Document:

Exhibit 10.11

 

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

EXECUTIVE SEVERANCE PLAN

 

Amended and Restated -

As of November 3, 2005

 

 

SCHWEITZER-MAUDUIT INTERNATIONAL, INC.

EXECUTIVE SEVERANCE PLAN FOR KEY EMPLOYEES

AMENDED AND RESTATED AS OF NOVEMBER 3, 2005

 

ARTICLE 1 - PURPOSE AND ADOPTION OF PLAN

 

1.1                                 Adoption
of Plan.  Schweitzer-Mauduit
International, Inc. (“Company”) hereby amends and restates the Schweitzer-Mauduit
International, Inc. Executive Severance Plan as of November 3, 2005.  The Company intends that this Plan qualify as
and come within the various exceptions and exemptions under the Employee
Retirement Income Security Act of 1974 (“ERISA”), as amended, for an unfunded
plan maintained primarily for a select group of management or highly compensated
employees, and any ambiguities in this Plan shall be construed to effect that
intent.  The benefits of this Plan for
U.S. Employees (as hereinafter defined) shall be paid solely from the general
assets of the Company.  The benefits of
this Plan for French Employees (as hereinafter defined) shall be paid by the
French Employer (as hereinafter defined) but, if as a result of applicable
French laws, a French Employer would be prohibited from paying the benefits of
this Plan to a French Employee, any such benefits shall be paid by the Company
to such French Employee.

 

1.2                                 Purpose.  The Plan is primarily designed to provide
benefits to certain Key Employees (as hereinafter defined) upon termination of
employment as a result of a Change of Control or otherwise.

 

1.3                                 Effect
on Other Plans Sponsored by the Company or by a French Employer.  The benefits payable under the Plan are in
addition to the coverage and benefits generally afforded by Other Plans (as
hereinafter defined) to Key Employees terminating from the

 

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service of the Company
or, as the case may be, from the service of a French Employer and any other
programs sponsored by the Company or provided to Participants who are French Employees
including, but not limited to, vested benefits under any qualified employee
benefit plans.  However, nothing herein
is intended to or shall be construed to require the Company or a French
Employer to institute or continue in effect any particular plan or benefit
sponsored by the Company or such French Employer, and the Company and each
French Employer hereby reserve the right to amend or terminate any of their
Other Plans or benefit programs at any time in accordance with the procedures
set forth in each such plan or program and any applicable law.

 

The masculine pronoun shall be construed to include
the feminine pronoun and singular shall include the plural where the context so
requires.

 

ARTICLE 2 - DEFINITIONS

 

2.1                                 “Administrator”
shall mean the Compensation Committee of the Board.  Following a Change of Control, the
Administrator shall be the Trustee of a grantor trust established by the
Company that includes this Plan.

 

2.2                                 “Agreement”
shall mean the participation agreement provided to a Key Employee by the
Administrator as provided in Section 3.2.

 

2.3                                 “Annual
Compensation” shall mean:

 

a)                                      For
U.S. Employees, a Participant’s rate of base salary paid or payable for a
calendar year by the Company and any incentive award paid or payable to such
Participant pursuant to the Schweitzer-Mauduit International, Inc.  Annual Incentive Plan (the “SMI Annual
Incentive Plan”) or any replacement or successor to such plan for such calendar
year.

 

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b)                                     For
French Employees, a Participant’s rate of base salary paid or payable for a
calendar year by his French Employer, plus any incentive award paid or payable
to such Participant pursuant to the SMI Annual Incentive Plan or any
replacement or successor to such plan for such calendar year, plus any profit-sharing
paid or payable by his French Employer attributable to such calendar year minus
the aggregate amount of (i) any Convention Collective payments, (ii) Assedic
Payments, or (iii) private insurance payments paid or payable to such
Participant as a result of a Change of Control Termination.

 

2.4                                 “Basic
Plan” shall mean the Securite Sociale retirement benefit plan sponsored by the
French Government.

 

2.5                                 “Board”
shall mean the Board of Directors of Schweitzer-Mauduit International, Inc.

 

2.6                                 “Cause”
shall mean the termination of the Participant’s employment by the Company or by
his French Employer, as the case may be, on the basis of criminal or civil
fraud on the part of the Participant.

 

2.7                                 “Change
of Control” shall mean the date as of which: (a) a third person,
including a “group” as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, acquires actual or beneficial ownership of shares of the
Company having 15% or more of the total number of votes that may be cast for
the election of Directors of the Company; or (b) as the result of any cash
tender or exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing transactions (a “Transaction”),
the persons who

 

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were directors of the
Company before the Transaction shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the Company.

 

2.8                                 “Change
of Control Termination” shall mean the termination of a Participant’s
employment by the Company or his French Employer, as the case may be, within
two years of a Change of Control for any reason other than for Cause,
Retirement, Disability or the Participant’s death.

 

2.9                                 “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

2.10                           “Company”
shall mean Schweitzer-Mauduit International, Inc. and each of its
successors and assigns.

 

2.11                           “Complementary
Plan” shall mean the national pension plans for French Employees and
workers sponsored by the Association des Régimes de Retraite Complémentaires (“ARRCO”)
and the Association Généralé des Institutions de Retraite des Cadres (“AGIRC”),
respectively.

 

2.12                           “Disability”
shall mean Totally and Permanently Disabled, within the meaning of the
Retirement Plan, provided that the Administrator shall make any such
determination with respect to a Participant hereunder.

 

2.13                           “French
Employee” shall mean an individual employed by one of the French Employers.

 

2.14                           “French
Employer(s)” mean Schweitzer-Mauduit France, S.A.R.L. or LTR Industries,
S.A., and their respective successors and subsidiaries.

 

2.15                           “French
Supplementary Plans” shall mean the supplementary pension benefit plans
provided, respectively, by Papeteries de Mauduit, S.A. and LTR Industries, S.A.
to their employees.

 

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2.16                           “Key Employee” shall mean an individual who is a member of a
select group of management or highly compensated French Employees and/or U.S.
Employees, as determined from time to time by the Administrator.

 

2.17                           “Other
Plans” shall mean other plans of the Company or of the French Employer,
including but not limited to the Schweitzer-Mauduit International, Inc.
Annual Incentive Plan, the Schweitzer-Mauduit International, Inc. Equity
Participation Plan, the Schweitzer-Mauduit International, Inc. Long-Term
Incentive Plan, Schweitzer-Mauduit International, Inc. Restricted Stock
Plan,  Schweitzer-Mauduit International, Inc.
Deferred Compensation Plan and the Supplemental Plan.

 

2.18                           “Participant”
shall mean a Key Employee who has entered into an Agreement with the
Administrator in accordance with Section 3.2.

 

2.19                           “Plan”
shall mean this Schweitzer-Mauduit International, Inc. Executive Severance
Plan.

 

2.20                           “Retirement”
shall mean

 

a)                                      For
U.S. Employees, the voluntary termination of the Participant’s employment by
the Company pursuant to the terms of the qualified defined benefit pension plan
of the Company, which termination was initiated by such Participant in writing
pursuant to the procedures of such qualified defined benefit pension plan prior
to a Change of Control notwithstanding the Participant’s actual retirement date
occurs after a Change of Control.

 

b)                                     For
French Employees, the voluntary termination of the Participant’s employment by
his French Employer as a result of such Participant’s retirement pursuant to
the terms of the Basic Plan, the Complementary Plan and, if

 

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applicable,
the French Supplementary Plan, which termination was initiated by such
Participant in writing pursuant to the procedures of such Basic Plan,
Complementary Plan and, if applicable, French Supplementary Plan prior Change
of Control, notwithstanding that the Participant’s actual retirement date
occurs after a Change of Control.

 

2.21                           “Retirement
Plan” shall mean the Schweitzer-Mauduit International, Inc. Retirement
Plan, as amended and restated as of July 1, 2000 and including amendments
2001-1, 2001-2, 2002-2 and 2003-1.  For
clarity and to avoid confusion, the term Retirement Plan for the purposes of
this Plan shall not refer to or include the terms of any amendment of the
Retirement Plan impacting the benefits of a participant therein made subsequent
to July 1, 2000 other than those specifically identified hereinabove.

 

2.22                           “Supplemental
Plan” shall mean the Supplemental Benefit Plan to the Schweitzer-Mauduit
International, Inc. Retirement Plan, as amended and restated as of November 21,
2003.  For clarity and to avoid
confusion, the term Supplemental Plan for the purposes of this Plan shall not
refer to or include the terms of any amendment of the Supplemental Plan
impacting the benefits of a participant therein made subsequent to November 21,
2003.

 

2.23                           “U.S.
Employee” shall mean individuals employed by the Company.

 

2.24                           “Voluntary
Resignation” shall mean termination of a Participant’s employment with the
Company or the French Employer(s) as a result of a resignation initiated by the
Participant which is unrelated to any act or omission of the Company or the
French Employer, as the case may be, which could not reasonably be construed to
be a constructive discharge of such Participant.

 

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2.25                           “Deferred
Compensation Plan” shall mean the Schweitzer-Mauduit International, Inc.
Deferred Compensation Plan, amended and restated as of February 26, 2004,
and the Schweitzer-Mauduit International, Inc. Deferred Compensation Plan No. 2,
effective as of January 1, 2005.

 

ARTICLE 3 - ELIGIBILITY

 

3.1                                 Eligibility
to Participate.  The Administrator
shall from time to time determine in writing the Key Employees who are eligible
to participate in this Plan.  A list of
current Participants shall be set forth on Appendix A hereto, as updated by the
Committee from time to time.

 

3.2                                 Agreement.  The Administrator shall enter into a
participation agreement with each Key Employee the Administrator determines to
be eligible for participation in this Plan. 
Such Agreement shall identify the Key Employee as a Participant in this
Plan and shall contain such terms as deemed appropriate by the Administrator,
but shall be consistent with and governed by the terms of this Plan.

 

ARTICLE 4 - SEVERANCE BENEFITS

 

4.1                                 Termination
Following Change of Control.  A
Participant shall be entitled to receive benefits under this Plan following a
Change of Control as follows:

 

a)                                      Subject
to Section 4.1 (b), a Participant’s employment with the Company or his
French Employer, as the case may be, shall terminate within two years of a
Change of Control for any reason other than for Cause, Retirement, Disability
or the Participant’s death.

 

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b)                                     A
Participant that has been requested in writing by the Company or the French
Employer, as the case may be, to continue in the employment of the Company or
the French Employer through a specified date, which shall not be more than six (6) months
from the date of a Change of Control, under terms and conditions of employment,
at the place of employment and with the same salary and benefits that the
Participant was provided prior to the Change of Control, shall have satisfied
such request by remaining in the employment of the Company or the French
Employer for the specified period.

 

c)                                      A
Participant entitled to benefits under this Plan shall receive and the Company
or, subject to the provisions of Section 1.1, the French Employer, as the
case may be, shall pay or, with respect to certain benefits hereinafter
described, shall cause to be paid to the Participant the following benefits:

 

(1)                                     an
amount equal to three times the Participant’s highest Annual Compensation for
any calendar year beginning with or within the three-year period terminating on
the date of termination of the Participant’s employment, which amount shall be
paid to the Participant in cash on or before the fifth day following the date
of termination;

 

(2)                                     for
a period of three years following the date of termination of employment, the
Participant and anyone entitled to claim under or through the Participant shall
be entitled to benefits as follows:

 

(i)                                     For
U.S. Employees, all benefits under the group health care plan, dental care
plan, life or other insurance or death benefit plan, or other present or future
similar group employee benefit plan or

 

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program
of the Company for which key executives are eligible at the date of a Change of
Control, to the same extent as if the Participant had continued to be an
employee of the Company during such period and such benefits shall, to the
extent not fully paid under any such plan or program, be paid by the Company;
and

 

(ii)                                  for
French Employees, all medical and dental benefits provided by “Social Securite”,
medical, dental and life insurance or death benefit plans, or other present or
future similar medical, dental, life or other insurance or death benefit plans
or programs generally available to French Employees for which such Participant
is eligible at the date of the Change of Control, to the same extent as if the
Participant had continued to be a French Employee during such period and such
benefits shall, to the extent not fully paid under any such plan or program, be
paid by the French Employer.

 

(3)                                  for
a U.S. Employee, a lump sum payable in cash on or before the fifth day
following the date of termination equal to:

 

(i)                                     for
a U.S. Employee Participant in the final average pay benefit formula under the
Retirement Plan an amount equal to the Actuarial Equivalent (as defined in the
Retirement Plan) of the accrued benefit the Participant would have earned under
the Retirement Plan and the Supplemental Plan for the three-year period
following the date of termination of his employment with the Company based on
the Participant’s earnings in effect for

 

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purposes
of the Retirement Plan and the Supplemental Plan on the date of such
termination.

 

(ii)                                  for
a U.S. Employee Participant in the cash balance benefit formula under the
Retirement Plan an amount equal to the actual dollar amount of the accrued
benefit the Participant would have earned under the Retirement Plan and the
Supplemental Plan for the three-year period following the date of termination
of his employment with the Company based on the Participant’s earnings in
effect for purposes of the Retirement Plan and the Supplemental Plan on the
date of such termination.  Such amounts
shall include any amounts payable in the form of Excess Retirement Benefit
contributions into the Deferred Compensation Plan, as such term is defined in
the Deferred Compensation Plan.

 

(4)                                  for
French Employees, a lump sum equal to the sum of the following amounts which
sum shall be payable in cash on or before the tenth day following the date of
termination:

 

(i)                                     the
cost of purchasing any pension credits lost by a Participant under the Basic
Plan as a result of a Change of Control Termination, but in no event shall the
pension credits so purchased exceed 12 quarters of pension credits;

 

(ii)                                  a
lump sum equal to (x) the purchase price of any pension credits lost by a
Participant under the Complementary Plan plus (y) the present value of any
portion of lost pension credits which may not

 

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be
purchased back from the Complementary Plan, each as a result of a Change of
Control Termination provided,  however, that in no event shall
such lost Complementary Plan benefits exceed the present worth of three years
of such lost pension benefits; and

 

(iii)                               for pension benefits
lost under the French Supplementary Plan as a result of a Change of Control
Termination, payment of a lump sum calculated as follows:

 

a)                                      if
the Participant is terminated between ages 62 and 65, a lump sum equal to the
present worth of the difference between the pension benefits the Participant
would have received at age 65 absent the Change of Control Termination and the
reduced pension benefit such Participant will receive at age 65 as a result of
such termination;

 

b)                                     if
the Participant is terminated between ages 60 and 62, payment of a lump sum as
calculated in (a) above multiplied by the ratio of A to B where A = three
years and B = the number of years between the Change of Control Termination and
attainment of age 65.

 

c)                                      if
the Participant is terminated before age 60 or with less than 20 years service
with a French Employer, a lump sum equal to the present worth of the

 

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pension
benefit the Participant would have received at age 65, absent the Change of
Control Termination multiplied by the ratio of A to B where A = three years and
B = the number of years between the Change of Control Termination and the date
on which the Participant would attain age 65 provided,  however, that
no such lump sum shall be payable unless such Participant could have earned 20
years service with a French Employer on or before attainment of age 65, absent
a Change of Control Termination.

 

d)                                     If
a Participant is or may be liable for Federal income taxes in the United
States, such Participant’s Agreement shall provide that the parties agree that
the payments provided in Section 4.1(a) hereof are reasonable
compensation in light of the Participant’s services rendered to the Company or
the French Employer, as the case may be, and that neither party shall contest
the payment of such benefits as constituting an “excess parachute payment”
within the meaning of Section 280G(b)(1) of the Code.

 

e)                                      In
the event that (i) the Participant becomes entitled to the compensation
and benefits described in Section 4.1(a) hereof (“Compensation
Payments”), (ii) the Company

 

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determines,
based upon the advice of tax counsel selected by the Company’s independent
auditors and acceptable to the Participant, that, as a result of such
Compensation Payments and any other benefits or payments required to be taken
into account under Code Section 280G(b)(2) (“Parachute Payments”),
any of such Parachute Payments must be reported by the Company as “excess
parachute payments”, and (iii) such Parachute Payments are 3.5 or more
times the “base amount” as defined in Code Section 280G(b)(3) with
respect to such Participant (“Base Amount”), the Company shall pay to the
Participant at the time specified in Section 4.1(a) above an
additional amount (“Gross-Up Payment”) such that the net amount retained by the
Participant, after deduction of any of the tax imposed on the Participant by Section 4999
of the Code (“Excise Tax”) and any Federal, state and local income tax and
Excise Tax upon the Gross-Up Payment, shall be equal to the Parachute Payments
determined prior to the application of this paragraph.  The value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company’s independent
auditors.  For purposes of determining
the amount of the Gross-Up Payment, the Participant shall be deemed to pay
Federal income taxes at

 

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the
highest marginal rate of Federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rates of taxation in the state and locality of the Participant’s
residence on the date of termination of his employment, net of the maximum
reduction in Federal income taxes which could be obtained from deduction of
such state and local taxes.  In the event
that the Excise Tax payable by the Participant is subsequently determined to be
less than the amount, if any, taken into account hereunder at the time of
termination of the Participant’s employment, the Participant shall repay to the
Company at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
plus interest on the amount of such repayment at the rate provided for in Section 1274(b)(2)(B) of
the Code (“Repayment Amount”).  In the
event that the Excise Tax payable by the Participant is determined to exceed
the amount, if any, taken into account hereunder at the time of the termination
of the Participant’s employment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up

 

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Payment
in respect of such excess (plus any interest and penalty payable with respect
to such excess) immediately prior to the time that the amount of such excess is
required to be paid by Participant (regardless of any contest of such payment
pursuant to Section 4.1(e)) (“Additional Gross-up Payment”), such that the
net amount retained by the Participant, after deduction of any Excise Tax on
the Parachute Payments and any Federal, state and local income tax and Excise
Tax upon the Additional Gross-Up Payment, shall be equal to the Parachute
Payments determined prior to the application of this paragraph. In the event
that the Excise Tax payable by the Participant is subsequently determined to be
less than the amount of the Additional Gross-up Payment paid to the
participant, the Participant shall repay to the Company at the time that the
amount of such reduction in the Additional Gross-up Payment is determined the
portion of the Additional Gross-up Payment attributable to such reduction plus
interest on the amount of such repayment at the rate provided for in Section 1274(h)(2)(B) of
the Code (“Additional Repayment Amount”). 
The obligation to pay any Repayment Amount, Additional Gross-up or
Additional Repayment Amount shall remain in effect under

 

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this
Agreement for the entire period during which the Participant remains liable for
the Excise Tax, including the period during which any applicable statute of
limitation remains open.

 

f)                                        In
the event the Participant’s Parachute Payments are less than 3.5 times the Base
Amount, the Company shall limit the Compensation Payments provided hereunder to
the extent necessary so that the Participant’s Parachute Payments do not exceed
2.99 times the Base Amount.

 

g)                                     Unless
the Company determines that any Parachute Payments made hereunder must be
reported as “excess parachute payments” in accordance with Section 4.1(c) above,
neither party shall file any return taking the position that the payment of
such benefits constitutes an “excess parachute payment” within the meaning of Section 280G(b)(1) of
the Code.  If the Internal Revenue
Service proposes an assessment of Excise Tax against the Participant in excess
of the amount, if any, taken into account at the time specified in Section 4.1(c) and
the Company notifies the Participant in writing that the Company elects to
contest such assessment at its own expense, the Participant shall cooperate in
good faith with the Company in contesting such proposed assessment and

 

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agrees
not to settle such contest without the written consent of the Company.  Any such contest shall be controlled by the
Company, provided, however, that the Participant shall have the right to
participate in such contest. 
Notwithstanding the Company’s election to contest the assessment of an
Excise Tax, the Participant shall be entitled to an Additional Gross-Up Payment
under Section 4.l(c) at the time set forth therein.

 

4.2                                 Termination
of Employment.  If a Participant’s
employment with the Company or his French Employer shall terminate during the
term of his Agreement for any reason other than death, Retirement, Voluntary
Resignation or Cause, the Company or (if such payment is not inconsistent with
any relevant French law) his French Employer, shall pay the Participant or the
Participant’s beneficiary, as the case may be, in cash a lump sum payment in
the amount set forth in the Agreement with such Participant under this Plan
within 30 days of his termination of employment.  Such amount shall be set forth on Appendix A
hereto and shall not be more than the Participant’s monthly base salary
multiplied by 24.  No benefits shall be
payable pursuant to this Section 4.2 in the event a Participant is
entitled to severance payments under Section 4.1 hereof.

 

ARTICLE 5 - ADMINISTRATION

 

5.1                                 Administrator.  The Administrator is responsible for the
general administration of the Plan.

 

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5.2                                 Duties
of the Administrator.  The
Administrator shall be responsible for the daily administration of the Plan and
may appoint other persons or entities to perform or assist in the performance
of any of its duties, subject to its review and approval.  The Administrator shall have the right to
remove any such appointee from his position without cause upon notice.

 

5.3                                 Powers.  The Administrator shall administer the Plan
in accordance with its terms and shall have all powers necessary to carry out
the provisions of the Plan as more particularly set forth herein.  The Administrator shall have discretionary
authority to interpret the Plan, and to determine all questions arising in the
administration, interpretation, and application of the Plan; provided, however,
that such discretionary authority shall be exercised in good faith in order to
achieve the principal purposes of the Plan to provide severance benefits,
including enhanced severance benefits upon a Change of Control, as described in
Article 4.  All such determinations
shall be conclusive and binding on all interested persons.  The Administrator shall adopt such procedures
and regulations necessary and/or desirable for the discharge of its duties
hereunder and may appoint such accountants, counsel, actuaries, specialists,
and other agents as it deems necessary and/or desirable in connection with the
administration of this Plan.

 

5.4                                 Compensation
of the Administrator.  The
Administrator shall not receive any compensation from the Plan for its
services.

 

5.5                                 Indemnification.  The Company shall indemnify the Administrator
against any and all claims, losses, damages, expenses, and liability arising
from its actions or omissions, except when the same is finally adjudicated to
be due to the Administrator’s gross negligence or willful misconduct.  The Company may purchase at its own expense
sufficient liability insurance for the Administrator to cover any and all
claims, losses, damages, and expenses arising from any action or omission in
connection with the execution of the duties as the Administrator.

 

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ARTICLE 6 - SUCCESSOR TO THE COMPANY

 

6.1                                 The Company will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, expressly, absolutely and unconditionally to assume this Plan and
agree to perform the obligations of the Company under this Plan and each
Participant’s Agreement in the same manner and to the same extent that the
Company would be required to perform such obligations if no such succession or
assignment had taken place.

 

ARTICLE 7 - MISCELLANEOUS

 

7.1                                 Funding
of Benefits.  The benefits payable to
a Participant under the Plan shall not be funded in any manner and shall be
paid by the Company or the French employer, as the case may be, out of its
general assets, which assets are subject to the claims of the Company’s or the
French Employer’s creditors.

 

7.2                                 Establishment
of Trust.

 

a)                                      The
Company may establish a Grantor Trust (“Trust”) for the Plan.  If established, all benefits payable under
this Plan to a Participant shall be paid directly by the Company from the
Trust.  To the extent that such benefits
are not paid from the Trust, the benefits shall be paid from the general assets
of the Company and shall

 

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be
reimbursed to the Company by the Trust at the Company’s request upon
presentation of reasonable proof that the Company made such payment.  Any Trust shall be an irrevocable grantor
trust which conforms the requirements of the model trust as described in IRS
Revenue Procedure 92-64, I.R.B. 1992-33. 
The assets of the Trust are subject to the claims of the Company’s
creditors in the event of its insolvency.  Except as to any amounts paid or payable to a
Trust, the Company shall not be obligated to set aside, earmark or escrow any
funds or other assets to satisfy its obligations under this Plan, and the
Participant shall not have any property interest in any specific assets of the
Company other than the unsecured right to receive payments from the Company, as
provided in this Plan.

 

b)                                     Payment
From the Trust.  In the event a Trust is
established and payments are not made by the Company in accordance with the terms
of the Plan, a Participant may petition the trustee of the Trust directly for
payment and the trustee may make such payment directly to the Participant upon
the trustee’s good faith determination that the payment was in fact owed, was
not timely paid by the Company and that there are sufficient assets in the
Trust to make the payment.

 

7.3                                 Settlement
of Accounts.  Except as prohibited by
applicable law, there shall be deducted from the payment of any benefit due
under the Plan the amount of any uncontested indebtedness, obligation, or
liability which the Participant has acknowledged in writing as owing to the
Company or the French Employer as the case may be, or any of their respective
subsidiaries and the amount of which has been agreed to by the Participant.

 

7.4                                 Withholding.  There shall be deducted from the payment of
any benefit due under the Plan the amount of any tax required by any
governmental authority to be withheld and paid

 

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over by the Company or
the French Employer, as the case may be, to such governmental authority for the
account of the Participant entitled to such payment.

 

7.5                                 Assignment
by the Participant.  Unless required
by court order, no Participant or beneficiary shall have any rights to sell,
assign, transfer, encumber, or otherwise convey the right to receive the
payment of any benefit due hereunder, which payment and the rights thereto are
expressly declared to be nonassignable and nontransferable.  Any attempt to do so shall be null and void
and of no effect.

 

7.6                                 Amendment
and Termination.  The Plan may be
amended or terminated at any time by the Company, by resolution of the Board;
provided that no termination or amendment reducing the severance benefits
provided hereunder shall be effective until the expiration of the two-year
period following the date of the Board resolution providing for such
termination.  Further, no amendment or
termination shall be effective during the two-year period following the date of
a Change of Control of the Company without the consent of all the
Participants.  Any termination of this
Plan shall cause the immediate termination of all outstanding Agreements
hereunder.  No amendment or termination
shall affect the rights of any Participant who is entitled to severance
benefits pursuant to Article 4 at the time of such amendment or
termination.

 

7.7                                 No
Guarantee of Employment. 
Participation hereunder shall not be construed as creating any contract
of employment between the Company or a French Employer and any Key Employee,
nor shall it limit the right of the Company or such French Employer to
terminate a Key Employee’s employment at any time for any reason whatsoever.

 

7.8  Construction.  This Plan shall be construed in accordance
with and governed by the laws of the State of Georgia, to the extent such laws
are not otherwise superseded by the laws of the United States.

 

21

 

APPENDIX A

 

Participants in the

Schweitzer-Mauduit International, Inc.

Executive Severance Plan and Number of

Months of Base Salary Pursuant to

Section 4.2 of the Plan

 

	
   

  	
   

  	
  Number of Months of

  
	
   

  	
   

  	
  Participant’s Base Salary in
  the

  
	
   

  	
   

  	
  Event of Termination, Pursuant
  to

  
	
  Name

  	
   

  	
  Section 4.2 of the Plan

  
	
   

  	
   

  	
   

  
	
  Wayne H.
  Deitrich

  	
   

  	
  24

  
	
  Paul C. Roberts

  	
   

  	
  12

  
	
  John W. Rumely

  	
   

  	
  12

  
	
  William R. Foust

  	
   

  	
  12

  
	
  Wayne L.
  Grunewald

  	
   

  	
  6

  
	
  Jean-Pierre Le
  Hétêt

  	
   

  	
  12

  
	
  Raymond Nedellec

  	
   

  	
  6

  
	
  Thierry
  Bellanger

  	
   

  	
  12

  
	
  Peter J.
  Thompson

  	
   

  	
  12

  
	
  Otto R. Herbst

  	
   

  	
  12

  
	
  Widjaja Jiemy

  	
   

  	
  12

  

 

22Exhibit 4.01

 

APOLLO RESOURCES
INTERNATIONAL, INC.

FIFTH AMENDED 2005
STOCK OPTION AND AWARD PLAN

 

APOLLO RESOURCES
INTERNATIONAL, INC. (formerly Powerball International, Inc.), a Utah
corporation (the “Company”), hereby adopts this Fifth Amended 2005 Stock Option
and Award Plan (the “Plan”), effective as of the 31rst day of October, 2005,
under which options to acquire stock of the Company or bonus stock may be
granted from time to time to employees, including of officers and directors of
the Company and/or its subsidiaries. In addition, at the discretion of the
board of directors or other administrator of this Plan, options to acquire
stock of the Company or bonus stock may from time to time be granted under this
Plan to other individuals who contribute to the success of the Company or its
subsidiaries but who are not employees of the Company, all on the terms and
conditions set forth herein.

 

1.             Purpose of the Plan. The Plan is intended to aid
the Company in maintaining and developing a management team, attracting
qualified officers and employees capable of assisting in the future success of
the Company, and rewarding those individuals who have contributed to the
success of the Company. It is designed to aid the Company in retaining the
services of executives and employees and in attracting new personnel when
needed for future operations and growth and to provide such personnel with an
incentive to remain employees of the Company, to use their best efforts to
promote the success of the Company’s business, and to provide them with an
opportunity to obtain or increase a proprietary interest in the Company. It is
also designed to permit the Company to reward those individuals who are not
employees of the Company but who are perceived by management as having contributed
to the success of the Company or who are important to the continued business
and operations of the Company. The above aims will be effectuated through the
granting of options (“Options”) to purchase shares of common stock of the
Company, par value $0.001 per share (the “Stock”), or the granting of awards of
bonus stock (“Stock Awards”), all subject to the terms and conditions of this
Plan. It is intended that the Options issued pursuant to this Plan include,
when designated as such at the time of grant, options which qualify as
Incentive Stock Options (“Incentive Options”) within the meaning of section 422
of the Internal Revenue Code of 1986, as amended (the “Code”), or any amendment
or successor provision of like tenor. If the Company has a class of securities
registered under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), it is intended that Options or Stock Awards granted pursuant to this
Plan qualify for the exemption provided for in Rule 16b-3 (“Rule 16b-3”)
promulgated under the Exchange Act or any amendment or successor rule of
like tenor when granted in accordance with the provisions of such rule.

 

2.             Shareholder Approval. The Plan shall become
effective immediately on adoption by the board of directors of the Company (the
“Board”) and awards under the Plan can be made at that time or at any
subsequent time. The Plan shall be submitted to the Company’s shareholders in
the manner set forth below:

 

(a)           Within twelve months after the Plan
has been adopted by the Board, the Plan shall be submitted for approval by
those shareholders of the Company who are entitled to vote on such matters at a
duly held shareholders’ meeting or approved by the unanimous written consent of
the holders of the issued and outstanding Stock of the Company. If the Plan is
presented at a shareholders’ meeting, it shall be approved by the affirmative
vote of the holders of a majority of the issued and outstanding Stock in
attendance, in person or by proxy, at such meeting. Notwithstanding the
foregoing, the Plan may be approved by the shareholders in any other manner not
inconsistent with the Company’s articles of incorporation and bylaws, the
applicable provisions of state corporate laws, and the applicable provisions of
the Code and regulations adopted thereunder.

 

(b)           In the event the Plan is so approved,
the secretary of the Company shall, as soon as practicable following the date
of final approval, prepare and attach to this Plan certified copies of all
relevant resolutions adopted by the shareholders and the Board.

 

(c)           Failure to obtain shareholder
approval on or before the date that is twelve months subsequent to the adoption
of this Plan by the Board shall not affect awards previously granted under the
Plan; provided that, none of the
Options issued under this Plan will qualify as Incentive Options.

 

1

 

3.             Administration of the Plan. Administration of the
Plan shall be determined by the Board. Subject to compliance with applicable
provisions of the governing law, the Board may delegate administration of the
Plan or specific administrative duties with respect to the Plan, on such terms
and to such committees of the Board as it deems proper. Any Option or Stock
Award approved by the Board shall be approved by a majority vote of those
members of the Board in attendance at a meeting at which a quorum is present.
Any Option or Stock Award approved by a committee designated by the Board shall
be approved as specified by the Board at the time of delegation. The
interpretation and construction of the terms of the Plan by the Board or a duly
authorized committee shall be final and binding on all participants in the Plan
absent a showing of demonstrable error. No member of the Board or duly
authorized committee shall be liable for any action taken or determination made
in good faith with respect to the Plan.

 

The Board’s or duly
authorized committee’s determination under the Plan (including without
limitation determinations of the persons to receive Options or Stock Awards,
the form, amount, and timing of such Options or Stock Awards, the terms and
provisions of such Options or Stock Awards, and the agreements evidencing same)
need not be uniform and may be made by the Board or duly authorized committee
selectively among persons who receive, or are eligible to receive, Options or
Stock Awards under the Plan, whether or not such persons are similarly
situated.

 

4.             Shares of Stock Subject to the Plan.  A total of 19,932,000 shares of Stock may be
subject to, or issued pursuant to, Options or Stock Awards granted under the
terms of this Plan. Any shares subject to an Option or Stock Award under the
Plan, which Option or Stock Award for any reason expires or is forfeited
terminated, or surrendered unexercised as to such shares, shall be added back
to the total number of shares reserved for issuance under the terms of this
Plan. If any right to acquire Stock granted under the Plan is exercised by the
delivery of shares of Stock or the relinquishment of rights to shares of Stock,
only the net shares of Stock issued (the shares of Stock issued less the shares
of Stock surrendered) shall count against the total number of shares reserved
for issuance under the terms of this Plan. 
The number of shares of Stock subject to the Plan is subject to
adjustment as set forth in Section 16 hereof.

 

5.             Reservation of Stock on Granting of Option.  At the time of granting any Option under the
terms of this Plan, there will be reserved for issuance on the exercise of the
Option the number of shares of Stock of the Company subject to such Option. The
Company may reserve either authorized but unissued shares or issued shares that
have been reacquired by the Company.

 

6.             Eligibility. Options or Stock Awards under the
Plan may be granted to employees, including officers and directors, of the
Company or its subsidiaries, as may be existing from time to time, and to other
individuals who are not employees of the Company as may be deemed in the best
interest of the Company by the Board or a duly authorized committee. Such
Options or Stock Awards shall be in the amounts, and shall have the rights and
be subject to the restrictions, as may be determined by the Board or a duly
authorized committee at the time of grant, all as may be within the general provisions
of this Plan.

 

7.             Term of Options and Certain Limitations on Right to
Exercise.

 

(a)           Each Option shall have the term
established by the Board or duly authorized committee at the time the Option is
granted but in no event may an Option have a term in excess of five years.

 

(b)           The term of the Option, once it is
granted, may be reduced only as provided for in this Plan or under the written
provisions of the Option.

 

2

 

(c)           Unless otherwise specifically provided
by the written provisions of the Option, no holder or his or her legal
representative, legatee, or distributee will be, or shall be deemed to be, a
holder of any shares subject to an Option unless and until the holder exercises
his or her right to acquire all or a portion of the Stock subject to the Option
and delivers the required consideration to the Company in accordance with the
terms of this Plan and the Option and then only to the extent of the number of
shares of Stock acquired. Except as specifically provided in this Plan or as
otherwise specifically provided by the written provisions of the Option, no
adjustment to the exercise price or the number of shares of Stock subject to
the Option shall be made for dividends or other rights for which the record
date is prior to the date the Stock subject to the Option is acquired by the
holder.

 

(d)           Options under the Plan shall vest and
become exercisable at such time or times and on such terms as the Board or a
duly authorized committee may determine at the time of the grant of the Option.

 

(e)           Options granted under the Plan shall
contain such other provisions, including, without limitation, further
restrictions on the vesting and exercise of the Option, as the Board or a duly
authorized committee shall deem advisable.

 

(f)            In no event may an Option be
exercised after the expiration of its term.

 

(g)           Unless otherwise specifically
provided by the written provisions of an Option granted pursuant to this Plan,
upon receipt of:

 

(i) any request that
the exercise of the Option or the resale of any shares of Stock issued or to be
issued on exercise of such Option will be registered under the Securities Act;
or

 

(ii) any notice of
exercise of such Option pursuant to its terms, in lieu of any obligation to
effect any registration with respect to the Options or shares of Common Stock
issuable on such Option or in lieu of delivering shares of Common Stock on the
exercise of the Option;

 

the Company may, within
five business days of receipt of such request to register or notice of
exercise, purchase, in whole or in part, such Options from the Optionee at an
amount in cash equal to the difference between the then current fair market
value (as defined below) of the Common Stock on the day of such repurchase and
the exercise price in effect on such day.

 

In order to exercise such
right, the Company must provide written notice to the optionee at least five
days prior to the date that the Company proposes to repurchase such Options.
For purposes of this section. the fair market value of the Common Stock shall
be determined by the Board or a duly authorized committee based on the closing
price for the Stock as quoted on a registered national securities exchange or,
if not listed on a national exchange, the Nasdaq Stock Market (“Nasdaq”), on
the trading day immediately preceding the date that the Company’s provides
notice of its intent to repurchase the Options, or, if not listed on such an
exchange or included on Nasdaq, the closing price for the Stock as determined
by the Board or a duly authorized committee through any other reliable means of
determination available on the close of business on the trading day last
preceding the date of providing the notice.

 

8.             Exercise Price. The exercise price of each Option
issued under the Plan shall be determined by the Board or a duly authorized
committee on the date of grant.

 

3

 

9.             Payment of Exercise Price. The exercise of any
Option shall be contingent on receipt by the Company of cash, certified bank
check to its order, or other consideration acceptable to the Company; provided that, at the discretion of the
Board or a duly authorized committee, the written provisions of the Option may
provide that payment can be made in whole or in part in shares of Stock of the
Company that have been owned by the optionee for more than six months or by the
surrender of Options to acquire Stock from the Company that have been held for
more than six months, which Stock or Options shall be valued at their then fair
market value as determined by the Board or a duly authorized committee. Any
consideration approved by the Board or a duly authorized committee that calls
for the payment of the exercise price over a period of more than one year shall
provide for interest, which shall not be included as part of the exercise
price, that is equal to or exceeds the imputed interest provided for in section 483
of the Code or any amendment or successor section of like tenor.

 

10.           Withholding. If the grant of a
Stock Award or the grant or exercise of an Option pursuant to this Plan, or any
other event in connection with any such grant or exercise, creates an
obligation to withhold income and employment taxes pursuant to the Code or
applicable state or local laws, such obligation may, at the discretion of the
Board or a duly authorized committee at the time of the grant of the Option or
Stock Award and to the extent permitted by the terms of the Option or Stock
Award and the then governing provisions of the Code and the Exchange Act, be
satisfied (i) by the holder of the Option or Stock Award delivering to the
Company an amount of cash equal to such withholding obligation; (ii) by
the Company withholding from any compensation or other amount owing to the
holder of the Option or Stock Award the amount (in cash, Stock, or other
property as the Company may determine) of the withholding obligation; (iii) by
the Company withholding shares of Stock subject to the Option or Stock Award
with a fair market value equal to such obligation; or (iv) by the holder
of the Option or Stock Award either delivering shares of Stock that have been
owned by the holder for more than six months or canceling Options or other
rights to acquire Stock from the Company that have been held for more than six
months with a fair market value equal to such requirements. In all events,
delivery of shares of Stock issuable on exercise of the Option or on grant of
the Stock Award shall be conditioned upon and subject to the satisfaction or
making provision for the satisfaction of the withholding obligation of the
Company resulting from the grant or exercise of the Option, grant of the Stock
Award, or any other event. The Company shall be further authorized to take such
other action as may be necessary, in the opinion of the Company, to satisfy all
obligations for the payment of such taxes.

 

11.           Incentive Options - Additional
Provisions. In addition to the other restrictions and provisions of this
Plan, any Option granted hereunder that is intended to be an Incentive Option
shall meet the following further requirements:

 

(a)           The exercise price of an Incentive
Option shall not be less than the fair market value of the Stock on the date of
grant of the Incentive Option as determined by the Board or a duly authorized
committee based on the closing price for the Stock as quoted on a registered
national securities exchange or, if not listed on a national exchange or
Nasdaq, over the five-day trading period immediately prior to the date of grant
of such Incentive Option, or, if not listed on such an exchange or included on
Nasdaq, the closing price for the Stock as determined by the Board or a duly
authorized committee through any other reliable means of determination
available on the close of business on the trading day last preceding the date
of grant of such Incentive Option and permitted by the applicable provisions of
the Code.

 

(b)           No Incentive Option may be granted
under the Plan to any individual that owns (either of record or beneficially)
Stock possessing more than 10% of the combined voting power of the Company or
any parent or subsidiary corporation unless both the exercise price is at least
110% of the fair market value of the Stock on the date the Option is granted
and the Incentive Option by its terms is not exercisable more than five years
after the date it is granted.

 

(c)           Incentive Options may be granted only
to employees of the Company or its subsidiaries and only in connection with
that employee’s employment by the Company or the subsidiary. Notwithstanding the
above, directors and other individuals who have contributed to the success of
the Company or its subsidiaries may be granted Incentive Options under the
Plan, subject to, and to the extent permitted by, applicable provisions of the
Code and regulations promulgated thereunder, as they may be amended from time
to time.

 

4

 

(d)           The aggregate fair market value
(determined as of the date the Incentive Option is granted) of the shares of
Stock with respect to which Incentive Options are exercisable for the first
time by any individual during any calendar year under the Plan (and all other
plans of the Company and its subsidiaries) may not exceed $100,000.

 

(e)           No Incentive Option shall be
transferable other than by will or the laws of descent and distribution and
shall be exercisable, during the lifetime of the optionee, only by the optionee
to whom the Incentive Option is granted.

 

(f)            No individual acquiring shares of
Stock pursuant to any Incentive Option granted under this Plan shall sell,
transfer, or otherwise convey the Stock until after the date that is both two
years after the date the Incentive Option was granted and one year after the
date the Stock was acquired pursuant to the exercise of the Incentive Option.
If any individual makes a disqualifying disposition, he or she shall notify the
Company within 30 days of such transaction.

 

(g)           No Incentive Option may be exercised
unless the holder was, within three months of such exercise, and had been since
the date the Incentive Option was granted, an eligible employee of the Company
as specified in the applicable provisions of the Code, unless the employment
was terminated as a result of the death or disability (as defined in the Code
and the regulations promulgated thereunder as they may be amended from time to
time) of the employee or the employee dies within three months of the
termination. In the event of termination as a result of disability, the holder
shall have a one year period following termination in which to exercise the
Incentive Option. In the event of death of the holder, the Incentive Option
must be exercised within six months after the issuance of letters testamentary
or administration or the appointment of an administrator, executor, or personal
representative, but not later than one year after the date of termination of
employment. An authorized absence or leave approved by the Board or a duly
authorized committee for a period of 90 days or less shall not be considered an
interruption of employment for any purpose under the Plan.

 

(h)           All Incentive Options shall be deemed
to contain such other limitations and restrictions as are necessary to conform
the Incentive Option to the requirements for “incentive stock options” as
defined in section 422 of the Code, or any amendment or successor statute
of like tenor.

 

All of the foregoing
restrictions and limitations are based on the governing provisions of the Code
as of the date of adoption of this Plan. If at any time the Code is amended to
permit the qualification of an Option as an incentive stock option without one
or more of the foregoing restrictions or limitations or the terms of such
restrictions or limitations are modified, the Board or a duly authorized
committee may grant Incentive Options, and may modify outstanding Incentive
Options in accordance with such changes, all to the extent that such action by
the Board or duly authorized committee does not disqualify the Options from
treatment as incentive stock options under the provisions of the Code as may be
amended from time to time.

 

12.           Awards to Directors and Officers.
To the extent the Company has a class of securities registered under the
Exchange Act, Options or Stock Awards granted under the Plan to directors and
officers (as used in Rule 16b-3 promulgated under the Exchange Act or any
amendment or successor rule of like tenor) intended to qualify for the
exemption from section 16(b) of the Exchange Act provided in Rule 16b-3
shall, in addition to being subject to the other restrictions and limitations
set forth in this Plan, be made as follows:

 

(a)           A transaction whereby there is a
grant of an Option or Stock Award pursuant to this Plan must satisfy one of the
following:

 

(i)            The transaction must be approved by
the Board or a duly authorized committee composed solely of two or more
non-employee directors of the Company (as defined in Rule 16b-3);

 

5

 

(ii)           The transaction must be approved or
ratified, in compliance with section 14 of the Exchange Act, by either:
the affirmative vote of the holders of a majority of the securities of the
Company present or represented and entitled to vote at a meeting of the
shareholders of the Company held in accordance with the applicable laws of the
state of incorporation of the Company; or, if allowed by applicable state law,
the written consent of the holders of a majority, or such greater percentage as
may be required by applicable laws of the state of incorporation of the
Company, of the securities of the Company entitled to vote. If the transaction
is ratified by the shareholders, such ratification must occur no later than the
date of the next annual meeting of shareholders; or

 

(iii)          The Stock acquired must be held by the
officer or director for a period of six months subsequent to the date of the
grant; provided that, if the
transaction involves a derivative security (as defined in section 16 of
the Exchange Act), this condition shall be satisfied if at least six months
elapse from the date of acquisition of the derivative security to the date of
disposition of the derivative security (other than on exercise or conversion)
or its underlying equity security.

 

(b)           Any transaction involving the
disposition to the Company of its securities in connection with Options or
Stock Awards granted pursuant to this Plan shall:

 

(i)            be approved by the Board or a duly
authorized committee composed solely of two or more non-employee directors; or

 

(ii)           be approved or ratified, in
compliance with section 14 of the Exchange Act, by either: the affirmative
vote of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting duly held in accordance with the
applicable laws of the state of incorporation of the Company or, if allowed by
applicable state law, the written consent of the holders of a majority, or such
greater percentage as may be required by applicable laws of the state of
incorporation of the Company, of the securities of the Company entitled to
vote; provided that, such
ratification occurs no later than the date of the next annual meeting of
shareholders.

 

All of the foregoing
restrictions and limitations are based on the governing provisions of the
Exchange Act and the rules and regulations promulgated thereunder as of
the date of adoption of this Plan. If at any time the governing provisions are
amended to permit an Option to be granted or exercised or Stock Award to be
granted pursuant to Rule 16b-3 or any amendment or successor rule of
like tenor without one or more of the foregoing restrictions or limitations, or
the terms of such restrictions or limitations are modified, the Board or a duly
authorized committee may award Options or Stock Awards to directors and of
dicers, and may modify outstanding Options or Stock Awards, in accordance with
such changes, all to the extent that such action by the Board or a duly
authorized committee does not disqualify the Options or Stock Awards from
exemption under the provisions of Rule 16b-3 or any amendment or successor
rule of similar tenor.

 

13.           Stock Awards. The Board or a
duly authorized committee may grant Stock Awards to individuals eligible to
participate in this Plan, in the amount, and subject to the provisions
determined by the Board or a duly authorized committee. The Board or a duly
authorized committee shall notify in writing each person selected to receive a
Stock Award hereunder as soon as practicable after he or she has been so
selected and shall inform such person of the number of shares he or she is entitled
to receive, the approximate date on which such shares will be issued, and the
Forfeiture Restrictions applicable to such shares. (For purposes hereof, the
term “Forfeiture Restrictions” shall mean any prohibitions against sale or
other transfer of shares of Stock granted under the Plan and the obligation of
the holder to forfeit his or her ownership of or right to such shares and to
surrender such shares to the Company on the occurrence of certain conditions.)
The Board or a duly authorized committee may, at its discretion, require the
payment in cash to the Company by the award recipient of the par value of the
Stock. The shares of Stock issued pursuant to a Stock Award shall not be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed of during
such period or periods of time which the Board or a duly authorized committee
shall establish at the time of the grant of the Stock Award. If a Stock Award
is made to an employee of the Company or its subsidiaries, the employee shall
be obligated for no consideration other than the amount, if any, of the par
value paid in cash for such shares, to forfeit and surrender such shares as he
or shall have received under the Plan which are then subject to

 

6

 

Forfeiture Restrictions
to the Company if he or she is no longer an employee of the Company or its
subsidiaries for any reason; provided that, in
the event of termination of the employee’s employment by reason of death or
total and permanent disability, the Board or duly authorized committee, in its
sole discretion, may cancel the Forfeiture Restrictions. Certificates
representing shares subject to Forfeiture Restrictions shall be appropriately
legend as determined by the Board or a duly authorized committee to reflect the
Forfeiture Restrictions, and the Forfeiture Restrictions shall be binding on
any transferee of the shares.

 

14.           Assignment. At the time of
grant of an Option or Stock Award, the Board or duly authorized Committee, in
its sole discretion, may impose restrictions on the transferability of such
Option or Stock Award and provide that such Option shall not be transferable
other than by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code and that, except as
permitted by the foregoing, such Options or Stock Awards, granted under the
Plan and the rights and privileges thereby conferred shall not be transferred,
assigned, pledged, or hypothecated in any way (whether by operation of law or
otherwise), and shall not be subject to execution, attachment, or similar
process. On any attempt to transfer, assign, pledge, hypothecate, or otherwise
dispose of the Option or Stock Award, or of any right or privilege conferred
thereby, contrary to the provisions thereof, or on the levy of any attachment
or similar process on such rights and privileges, the Option or Stock Award and
such rights and privileges shall immediately become null and void.

 

15.           Additional Terms and Provisions of
Awards. The Board or duly authorized committee shall have the right to
impose additional limitations on individual awards under the Plan. For example,
and without limiting the authority of the Board or a duly authorized committee,
an individual award may be conditioned on continued employment for a specified
period or may be voided based on the award holder’s gross negligence in the
performance of his or her duties, substantial failure to meet written standards
established by the Company for the performance of his or her duties, criminal
misconduct, or willful or gross misconduct in the performance of his or her
duties. In addition, the Board or a duly authorized committee may establish
additional rights in the holders of individual awards at the time of grant. For
example, and without limiting the authority of the Board or a duly authorized
committee, an individual award may include the right to immediate payment of
the value inherent in the award on the occurrence of certain events such as a
change in control of the Company, all on the terms and conditions set forth in
the award at the time of grant. The Board or a duly authorized committee may.
at the time of the grant of the Option or Stock Award, establish any other
terms, restrictions, or provisions on the exercise of an Option or the holding
of Stock subject to the Stock Award as it deems appropriate. All such terms,
restrictions, and provisions must be set forth in writing at the time of grant
in order to be effective.

 

16.           Dilution or Other Adjustment.
In the event that the number of shares of Stock of the Company from time to
time issued and outstanding is increased pursuant to a stock split or a stock
dividend, the number of shares of Stock then covered by each outstanding Option
granted hereunder shall be increased proportionately, with no increase in the
total purchase price of the shares then so covered, and the number of shares of
Stock subject to the Plan shall be increased by the same proportion. Shares
awarded under the terms of a Stock Award shall be entitled to the same rights
as other issued and outstanding shares of Stock, whether or not then subject to
Forfeiture Restrictions, although any additional shares of Stock issued to the
holder of a Stock Award shall be subject to the same Forfeiture Restrictions as
the Stock Award. In the event that the number of shares of Stock of the Company
from time to time issued and outstanding is reduced by a combination or
consolidation of shares, the number of shares of Stock then covered by each
outstanding Option granted hereunder shall be reduced proportionately, with no
reduction in the total purchase price of the shares then so covered, and the
number of shares of Stock subject to the Plan shall be reduced by the same
proportion. Shares awarded under a Stock Award shall be treated as other issued
and outstanding shares of Stock, whether or not then subject to Forfeiture
Restrictions. In the event that the Company should transfer assets to another
corporation and distribute the stock of such other corporation without the
surrender of Stock of the Company, and if such distribution is not taxable as a
dividend and no gain or loss is recognized by reason of section 355 of the
Code or any amendment or successor statute of like tenor, then the total
purchase price of the Stock then covered by each outstanding Option shall be
reduced by an amount that bears the same ratio to the total purchase price then
in effect as the market value of the stock distributed in respect of a share of
the Stock of the Company, immediately following the distribution, bears to the
aggregate of the market value at such time of a share of the Stock of the
Company plus the stock distributed in respect thereof. Shares issued under a
Stock Award shall be treated as issued and outstanding whether or not subject
to Forfeiture Restrictions, although any stock of the other corporation to be
distributed with respect to the shares awarded under the Stock Award shall be
subject to the Forfeiture Restrictions

 

7

 

then applicable to such
shares and may be held by the Company or otherwise subject to restrictions on
transfer until the expiration of the Forfeiture Restrictions. In the event that
the Company distributes the stock of a subsidiary to its shareholders, makes a
distribution of a major portion of its assets, or otherwise distributes a
significant portion of the value of its issued and outstanding Stock to its
shareholders, the number of shares then subject to each outstanding Option and
the Plan, or the exercise price of each outstanding Option, may be adjusted in
the reasonable discretion of the Board or a duly authorized committee. Shares
awarded under a Stock Award shall be treated as issued and outstanding, whether
or not subject to Forfeiture Restrictions, although any Stock, assets, or other
rights distributed shall be subject to the Forfeiture Restrictions governing
the shares awarded under the Stock Award and, at the discretion of the Board or
a duly authorized committee, may be held by the Company or otherwise subject to
restrictions on transfer by the Company until the expiration of such Forfeiture
Restrictions. All such adjustments shall be made by the Board or duly
authorized committee, whose determination upon the same, absent demonstrable
error, shall be final and binding on all participants under the Plan. No
fractional shares shall be issued, and any fractional shares resulting from the
computations pursuant to this section shall be eliminated from the
respective Option or Stock Award. No adjustment shall be made for cash
dividends, for the issuance of additional shares of Stock for consideration
approved by the Board, or for the issuance to stockholders of rights to
subscribe for additional Stock or other securities.

 

17.           Options or Stock Awards to Foreign
Nationals. The Board or a duly authorized committee may, in order to
fulfill the purposes of this Plan and without amending the Plan, grant Options
or Stock Awards to foreign nationals or individuals residing in foreign
countries that contain provisions, restrictions, and limitations different from
those set forth in this Plan and the Options or Stock Awards made to United
States residents in order to recognize differences among the countries in law,
tax policy, and custom. Such grants shall be made in an attempt to provide such
individuals with essentially the same benefits as contemplated by a grant to
United States residents under the terms of this Plan.

 

18.           Listing and Registration of Shares.
Unless otherwise expressly provided on the granting of an award under this
Plan, the Company shall have no obligation to register any securities issued
pursuant to this Plan or issuable on the exercise of Options granted hereunder.
Each award shall be subject to the requirement that if at any time the Board or
a duly authorized committee shall determine, in its sole discretion, that it is
necessary or desirable to list, register, or qualify the shares covered thereby
on any securities exchange or under any state or federal law, or obtain the consent
or approval of any governmental agency or regulatory body as a condition of, or
in connection with, the granting of such award or the issuance or purchase of
shares thereunder, such award may not be made or exercised in whole or in part
unless and until such listing. registration, consent, or approval shall have
been effected or obtained free of any conditions not acceptable to the Board or
a duly authorized committee.

 

19.           Expiration and Termination of the
Plan. The Plan may be abandoned or terminated at any time by the Board or a
duly authorized committee except with respect to any Options or Stock Awards
then outstanding under the Plan. The Plan shall otherwise terminate on the
earlier of the date that is: (i) ten years after the date the Plan is adopted
by the Board; or (ii) ten years after the date the Plan is approved by the
shareholders of the Company.

 

20.           Form of Awards. Awards
granted under the Plan shall be represented by a written agreement which shall
be executed by the Company and which shall contain such terms and conditions as
may be determined by the Board or a duly authorized committee and permitted
under the terms of this Plan. Option agreements evidencing Incentive Options
shall contain such terms and conditions, among others, as may be necessary in
the opinion of the Board or a duly authorized committee to qualify them as
incentive stock options under section 422 of the Code or any amendment or
successor statute of like tenor.

 

21.           No Right of Employment.
Nothing contained in this Plan or any Option or Stock Award shall be construed
as conferring on a director, officer, or employee any right to continue or
remain as a director, officer, or employee of the Company or its subsidiaries.

 

8

 

22.           Leaves of Absence. The Board
or duly authorized committee shall be entitled to make such rules, regulations,
and determinations as the Board or duly authorized committee deems appropriate
under the Plan in respect of any leave of absence taken by the recipient of any
Option or Stock Award. Without limiting the generality of the foregoing, the
Board or duly authorized committee shall be entitled to determine (a) whether
or not any such leave of absence shall constitute a termination of employment
within the meaning of the Plan, and (b) the impact, if any, of any such
leave of absence on any Option or Stock Award under the Plan theretofore made
to any recipient who takes such leave of absence.

 

23.           Amendment of the Plan. The
Board or a duly authorized committee may modify and amend the Plan in any
respect; provided, however, that to the extent such amendment or modification
would cause the Plan to no longer comply with the applicable provisions of the
Code with respect to Incentive Options, such amendment or modification shall
also be approved by the shareholders of the Company. Subject to the foregoing
and, if the Company is subject to the provisions of 16(b) of the Exchange
Act, the limitations of Rule 16b-3 promulgated under the Exchange Act or
any amendment or successor rule of like tenor, the Plan shall be deemed to
be automatically amended as is necessary (i) with respect to the issuance
of Incentive Options, to maintain the Plan in compliance with the provisions of
section 422 of the Code, and regulations promulgated thereunder from time
to time, or any amendment or successor statute thereto, and (ii) with
respect to Options or Stock Awards granted to officers and directors of the
Company, to maintain the awards made under the Plan in compliance with the provisions
of Rule 16b-3 promulgated under the Exchange Act or any amendment or
successor rule of like tenor.

 

	
  DATE: October 31,
  2005

  	
  ATTEST:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher
  Chambers

  	
   

  
	
   

  	
   

  	
  Christopher Chambers,
  Secretary

  
					

 

9

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