify, and (ii) permitted under Section 157 and other applicable provisions of the Delaware General Corporation Law.  

(c) 

Limitation of Liability.  The Committee and each member thereof, and any person acting pursuant to authority delegated by the Committee, shall be entitled, in good faith, to rely or act upon any report or other information furnished by any executive officer, other officer or employee of the Company or a subsidiary or affiliate, the Company's independent auditors, consultants or any other agents assisting in the administration of the Plan.  Members of the Committee, any person acting pursuant to authority delegated by the Committee, and any officer or employee of the Company or a subsidiary or affiliate acting at the direction or on behalf of the Committee or a delegee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action or determination.  

4.

Stock Subject To Plan.  

(a) 

Overall Number of Shares Available for Delivery.  The total number of shares of Stock reserved and available for delivery in connection with Awards under the Plan shall be (i) 150,000 shares, plus (ii) the number of shares that, immediately prior to the Effective Date, remain available for new awards under the Preexisting Plan plus (iii) the number of shares subject to awards under the Preexisting Plan which become available in accordance with Section 4(b) after the Effective Date; provided, however, that the total number of shares with respect to which ISOs may be granted shall not exceed the number specified under clause (i) above.  Any shares of Stock delivered under the Plan shall consist of authorized and unissued shares or treasury shares.  

(b) 

Share Counting Rules.  The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments in accordance with this Section 4(b).  Shares shall be counted against those reserved to the extent such shares have been delivered and are no longer subject to a risk of forfeiture.  Accordingly, (i) to the extent that an Award under the Plan or award under the Preexisting Plan is canceled, expired, forfeited, settled in cash, settled by issuance of fewer shares than the number underlying the award, or otherwise terminated without delivery of shares to the Participant, the shares to be retained by or returned to the Company will be available under the Plan; and (ii) shares that are withheld from such an Award or award or separately surrendered by the Participant in payment of the exercise price or taxes relating to such an Award or award shall be deemed to constitute shares not delivered to the Participant and will be available under the Plan.  The Committee may determine that Awards may be outstanding that relate to more shares than the aggregate remaining available under the Plan so long as such Awards will not in fact result in delivery and vesting of shares in excess of the number then available under the Plan.  In addition, in the case of any Award granted in assumption of or in substitution for an award of a company or business acquired by the Company or a subsidiary or affiliate or with which the Company or a subsidiary or affiliate combines, shares issued or issuable in connection with such substitute Award shall not be counted against the number of shares reserved under the Plan

5.

Eligibility; Per-Person Award Limitations.  

(a)

Eligibility.  Awards may be granted under the Plan only to Eligible Persons.  For purposes of the Plan, an "Eligible Person" means an employee of the Company or any subsidiary or affiliate, including any executive officer or non-employee director of the Company or a subsidiary or affiliate, and any person who has been offered employment by the Company or a subsidiary or affiliate, 

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provided that such prospective employee may not receive any payment or exercise any right relating to an Award until such person has commenced employment with the Company or a subsidiary or affiliate.  An employee on leave of absence may be considered as still in the employ of the Company or a subsidiary or affiliate for purposes of eligibility for participation in the Plan.  For purposes of the Plan, a joint venture in which the Company or a subsidiary has a substantial direct or indirect equity investment shall be deemed an affiliate, if so determined by the Committee.  Holders of awards granted by a company or business acquired by the Company or a subsidiary or affiliate, or with which the Company or a subsidiary or affiliate combines, are eligible for grants of substitute awards granted in assumption of or in substitution for such outstanding awards previously granted under the Plan in connection with such acquisition or combination transaction.  

(b) 

Per-Person Award Limitations.  In each calendar year during any part of which the Plan is in effect, an Eligible Person may be granted Awards intended to qualify as "performance-based compensation" under Code Section 162(m) under the Plan relating to up to his or her Annual Limit (such Annual Limit applies to Dividend Equivalents under Section 6(g) only if such Dividend Equivalents are granted separately from and not as a feature of another Award).  A Participant's Annual Limit, in any year during any part of which the Participant is then eligible under the Plan, shall equal 200,000 shares plus the amount of the Participant's unused Annual Limit relating to the same type of Award as of the close of the previous year, subject to adjustment as provided in Section 11(c).  In the case of an Award which is not valued in a way in which the limitation set forth in the preceding sentence would operate as an effective limitation satisfying applicable law (including Treasury Regulation 1.162-27(e)(4)), an Eligible Person may not be granted Awards authorizing the earning during any calendar year of an amount that exceeds the Eligible Person's Annual Limit, which for this purpose shall equal $1.5 million plus the amount of the Eligible Person's unused cash Annual Limit as of the close of the previous year (this limitation is separate and not affected by the number of Awards granted during such calendar year subject to the limitation in the preceding sentence).  For this purpose, (i) "earning" means satisfying performance conditions so that an amount becomes payable, without regard to whether it is to be paid currently or on a deferred basis or continues to be subject to any service requirement or other non-performance condition, and (ii) a Participant's Annual Limit is used to the extent an amount or number of shares may be potentially earned or paid under an Award, regardless of whether such amount or shares are in fact earned or paid.  

(c)

Limits on Non-Employee Director Awards.  Non-employee directors may be granted any type of Award under the Plan, but the aggregate number of shares that may be delivered in connection with Awards granted to non-employee directors shall be ten percent of the total reserved under the Plan, and in each calendar year during any part of which the Plan is in effect, a non-employee director may be granted Awards relating to no more than 20,000 shares, subject to adjustment as provided in Section 11(c).

6.

Specific Terms Of Awards.  

(a) 

General.  Awards may be granted on the terms and conditions set forth in this Section 6.  In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Sections 11(e) and 11(k)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment or service by the Participant and terms permitting a Participant to make elections relating to his or her Award.  The Committee shall retain full power and discretion with respect to any term or condition of an Award that is not mandatory under the Plan, subject to Section 11(k).  The Committee shall require the payment of lawful consideration for an Award to the extent necessary to satisfy the requirements of the Delaware General Corporation Law, and may otherwise require payment of consideration for an Award except as limited by the Plan.  

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(b) 

Options.  The Committee is authorized to grant Options to Participants on the following terms and conditions: 

(i) 

Exercise Price.  The exercise price per share of Stock purchasable under an Option (including both ISOs and non-qualified Options) shall be determined by the Committee, provided that such exercise price shall be not less than the Fair Market Value of a share of Stock on the date of grant of such Option, subject to Section 8(a).  Notwithstanding the foregoing, any substitute award granted in assumption of or in substitution for an outstanding award granted by a company or business acquired by the Company or a subsidiary or affiliate, or with which the Company or a subsidiary or affiliate combines may be granted with an exercise price per share of Stock other than as required above.  

(ii) 

Option Term; Time and Method of Exercise.  The Committee shall determine the term of each Option, provided that in no event shall the term of any Option exceed a period of ten years from the date of grant.  The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the methods by which such exercise price may be paid or deemed to be paid and the form of such payment (subject to Sections 11(k) and 11(l)), including, without limitation, cash, Stock (including by withholding Stock deliverable upon exercise), other Awards or awards granted under other plans of the Company or any subsidiary or affiliate, or other property (including through broker-assisted "cashless exercise" arrangements, to the extent permitted by applicable law), and the methods by or forms in which Stock will be delivered or deemed to be delivered in satisfaction of Options to Participants (including, in the case of 409A Awards, deferred delivery of shares subject to the Option, as mandated by the Committee, with such deferred shares subject to any vesting, forfeiture or other terms as the Committee may specify).  

(iii) 

ISOs.  The terms of any ISO granted under the Plan shall comply in all respects with the provisions of Code Section 422.

(c) 

Stock Appreciation Rights.  The Committee is authorized to grant SARs to Participants on the following terms and conditions: 

(i) 

Right to Payment.  An SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee.  

(ii) 

Other Terms.  The Committee shall determine the term of each SAR, provided that in no event shall the term of an SAR exceed a period of ten years from the date of grant.  The Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which a SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, whether or not a SAR shall be free-standing or in tandem or combination with any other Award, and whether or not the SAR will be a 409A Award or Non-409A Award.  Limited SARs that may only be exercised in connection with a Change in Control or termination of service following a Change in Control as specified by the Committee may be granted on such terms, not inconsistent with this Section 6(c), as the Committee may determine.  The Committee may require that an outstanding Option be exchanged for an SAR exercisable for Stock having vesting, expiration, and other terms substantially the same as the Option, so long as such exchange will not result in additional accounting expense to the Company.

(d) 

Restricted Stock.  The Committee is authorized to grant Restricted Stock to Participants on the following terms and conditions: 

6

(i)

Grant and Restrictions.  Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of performance goals and/or future service requirements), in such installments or otherwise and under such other circumstances as the Committee may determine at the date of grant or thereafter.  Except to the extent restricted under the terms of the Plan and any Award document relating to the Restricted Stock, a Participant granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote the Restricted Stock and the right to receive dividends thereon (subject to any mandatory reinvestment or other requirement imposed by the Committee).  

(ii) 

Forfeiture.  Except as otherwise determined by the Committee, upon termination of employment or service during the applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided that the Committee may provide, by rule or regulation or in any Award document, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will lapse in whole or in part, including in the event of terminations resulting from specified causes.  

(iii) 

Certificates for Stock.  Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine.  If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.  

(iv) 

Dividends and Splits.  As a condition to the grant of an Award of Restricted Stock, the Committee may require that any dividends paid on a share of Restricted Stock shall be either (A) paid with respect to such Restricted Stock at the dividend payment date in cash, in kind, or in a number of shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) automatically reinvested in additional Restricted Stock or held in kind, which shall be subject to the same terms as applied to the original Restricted Stock to which it relates, or (C) deferred as to payment, either as a cash deferral or with the amount or value thereof automatically deemed reinvested in shares of Deferred Stock, other Awards or other investment vehicles, subject to such terms as the Committee shall determine or permit a Participant to elect.  Unless otherwise determined by the Committee, Stock distributed in connection with a Stock split or Stock dividend, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed.  

(e) 

Deferred Stock.  The Committee is authorized to grant Deferred Stock to Participants, subject to the following terms and conditions: 

(i)  

Award and Restrictions.  Issuance of Stock will occur upon expiration of the deferral period specified for an Award of Deferred Stock by the Committee (or, if permitted by the Committee, as elected by the Participant).  In addition, Deferred Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of performance goals and/or future service requirements), separately or in combination, in installments or otherwise, and under such other circumstances as the Committee may determine at the date of grant or thereafter.  Deferred Stock may be satisfied by delivery of Stock, other Awards, or a combination thereof (subject to Section 11(l)), as determined by the Committee at the date of grant or thereafter.  

(ii)  

Forfeiture.  Except as otherwise determined by the Committee, upon termination of employment or service during the applicable deferral period or portion thereof to which 

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forfeiture conditions apply (as provided in the Award document evidencing the Deferred Stock), all Deferred Stock that is at that time subject to such forfeiture conditions shall be forfeited; provided that the Committee may provide, by rule or regulation or in any Award document, or may determine in any individual case, that restrictions or forfeiture conditions relating to Deferred Stock will lapse in whole or in part, including in the event of terminations resulting from specified causes.   Deferred Stock subject to a risk of forfeiture may be called "restricted stock units" or otherwise designated by the Committee. 

(iii) 

Dividend Equivalents.  Unless otherwise determined by the Committee, Dividend Equivalents on the specified number of shares of Stock covered by an Award of Deferred Stock shall be either (A) paid with respect to such Deferred Stock at the dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Deferred Stock, either as a cash deferral or with the amount or value thereof automatically deemed reinvested in additional Deferred Stock, other Awards or other investment vehicles having a Fair Market Value equal to the amount of such dividends, as the Committee shall determine or permit a Participant to elect.  

(f) 

Bonus Stock and Awards in Lieu of Obligations.  The Committee is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations of the Company or a subsidiary or affiliate to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, subject to such terms as shall be determined by the Committee.  

(g) 

Dividend Equivalents.  The Committee is authorized to grant Dividend Equivalents to a Participant, which may be awarded on a free-standing basis or in connection with another Award.  The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and subject to restrictions on transferability, risks of forfeiture and such other terms as the Committee may specify.  

(h) 

Other Stock-Based Awards.  The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock or factors that may influence the value of Stock, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or business units thereof or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified subsidiaries or affiliates or other business units.  The Committee shall determine the terms and conditions of such Awards.  Stock delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, notes, or other property, as the Committee shall determine.  Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted pursuant to this Section 6(h).  

(i) 

Performance Awards.  Performance Awards, denominated in cash or in Stock or other Awards, may be granted by the Committee in accordance with Section 7.  

7.  

Performance Awards, Including Annual Incentive Awards.  

(a) 

Performance Awards Generally.  Performance Awards may be denominated as a cash amount, number of shares of Stock, or specified number of other Awards (or a combination) which may be earned upon achievement or satisfaction of performance conditions specified by the Committee.  In addition, the Committee may specify that any other Award shall constitute a Performance Award by conditioning the right of a Participant to exercise the Award or have it settled, and the timing thereof, upon 

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achievement or satisfaction of such performance conditions as may be specified by the Committee.  The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and may exercise its discretion to reduce or increase the amounts payable under any Award subject to performance conditions, except as limited under Sections 7(b) and 7(c) in the case of a Performance Award intended to qualify as "performance-based compensation" under Code Section 162(m).  

(b) 

Performance Awards Granted to Covered Employees.  If the Committee determines that a Performance Award to be granted to an Eligible Person who is designated by the Committee as likely to be a Covered Employee should qualify as "performance-based compensation" for purposes of Code Section 162(m), the grant, exercise and/or settlement of such Performance Award shall be contingent upon achievement of a preestablished performance goal and other terms set forth in this Section 7(b).  

(i) 

Performance Goal Generally.  The performance goal for such Performance Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with this Section 7(b).  The performance goal shall be objective and shall otherwise meet the requirements of Code Section 162(m) and regulations thereunder, including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being "substantially uncertain." The Committee may determine that such Performance Awards shall be granted, exercised and/or settled upon achievement of any one performance goal or that two or more of the performance goals must be achieved as a condition to grant, exercise and/or settlement of such Performance Awards.  Performance goals may differ for Performance Awards granted to any one Participant or to different Participants.  

(ii) 

Business Criteria.  One or more of the following business criteria for the Company, on a consolidated basis, and/or for specified subsidiaries or affiliates or other business units of the Company shall be used by the Committee in establishing performance goals for such Performance Awards: (1) sales or revenue measures; (2) operating income, earnings from operations, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items, (3) net income or net income per common share (basic or diluted); (4) return on assets, return on investment, return on capital, or return on equity; (5) cash flow, free cash flow, cash flow return on investment, or net cash provided by operations; (6) interest expense after taxes; (7) economic profit or value created; (8) operating margin; (9) stock price or total stockholder return; and (10) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates, joint ventures or other assets.  The targeted level or levels of performance with respect to such business criteria may be established at such levels and in such terms as the Committee may determine, in its discretion, including in absolute terms, as a goal relative to performance in prior periods, or as a goal compared to the performance of one or more comparable companies or an index covering multiple companies.  

(iii) 

Performance Period; Timing for Establishing Performance Goals.  Achievement of performance goals in respect of such Performance Awards shall be measured over a performance period of up to one year or more than one year, as specified by the Committee.  A performance goal shall be established not later than the earlier of (A) 90 days after the beginning of any performance period applicable to such Performance Award or (B) the time 25% of such performance period has elapsed.  

(iv) 

Performance Award Pool.  The Committee may establish a Performance Award pool, which shall be an unfunded pool, for purposes of measuring performance of the Company in 

9

connection with Performance Awards.  The amount of such Performance Award pool shall be based upon the achievement of a performance goal or goals based on one or more of the business criteria set forth in Section 7(b)(ii) during the given performance period, as specified by the Committee in accordance with Section 7(b)(iv).  The Committee may specify the amount of the Performance Award pool as a percentage of any of such business criteria, a percentage thereof in excess of a threshold amount, or as another amount which need not bear a strictly mathematical relationship to such business criteria.  

(v) 

Settlement of Performance Awards; Other Terms.  Settlement of Performance Awards shall be in cash, Stock, other Awards or other property, in the discretion of the Committee.  The Committee may, in its discretion, increase or reduce the amount of a settlement otherwise to be made in connection with such Performance Awards, but may not exercise discretion to increase any such amount payable to a Covered Employee in respect of a Performance Award subject to this Section 7(b) beyond the level of payment authorized for achievement of the performance goal specified under this Section 7(b) based on the actual level of achievement of such goal.  Any settlement which changes the form of payment from that originally specified shall be implemented in a manner such that the Performance Award and other related Awards do not, solely for that reason, fail to qualify as "performance-based compensation" for purposes of Code Section 162(m).  The Committee shall specify the circumstances in which such Performance Awards shall be paid or forfeited in the event of termination of employment by the Participant or other event (including a Change in Control) prior to the end of a performance period or settlement of such Performance Awards.  

(c) 

Annual Incentive Awards Granted to Designated Covered Employees.  The Committee may grant an Annual Incentive Award to an Eligible Person who is designated by the Committee as likely to be a Covered Employee.  Such Annual Incentive Award will be intended to qualify as "performance-based compensation" for purposes of Code Section 162(m), and its grant, exercise and/or settlement shall be contingent upon achievement of preestablished performance goals and other terms set forth in this Section 7(c).  

(i) 

Grant of Annual Incentive Awards.  Not later than the earlier of 90 days after the beginning of any performance period applicable to such Annual Incentive Award or the time 25% of such performance period has elapsed, the Committee shall determine the Covered Employees who will potentially receive Annual Incentive Awards, and the amount(s) potentially payable thereunder, for that performance period.  The amount(s) potentially payable shall be based upon the achievement of a performance goal or goals based on one or more of the business criteria set forth in Section 7(b)(ii) in the given performance period, as specified by the Committee.  The Committee may designate an annual incentive award pool as the means by which Annual Incentive Awards will be measured, which pool shall conform to the provisions of Section 7(b)(iv).  In such case, the portion of the Annual Incentive Award pool potentially payable to each Covered Employee shall be preestablished by the Committee.  In all cases, the maximum Annual Incentive Award of any Participant shall be subject to the limitation set forth in Section 5.  

(ii) 

Payout of Annual Incentive Awards.  After the end of each performance period, the Committee shall determine the amount, if any, of the Annual Incentive Award for that performance period payable to each Participant.  The Committee may, in its discretion, determine that the amount payable to any Participant as a final Annual Incentive Award shall be reduced from the amount of his or her potential Annual Incentive Award, including a determination to make no final Award whatsoever, but may not exercise discretion to increase any such amount in respect of an Award subject to this Section 7(b) beyond the level of payment authorized for achievement of the performance goal specified under this Section 7(c) based on the actual level of achievement of such goal.  The Committee shall specify the circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of termination of employment by the Participant or other event prior to the end of a performance period or settlement of such Annual Incentive Award.  

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(d) 

Written Determinations.  Determinations by the Committee as to the establishment of performance goals, the amount potentially payable in respect of Performance Awards and Annual Incentive Awards, the level of actual achievement of the specified performance goals relating to Performance Awards and Annual Incentive Awards, and the amount of any final Performance Award and Annual Incentive Award shall be recorded in writing in the case of Performance Awards intended to qualify under Section 162(m).  Specifically, the Committee shall certify in writing, in a manner conforming to applicable regulations under Section 162(m), prior to settlement of each such Award granted to a Covered Employee, that the performance objective relating to the Performance Award and other material terms of the Award upon which settlement of the Award was conditioned have been satisfied.  

8.  

Certain Provisions Applicable To Awards.  

(a) 

Stand-Alone, Additional, Tandem, and Substitute Awards.  Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, any subsidiary or affiliate, or any business entity to be acquired by the Company or a subsidiary or affiliate, or any other right of a Participant to receive payment from the Company or any subsidiary or affiliate; provided, however, that a 409A Award may not be granted in tandem with a Non-409A Award.  Awards granted in addition to or in tandem with other Awards or awards may be granted either as of the same time as or a different time from the grant of such other Awards or awards.  Subject to Sections 11(k) and (l), the Committee may determine that, in granting a new Award, the in-the-money value or fair value of any surrendered Award or award or the value of any other right to payment surrendered by the Participant may be applied to the purchase of any other Award.  

(b) 

Term of Awards.  The term of each Award shall be for such period as may be determined by the Committee, subject to the express limitations set forth in Sections 6(b)(ii), 6(c)(ii) and 8 or elsewhere in the Plan.  

(c) 

Form and Timing of Payment under Awards; Deferrals.  Subject to the terms of the Plan (including Sections 11(k) and (l)) and any applicable Award document, payments to be made by the Company or a subsidiary or affiliate upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including, without limitation, cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis.  The settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon occurrence of one or more specified events, subject to Sections 11(k) and (l).  Subject to Section 11(k), installment or deferred payments may be required by the Committee (subject to Section 11(e)) or permitted at the election of the Participant on terms and conditions established by the Committee.  Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock.  In the case of any 409A Award that is vested and no longer subject to a risk of forfeiture (within the meaning of Code Section 83), such Award will be distributed to the Participant, upon application of the Participant, if the Participant has had an unforeseeable emergency within the meaning of Code Sections 409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), in accordance with Section 409A(a)(2)(B)(ii).

9.  

Change in Control.  

(a) 

Effect of "Change in Control" on Non-Performance Based Awards.  In the event of a "Change in Control," the following provisions shall apply to non-performance based Awards, including Awards as to which performance conditions previously have been satisfied or are deemed satisfied under Section 9(b), unless otherwise provided by the Committee in the Award document: 

11

(i) 

All forfeiture conditions and other restrictions applicable to Awards granted under the Plan shall lapse and such Awards shall be fully payable as of the time of the Change in Control without regard to vesting or other conditions, except to the extent of any waiver by the Participant and subject to applicable restrictions set forth in Section 11(a); and

(ii)

Any Award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested as of the time of the Change in Control and, upon any termination of employment or service by the Participant other than a termination for cause within two years after the Change in Control, shall remain outstanding and exercisable until the earlier of three years after such termination or the stated expiration date of such Award, subject only to applicable restrictions set forth in Section 11(a); and   

 (iii) 

All deferral of settlement, forfeiture conditions and other restrictions applicable to an unvested Award granted under the Plan shall lapse and such Awards shall be fully payable as of the time of the Change in Control without regard to deferral and vesting conditions, except to the extent of any waiver by the Participant (if permitted under Section 409A) and subject to applicable restrictions set forth in Section 11(a); 

provided, however, that no distribution shall occur with respect to a 409A Award unless the Change in Control also constitutes a 409A Ownership/Control Change.

(b) 

Effect of "Change in Control" on Performance-Based Awards.  In the event of a "Change in Control," with respect to an outstanding Award subject to achievement of performance goals and conditions, such performance goals and conditions shall be deemed to be met or exceeded if and to the extent so provided by the Committee in the Award document governing such Award or other agreement with the Participant, to the maximum extent permitted under Section 409A in the case of 409A Awards.  

(c) 

Definition of "Change in Control." A "Change in Control" shall be deemed to have occurred if, after the Effective Date, there shall have occurred any of the following: 

(i) 

Any "person," as such term is used in Section 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), acquires voting securities of the Company and immediately thereafter is a "25% Beneficial Owner."  For purposes of this provision, a "25% Beneficial Owner" shall mean a person who is the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then-outstanding voting securities; provided that the term "25% Beneficial Owner" shall not include any person who, at all times following such an acquisition of securities, remains eligible to file a Schedule 13G pursuant to Rule 13d-1(b) under the Exchange Act, or remains exempt from filing a Schedule 13D under Section 13(d)(6)(b) of the Exchange Act, with respect to all classes of Company voting securities;  

(ii) 

During any period of two consecutive years commencing on or after the Effective Date, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person (as defined above) who has entered into an agreement with the Company to effect a transaction described in subsections (i), (iii) or (iv) of this definition) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (the "Continuing Directors") cease for any reason to constitute at least a majority thereof; 

12

(iii) 

The stockholders of the Company have approved a merger, consolidation, recapitalization, or reorganization of the Company, or a reverse stock split of any class of voting securities of the Company, or the consummation of any such transaction if stockholder approval is not obtained, other than any such transaction which would result in at least 50% of the combined voting power of the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 80% of the combined voting power of the voting securities of the Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each other continuing holder not substantially altered as a result of the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 60% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company, such surviving entity or a subsidiary thereof; and provided further, that, if consummation of the corporate transaction referred to in this Section 9(c)(iii) is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency or approval of the stockholders of another entity or other material contingency, no Change in Control shall occur until such time as such consent and approval has been obtained and any other material contingency has been satisfied; 

(iv) 

The stockholders of the Company have approved a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets (or any transaction having a similar effect); provided that, if consummation of the transaction referred to in this Section 9(c)(iv) is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency or approval of the stockholders of another entity or other material contingency, no Change in Control shall occur until such time as such consent and approval has been obtained and any other material contingency has been satisfied. 

(d)

Definition of "409A Ownership/Control Change." A "409A Ownership/Control Change" shall be deemed to have occurred if a Change in Control occurs which involves transactions which constitute a change in the ownership or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, within the meaning of Code Section 409A(a)(2)(A)(v).    

(e) 

Termination of Employment After Change in Control Negotiations Have Commenced.  For purposes of this Section 9, a termination of a Participant's employment by the Company without cause after the commencement of negotiations with a potential acquirer or business combination partner will be deemed to be a termination of employment immediately after a Change in Control if such negotiations result in a transaction constituting a Change in Control within 12 months of the commencement date of such negotiations.  

10.  

Additional Award Forfeiture Provisions.  

(a) 

Forfeiture of Options and Other Awards and Gains Realized Upon Prior Option Exercises or Award Settlements.  Unless otherwise determined by the Committee, each Award granted hereunder, other than Awards granted to non-employee directors, shall be subject to the following additional forfeiture conditions, to which the Participant, by accepting an Award hereunder, agrees.  If any of the events specified in Section 10(b)(i), (ii), or (iii) occurs (a "Forfeiture Event"), all of the following forfeitures will result: 

(i) 

The unexercised portion of the Option, whether or not vested, and any other Award not then settled (except for an Award that has not been settled solely due to an elective deferral by the Participant and otherwise is not forfeitable in the event of any termination of service of the Participant) will be immediately forfeited and canceled upon the occurrence of the Forfeiture Event; and 

13

(ii) 

The Participant will be obligated to repay to the Company, in cash, within five business days after demand is made therefor by the Company, the total amount of Award Gain (as defined herein) realized by the Participant upon each exercise of an Option or settlement of an Award (regardless of any elective deferral) that occurred on or after (A) the date that is six months prior to the occurrence of the Forfeiture Event, if the Forfeiture Event occurred while the Participant was employed by the Company or a subsidiary or affiliate, or (B) the date that is six months prior to the date the Participant's employment by the Company or a subsidiary or affiliate terminated, if the Forfeiture Event occurred after the Participant ceased to be so employed.  For purposes of this Section, the term "Award Gain" shall mean (i), in respect of a given Option exercise, the product of (X) the Fair Market Value per share of Stock at the date of such exercise (without regard to any subsequent change in the market price of shares) minus the exercise price times (Y) the number of shares as to which the Option was exercised at that date, and (ii), in respect of any other settlement of an Award granted to the Participant, the Fair Market Value of the cash or Stock paid or payable to Participant (regardless of any elective deferral) less any cash or the Fair Market Value of any Stock or property (other than an Award or award which would have itself then been forfeitable hereunder and excluding any payment of tax withholding) paid by the Participant to the Company as a condition of or in connection such settlement.  

(b) 

Events Triggering Forfeiture.  The forfeitures specified in Section 10(a) will be triggered upon the occurrence of any one of the following Forfeiture Events at any time during the Participant's employment by the Company or a subsidiary or affiliate and resulting in his or her termination of employment, or during the one-year period following termination of such employment: 

(i) 

The Participant, acting alone or with others, directly or indirectly, prior to a Change in Control, (A) engages, either as employee, employer, consultant, ad­visor, or director, or as an owner, investor, partner, or stockholder unless the Participant's interest is insubstantial, in any business in an area or region in which the Company conducts business at the date the event occurs, which is directly in competition with a business then conducted by the Company or a sub­sidiary or affiliate; (B) induces any customer or supplier of the Company or a subsid­iary or affiliate, or a telephone company with which the Company or a sub­sid­iary or affiliate has a business relationship, to curtail, cancel, not renew, or not continue his or her or its business with the Company or any subsidiary or affiliate; or (C) induces, or attempts to influence, any employee of or service provider to the Company or a subsidiary or affiliate to terminate such employment or service.  The Committee shall, in its discretion, determine which lines of business the Company conducts on any particular date and which third parties may reasonably be deemed to be in competition with the Company.  For purposes of this Section 10(b)(i), a Participant's interest as a stockholder is insubstantial if it represents beneficial ownership of less than five percent of the outstanding class of stock, and a Participant's interest as an owner, investor, or partner is insubstantial if it represents ownership, as determined by the Committee in its discretion, of less than five percent of the outstanding equity of the entity; 

(ii) 

The Participant discloses, uses, sells, or otherwise transfers, except in the course of employment with or other service to the Company or any subsidiary or affiliate, any confidential or proprietary information of the Company or any subsidiary or affiliate, including but not limited to information regarding the Company's current and potential customers, organization, employees, finances, and methods of operations and investments, so long as such information has not otherwise been disclosed to the public or is not otherwise in the public domain, except as required by law or pursuant to legal process, or the Participant makes statements or representations, or otherwise communicates, directly or indirectly, in writing, orally, or otherwise, or takes any other action which may, directly or indirectly, disparage or be damaging to the Company or any of its subsidiaries or affiliates or their respective officers, directors, employees, advisors, businesses or reputations, except as required by law or pursuant to legal process; or 

14

(iii) 

The Participant fails to cooperate with the Company or any subsidiary or affiliate in any way, including, without limitation, by making himself or herself available to testify on behalf of the Company or such subsidiary or affiliate in any action, suit, or proceeding, whether civil, criminal, administrative, or investigative, or other­wise fails to assist the Company or any subsidiary or affiliate in any way, includ­ing, without limitation, in connection with any such action, suit, or proceeding by providing information and meeting and consulting with members of management of, other representatives of, or counsel to, the Company or such subsidiary or affiliate, as reasonably requested.  

(c) 

Agreement Does Not Prohibit Competition or Other Participant Activities.  Although the conditions set forth in this Section 10 shall be deemed to be incorporated into an Award, a Participant is not thereby prohibited from engaging in any activity, including but not limited to competition with the Company and its subsidiaries and affiliates.  Rather, the non-occurrence of the Forfeiture Events set forth in Section 10(b) is a condition to the Participant's right to realize and retain value from his or her compensatory Options and Awards, and the consequence under the Plan if the Participant engages in an activity giving rise to any such Forfeiture Event are the forfeitures specified herein.  The Company and the Participant shall not be precluded by this provision or otherwise from entering into other agreements concerning the subject matter of Sections 10(a) and 10(b).  

(d) 

Committee Discretion.  The Committee may, in its discretion, waive in whole or in part the Company's right to forfeiture under this Section, but no such waiver shall be effective unless evidenced by a writing signed by a duly authorized officer of the Company.  In addition, the Committee may impose additional conditions on Awards, by inclusion of appropriate provisions in the document evidencing or governing any such Award.  

11.  

General Provisions.  

(a) 

Compliance with Legal and Other Requirements.  The Company may, to the extent deemed necessary or advisable by the Committee and subject to Section 11(k), postpone the issuance or delivery of Stock or payment of other benefits under any Award until completion of such registration or qualification of such Stock or other required action under any federal or state law, rule or regulation, listing or other required action with respect to any stock exchange or automated quotation system upon which the Stock or other securities of the Company are listed or quoted, or compliance with any other obligation of the Company, as the Committee may consider appropriate, and may require any Participant to make such representations, furnish such information and comply with or be subject to such other conditions as it may consider appropriate in connection with the issuance or delivery of Stock or payment of other benefits in compliance with applicable laws, rules, and regulations, listing requirements, or other obligations.  The foregoing notwithstanding, in connection with a Change in Control, the Company shall take or cause to be taken no action, and shall undertake or permit to arise no legal or contractual obligation, that results or would result in any postponement of the issuance or delivery of Stock or payment of benefits under any Award or the imposition of any other conditions on such issuance, delivery or payment, to the extent that such postponement or other condition would represent a greater burden on a Participant than existed on the 90th day preceding the Change in Control.  

(b) 

Limits on Transferability; Beneficiaries.  No Award or other right or interest of a Participant under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien, obligation or liability of such Participant to any party (other than the Company or a subsidiary or affiliate thereof), or assigned or transferred by such Participant otherwise than by will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that may be exercisable shall be exercised during the lifetime of the Participant only by the Participant or his or her guardian or legal representative, except that Awards and other rights (other than ISOs and SARs in tandem therewith) may be transferred to one or more transferees during the lifetime of the Participant for purposes of estate-planning, and may be exercised by such transferees in accordance with the terms of such Award, but only if and to the extent such transfers are permitted by the Committee and 

15

the Committee has determined that there will be no transfer of the Award to a third party for value, and subject to any terms and conditions which the Committee may impose thereon (which may include limitations the Committee may deem appropriate in order that offers and sales under the Plan will meet applicable requirements of registration forms under the Securities Act of 1933 specified by the Securities and Exchange Commission).  A Beneficiary, transferee, or other person claiming any rights under the Plan from or through any Participant shall be subject to all terms and conditions of the Plan and any Award document applicable to such Participant, except as otherwise determined by the Committee, and to any additional terms and conditions deemed necessary or appropriate by the Committee. 

(c) 

Adjustments.  In the event that any large, special and non-recurring dividend or other distribution (whether in the form of cash or property other than Stock), recapitalization, forward or reverse split, Stock dividend, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, liquidation, dissolution or other similar corporate transaction or event affects the Stock such that an adjustment is determined by the Committee to be appropriate or, in the case of any outstanding Award, which is necessary in order to prevent dilution or enlargement of the rights of the Participant, then the Committee shall, in an equitable manner as determined by the Committee, adjust any or all of (i) the number and kind of shares of Stock which may be delivered in connection with Awards granted thereafter, including the number of shares available under Section 4, (ii) the number and kind of shares of Stock by which annual per-person Award limitations are measured under Section 5, including the share limits applicable to non-employee director Awards under Section 5(c), (iii) the number and kind of shares of Stock subject to or deliverable in respect of outstanding Awards and (iv) the exercise price, grant price or purchase price relating to any Award or, if deemed appropriate, the Committee may make provision for a payment of cash or property to the holder of an outstanding Option (subject to Section 11(l)).  In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including Performance Awards and performance goals and any hypothetical funding pool relating thereto) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding sentence, as well as acquisitions and dispositions of businesses and assets) affecting the Company, any subsidiary or affiliate or other business unit, or the financial statements of the Company or any subsidiary or affiliate, or in response to changes in applicable laws, regulations, accounting principles, tax rates and regulations or business conditions or in view of the Committee's assessment of the business strategy of the Company, any subsidiary or affiliate or business unit thereof, performance of comparable organizations, economic and business conditions, personal performance of a Participant, and any other circumstances deemed relevant; provided that no such adjustment shall be authorized or made if and to the extent that the existence of such authority (i) would cause Options, SARs, or Performance Awards granted under the Plan to Participants designated by the Committee as Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder to otherwise fail to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder, or (ii) would cause the Committee to be deemed to have authority to change the targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the performance goals relating to Options or SARs granted to Covered Employees and intended to qualify as "performance-based compensation" under Code Section 162(m) and regulations thereunder.  

(d) 

Tax Provisions.  

(i) 

Withholding.  The Company and any subsidiary or affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Stock, or any payroll or other payment to a Participant, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award.  This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant's withholding obligations, either on a mandatory or elective basis in the discretion of the Committee, or in satisfaction of other tax obligations.  Other 

16

provisions of the Plan notwithstanding, only the minimum amount of Stock deliverable in connection with an Award necessary to satisfy statutory withholding requirements will be withheld, unless withholding of any additional amount of Stock will not result in additional accounting expense to the Company.

(ii) 

Required Consent to and Notification of Code Section 83(b) Election.  No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the United States may be made unless expressly permitted by the terms of the Award document or by action of the Committee in writing prior to the making of such election.  In any case in which a Participant is permitted to make such an election in connection with an Award, the Participant shall notify the Company of such election within ten days of filing notice of the election with the Internal Revenue Service or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Code Section 83(b) or other applicable provision.  

(iii) 

Requirement of Notification Upon Disqualifying Disposition Under Code Section 421(b).  If any Participant shall make any disposition of shares of Stock delivered pursuant to the exercise of an ISO under the circumstances described in Code Section 421(b) (i.e., a disqualifying disposition), such Participant shall notify the Company of such disposition within ten days thereof.  

(e) 

Changes to the Plan.  The Board may amend, suspend or terminate the Plan or the Committee's authority to grant Awards under the Plan without the consent of stockholders or Participants; provided, however, that any amendment to the Plan shall be submitted to the Company's stockholders for approval not later than the earliest annual meeting for which the record date is at or after the date of such Board action if such stockholder approval is required by any federal or state law or regulation or Nasdaq Marketplace Rules or any other stock exchange or automated quotation system on which the Stock may then be listed or quoted, or if such amendment would materially increase the number of shares reserved for issuance and delivery under the Plan, and the Board may otherwise, in its discretion, determine to submit other amendments to the Plan to stockholders for approval; and provided further, that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any outstanding Award (for this purpose, actions that alter the timing of federal income taxation of a Participant will not be deemed material unless such action results in an income tax penalty on the Participant).  Without the approval of stockholders, the Committee will not amend or replace previously granted Options or SARs in a transaction that constitutes a "repricing," which for this purpose means any of the following or any other action that has the same effect:

·

Lowering the exercise price of an option or SAR after it is granted; 

·

Any other action that is treated as a repricing under generally accepted accounting principles;

·

Canceling an option or SAR at a time when its exercise price exceeds the fair market value of the underlying Stock, in exchange for another option or SAR, restricted stock, or other equity;

provided, however, that the foregoing transactions shall not be deemed a repricing if pursuant to an adjustment authorized under Section 10(c).  With regard to other terms of Awards, the Committee shall have no authority to waive or modify any such Award term after the Award has been granted to the extent the waived or modified term would be mandatory under the Plan for any Award newly granted at the date of the waiver or modification. 

(f) 

Right of Setoff.  The Company or any subsidiary or affiliate may, to the extent permitted by applicable law, deduct from and set off against any amounts the Company or a subsidiary or affiliate may owe to the Participant from time to time, including amounts payable in connection with any 

17

Award, owed as wages, fringe benefits, or other compensation owed to the Participant, such amounts as may be owed by the Participant to the Company, including but not limited to amounts owed under Section 10(a), although the Participant shall remain liable for any part of the Participant's payment obligation not satisfied through such deduction and setoff.  By accepting any Award granted hereunder, the Participant agrees to any deduction or setoff under this Section 11(f).  

(g) 

Unfunded Status of Awards; Creation of Trusts.  The Plan is intended to constitute an "unfunded" plan for incentive and deferred compensation.  With respect to any payments not yet made to a Participant or obligation to deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided that the Committee may authorize the creation of trusts and deposit therein cash, Stock, other Awards or other property, or make other arrangements to meet the Company's obligations under the Plan.  Such trusts or other arrangements shall be consistent with the "unfunded" status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.  

(h) 

Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements, apart from the Plan, as it may deem desirable, including incentive arrangements and awards which do not qualify under Code Section 162(m), and such other arrangements may be either applicable generally or only in specific cases.  

(i) 

Payments in the Event of Forfeitures; Fractional Shares.  Unless otherwise determined by the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid cash consideration, the Participant shall be repaid the amount of such cash consideration.  No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.  

(j) 

Compliance with Code Section 162(m).  It is the intent of the Company that Options and SARs granted to Covered Employees and other Awards designated as Awards to Covered Employees subject to Section 7 shall constitute qualified "performance-based compensation" within the meaning of Code Section 162(m) and regulations thereunder, unless otherwise determined by the Committee at the time of allocation of an Award.  Accordingly, the terms of Sections 7(b), (c), and (d), including the definitions of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with Code Section 162(m) and regulations thereunder.  The foregoing notwithstanding, because the Committee cannot determine with certainty whether a given Participant will be a Covered Employee with respect to a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean only a person designated by the Committee as likely to be a Covered Employee with respect to a specified fiscal year.  If any provision of the Plan or any Award document relating to a Performance Award that is designated as intended to comply with Code Section 162(m) does not comply or is inconsistent with the requirements of Code Section 162(m) or regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person discretion to increase the amount of compensation otherwise payable in connection with any such Award upon attainment of the applicable performance objectives.  

(k) 

Certain Limitations on Awards to Ensure Compliance with Section 409A.  For purposes of the Plan, references to an Award term or event (including any authority or right of the Company or a Participant) being “permitted” under Section 409A mean, for a 409A Award, that the term or event will not cause the Participant to be deemed to be in constructive receipt of compensation relating 

18

to the Award prior to the distribution of Stock, cash or other property or to be liable for payment of interest or a tax penalty under Section 409A and, for a Non-409A Award, that the term or event will not cause the Award to be treated as subject to Section 409A.  Other provisions of the Plan notwithstanding, the terms of any 409A Award and any Non-409A Award, including any authority of the Company and rights of the Participant with respect to the Award, shall be limited to those terms permitted under Section 409A, and any terms not permitted under Section 409A shall be automatically modified and limited to the extent necessary to conform with Section 409A.  For this purpose, other provisions of the Plan notwithstanding, the Company shall have no authority to accelerate distributions relating to 409A Awards in excess of the authority permitted under Section 409A, any distribution subject to Section 409A(a)(2)(A)(i) upon separation from service of a “Specified Employee” (or “key employee”) as defined under Section 409A(a)(2)(B)(i) shall not occur earlier than the earliest time permitted under Section 409A(a)(2)(B)(i), any distribution triggered by a Participant’s termination of employment and intended to qualify under Section 409A(a)(2)(A)(i) shall be made only at or following such time as the Participant has had a “separation from service” within the meaning of Section 409A(a)(2)(A)(i), and any authorization of payment of cash to settle a Non-409A Award shall apply only to the extent permitted under Section 409A for such Award.  

(l) 

Governing Law.  The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan and any Award document shall be determined in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable provisions of federal law.  

(m) 

Awards to Participants Outside the United States.  The Committee may modify the terms of any Award under the Plan made to or held by a Participant who is then resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that such Award shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant's residence or employment abroad shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States.  An Award may be modified under this Section 11(n) in a manner that is inconsistent with the express terms of the Plan, so long as such modifications will not contravene any applicable law or regulation or result in actual liability under Section 16(b) for the Participant whose Award is modified.  

(n) 

Limitation on Rights Conferred under Plan.  Neither the Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or a subsidiary or affiliate, (ii) interfering in any way with the right of the Company or a subsidiary or affiliate to terminate any Eligible Person's or Participant's employment or service at any time (subject to the terms and provisions of any separate written agreements), (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and employees, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award or an Option is duly exercised.  Except as expressly provided in the Plan and an Award document, neither the Plan nor any Award document shall confer on any person other than the Company and the Participant any rights or remedies thereunder.  

(o) 

Severability; Entire Agreement.  If any of the provisions of this Plan or any Award document is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and the remaining provisions shall not be affected thereby; provided, that, if any of such provisions is finally held to be invalid, illegal, or unenforceable because it exceeds the maximum scope 

19

determined to be acceptable to permit such provision to be enforceable, such provision shall be deemed to be modified to the minimum extent necessary to modify such scope in order to make such provision enforceable hereunder.  The Plan and any Award documents contain the entire agreement of the parties with respect to the subject matter thereof and supersede all prior agreements, promises, covenants, arrangements, communications, representations and warranties between them, whether written or oral with respect to the subject matter thereof.  

(p) 

Plan Effective Date and Termination.  The Plan shall become effective if, and at such time as, the stockholders of the Company have approved it by the affirmative votes of the holders of a majority of the voting securities of the Company present, or represented, and entitled to vote on the subject matter at a duly held meeting of stockholders.  Upon such approval of the Plan by the stockholders of the Company, no further awards shall be granted under the Preexisting Plan, but any outstanding awards under the Preexisting Plan shall continue in accordance with their terms.  Unless earlier terminated by action of the Board of Directors, the authority of the Committee to make grants under the Plan shall terminate on the date that is ten years after the latest date upon which stockholders of the Company have approved the Plan, and the Plan will remain in effect until such time as no Stock remains available for delivery under the Plan and the Company has no further rights or obligations under the Plan with respect to outstanding Awards under the Plan.  

20Prepared and filed by St Ives Financial

  
    EXHIBIT
      10.1

    

    04/07/2006

    EMPLOYMENT
      AGREEMENT

    

    THIS
      AGREEMENT, made as of this 7 day of April, 2006, is between Orleans
      Homebuilders, Inc., a Delaware corporation with offices at 3333 Street Road,
      One
      Greenwood Square, Bensalem, Pennsylvania 19020 (hereinafter “the Company” or
“Orleans”), and Joel A. Armstrong, an individual (hereinafter called
“Employee”).

    

    BACKGROUND

    

    The
      Company desires to employ Employee as Executive Vice President, and Employee
      desires to be so employed on the terms and conditions contained in this
      Agreement.

    

    NOW
      THEREFORE, in consideration of the promises and the mutual covenants and
      agreements contained herein, and intending to be legally bound hereby, the
      parties hereto agree as follows:

    

    PARAGRAPH
      1. CAPACITY AND DUTIES

    

    1.1
      Employment:
      Acceptance of Employment. The
      Company employs Employee, and Employee accepts employment by the Company, upon
      the terms and conditions hereinafter set forth. The effective date of such
      employment (the “Effective Date”) is May 1, 2006. The term of Employee’s
      employment hereunder shall commence on the Effective Date and end on the third
      anniversary of the Effective Date, unless sooner terminated pursuant to the
      provisions of this Agreement.

    

    1.2 
      Capacity
      and Duties.

    

    (a) Employee
      shall be employed by the Company as Executive Vice President, and, subject
      to
      the supervision and control of Orleans” President or his designee, agrees to
      perform such duties and responsibilities normally associated with the position
      of Executive Vice President and as may be assigned to Employee from time to
      time
      by Orleans’ President or by his designee. Employee is required to work those
      hours necessary to perform properly such duties and responsibilities normally
      associated with the position of Executive Vice President and as may be assigned
      to Employee from time to time by Orleans’ President or by his
      designee.

    

    (b) During
      his employment hereunder, Employee shall devote his full working time, energy,
      skill and best efforts to the performance of his duties hereunder and shall
      not
      be employed by or participate or engage in or take part in any manner in the
      management or operation of any business enterprise or pursuit other than the
      Company and its Affiliates. For purposes of this Agreement, “Affiliate” means
      any person or entity controlling, controlled by or under common control with
      the
      Company. “Control”, as used herein, means the power to direct management and
      policies of a person or entity, directly or indirectly, whether through the
      ownership of voting securities, by contract or otherwise.

-1-

    PARAGRAPH
      2. COMPENSATION AND FRINGE BENEFITS

    

    2.1
      Compensation

    

    (a) Base
      Salary. As
      compensation for Employee’s services hereunder, the Company shall pay to
      Employee a salary at an annual rate of Six Hundred Thousand Dollars ($600,000)
      (the “Base Salary”), payable in accordance with the Company’s regular payroll
      practices in effect from time to time during the tenure of Employee’s
      employment; and

    

    (b) Bonus.
      A bonus
      payable semi-annually in the amount of Five Hundred Thousand Dollars ($500,000)
      per annum.

    

    2.2
      Fringe
      Benefits. Employee
      shall be eligible to participate in the Company’s insurance and health benefit
      plans, subject to their respective eligibility requirements and other terms,
      conditions, restrictions and exclusions. Nothing herein shall preclude or
      otherwise restrict the Company’s right to modify or terminate any insurance or
      other benefit plan, policy or program as it deems appropriate in its sole
      discretion. Employee shall also be entitled to those benefits set forth on
      Schedule 2.1 to this Agreement.

    

    2.3
      Vacation.
      Employee shall be entitled to 4 weeks of vacation during each calendar year
      of
      his employment.

    

    2.4
      Expense
      Reimbursement. During
      his employment, the Company shall reimburse Employee for all reasonable expenses
      incurred by him in connection with the performance of his duties hereunder
      in
      accordance with its regular reimbursement policies as in effect from time to
      time and upon receipt of itemized vouchers therefor and such other supporting
      information as the Company may reasonably require. In addition, Company shall
      reimburse Employee for his reasonable moving expenses from his present residence
      in Florida to Arizona.

    

    2.5
      Payments
      After Termination of Employment.  

    

    (a) Subject
      to the terms and conditions set forth in Paragraph 2.5(b), if, on or before
      the
      third anniversary of the Effective Date, Employee is terminated by the Company
      without Cause (as that term is defined below), the Company shall continue to
      pay
      Employee his Base Salary and any bonus to which he is entitled for the lesser
      of
      (i) 12 months; or (ii) the remaining term of this Agreement. These payments
      shall be made according to Employee’s normal payment schedule.

    

    (b) Employee
      shall have no right to any payments under Paragraph 2.5(a) if Employee is
      terminated by the Company for Cause, or (ii) terminates his
      employment.

     

    (c) Regardless
      of the reason for the termination of Employee’s employment, whether by Employee
      or the Company, whether for Cause or not, whether or not due to Employee’s
        death, Employee (or his estate) will receive pay for any days actually worked
        by
        Employee prior to the termination of his employment, expense reimbursement
        for
        all reasonable expenses incurred by him in connection with the performance
        of
        his duties prior to the termination of his employment in accordance with
        the
        terms and conditions of Paragraph 2.4, and any pay for accrued but unused
        paid
        time off benefits, to the extent Employee may be eligible for same under
        the
        Company’s policies.

    -2-

    (d) Regardless
      of the reason for the termination of Employee’s employment, whether by Employee
      or the Company, whether for Cause or not, whether or not due to Employee’s
      death, the Employee (or his estate) shall not be eligible for any Company-paid
      benefits subsequent to the termination of his employment.

    

    PARAGRAPH
      3. TERMINATION OF EMPLOYMENT

    

    3.1 Paragraph
      4 Obligations. The
      termination of Employee’s employment either by Employee or by the Company,
      whether with or without Cause, shall not release Employee from Employee’s
      obligations and restrictions under Paragraph 4 of this Agreement. In addition,
      nothing in this Agreement shall restrict the right of the Company to terminate
      Employee’s employment, with or without Cause, pursuant to Paragraph
      3.4.

    

    3.2 Death
      of Employee. Employee’s
      employment hereunder shall immediately terminate upon his death, upon which
      the
      Company shall have no further obligations hereunder other than payment of
      amounts (including salary, bonus, if any, and expense reimbursement), accrued
      as
      of the date of Employee’s death in accordance with GAAP, as conclusively
      determined in the absence of bad faith or manifest error by the
      Company.

    

    3.3 Employee’s
      Inability to Perform.
      If
      Employee is unable to perform the essential functions of his job, for any
      reason, for a total of thirteen (13) weeks or more in any rolling six (6) month
      period, then the Company shall have the right to terminate Employee’s employment
      upon 30 days prior written notice to Employee at any time during the
      continuation of such inability, in which event the Company shall have no further
      obligations hereunder other than payment of amounts (including salary, bonus,
      if
      any, and expense reimbursement), accrued as of the date of Employee’s
      termination of employment in accordance with GAAP, as conclusively determined
      in
      the absence of bad faith or manifest error by the Company. If Employee is able
      to return to work with the Company and perform the essential functions of his
      job within thirty (30) days of receipt of the written notice from the Company
      described herein, then Employee’s employment will not be
      terminated.

    

    3.4 Termination
      for Cause. Company
      may terminate Employee’s employment at any time without prior notice for
“Cause”, which for purposes of this Agreement, shall mean any of the following:
      willful misconduct, fraud, misappropriation, embezzlement, dishonesty, willful
      misrepresentation, being charged by governmental authorities with or convicted
      of a felony, material failure of Employee to perform his known duties and
      responsibilities to the Company which persists for more than fourteen days
      after
      written notice, gross negligence or self dealing which persists for more than
      fourteen days after written notice from the Company, or which recurs, willful
      material violation in any material respect by Employee of any policy, rule,
      or
      reasonable direction or regulation of the Company, or material violation by
      Employee of any provision of this Agreement.

-3-

    3.5 Termination
      Without Cause by Company.
      The
      Company can terminate this Agreement and the employment relationship between
      the
      parties at any time and for any or no reason by providing Employee with fourteen
      days written notice, which notice the Company can waive, in whole or in part,
      in
      its sole discretion, by paying Employee for such time; provided however, the
      Company can terminate this Agreement and Employee’s employment immediately
      without any prior notice in the event there is “Cause” as defined in Paragraph
      3.4, in the event of Employee’s inability to perform as discussed in Paragraph
      3.3, or in the event of Employee’s death as discussed in Paragraph 3.2. Upon
      termination of employment pursuant to this Paragraph 3.5, and subject to the
      terms and conditions set forth in Paragraph 2.5, Employee shall be entitled
      to
      the payments under Paragraph 2.5.

    

    PARAGRAPH
      4. RESTRICTIVE COVENANTS

    

    4.1 Confidentiality.
      Employee
      shall not use for his personal benefit, or disclose, communicate or divulge
      to,
      or use for the direct or indirect benefit of any person, firm, association
      or
      company other than the Company and Orleans, any Confidential Information. For
      purposes of the preceding sentence, “Confidential Information” means any
      information regarding Company’s business methods, business policies, procedures,
      techniques, research or development projects or results; historical or projected
      financial information, budgets, trade secrets or other knowledge or processes
      of
      or developed by Company; any names and addresses of customers or clients or
      any
      data on or relating to past, present or prospective Company customers or
      clients; or any other confidential information relating to or dealing with
      the
      business, operations or activities of Company, excepting in each case
      information otherwise lawfully known generally by, or readily accessible to,
      the
      trade or the general public, or as required to be disclosed by law or final,
      unappealable order of a court of competent jurisdiction or governmental
      authority. At no time shall Employee, directly or indirectly, remove or cause
      to
      be removed from the premises of Company, or any Company Subsidiary any
      memorandum, note, list, record, file, document or other paper, equipment or
      any
      like item relating to its business (including copies, extracts and summaries
      thereof) except in furtherance of the performance of Employee’s duties under the
      Agreement. The restrictions and obligations contained herein shall be in
      addition to (and not a limitation of) any legally applicable protections of
      Company’s interest in confidential information, trade secrets and the
      like.

    

    4.2 Noncompetition
      and Non-Solicitation. During
      the duration of Employee’s receipt of payments after termination of employment
      pursuant to Paragraph 2.5(a) above, (“Restricted Period”), (i) Employee shall
      not directly or indirectly engage in (as a principal, shareholder, partner,
      director, officer, agent, employee, consultant or otherwise) or be financially
      interested in any business operating within the State of Arizona, Florida or
      Illinois (the “Restricted Area”), which is engaged in the construction or
      marketing of any homes or the acquisition or development of any property for
      residential purposes; provided, however, nothing contained in this Paragraph
      4.2
      shall prevent Employee from holding for investment no more than two percent
      (2%)
      of any class of equity securities of a company whose securities are publicly
      traded on a national securities exchange or in a national market system; (ii)
      Employee shall not directly or indirectly induce or attempt to influence any
      employee, customer, client, independent contractor or supplier of Company to
      terminate employment or any other relationship with Company; and (iii) Employee
      shall not directly or indirectly induce or attempt to induce any person who
      is
      or was within the preceding year an employee of Company to establish an
      employment relationship with ay other person or entity.

-4-

    4.3 Injunctive
      and Other Relief.

    

    (a) Employee
      acknowledges that the restrictions contained in this Paragraph 4, in view of
      the
      nature of the business in which the Company is engaged, are reasonable and
      necessary in order to protect the legitimate interests of the Company, that
      their enforcement will not impose a hardship on Employee or significantly impair
      his ability to earn a livelihood, and that any violation thereof would result
      in
      irreparable injuries to the Company. Employee therefore acknowledges that,
      in
      the event of Employee’s violation of, or threatened violation of, any of these
      restrictions, the Company shall be entitled to obtain from any court of
      competent jurisdiction preliminary and permanent injunctive relief as well
      as
      damages, including, subject to Paragraph 4.3(b) hereof, the Company’s legal and
      other costs of enforcing Employee’s compliance with these restrictions, and an
      equitable accounting of all earnings, profits and other benefits arising from
      such violation, which rights shall be cumulative and in addition to any other
      rights or remedies to which the Company may be entitled.

    

    (b) In
      the
      event that the Company or the Employee incur counsel fees or other costs and
      expenses in connection with the enforcement of any and all of its rights under
      this Agreement, including any arbitration proceeding pursuant to Paragraph
      5
      hereof, the substantially prevailing party shall be entitled to receive
      reasonable attorneys’ fees and costs an expenses in connection with the
      enforcement of such prevailing party’s rights.

    

    (c) If
      the
      Restricted Period or the Restricted Area specified in Paragraph 4.2 above should
      be adjudged unreasonable in any proceeding, then the period of time shall be
      reduced by such amount or the area shall be reduced by the elimination of such
      portion or both such reductions shall be made so that such restrictions may
      be
      enforced for such time and in such area as is adjudged to be reasonable. If
      Employee violates any of the restrictions contained in Paragraph 4.2, the
      Restricted Period shall be extended by a period equal to the length of time
      from
      the commencement of any such violation until such time as such violation shall
      be cured by Such Employee to the satisfaction of Company. The Company shall
      have
      the right and remedy to require Employee to account for and pay over to the
      Company all compensation, profits, monies, accruals, increments or other
      benefits derived or received by Employee as the result of any transactions
      constituting a breach of this Paragraph 4, and Employee shall account for and
      pay over such amounts to the Company upon the Company’s request therefor. The
      Employee hereby expressly consents to the jurisdiction of any court within
      the
      Restricted Area to enforce the provisions of this Paragraph 4, and agrees to
      accept service of process by mail relating to any such proceeding. The Company
      may supply a copy of Paragraph 4 of this Agreement to any future or prospective
      employer of Employee or to any person to whom Employee has supplied information
      if the Company determines that there is a reasonable likelihood that Employee
      has violated or will violate this Paragraph 4.

-5-

    PARAGRAPH
      5. ARBITRATION

    

    5.1 All
      disputes, claims, or controversies (“claims”) arising out of or in connection
      with Employee’s employment and/or termination of employment, except as set forth
      in Paragraph 5.10 below, shall exclusively be submitted to final and binding
      arbitration, before a single arbitrator, in accordance with the then current
      American Arbitration Association (“AAA”) National Rules for the Resolution of
      Employment Disputes (“AAA Rules”).

    

    5.2 Employee’s
      duty to arbitrate covers, but is not limited to: any claims relating to or
      arising out of Employee’s employment with and/or termination of employment by
      the Company and/or any of its related and/or affiliated companies; any claims
      for unpaid or withheld wages, severance, benefits, bonuses, and/or other
      compensation of any kind; any claims arising under the Employee Retirement
      Income Security Act; any claims for attorneys’ fees, costs or expenses; any
      claims of discrimination and/or harassment based on age, sex, race, religion,
      color, creed, disability, handicap, citizenship, national origin, ancestry,
      sexual orientation, or any other factor protected by Federal, State or Local
      law; any claims for retaliation and/or any whistleblower claims; any claims
      for
      emotional distress or pain and suffering; and/or any other statutory or common
      law claims, now existing or hereinafter recognized, known or unknown, including,
      but not limited to, breach of contract, libel, slander, fraud, wrongful
      discharge, promissory estoppel, equitable estoppel and
      misrepresentation.

    

    5.3 In
      agreeing to submit to arbitration all claims arising out of or in connection
      with Employee’s employment and/or termination of employment, except as set forth
      in Paragraph 5.10 below, Employee and Company are voluntarily and knowingly
      waiving their right to trial by jury.

    

    5.4 To
      start
      the arbitration process, Employee or Company must submit a written request
      to
      AAA within one (1) year of the date on which the event giving rise to a cause
      of
      action occurs. The arbitration is to take place in or near the city in which
      Employee is or was last employed by the Company. Any failure to request
      arbitration within this time frame shall constitute a waiver of all rights
      by
      Employee or Company to raise any claims in any forum arising out of any Claim
      that was subject to arbitration.

    

5.5
  The
  arbitrator shall be selected in accordance with the AAA Rules, and shall be
  a former judge.

    

5.6
  The
  AAA, in cooperation with the arbitrator and the parties, shall set the date,
  time and place of the hearing.

    

    5.7 The
      arbitrator shall have all of the power of a court of law and equity, including
      the power to order discovery, in the arbitrator’s discretion, as is available
      under the then current Federal Rules of Civil Procedure, and to grant legal
      and
      equitable remedies.

-6-

    5.8 The
      decision of the arbitrator shall be in writing and set forth the findings and
      conclusion upon which the decision is based. The decision of the arbitrator
      shall be final and binding and may be enforced under the terms of the Federal
      Arbitration Act (9 U.S.C. Paragraph 1 et seq.). Judgment upon the award may
      be
      entered, confirmed and enforced in any federal or state court of competent
      jurisdiction.

    

    5.9 The
      Company shall bear the full cost of the arbitrator’s fee. The Company and
      Employee shall bear their respective filing fees and attorneys’ fees. However,
      the arbitrator may award Employee reimbursement for his filing fees and
      attorneys’ fees in accordance with applicable law.

    

    5.10 It
      is
      expressly agreed that at the sole election of the Company, the Company may
      bring
      in any court of competent jurisdiction, any claims for special, temporary or
      permanent injunctive relief against Employee for misappropriation of
      confidential information, tortuous interference with contractual relations,
      or
      violation of any covenant against competition or non-solicitation agreement
      as
      stated more fully in Paragraph 4 above. Any damages with respect to such claims
      may be pursued in any court of competent jurisdiction in conjunction with a
      cause of action set forth in Paragraph 4 and/or in this Paragraph 5.10 including
      any counter-claims by Employee. This Agreement does not preclude Employee from
      filing claims with any federal, state, or local administrative
      agency.

    

    5.11 If
      any
      provision of this Arbitration Agreement is construed by a court of competent
      jurisdiction or arbitrator to be invalid or unenforceable, the remainder of
      this
      Agreement shall not be affected and the remaining provisions shall be given
      full
      force and effect without regard to the unenforceable provisions.

    

    PARAGRAPH
      6. MISCELLANEOUS

    

    6.1 Prior
      Employment. Employee
      represents and agrees that, on the date hereof, he is not a party to, and will
      not as of the Effective Date be a party to, any other employment,
      non-competition, joint venture, partnership or other agreement or restriction
      that could interfere with his employment with the Company or his or the
      Company’s rights and obligations hereunder; and that his employment and the
      performance of his duties hereunder will not breach the provisions of any
      contract, agreement, or understanding to which he is party or any duty owed
      by
      him to any other person. Employee warrants and covenants that he will not
      hereafter become a party to or be bound by any such conflicting
      agreement.

    

6.2 Severability.
  The invalidity or unenforceability of any particular provision or part of any
  provision of this Agreement shall not affect the other provisions or parts hereof.
  If any provision hereof is determined to be invalid or unenforceable by a court
  of competent jurisdiction by reason of the duration or scope of the covenants
  contained therein, such duration or scope, or both, shall be considered to be
  reduced to a duration or scope to the extent necessary to cure such invalidity.

    

6.3 Notices.
  All notices hereunder shall be in writing and shall be sufficiently given in
  hand-delivered, sent by documented overnight delivery service or registered
  or certified mail, postage prepaid, return receipt request or by telegram, fax
  or telecopy (confirmed by U.S. mail), receipt acknowledged, addressed as set
  forth below or to such other person and/or at such other address as may be furnished
  in writing by any party hereto to the other. Any such notice shall be deemed
  to have been given as of the date received, in the case of personal delivery,
  or on the date shown on the receipt of confirmation therefor, in all other cases.
  

-7-

    (a) If
      to
      Company:

    

    c/o
      Orleans Homebuilders Inc.

    One
      Greenwood Square

    3333
      Street Road

    Suite
      101

    Bensalem,
      PA 19020

    Tel:
      (215) 245-7500

    Fax:
      (215) 633-2351

    

    Attn: Benjamin
      D. Goldman, Vice Chairman

    

    (b) If
      to
      Employee:

    

    At
      Employee’s current home address as reflected in the Company’s
      records.

    

    6.4 Entire
      Agreement and Modification. This
      Agreement constitutes the entire agreement between the parties hereto with
      respect to the matters contemplated herein and supersedes all prior agreements
      and understandings with respect thereto. No amendment, modification, or waiver
      of this Agreement shall be effective unless in writing. Neither the failure
      nor
      any delay on the part of any party to exercise any right, remedy, power or
      privilege hereunder shall operate as a waiver thereof, nor shall any single
      or
      partial exercise of any right, remedy, power or privilege preclude any other
      of
      further exercise of the same or any other right, remedy, power, or privilege
      with respect to any occurrence or be construed as a waiver of any right, remedy,
      power, or privilege with respect to any other occurrence.

    

    6.5 Governing
      Law. The
      parties agree that this Agreement is made pursuant to, and shall be construed
      an
      enforced in accordance with, the internal laws of the Commonwealth of
      Pennsylvania (and United States federal law, to the extent applicable), without
      giving effect to otherwise applicable principles of conflicts of
      law.

    

6.6 Headings;
  Counterparts. 
  The headings of paragraphs in this Agreement are for convenience only and shall
  not affect its interpretation. This Agreement may be executed in two or more
  counterparts, each of which shall be deemed to be an original and all of which,
  when taken together, shall be deemed to constitute but one and the same Agreement.

-8-

    IN
      WITNESS WHEREOF, and intending to be legally bound, the parties have executed
      this Agreement as of the date first above written.

     

    

  	ORLEANS HOMEBUILDERS, INC. 	 	EMPLOYEE
	 	 	 	 
	 	 	 	 
	By:
        	BENJAMIN D. GOLDMAN	 	JOEL A. ARMSTRONG
	 	
        

      	 	
        

      
	 	Benjamin D. Goldman	 	Joel A. Armstrong
	 	Vice Chairman	 	 

    

-9-

    SCHEDULE
      2.1 TO EMPLOYMENT CONTRACT

    

    Automobile

    

    $500
      per
      month plus reasonable expenses for insurance, gas and maintenance

    

    

    Cellular
      Phone

    

    Company
      issued for business use

    

-10-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}]]