Document:

exv10w1

 

EXHIBIT 10.1

SUPERIOR INDUSTRIES INTERNATIONAL, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

JANUARY 1, 2005

     This Executive Employment Agreement (“Agreement”), dated January 1, 2005 is between Superior
Industries International, Inc. (“Company”) and Steven J. Borick (“Employee”).

RECITALS

     Company is formed to engage primarily in the automobile parts manufacturing business.
Employee has experience in this business and possesses valuable skills and experience that will
be used in advancing Company’s interests. Employee is willing to be engaged by Company and
Company is willing to engage Employee in the capacity of President and Chief Executive Officer of
Company (“President and CEO”), upon the terms and conditions set forth in this Agreement.
Capitalized terms used herein without definition shall have the meanings ascribed to them in this
agreement.

AGREEMENT

     Employee and Company, intending to be legally bound, agree as follows:

	1.  	SERVICES

	 	1.1.  	General Services. Reports to Board of Directors

1.1.1. Company shall engage Employee as its President and CEO, reporting to the Board
of Directors. As of the Commencement Date, Employee shall perform the duties
customarily performed by one holding such position in a similar business as that
engaged in by Company, as determined by the Board in its sole and absolute discretion,
and shall serve as a member of the Board so long as he is employed as President and
CEO of Company. Employee’s duties may change from time to time on reasonable notice,
based on the needs of Company and Employee’s skills as determined by Company. (The
duties to be performed by Employee to Company and its affiliates shall hereinafter be
referred to as the “Services”).

1.1.2. Employee shall devote his entire working time, attention, and energies to the
business of Company, and shall not, during the Term (as defined below), be engaged in
any other business activity whether or not such business activity is pursued for gain,
profit or other pecuniary advantage, without the prior written consent of the Board.
The foregoing is not intended to restrict Employee’s ability to enter into passive
investments that do not compete in any way with Company’s business.

	 	1.2.  	Location. Employee shall be based at the company’s corporate headquarters.
Employee shall undertake such travel as is necessary or advisable for the effective
performance of the duties of the position. Employee’s office initially will be based in
California or such other location in Los Angeles County as Company may designate.
	 
	 	1.3.  	Best Abilities. Employee shall serve Company faithfully and to the best of his
ability and shall use his best abilities to perform the Services. Employee shall act at all
times according to what is reasonably believed to be in the best interests of Company.
	 
	 	1.4.  	Company Authority. As an officer of Company, Employee shall, with the assistance
of consultants, professionals, and other employees of Company, comply with all laws, rules
and regulations applicable to Employee as a result of this Agreement. In complying with the
Laws, Employee may after reasonable investigation and in good faith rely upon advice given
to Employee or to the Board by Company’s legal counsel and other consultants or employees
Company engages in connection with compliance with the Laws; provided, however, that
Employee may rely only upon advice that is within the scope of the profession or expertise
of the person providing such advice. Prior to the execution of this Agreement, Employee has
received and reviewed Company’s Policies and Procedures and Company’s Employee Handbook.
Employee shall comply with Company’s Policies and Procedures (as they may be amended from
time to time), as well as practices now in effect or as later amended or adopted by Company,
as required of similarly situated employees at Company.

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	2.  	TERM.

	 	2.1.  	The term (the “Term”) of this Agreement shall be effective as of the date hereof (the
“Effective Date”) and shall govern Employee’s employment from and after such date through
and including December 31, 2009. This Agreement shall automatically renew for an additional
one (1) year period thereafter unless either party provides written notice at least six (6)
months in advance of terminating the Agreement, or until as provided in Section 4 of this
Agreement.
	 
	 	2.2.  	COMPENSATION AND BENEFITS
	 
	 	2.3.  	Compensation. Employee’s total compensation consists of base salary, variable
compensation (as further identified in this Agreement) and other benefits generally provided
to similarly situated employees of Company. Any compensation paid to Employee shall be
pursuant to Company’s policies and practices for exempt employees and shall be subject to
all applicable laws and requirements regarding the withholding of federal, state and/or
local taxes. Compensation provided in this Agreement is full payment for the Services and
Employee shall receive no additional compensation for extraordinary services unless
otherwise authorized in writing by the Board.

2.3.1. Base Compensation. During the Term, Company agrees to pay Employee an
annual base salary of $750,000.00, less applicable withholdings, payable in equal
installments no less frequently than semi-monthly. In no event shall Employee’s base
compensation be less than $750,000.00 per year. Commencing on the first anniversary
of the Effective Date and on each anniversary thereafter, the Board may, at its sole
discretion, adjust the base compensation to take into account Employee’s performance
and the performance of Company in general; however, the Board shall have no obligation
to do so.

2.3.2. Variable Compensation. Employee shall be eligible for variable
compensation, subject to applicable withholdings and subject to approval by the Board
and the Company’s Compensation Committee, and shall be set forth in a separate
agreement.

2.3.3. Equity Compensation. Employee shall be eligible for equity
compensation in the form of non–qualified stock options subject to the terms of the
Superior Industries International, Inc., 2003 Equity Incentive Plan. For each year of
this Agreement commencing March 1, 2006, Employee shall receive an annual stock option
grant at fair market value (as defined in the 2003 Equity Incentive Plan) of 120,000
shares per year. Shares will vest according to the terms of the 2003 Equity Incentive
Plan. Stock option grants will be subject to the Employee’s continued employment in
the capacity of President and CEO at the Company.

	 	2.4.  	Business Expenses. Company shall reimburse Employee for business expenses
reasonably incurred in performing the Services according to Company’s Expense Reimbursement
Policy.
	 
	 	2.5.  	Additional Benefits. Company shall provide Employee those additional benefits
normally granted by Company to similarly situated employees subject to eligibility
requirements applicable to each benefit. Company has no obligation to provide any other
benefits unless provided for in this Agreement. As of the Commencement Date, Company
intends to provide major medical and dental benefits, holidays, and a 401K Plan. To the
extent that Company offers life or disability insurance to other executive officers of
Company and to the extent Employee is otherwise eligible for coverage there under without a
material adverse impact on the ability of Company to offer such benefits generally, Company
shall make those same benefits available to Employee. Company reserves the right to modify,
suspend, or discontinue any and all of the above benefit plans, policies, and practices at
any time without notice to or recourse by Employee so long as such action is taken generally
with respect to other similarly situated persons and does not single out Employee.
	 
	 	2.6.1  	Use of Automobile. The Company shall provide Employee with a reasonable car
allowance on a monthly basis intended to cover all operating expenses of the automobile and
adequate automobile insurance with reasonable policy limits.
	 
	 	2.6.2  	Paid Time Off. Employee shall be entitled to four (4) weeks of paid time off per
calendar year.

	3.  	TERMINATION

	 	3.1  	Circumstances of Termination. This Agreement and the relationship between Company
and Employee may be terminated prior to the expiration of the Term only as follows:

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3.1.1 Death. This Agreement shall terminate upon Employee’s death,
effective as of the date of Employee’s death.

3.1.2 Disability. Company may, at its sole discretion, either suspend
compensation payments due under Section 3.1 or terminate this Agreement due to
Employee’s Disability. For purposes of this Agreement, “Disability” shall mean
circumstances in which Employee is incapable of performing the Services, after
Company has made or attempted to provide reasonable accommodations to Employee as
required by applicable law, because of accident, injury, or physical or mental
illness for sixty (60) consecutive days, or is unable or shall have failed to
perform the Services for a total period of ninety (90) days, regardless of whether
such days are consecutive. If Company suspends compensation payments because of
Employee’s Disability; Company shall resume compensation payments when Employee
resumes performance of the Services. If Company elects to terminate this Agreement
due to Employee’s Disability; it will give Employee not more than thirty (30) days
advance written notice.

3.1.3 Discontinuance of Business. If Company discontinues operating
its business in any substantial respect, then this Agreement shall terminate as of
the last day of the month on which Company ceases such operations with the same
effect as if that last date were originally established as the termination date of
this Agreement.

3.1.4 For Cause. Company may terminate this Agreement without advance
notice for Cause, as determined at the sole discretion of the Board. For the
purpose of this Agreement, “Cause” shall mean, as determined by Company in its sole
discretion: any failure to comply in any material respect with this Agreement or
any agreement incorporated herein; personal or professional misconduct by Employee
(including, but not limited to, criminal activity or gross or willful neglect of
duty); breach of Employee’s fiduciary duty to Company and/or any subsidiaries,
affiliates or successors of Company; conduct that threatens public health or
safety, threatens Company’s ability to manufacture automobile parts, or threatens
to do immediate or substantial harm to Company’s business or reputation; or any
other misconduct, deficiency, failure of performance, breach or default. To the
extent that a breach pursuant to this Section 3.1.4 is, in Company’s sole
discretion, reasonably capable of being cured by Employee without harm to Company
or its reputation, Company shall, instead of immediately terminating Employee
pursuant to this Agreement, provide Employee with notice of such breach, specifying
the actions required to cure such breach, and Employee shall have thirty (30) days
to cure such breach by performing the actions so specified. If Employee fails to
cure such breach to the Company’s satisfaction within the thirty (30) day period,
Company may terminate this Agreement without further notice. Company’s exercise of
its right to terminate under this Section shall be without prejudice to any other
remedy to which Company may be entitled at law, in equity, or under this Agreement.

3.1.5 Without Cause. This Agreement may be terminated without Cause
at any time by the Company upon thirty (30) days advanced written notice to
Employee.

3.1.6 Voluntary Termination. This Agreement may be terminated for any
reason at any time by Employee upon thirty (30) days advanced written notice to the
Company.

3.1.7 Change in Control. For purposes of this Plan, a “Change in
Control” of the Company shall be deemed to have occurred if:

3.1.7.1.1 Any “person” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power of
the Company’s then outstanding securities.

3.1.7.1.2 The stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (i) a merger or consolidation that would
result in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (ii) a merger or consolidation
effected to implement a re-capitalization of the Company (or similar transaction) in
which no “person” (as hereinabove described) acquires more than 50% of the combined
voting power of the Company’s then outstanding securities; or

3.1.7.1.3 The stockholders of the Company approve 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.

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3.1.8 Activation Event. For purpose of this Plan, the term
“Activation Event” shall mean an involuntary termination of employment with the
Company within one (1) year after a Change in Control. “Involuntary termination”
shall mean:

3.1.8.1.1 without the Employee’s express written consent the significant reduction of the
Employee’s duties, authority or responsibilities, relative to the Employee’s duties,
authority or responsibilities as in effect immediately prior to such reduction, or
the assignment to Employee of such reduced duties, authority, or responsibilities;

3.1.8.1.2 without the Employees’ express written consent, a substantial reduction, without
good business reasons, of the facilities and perquisites (including office space and
location) available to the Employee immediately prior to such reduction;

3.1.8.1.3 a reduction by the Company in the base salary and/or incentive compensation
opportunity of the employee as in effect immediately prior to such reduction;

3.1.8.1.4 a material reduction by the Company in the kind or level of employee benefits,
to which the Employee was entitled immediately prior to such reduction with the
result that the employee’s overall benefits package is significantly reduced;

3.1.8.1.5 the relocation of the Employee to a facility or a location more than 50 miles
from the employee’s then present location, without the Employee’s express written
consent;

3.1.8.1.6 any purported termination of the employee by the Company that is not effected
for disability or for just cause, or any purported termination for which the grounds
relied upon are not valid;

3.1.8.1.7 the failure of the Company to obtain the assumption of this Plan by any
successors contemplated by the Change-in-Control agreement or transaction; or

3.1.8.1.8 any act or set of facts or circumstances, that would, violate California case
law.

	 	3.2  	Employee’s Rights Upon Termination.

3.2.1 Expiration of Term. Upon termination of this Agreement by expiration
of the Term set forth in Section 2 above, Company shall have no further obligation to
Employee under this Agreement or otherwise except to pay to Employee (a) any accrued
and unpaid base compensation and variable compensation (less applicable withholdings)
and (b) reimbursement of any unpaid reimbursable expenses, owed to Employee prior to
the expiration of the Term.

3.2.2 Death or Disability. Upon termination of this Agreement because of
death or Disability of Employee pursuant to Sections 3.1.1 or 3.1.2 above, Company
shall have no further obligation to Employee under this Agreement or otherwise except
to pay to Employee’s estate or designated beneficiary (a) any accrued and unpaid base
compensation and variable compensation pro rated to the date of termination (less
applicable withholdings) and (b) reimbursement of any unpaid reimbursable expenses,
owed to Employee prior to the date of Employee’s death or termination due to
Disability.

3.2.3 Discontinuance Of Business. Upon termination of this Agreement because
of discontinuation of Company’s business pursuant to Section 3.1.3, Company shall have
no further obligation to Employee under this Agreement or otherwise except to pay to
Employee (a) any unpaid base compensation (less applicable withholdings) and (b)
reimbursement of any unpaid reimbursable expenses, owed to Employee prior to the date
of termination of this Agreement.

3.2.4 Termination With Cause. Upon termination of Employee’s employment for
Cause pursuant to Section 3.1.4, Company shall have no further obligation to Employee
under this Agreement or otherwise except to pay to Employee (a) any unpaid base
compensation (less applicable withholdings) and (b) reimbursement of any unpaid
reimbursable expenses, owed to Employee by Company prior to the date of the
termination.

3.2.5 Termination Without Cause. Upon termination of Employee’s employment by
Company without “Cause,” Company shall have no further obligation to Employee under
this Agreement or otherwise except to pay to Employee:

3.2.5.1.1 Any accrued and unpaid base compensation (less applicable withholdings) and
reimbursement of any unpaid reimbursable expenses owed by Company to Employee through
the termination date; and

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3.2.5.1.2 Severance compensation totaling one (1) year base compensation in the form
of (i) monthly payments to Employee in the amount of Employee’s monthly base salary
as in effect on the date of termination, payable in accordance with customary payroll
practices, for twelve (12) months following such termination; provided, however, that
such severance payments shall be reduced by 50% of any earnings of Employee
subsequent to the termination that gives rise to the severance payments. Payment of
severance compensation shall be conditioned upon Employee executing a Release
Agreement, which shall include among other things the language set forth in
Exhibit A and upon Employee’s compliance with his obligations under Article
6; provided, however, that Company may in its sole discretion revise the language in
Exhibit A at any time prior to the execution of the Release Agreement.
Severance compensation pursuant to this Section 3.2.5 shall be in lieu of any other
severance benefit or other right or remedy to which Employee would otherwise be
entitled under Company’s policies in effect on the date of execution of this
Agreement or thereafter. Employee acknowledges and agrees that in the event Employee
breaches any provision of Article 6 or the Release Agreement, his right to receive
severance payments under this Section 4.2.5 shall automatically terminate and
Employee shall repay all severance payments received.

3.2.5.1.3 For purposes of clarification, Company’s or Employee’s election not to
renew the employment Term shall not constitute a termination without “Cause” covered
by this Section 3.2.5, but shall constitute a termination due to expiration of Term
and subject to and covered by Section 3.2.1.

3.2.6 Voluntary Termination. Upon Employee’s voluntary termination of his
employment, Company shall have no further obligation to Employee under this Agreement
or otherwise, except to pay to Employee (a) any unpaid base compensation (less
applicable withholdings) and (b) reimbursement of any unpaid reimbursable expenses
owed to Employee by Company prior to the date of termination.

3.2.7 Termination Due to Change in Control 

Upon termination of Employee’s employment by Company due to Change In control,”
Company shall have no further obligation to Employee under this Agreement or
otherwise except to pay to Employee:

3.2.7.1.1 Any accrued and unpaid base compensation (less applicable withholdings) and
reimbursement of any unpaid reimbursable expenses owed by Company to Employee through
the termination date; and

3.2.7.1.2 Severance compensation totaling three (3) years base compensation in the
form of (i) monthly payments to Employee in the amount of Employee’s monthly base
salary as in effect on the date of termination, payable in accordance with customary
payroll practices, for thirty six (36) months following such termination; provided,
however, that such severance payments shall be reduced by 50% of any earnings of
Employee subsequent to the termination that gives rise to the severance payments.
Payment of severance compensation shall be conditioned upon Employee executing a
Release Agreement, which shall include among other things the language set forth in
Exhibit A and upon Employee’s compliance with his obligations under Article
5; provided, however, that Company may in its sole discretion revise the language in
Exhibit A at any time prior to the execution of the Release Agreement.
Severance compensation pursuant to this Section 3.2.7 shall be in lieu of any other
severance benefit or other right or remedy to which Employee would otherwise be
entitled under Company’s policies in effect on the date of execution of this
Agreement or thereafter. Employee acknowledges and agrees that in the event Employee
breaches any provision of Article 6 or the Release Agreement, his right to receive
severance payments under this Section 3.2.7 shall automatically terminate and
Employee shall repay all severance payments received.

3.2.8 For purposes of clarification, Company’s or Employee’s election not to renew
the employment Term shall not constitute a termination without “Cause” covered by
this Section 3.2.7, but shall constitute a termination due to expiration of Term and
subject to and covered by Section 3.2.1.

3.2.9 Board Membership. Upon Employee’s termination of employment for any
reason whatsoever, Employee shall be deemed to have resigned as a member of the Board
effective as of the date of Employee’s termination, without any further action by
Employee or any other party unless nominated by the Nominating committee and subject
to shareholder approval.

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	4  	REPRESENTATIONS AND WARRANTIES

	 	4.1  	Representations of Employee. Employee represents and warrants that he has
all right, power, authority and capacity, and is free to enter into this Agreement; that
by doing so, Employee will not violate or interfere with the rights of any other person
or entity; and that Employee is not subject to any contract, understanding or obligation
that will or might prevent, interfere with or impair the performance of this Agreement by
Employee. Employee shall indemnify and hold Company harmless with respect to any losses,
liabilities, demands, claims, fees, expenses, damages and costs (including attorneys’
fees and court costs) resulting from or arising out of any third party claim or action
based upon Employee’s violation of the foregoing representation.
	 
	 	4.2  	Representations of Company. Company represents and warrants that it has all
right, power and authority, without the consent of any other person, to execute and
deliver, and perform its obligations under, this Agreement. All corporate and other
actions required to be taken by Company to authorize the execution; delivery and
performance of this Agreement and the consummation of all transactions contemplated
hereby have been duly and properly taken.
	 
	 	4.3  	Materiality of Representations. The representations, warranties and
covenants set forth in this Agreement shall be deemed to be material and to have been
relied upon by the parties hereto.

	5  	COVENANTS

	 	5.1  	Nondisclosure and Invention Assignment. Employee shall not disclose or use
at any time, either during the Term or thereafter, to any person or entity or use for his
own direct or indirect benefit any Confidential Information (as defined below) of which
Employer is or becomes aware, whether or not such information is developed by Employee,
except to the extent that such disclosure or use is directly related to and required by
Employee’s Performance of his duties under this Agreement. For purposes of this
Agreement, “Confidential Information” shall include Company’s products, reports, studies,
services, processes, suppliers, customers, customers’ account executives, financial,
sales and distribution information, price lists, identity and list of actual and
potential customers, trade secrets, technical information, business plans and strategies
to the extent that such information has not been publicly disseminated by Company or
otherwise made available to the public. For purposes of the foregoing, information shall
not be deemed to have been “publicly disseminated” or “otherwise made available to the
public” if such dissemination or availability arose as a result of a breach of this
Agreement.
	 
	 	5.2  	Covenant to Deliver Records. Upon termination of Employee’s employment,
Employee will deliver to Company all customer lists, proposals, reports, memoranda,
computer software and programming, budgets and other financial information, and other
materials or records or writings of any type (including any copies thereof and regardless
of the medium in which the information exists) made, used or obtained by Employee in
connection with his employment by Company.
	 
	 	5.3  	Employee Proprietary Information and Inventions Agreement. Employee shall be
subject to the provisions of the Company’s Employee Standards of Professional Conduct
Statement and is incorporated herein by this reference.
	 
	 	5.4  	Non-Solicitation. Employee agrees that, so long as he is employed by Company
and for a period of one (1) year after termination of his employment for any reason, he
shall not (a) directly or indirectly solicit, induce or attempt to solicit or induce any
Company employee to discontinue his or her employment with Company (b) usurp any
opportunity of Company that Employee became aware of during his tenure at Company which
is made available to him on the basis of the belief that Employee is still employed by
Company, or (c) directly or indirectly solicit or induce or attempt to influence any
person or business that is an account, customer or client of Company to restrict or
cancel the business of any such account, customer or client with Company. (For purposes
of this Agreement, an employee, consultant, or agent is defined as any person who has
worked for Company within the twelve-month period immediately preceding the termination
of Employee’s employment.).
	 
	 	5.5  	Non Disparagement. Employee shall not, directly or indirectly, either for
the benefit of Employee or any other Person, from the Effective Date to the first
anniversary of the termination of his Employment, make any disparaging remarks that are
reasonably likely to cause material injury to the relationship between the Company or its
affiliates and any existing or prospective client, lessor, lessee, contractual
counterparty, vendor, supplier, customer, distributor, employee, consultant, regulator or
other business associate of the Company or its affiliates.

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	6  	CERTAIN RIGHTS OF COMPANY

	 	6.1  	Announcement. Company shall have the right to make public announcements
concerning the execution of this Agreement and certain terms thereof.
	 
	 	6.2  	Right to Insure. Company shall have the right to secure, in its own name or
otherwise, and at its own expense, life, health, accident or other insurance covering
Employee, and Employee shall have no right, title or interest in and to such insurance.
Employee shall assist Company in procuring such insurance by submitting to examinations
and by signing such applications and other instruments as may be required by the
insurance carriers to which application is made for any such insurance.

	7  	ASSIGNMENT

	 	7.1  	Neither party may assign or otherwise dispose of its rights nor obligations under
this Agreement without the prior written consent of the other party except as provided in
this Paragraph. Company may assign and transfer this Agreement, or its interest in this
Agreement, to any affiliate of Company or to any entity that is a party to a merger,
reorganization, or consolidation with Company, or to a subsidiary of Company, or to any
entity that acquires substantially all of the assets of Company or of any division with
respect to which Employee is providing services (providing such assignee assumes
Company’s obligations under this Agreement) without Employee’s consent. Employee shall,
if requested by Company, perform the Services, as specified in this Agreement, for the
benefit of any subsidiary or other affiliate of Company. Upon assignment, acquisition,
merger, consolidation or reorganization, the term “Company” as used herein shall be
deemed to refer to such assignee or successor entity. Employee shall not have the right
to assign his interest in this Agreement, any rights under this Agreement, or any duties
imposed under this Agreement, nor shall Employee or his spouse, heirs, beneficiaries,
executors or administrators have the right to pledge, hypothecate or otherwise encumber
Employee’s right to receive compensation hereunder without the express written consent of
Company.

	8  	RESOLUTION OF DISPUTES

	 	8.1  	Venue. In the event of any dispute arising out of or in connection with this
Agreement or in any way relating to the employment of Employee that leads to the filing
of a lawsuit, the parties agree that venue and jurisdiction shall be in Los Angeles
County, California.
	 
	 	8.2  	Submission To Arbitration. Company and Employee agree that any dispute with
any party (including Company’s affiliates, successors, predecessors, contractors,
employees and agents) that may arise out of this Agreement, or Employee’s engagement with
Company or the termination thereof, shall be submitted for resolution by mandatory,
binding arbitration in accordance with Company’s standard Alternative Dispute Resolution
Agreement. The arbitration requirement applies to all statutory, contractual and/or
common law claims including, but not limited to, claims arising under Title VII of the
Civil Rights Action of 1964; the Age Discrimination in Employment Act; the Equal Pay Act
of 1963; the California Fair Employment and Housing Act; California Labor Code sections
200, et seq., 970, and 1050, et seq.; the Fair Labor Standards Act; and the Americans
with Disabilities Act. Both Company and Employee shall be precluded from bringing or
raising in court or any other forum any dispute that was or could have been submitted to
binding arbitration. This arbitration requirement does not apply to claims for workers’
compensation benefits, claims arising under ERISA (29 U.S.C. §§ 1001, et seq.) or
provisional remedies under California Code of Civil Procedure section 1281.8.
	 
	 	8.3  	Payment Of Costs And Fees. Where required by law, Company shall pay all
additional costs peculiar to the arbitration to the extent such costs would not otherwise
be incurred in a court proceeding (for instance, Company will, if required, pay the
arbitrator’s fees to the extent it exceeds Court filing fees). Each party shall pay its
own costs and attorneys’ fees in the first instance. However, the arbitrator may award
costs and attorneys’ fees to the prevailing party to the extent permitted by law.

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	9  	GENERAL PROVISIONS

	 	9.1  	Notices. Notice under this Agreement shall be sufficient only if personally
delivered by a major commercial paid delivery courier service or mailed by certified or
registered mail (return receipt requested and postage pre-paid) to the other party at its
address set forth in the signature block below or to such other address as may be
designated by either party in writing. If not received sooner, notices by mail shall be
deemed received five (5) days after deposit in the United States mail.
	 
	 	9.2  	Agreement Controls. Unless otherwise provided for in this Agreement,
Company’s policies, procedures and practices shall govern the relationship between
Employee and Company. If, however, any of Company’s policies, procedures and/or
practices conflict with this Agreement (together with any amendments hereto), this
Agreement (and any amendments hereto) shall control.
	 
	 	9.3  	Amendment and Waiver. Any provision of this Agreement may be amended or
modified and the observance of any provision may be waived (either retroactively or
prospectively) only by written consent of the parties. Either party’s failure to enforce
any provision of this Agreement shall not be construed as a waiver of that party’s right
to enforce such provision.
	 
	 	9.4  	Governing Law. This Agreement and the performance hereunder shall be
interpreted under the substantive laws of the State of California, without giving effect
to the conflict of law principles thereof.
	 
	 	9.5  	Force Majeure. Either party shall be temporarily excused from performing
under this Agreement if any force majeure or other occurrence beyond the reasonable
control of either party makes such performance impossible, except a Disability as defined
in this Agreement, provided that the party subject to the force majeure provides notice
of such force majeure at the first reasonable opportunity. Under such circumstances,
performance under this Agreement that related to the delay shall be suspended for the
duration of the delay provided the delayed party shall resume performance of its
obligations with due diligence once the delaying event subsides. In case of any such
suspension, the parties shall use their reasonable best efforts to overcome the cause and
effect of such suspension.
	 
	 	9.6  	Remedies. Employee acknowledges that because of the nature of Company’s
business, and the fact that the services to be performed by Employee pursuant to this
Agreement are of a special, unique, unusual, extraordinary, and intellectual character
that give them a peculiar value, a breach of this Agreement shall cause substantial
injury to Company for which money damages cannot reasonably be ascertained and for which
money damages would be inadequate. Employee therefore agrees that Company shall have the
right to obtain injunctive relief, including the right to have the provisions of this
Agreement specifically enforced by Arbitration having equity jurisdiction, in addition to
any other remedies that Company may have.
	 
	 	9.7  	Severability. If any term, provision, covenant, paragraph, or condition of
this Agreement is held to be invalid, illegal, or unenforceable by any court of competent
jurisdiction, that provision shall be limited or eliminated to the minimum extent
necessary so this Agreement shall otherwise remain enforceable in full force and effect.
	 
	 	9.8  	Construction. Headings and captions are only for convenience and shall not
affect the construction or interpretation of this Agreement. Whenever the context
requires, words, used in the singular shall be construed to include the plural and vice
versa, and pronouns of any gender shall be deemed to include the masculine, feminine, or
neuter gender.
	 
	 	9.9  	Counterparts. This Agreement may be signed in counterpart copies, each of
which shall represent an original document, and all of which shall constitute a single
document.
	 
	 	9.10  	No Adverse Construction. The rule that a contract is to be construed against
the party drafting the contract is hereby waived, and shall have no applicability in
construing this Agreement or the terms hereof.
	 
	 	9.11  	Entire Agreement. With respect to its subject matter, namely, the engagement
by Company of Employee, this Agreement and all exhibits hereto (including the documents
expressly incorporated herein, such as the Employee Proprietary Information and
Inventions Agreement) contain the entire understanding between the parties, and
supersedes any prior agreements, understandings, and communications between the parties,
whether oral, written, implied or otherwise.
	 
	 	9.12  	Assistance of Counsel. Employee expressly acknowledges that he was advised he has
the right to be represented by counsel of his own choosing in connection with the
negotiation and drafting of the terms of this Agreement.

8

 

	 	9.13  	Attorneys’ Fees. Company shall reimburse Employee up to $2,500 for
attorneys’ fees incurred by Employee for advice and negotiation in connection with the
execution of this Agreement. Such reimbursement shall be made on the date that is six
(6) month after the Effective Date and only if, on that date; Employee is then employed
by Company.
	 
	 	9.14  	Further Assurances. Each party hereto shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable to carry
out the provisions of this Agreement and the transactions contemplated by this Agreement.
	 
	 	9.15  	Payment of Taxes. To the extent that any taxes become payable by Employee by
virtue of any payments made or benefits conferred by the Company, the Company shall not
be liable to pay or obligated to reimburse Employee for any such taxes or to make any
adjustment under this Agreement. Any payments otherwise due under this Agreement to
Employee shall be reduced by any required withholding for Federal, State and/or local
taxes and other appropriate payroll deductions.

The parties execute this Executive Employment Agreement as of the date stated above:

	 	 	 	 	 	 	 
	EMPLOYEE	 	SUPERIOR INDUSTRIES INTERNATIONAL, INC.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Steven J. Borick
	 	By:
	 	/s/ Louis L. Borick
	

	 	 
	 	 	 	 
	

	 	          Steven J. Borick
	 	 	 	          Louis L. Borick,
	

	 	          President and CEO
	 	 	 	          Chairman of the Board

NOTICE ADDRESS

Superior Industries International, Inc.

7800 Woodley Avenue

Van Nuys, CA 91406

9

 

EXHIBIT A

RELEASE AGREEMENT LANGUAGE

In consideration for this severance compensation, Employee, upon accepting such severance
payment, on behalf of himself, his agents, heirs, executors, administrators, and assigns,
expressly releases and forever discharges Company and its successors and assigns, and all of its
respective agents, Directors, officers, partners, employees, representatives, insurers,
attorneys, parent companies, subsidiaries, affiliates, and joint venturers, and each of them,
from any and all claims based upon acts or events that occurred on or before the date on which
Employee accepts the severance compensation, including any claim arising under any state or
federal statute or common law, including, but not limited to, Title VII of the Civil Rights Act
of 1964, 42 U.S.C. §§ 2000e, et seq., the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et
seq., the Age Discrimination in Employment Act, 29 U.S.C. §§ 623, et seq., the Worker Adjustment
and Retraining Notification Act, 29 U.S.C. §§ 2101, et seq., the California Fair Employment and
Housing Act, California Government Code §§ 12940, et seq., breach of contract, and any other
statutory or common law claim.

Employee acknowledges that he is familiar with section 1542 of the California Civil Code, which
reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MIGHT HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Employee expressly acknowledges and agrees that he is releasing all known and unknown claims, and
that he is waiving all rights he has or may have under Civil Code section 1542 or under any other
statute or common law principle of similar effect. Employee acknowledges that the benefits he is
receiving in exchange for this Release are more than the benefits to which he otherwise would
have been entitled, and that such benefits constitute valid and adequate consideration for this
Release. Employee further acknowledges that he has read this Release, understands all of its
terms, and has consulted with counsel of his choosing before signing this Agreement.

10exv10w1

 

Exhibit 10.1: The Ryland Group, Inc. 2005 Equity Incentive Plan

THE RYLAND GROUP, INC.

2005 EQUITY INCENTIVE PLAN

1. Purpose and Types of Awards

     The purpose of THE RYLAND GROUP, INC. 2005 EQUITY INCENTIVE PLAN (the “Plan”) is to promote
the long-term growth and profitability of the Corporation by providing key people with incentives
to improve stockholder value and to contribute to the growth and financial success of the
Corporation.

     The Plan permits the granting of stock options (including incentive stock options qualifying
under Code section 422 and nonqualified stock options), restricted stock awards, stock units or any
combination of the foregoing.

2. Definitions

     Under this Plan, except where the context otherwise indicates, the following definitions
apply:

     (a) “Administrator” means the Board, the Compensation Committee of the Board, or any committee
or committees that are appointed by the Compensation Committee or the Board that have authority to
administer the Plan as provided in Section 3 hereof.

     (b) “Affiliate” shall mean any entity, whether now or hereafter existing, which controls, is
controlled by or is under common control with the Corporation (including joint ventures, limited
liability companies and partnerships). For this purpose, “control” shall mean ownership of 50% or
more of the total combined voting power or value of all classes of stock or interests of the
entity.

     (c) “Award” shall mean any stock option, restricted stock award or stock unit award.

     (d) “Board” shall mean the Board of Directors of the Corporation.

     (e) “Change in Control” shall mean:

     (i) The acquisition by any person, other than the Corporation or any employee benefit
plans of the Corporation, of beneficial ownership of 20 percent or more of the combined
voting power of the Corporation’s then outstanding voting securities;

     (ii) The first purchase under a tender offer or exchange offer, other than an offer by
the Corporation or any employee benefit plans of the Corporation, pursuant to which shares
of Common Stock have been purchased;

     (iii) During any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Corporation cease for any reason to
constitute at least a majority thereof, unless the election or the nomination for the

 

 

election by stockholders of the Corporation of each new director was approved by a vote of
at least two-thirds of the directors then still in office who were directors at the
beginning of the period; or

     (iv) Approval by stockholders of the Corporation of a merger, consolidation,
liquidation or dissolution of the Corporation, or the sale of all or substantially all of
the assets of the Corporation; provided, however, that for purposes of any Award or subplan
that constitutes a “nonqualified deferred compensation plan,” within the meaning of Code
section 409A, the Administrator, in its discretion, may specify a different definition of
Change in Control in order to comply with the provisions of Code section 409A.

     (f) “Code” shall mean the Internal Revenue Code of 1986, as amended, and any regulations
promulgated thereunder.

     (g) “Common Stock” shall mean shares of common stock, $1.00 par value, of the Corporation.

     (h) “Corporation” shall mean The Ryland Group, Inc. and its successors and assigns.

     (i) “Designated Beneficiary” shall mean the beneficiary designated by an Award holder, in a
manner and to the extent determined by the Administrator, to receive amounts due or exercise rights
of the Award holder in the event of the Award holder’s death. In the absence of an effective
designation by an Award holder, “Designated Beneficiary” shall mean the Award holder’s estate.

     (j) “Effective Date” shall mean the date the Plan is approved by the stockholders of the
Corporation.

     (k) “Fair Market Value” shall mean, with respect to a share of the Corporation’s Common Stock
or other property for any purpose on a particular date, the value determined by the Administrator
in good faith. However, if the Common Stock is registered under Section 12(b) of the Securities
Exchange Act of 1934, as amended, “Fair Market Value” with respect to a share of the Corporation’s
Common Stock shall mean, as applicable, (i) either the closing price or the average of the high and
low sale price on the relevant date, as determined in the Administrator’s discretion, quoted on the
New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market; (ii) the last
sale price on the relevant date quoted on the Nasdaq SmallCap Market; (iii) the average of the high
bid and low asked prices on the relevant date quoted on the Nasdaq OTC Bulletin Board Service or by
the National Quotation Bureau, Inc. or a comparable service as determined in the Administrator’s
discretion; or (iv) if the Common Stock is not quoted by any of the above, the average of the
closing bid and asked prices on the relevant date furnished by a professional market maker for the
Common Stock, or by such other source, selected by the Administrator. If no public trading of the
Common Stock occurs on the relevant date, then Fair Market Value shall be determined as of the next
preceding date on which trading of the Common Stock does occur. For all purposes under this Plan,
the term “relevant date” as used in this Section 2(k) shall mean either the date as of which Fair
Market Value is to be determined or the next preceding date on which public trading of the Common
Stock occurs, as determined in the Administrator’s discretion.

     (l) “Grant Agreement” shall mean a written document memorializing the terms and conditions of
an Award granted pursuant to the Plan and shall incorporate the terms of the Plan.

 

 

     (m) “Plan Share Reserve” means the maximum number of shares of Common Stock that may be issued
with respect to Awards granted under the Plan.

     (n) “Prior Plans” shall mean The Ryland Group, Inc. 1992 Equity Incentive Plan and the 2002
Equity Incentive Plan.

     (o) “2002 Equity Incentive Plan” shall mean The Ryland Group, Inc. 2002 Equity Incentive Plan,
the term of which expires on April 24, 2012.

3. Administration

     (a) Administration of the Plan. The Plan shall be administered by the Board, the Compensation
Committee of the Board, or any committee or committees that are appointed by the Compensation
Committee or the Board from time to time.

     (b) Powers of the Administrator. The Administrator shall have all the powers vested in it by
the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to
grant Awards under the Plan, prescribe Grant Agreements evidencing such Awards and establish
programs for granting Awards.

     The Administrator shall have full power and authority to take all other actions necessary to
carry out the purpose and intent of the Plan, including, but not limited to, the authority to: (i)
determine the eligible persons to whom, and the time or times at which Awards shall be granted;
(ii) determine the types of Awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each Award; (iv) impose such terms, limitations,
restrictions and conditions upon any such Award as the Administrator shall deem appropriate; (v)
modify, amend, extend or renew outstanding Awards, or accept the surrender of outstanding Awards
and substitute new Awards (provided however, that, except as provided in Section 7(c) of the Plan,
(A) any modification that would adversely affect any outstanding Award shall not be made without
the consent of the holder, and (B) the exercise price for any outstanding stock option granted
under the Plan may not be decreased after the date of grant nor may any outstanding stock option
granted under the Plan be surrendered to the Corporation as consideration for the grant of a new
stock option with a lower exercise price); (vi) accelerate or otherwise change the time in which an
Award may be exercised or becomes payable and to waive or accelerate the lapse, in whole or in
part, of any restriction or condition with respect to such Award, including, but not limited to,
any restriction or condition with respect to the vesting or exercisability of an Award following
termination of any grantee’s employment or other service relationship with the Corporation; and
(vii) to establish, amend, modify, administer or terminate subplans, and prescribe, amend and
rescind rules and regulations relating to such subplans.

The Administrator shall have full power and authority, in its sole and absolute discretion, to
administer and interpret the Plan and to adopt and interpret such rules, regulations, agreements,
guidelines and instruments for the administration of the Plan and for the conduct of its business
as the Administrator deems necessary or advisable. To the extent permitted by applicable law, the
Administrator may delegate to one or more executive officers of the Corporation the power to (i)
grant Awards to individuals who are not subject to Section 16 of the Securities Exchange Act of
1934, as amended, or any successor provision and are not officers of the Corporation, and (ii) make
all

 

 

determinations under the Plan with respect thereto, provided that the Administrator shall fix the
maximum amount of such Awards for the group and a maximum for any one Award recipient.

     (c) Non-Uniform Determinations. The Administrator’s determinations under the Plan (including
without limitation, determinations of the persons to receive Awards, the form, amount and timing of
such Awards, the terms and provisions of such Awards and the Grant Agreements evidencing such
Awards) need not be uniform and may be made by the Administrator selectively among persons who
receive, or are eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.

     (d) Limited Liability. To the maximum extent permitted by law, no member of the Administrator
shall be liable for any action taken or decision made in good faith relating to the Plan or any
Award thereunder.

     (e) Indemnification. To the maximum extent permitted by law and by the Corporation’s charter
and by-laws, the members of the Administrator shall be indemnified by the Corporation in respect of
all their activities under the Plan.

     (f) Effect of Administrator’s Decision. All actions taken and decisions and determinations
made by the Administrator on all matters relating to the Plan pursuant to the powers vested in it
hereunder shall be in the Administrator’s sole and absolute discretion and shall be conclusive and
binding on all parties concerned, including the Corporation, its stockholders, any participants in
the Plan and any other employee, consultant, or director of the Corporation, and their respective
successors in interest.

4. Shares Available for the Plan; Maximum Awards

     (a) Plan Share Reserve. Subject to the following provisions of this Section 4 and adjustments
as provided in Section 7(c) of the Plan, the Plan Share Reserve shall be equal to the sum of: (i)
475,000 shares of Common Stock; (ii) 768,772 shares of Common Stock remaining under the 2002 Equity
Incentive Plan that are not subject to outstanding grants of Awards under Prior Plans; and (iii)
any shares of Common Stock that are represented by Awards granted under the Prior Plans that are
forfeited, expire or are canceled without delivery of shares of Common Stock or which result in the
forfeiture of the shares of Common Stock back to the Corporation.

     (b) Adjustments to Plan Share Reserve; Fixed ISO Limit. If any Award, or portion of an Award,
under the Plan or the Prior Plans expires or terminates unexercised, becomes unexercisable or is
forfeited or otherwise terminated, surrendered or canceled as to any shares, the shares subject to
such Award shall thereafter be available for Awards under the Plan; provided, however, that no more
than the number of shares available for issuance on the Effective Date shall be made available for
purchase pursuant to incentive stock options.

     (c) Cash Settlement of Awards. To the extent any shares of Common Stock covered by an Award
are not delivered to an Award holder or the holder’s Designated Beneficiary because the Award is
settled in cash, such shares shall not be deemed to have been issued for purposes of determining
the maximum number of shares of Common Stock available for issuance under the Plan.

 

 

     (d) Limitation on Restricted Stock and Stock Units. Notwithstanding the provisions of Section
4(a) of the Plan and subject to adjustment as provided in Section 7(c) of the Plan, the maximum
number of shares of Common Stock that may be issued in conjunction with Awards granted pursuant to
subsections (d) and (e) of Section 6 of the Plan (relating to restricted stock awards and stock
units) shall be 425,000 shares of Common Stock; provided, however, that any shares of Common Stock
that are forfeited back to the Corporation with respect to any such Awards shall be available for
further Awards under subsections (d) and (e) of Section 6 of the Plan.

     (e) Code Section 162(m) Limit. Subject to adjustments as provided in Section 7(c) of the
Plan, the maximum number of shares of Common Stock subject to Awards of any combination that may be
granted during any one fiscal year of the Corporation to any one individual under this Plan shall
be limited to 500,000 shares. Such per-individual limit shall not be adjusted to effect a
restoration of shares of Common Stock with respect to which the related Award is terminated,
surrendered or canceled. The maximum cash amount that may be payable in combination with any
performance-based award distributable in restricted stock or stock units is the cash amount equal
to the sum of the fair market value of the underlying shares plus the federal and state income and
Medicare taxes, assuming highest marginal tax rates, associated with the grant, vesting or
distribution of the related restricted stock or stock units.

5. Participation

     Participation in the Plan shall be open to all employees, officers and other individuals
providing bona fide services to or for the Corporation or of any Affiliate of the Corporation, as
may be selected by the Administrator from time to time. The Administrator may also grant Awards to
individuals in connection with hiring, retention or otherwise, prior to the date the individual
first performs services for the Corporation or an Affiliate provided that such Awards shall not
become vested or exercisable, and no shares shall be issued to such individual, prior to the date
the individual first commences performance of such services.

6. Awards

     (a) Terms of Awards. The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem with other types of
Awards. All Awards are subject to the terms and conditions provided in the Grant Agreement,
provided that all Awards shall have a minimum three-year graded vesting period, or a one-year
vesting period plus performance criteria established by the Administrator.

     (b) Performance Factors. For purposes of ensuring that compensation arising from Awards
granted under the Plan to officers and key employees of the Company is deductible as qualified
performance-based compensation within the meaning of Code section 162(m), the Administrator may
provide that the granting, vesting, right to exercise or lapse of restrictions associated with an
Award (each, a “performance-based award”) is contingent upon the attainment of one or more
pre-established, objective performance goals based on any, or any combination, of the following
business criteria as it may apply to an individual, a business unit, or the Company: return on
stockholder equity, return on investment, total revenue, earnings before interest and taxes
(“EBIT”), earnings before interest, taxes, depreciation and appreciation (“EBITDA”), profits, stock
price, earnings per share, or cost containment. Performance goals may include minimum, maximum and
target levels of performance, with the size of the performance-based award or the lapse of

 

 

restrictions with respect thereto based on the level attained. The Administrator may, at its sole
discretion, modify the measurement criteria as applied to performance-based awards to offset any
unintended results arising from events not anticipated when the performance goals were established;
provided, that such modifications may be made with respect to an Award granted to any executive
officer of the Company only to the extent permitted by Code section 162(m).

     (c) Stock Options. The Administrator may from time to time grant to eligible participants
Awards of incentive stock options, as that term is defined in Code section 422, or nonqualified
stock options; provided, however, that Awards of incentive stock options shall be limited to
employees of the Corporation or of any current or hereafter existing “parent corporation” or
“subsidiary corporation,” as defined in Code sections 424(e) and (f), respectively, of the
Corporation. No stock option shall be an incentive stock option unless so designated by the
Administrator at the time of grant or in the Grant Agreement evidencing such stock option. All
stock options granted under the Plan must have an exercise price at least equal to Fair Market
Value as of the date of grant and may not have a term longer than five years. Except for
adjustments pursuant to Section 7(c), the exercise price for any outstanding stock option granted
under the Plan may not be decreased after the date of grant nor may any outstanding stock option
granted under the Plan be surrendered to the Corporation as consideration for the grant of a new
stock option with a lower exercise price.

     (d) Stock Awards. The Administrator may from time to time grant restricted stock Awards to
eligible participants in such amounts, on such terms and conditions, and for such consideration,
including no consideration or such minimum consideration as may be required by law, as it shall
determine. A stock Award may be paid in Common Stock, in cash, or in a combination of Common Stock
and cash, as determined in the sole discretion of the Administrator.

     (e) Stock Units. The Administrator may from time to time grant Awards to eligible
participants denominated in stock-equivalent units in such amounts and on such terms and conditions
as it shall determine. Stock units granted to a participant shall be credited to a bookkeeping
reserve account solely for accounting purposes and shall not require a segregation of any of the
Corporation’s assets. An Award of stock units may be settled in Common Stock, in cash, or in a
combination of Common Stock and cash, as determined in the sole discretion of the Administrator.
Shares of Common Stock awarded in connection with an Award of stock units may be issued for such
consideration as may be determined by the Administrator, including for no consideration or such
minimum consideration as may be required by law. Except as otherwise provided in the applicable
Grant Agreement, the grantee shall not have the rights of a stockholder with respect to any shares
of Common Stock represented by a stock unit solely as a result of the grant of a stock unit to the
grantee.

7. Miscellaneous

     (a) Withholding of Taxes. Grantees and holders of Awards shall pay to the Corporation or its
Affiliate, or make provision satisfactory to the Administrator for payment of, any taxes required
to be withheld in respect of Awards under the Plan no later than the date of the event creating the
tax liability. The Corporation or its Affiliate may, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to the grantee or holder of an
Award. Notwithstanding the above, in no event may holders of Awards satisfy such tax liability
through the tender or withholding of shares of Common Stock.

 

 

     (b) Transferability. Except as otherwise determined by the Administrator, and in any event in
the case of an incentive stock option, no Award granted under the Plan shall be transferable by a
grantee otherwise than by will or the laws of descent and distribution. Unless otherwise
determined by the Administrator in accord with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the grantee, only by the grantee or,
during the period the grantee is under a legal disability, by the grantee’s guardian or legal
representative.

     (c) Adjustments; Business Combinations.

     (i) Upon a stock dividend of, or stock split or reverse stock split affecting, the
Common Stock of the Corporation, (A) the maximum number of shares reserved for issuance or
with respect to which Awards may be granted under the Plan and the maximum number of shares
with respect to which Awards may be granted during any one fiscal year of the Corporation
to any individual, as provided in Section 4 of the Plan, and (B) the number of shares
covered by and the exercise price and other terms of outstanding Awards, shall, without
further action of the Board, be adjusted to reflect such event unless the Board determines,
at the time it approves such stock dividend, stock split or reverse stock split, that no
such adjustment shall be made. The Administrator may make adjustments, in its discretion,
to address the treatment of fractional shares and fractional cents that arise with respect
to outstanding Awards as a result of the stock dividend, stock split or reverse stock
split.

     (ii) In the event of any other changes affecting the Corporation, the capitalization
of the Corporation or the Common Stock of the Corporation by reason of any spin-off,
split-up, dividend, recapitalization, merger, consolidation, business combination or
exchange of shares and the like, the Administrator except as otherwise provided in Section
7(d), in its discretion and without the consent of holders of Awards, may make: (A)
appropriate adjustments to the maximum number and kind of shares reserved for issuance or
with respect to which Awards may be granted under the Plan, in the aggregate and with
respect to any individual, as provided in Section 4 of the Plan, and to the number, kind
and price of shares covered by outstanding Awards; and (B) any other adjustments in
outstanding Awards, including but not limited to reducing the number of shares subject to
Awards or providing or mandating alternative settlement methods such as settlement of the
Awards in cash or in shares of Common Stock or other securities of the Corporation or of
any other entity, or in any other matters which relate to Awards as the Administrator
shall, in its sole discretion, determine to be necessary or appropriate.

     (iii) The Administrator is authorized to make, in its discretion and without the
consent of holders of Awards, adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events affecting the
Corporation, or the financial statements of the Corporation or any Affiliate, or of changes
in applicable laws, regulations, or accounting principles, whenever the Administrator
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the
Plan and outstanding Awards.

 

 

     (d) Change in Control. Notwithstanding the provisions of Section 7(c)(ii), in the event of a
Change in Control, all Awards under the Plan are automatically and fully vested and immediately
exercisable or payable in whole or in part. The obligations of the Corporation pursuant to the
Plan and performance with respect to rights of Award holders thereunder shall be assumed by any
participant, successor-in-interest or beneficiary of or interested party in the Change in Control
(collectively, the Change-in-Control Participant), and the Change-in Control Participant shall
cause the Awards to be assumed, or new rights substituted therefor, by another entity.

     (e) Substitution of Awards in Mergers and Acquisitions in which the Corporation or an
Affiliate is the Acquiring Entity. Solely in the event that the Corporation or an Affiliate is an
acquiring entity in a merger, acquisition and other business combination, Awards may be granted
under the Plan from time to time in substitution for Awards held by employees, officers,
consultants or directors of a target entity who become or are about to become employees, officers,
consultants or directors of the Corporation or an Affiliate as the result of a merger or
consolidation of the employing entity with the Corporation or an Affiliate, or the acquisition by
the Corporation or an Affiliate of the assets or stock of the employing entity. The terms and
conditions of any substitute Awards so granted may vary from the terms and conditions set forth
herein to the extent that the Administrator deems appropriate at the time of grant to conform the
substitute Awards to the provisions of the awards for which they are substituted.

     (f) Compensation Committee Report. For each performance year and/or performance period, the
Compensation Committee of the Board shall determine and set forth in writing not later than 90 days
after the commencement of the performance year and/or performance period and in no event later than
the point in time when 25% of the performance period has elapsed or the outcome of the performance
objectives is no longer substantially uncertain: (i) the participants under the Plan who are
granted performance-based awards for the performance period, (ii) the nature and amount (or the the
objective formula for determining the amount) of the performance-based award that will be earned if
specified performance objectives are met, (iii) the applicable performance factors, and (iv) any
other objective terms and conditions that must be satisfied by the participant in order to earn the
performance-based award.

     (g) Termination, Amendment and Modification of the Plan. The Administrator may terminate,
amend or modify the Plan or any portion thereof at any time; provided, however, that the provisions
of Section 6(a) relating to stock option repricing shall not be amended without approval by the
Corporation’s stockholders, and any amendments to the Plan will not (i) materially increase the
benefits accruing to participants under the Plan, (ii) materially increase the aggregate number of
securities that may be issued under the Plan, or (iii) materially modify the requirements as to
eligibility for participation in the Plan, without approval by the Corporation’s stockholders.

     (h) Non-Guarantee of Employment or Service. Nothing in the Plan or in any Grant Agreement
thereunder shall confer any right on an individual to continue in the service of the Corporation or
shall interfere in any way with the right of the Corporation to terminate such service at any time
with or without cause or notice. The Corporation expressly reserves the right at any time to
dismiss an Award recipient free from any liability or claim under the Plan, except as expressly
provided in the applicable Grant Agreement.

     (i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between the

 

 

Corporation and a grantee or any other person. To the extent that any grantee or other person
acquires a right to receive payments from the Corporation pursuant to an Award, such right shall be
no greater than the right of any unsecured general creditor of the Corporation.

     (j) Designated Beneficiaries. Unless otherwise provided in the applicable Grant Agreement,
amounts or certificates due an Award recipient after his or her death under an Award shall be paid
or delivered to the Award recipient’s Designated Beneficiary in accordance with the terms and
conditions of the Award.

     (k) Governing Law. The validity, construction and effect of the Plan, of Grant Agreements
entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made
by the Administrator relating to the Plan or such Grant Agreements, and the rights of any and all
persons having or claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State of Maryland,
without regard to its conflict of laws principles.

     (l) Effective Date; Termination Date. The Plan is effective as of the date on which the Plan
is approved by the stockholders of the Corporation. The Plan shall be unlimited in duration and,
in the event of Plan termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that no Awards shall be granted under the Plan after the close of
business on February 20, 2015.

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