Document:

EXHIBIT 10.1

 

FIFTH AMENDMENT
TO

AMENDED
AND RESTATED LOAN AGREEMENT

AND
AMENDMENT TO PROMISSORY NOTES

 

	
  DATED:

  	
   

  	
  As of June 30,
  2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PARTIES:

  	
   

  	
  Lithia
  Financial Corporation

  	
   

  	
  (“LFC”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lithia
  Motors, Inc.

  	
   

  	
  (“LMI”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lithia
  Aircraft, Inc.

  	
   

  	
  (“LAI”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  U.S. Bank
  National Association

  	
   

  	
  (“Lender”)

  

 

This Agreement amends (a) the Amended and Restated Loan Agreement
between the parties and Lithia Salmir, Inc. dated as of December 28,
2001, as amended by agreements dated April 2, 2003, February 6, 2004,
and December 22, 2004, (collectively, the “Loan Agreement”); (b) the
promissory note dated December 22, 2004, executed by LFC and LAI (i) in
the principal amount of $35,000,000.00; and (ii) in the principal amount
of $15,000,000.00 (each, a “Note” and collectively, “Notes”).

 

For valuable consideration, the parties agree as follows:

 

1.                                      Amendment to Loan Agreement.

 

a.                                       Section 3.3.3 of the Loan
Agreement is deleted and replaced with the following:

 

3.3.3                        Principal Payments.  The
principal balance of the New Revolving Note shall be due and payable on May 1,
2007.

 

2.                                      Amendment to Note.  Section 6(a) of
each of the Notes is deleted and replaced with the following:

 

(a)                                  Principal.  Principal is payable on May 1, 2007 (“Maturity
Date”).

 

3.                                      Conditions Precedent.  The
effectiveness of this Agreement is subject to satisfaction of each of the
following conditions:

 

a.                                       Lender has received executed
originals of this Agreement and such other Loan Documents as Lender requires
and each Loan Party has provided such information and satisfied such
requirements as Lender reasonably requires.

 

b.                                      No Default has occurred and is
continuing.

 

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c.                                       All representations and
warranties in the Loan Agreement are true and correct as of the date of this
Agreement.

 

4.                                      Defined Terms.  Capitalized terms
not otherwise defined herein shall have the meanings given to such terms in the
Loan Agreement.

 

5.                                      Reaffirmation.  Each Loan
Party reaffirms the representations and warranties in each of the existing Loan
Documents and agrees that (a) except as amended previously or in
connection herewith, each Loan Document is and shall remain valid and
enforceable in accordance with its terms and (b) such Loan Party has no
claims, defenses, setoffs, counterclaims or claims for recoupment against
Lender or the indebtedness and obligations represented by the Notes,
Guaranties, LC Agreements, Letter of Credit, and other Loan Documents.

 

6.                                      Expenses.  Borrower
shall pay all costs, fees and expenses incurred by Lender in connection with
the preparation, negotiation, execution, and delivery of this Agreement and any
other document required to be furnished herewith, including without limitation
the charges of Lender’s legal counsel.

 

7.                                      Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of said counterparts taken together shall be
deemed to constitute but one document.

 

8.                                      Copies.  Each Loan
Party acknowledges receipt of a copy of this amendment.  The Loan Agreement and Notes, together with
all amendments thereto from time to time, are “transferable records” as defined
in applicable law relating to electronic transactions.  Therefore, Lender may, on behalf of Borrower,
create a microfilm or optical disk or other electronic image of the Loan
Agreement and Notes (and all amendments thereto) that is an authoritative copy
of the Loan Agreement and Notes as defined in such law.  Lender may store the authoritative copy in its
electronic form and then destroy the paper original as part of Lender’s normal
business practices.  Lender, on its own
behalf, may control and transfer such authoritative copy as permitted by such
law.

 

9.                                      Disclosure.  Under Oregon law,
most agreements, promises and commitments made by lenders concerning loans and
other credit extensions which are not for personal, family or household
purposes or secured solely by the borrower’s residence must be in writing,
express consideration and be signed by the lender to be enforceable.

 

	
  LITHIA
  FINANCIAL CORPORATION 

  	
  LITHIA
  MOTORS, INC. 

  
	
   

  	
   

  
	
  By:

  	
  Sidney B.
  DeBoer 

  	
   

  	
  By:

  	
  Sidney B.
  DeBoer 

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  	
  Title:

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  
	
  LITHIA
  AIRCRAFT, INC.

  	
  U.S. BANK
  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
  By:

  	
  Sidney B.
  DeBoer 

  	
   

  	
  By:

  	
  Andrew Hein 

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
																	

 

2Exhibit 10.7

 

GENERAL MARITIME CORPORATION

2001 STOCK INCENTIVE PLAN

(As amended and restated, effective May 26, 2005)

 

ARTICLE I

 

General

 

1.1          Purpose

 

The
General Maritime Corporation 2001 Stock Incentive Plan (the “Plan”) is designed
to provide certain key persons, on whose initiative and efforts the successful
conduct of the business of General Maritime Corporation, a Marshall Islands
Company (known as General Maritime Shipholdings, Ltd., prior to its initial
public offering) (the “Company”) depends, and who are responsible for the
management, growth and protection of the business of the Company, with
incentives to: (a) enter into and remain in the service of the Company, a
Company subsidiary or a Company joint venture, (b) acquire a proprietary interest
in the success of the Company, (c) maximize their performance and (d) enhance
the long-term performance of the Company (whether directly or indirectly
through enhancing the long-term performance of a Company subsidiary or a
Company joint venture).  The Plan is also
designed to provide certain “performance-based” compensation to these key
persons.

 

1.2          Administration

 

(a)           Administration by Committee; Constitution of Committee.  The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (the “Board”)
or such other committee or subcommittee as the Board may designate or as shall
be formed by the abstention or recusal of a non-Qualified Member (as defined
below) of such committee (the “Committee”). The members of the Committee shall
be appointed by, and serve at the pleasure of, the Board.  While it is intended that at all times that
the Committee acts in connection with the Plan, the Committee shall consist
solely of Qualified Members, the number of whom shall not be less than two, the
fact that the Committee is not so comprised will not invalidate any grant
hereunder that otherwise satisfies the terms of the Plan.  For purposes of the foregoing, a “Qualified
Member” is both a “non-employee director” within the meaning of Rule 16b-3 (“Rule
16b-3”) promulgated under the Securities Exchange Act of 1934 (the “1934 Act”)
and an “outside director” within the meaning of section 162(m) of the Internal
Revenue Code of 1986 (the “Code”).  If
the Committee does not exist, or for any other reason determined by the Board,
the Board may take any action under the Plan that would otherwise be the
responsibility of the Committee.

 

(b)           Committee’s Authority.  The Committee shall have the authority (i) to
exercise all of the powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan and any Grant Certificates executed pursuant
to Section 2.1, (iii) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules governing its own operations,
(iv) to make all determinations necessary or advisable in administering the
Plan, (v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan, and (vi) to amend the Plan to reflect changes in
applicable law.

 

(c)           Committee Action. 
Actions of the Committee shall be taken by the vote of a majority of its
members.  Any action may be taken by a
written instrument signed by a majority of the Committee members, and action so
taken shall be fully as effective as if it had been taken by a vote at a
meeting.  Except to the extent prohibited
by applicable law or the applicable rules of a stock exchange, the Committee
may allocate all or any portion of its responsibilities and powers to any one
or more of its members and may delegate all or any part of its responsibilities
to any person or persons selected by it, and may revoke any such allocation or
delegation at any time.

 

(d)           Determinations Final.  The determination of the Committee on all
matters relating to the Plan or any Grant Certificate shall be final, binding
and conclusive.

 

 

(e)           Limit on Committee Members’ Liability.  No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any award thereunder.

 

1.3          Persons Eligible for Awards

 

The persons eligible to receive awards under the Plan
are those officers, directors, and executive, managerial, professional or
administrative employees of, and consultants to, the Company, its subsidiaries
and its joint ventures (collectively, “key persons”) as the Committee in its
sole discretion shall select.  The
Committee may from time to time in its sole discretion determine that any key
person shall be ineligible to receive awards under the Plan.

 

1.4          Types of Awards Under Plan

 

Awards may be made under the Plan in the form of (a)
incentive stock options, (b) non-qualified stock options, (c) stock
appreciation rights, (d) dividend equivalent rights, (e) restricted stock, (f)
unrestricted stock, and (g) performance shares, all as more fully set forth in
Article II.  The term “award” means any
of the foregoing.  No incentive stock
option may be granted to a person who is not an employee of the Company on the
date of grant.

 

1.5          Shares Available for Awards

 

(a)           Aggregate Number Available; Certificate Legends.  The total number of shares of common stock of
the Company (“Common Stock”) with respect to which awards may be granted
pursuant to the Plan shall not exceed 4.4 million shares.  Shares issued pursuant to the Plan may be
authorized but unissued Common Stock, authorized and issued Common Stock held
in the Company’s treasury or Common Stock acquired by the Company for the
purposes of the Plan.  The Committee may
direct that any stock certificate evidencing shares issued pursuant to the Plan
shall bear a legend setting forth such restrictions on transferability as may
apply to such shares.

 

(b)           Adjustment Upon Changes in Common Stock.  Upon certain changes in Common Stock, the
number of shares of Common Stock available for issuance with respect to awards
that may be granted under the Plan pursuant to Section 1.5(a), shall be
adjusted pursuant to Section 3.7(a).

 

(c)           Certain Shares to Become Available Again.  The following shares of Common Stock shall
again become available for awards under the Plan: any shares that are subject
to an award under the Plan and that remain unissued upon the cancellation or
termination of such award for any reason whatsoever; any shares of restricted
stock forfeited pursuant to Section 2.7(e), provided that any dividends paid on
such shares are also forfeited pursuant to such Section 2.7(e); and any shares
in respect of which a stock appreciation right or performance share award is
settled for cash.

 

(d)           Individual
Limit. Except for the limits set forth in this Section 1.5(d) and in
Section 2.2(h), no provision of this Plan shall be deemed to limit the number
or value of shares with respect to which the Committee may make awards to any
eligible person.  Subject to adjustment
as provided in Section 3.7(a), the total number of shares of Common Stock with
respect to which awards may be granted to any one employee of the Company or a
subsidiary during any one calendar year shall not exceed 750,000 shares.  Stock options and stock appreciation rights
granted and subsequently canceled or deemed to be canceled in the same calendar
year count against the limit for that year even after their cancellation.

 

1.6          Definitions of Certain Terms

 

(a)           The “Fair Market Value” of a share of Common Stock on any
day shall be the closing price on the New York Stock Exchange as reported for
such day in The Wall Street Journal or, if no such
price is reported for such day, the average of the high bid and low asked price
of Common Stock as reported for such day. 
If no quotation is made for the applicable day, the Fair Market Value of
a share of Common Stock on such day shall be determined in the manner set forth
in the preceding sentence using quotations for the next preceding day for which
there were quotations, provided that such quotations shall have been made
within the ten (10) business days preceding the applicable day.  Notwithstanding the foregoing, if deemed
necessary or appropriate by the Committee,

 

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the Fair Market Value of a share of Common Stock on
any day shall be determined by the Committee. 
In no event shall the Fair Market Value of any share of Common Stock be
less than its par value.

 

(b)           The
term “incentive stock option” means an option that is intended to qualify for
special federal income tax treatment pursuant to sections 421 and 422 of the
Code as now constituted or subsequently amended, or pursuant to a successor
provision of the Code, and which is so designated in the applicable Grant
Certificate.  Any option that is not
specifically designated as an incentive stock option shall under no
circumstances be considered an incentive stock option.  Any option that is not an incentive stock
option is referred to herein as a “non-qualified stock option.”

 

(c)           Except
for purposes of Section 2.5(f), a grantee shall be deemed to have a “termination
of employment” upon (i) the date the grantee ceases to be employed by, or to
provide consulting services for, the Company, any Company subsidiary or Company
joint venture, or any corporation (or any of its subsidiaries) which assumes
the grantee’s award in a transaction to which section 424(a) of the Code
applies; (ii) the date the grantee ceases to be a Board member; or (iii) in the
case of a grantee who is, at the time of reference, both an employee or
consultant and a Board member, the later of the dates determined pursuant to
subparagraphs (i) and (ii) above.  For
purposes of clause (i) above, a grantee who continues his employment or consulting
relationship with: (A) a Company subsidiary subsequent to its sale by the
Company, or (B) a Company joint venture subsequent to the Company’s sale of its
interests in such joint venture, shall have a termination of employment upon
the date of such sale.  The Committee may
in its discretion determine whether any leave of absence constitutes a
termination of employment for purposes of the Plan and the impact, if any, of
any such leave of absence on awards theretofore made under the Plan.  Such determinations of the Committee shall be
final, binding and conclusive.  A person
whose status changes from consultant, employee, or member of the Board to any
other of such positions without interruption shall not be considered to have
had a termination of employment by reason of such change.  For purposes of Section 2.5(f) a grantee
shall have a “termination of employment” when the grantee ceases to be a common
law employee of the Company or a parent or subsidiary of the Company.

 

(d)           The terms “parent corporation” and “subsidiary corporation”
shall have the meanings given them in section 424(e) and (f) of the Code,
respectively.

 

(e)           The
term “employment” shall be deemed to mean an employee’s employment with, or a
consultant’s provision of services to, the Company, any Company subsidiary or
any Company joint venture and each Board member’s service as a Board member.

 

(f)            The
term “cause” in connection with a termination of employment by reason of a
dismissal for cause shall mean:

 

(i)  to the
extent that there is an employment, severance or other agreement governing the
relationship between the grantee and the Company, a Company subsidiary or a
Company joint venture, which agreement contains a definition of “cause,” cause
shall consist of those acts or omissions that would constitute “cause” under
such agreement; and otherwise,

 

(ii)  the
grantee’s termination of employment by the Company or an affiliate on account
of any one or more of the following:

 

(A)  any failure
by the grantee substantially to perform the grantee’s employment duties;

 

(B)  any excessive
unauthorized absenteeism by the grantee;

 

(C)  any refusal
by the grantee to obey the lawful orders of the Board or any other person or
committee to whom the grantee reports;

 

(D)  any act or
omission by the grantee that is or may be injurious to the Company, monetarily
or otherwise;

 

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(E)  any act by
the grantee that is inconsistent with the best interests of the Company;

 

(F)  the grantee’s
material violation of any of the Company’s policies, including, without
limitation, those policies relating to discrimination or sexual harassment;

 

(G)  the grantee’s
unauthorized (a) removal from the premises of the Company or an affiliate of
any document (in any medium or form) relating to the Company or an affiliate or
the customers or clients of the Company or an affiliate or (b) disclosure to
any person or entity of any of the Company’s, or its affiliate’s, confidential
or proprietary information;

 

(H)  the grantee’s
commission of any felony, or any other crime involving moral turpitude; and

 

(I)  the grantee’s
commission of any act involving dishonesty or fraud.

 

Notwithstanding the
foregoing, in determining whether a termination of employment by reason of a
dismissal for cause has occurred pursuant to Section 1.6(f)(ii) for the
purposes of Section 3.8(b)(iii), reference shall be made solely to subsections
(C), (F), (G), (H), and (I) of Section 1.6 (f)(ii).

 

Any rights the Company may have hereunder in respect
of the events giving rise to cause shall be in addition to the rights the
Company may have under any other agreement with a grantee or at law or in
equity.  Any determination of whether a
grantee’s employment is (or is deemed to have been) terminated for cause shall
be made by the Committee in its discretion, which determination shall be final,
binding and conclusive on all parties. If, subsequent to a grantee’s voluntary
termination of employment or involuntary termination of employment without
cause, it is discovered that the grantee’s employment could have been
terminated for cause, the Committee may deem such grantee’s employment to have
been terminated for cause.  A grantee’s
termination of employment for cause shall be effective as of the date of the
occurrence of the event giving rise to cause, regardless of when the
determination of cause is made.

 

ARTICLE II

 

Awards Under The Plan

 

2.1          Agreements Evidencing Awards

 

Each award granted under the Plan (except an award of
unrestricted stock) shall be evidenced by a written certificate (“Grant
Certificate”) which shall contain such provisions as the Committee may in its
sole discretion deem necessary or desirable. 
By accepting an award pursuant to the Plan, a grantee thereby agrees
that the award shall be subject to all of the terms and provisions of the Plan
and the applicable Grant Certificate.

 

2.2          Grant of Stock Options,
Stock Appreciation Rights and Dividend Equivalent Rights

 

(a)           Stock Option Grants.  The Committee may grant incentive stock
options and non-qualified stock options (collectively, “options”) to purchase
shares of Common Stock from the Company, to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions and other terms
and conditions, as the Committee shall determine in its sole discretion,
subject to the provisions of the Plan.

 

(b)           Stock Appreciation Right Grants; Types of Stock
Appreciation Rights.  The Committee
may grant stock appreciation rights to such key persons, and in such amounts
and subject to such vesting and forfeiture provisions and other terms and
conditions, as the Committee shall determine in its sole discretion, subject to
the provisions of the Plan.  The terms of
a stock appreciation right may provide that it shall be automatically exercised
for a cash payment upon the happening of a specified event that is outside the
control of the grantee, and that it shall not be otherwise exercisable.  Stock appreciation rights may be granted in
connection with all or any part of, or independently of, any option granted
under the Plan.  A stock appreciation
right granted in connection with a non-qualified stock option may be granted at
or after the time of grant of such option. 
A stock appreciation right granted in connection with an incentive stock
option may be granted only at the time of grant of such option.

 

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(c)           Nature of Stock Appreciation Rights.  The grantee of a stock appreciation right
shall have the right, subject to the terms of the Plan and the applicable Grant
Certificate, to receive from the Company an amount equal to (i) the excess of
the Fair Market Value of a share of Common Stock on the date of exercise of the
stock appreciation right over the Fair Market Value of a share of Common Stock
on the date of grant (or over the option exercise price if the stock
appreciation right is granted in connection with an option), multiplied by (ii)
the number of shares with respect to which the stock appreciation right is
exercised.  Payment upon exercise of a
stock appreciation right shall be in cash or in shares of Common Stock (valued
at their Fair Market Value on the date of exercise of the stock appreciation
right) or both, all as the Committee shall determine in its sole
discretion.  Upon the exercise of a stock
appreciation right granted in connection with an option, the number of shares
subject to the option shall be reduced by the number of shares with respect to
which the stock appreciation right is exercised.  Upon the exercise of an option in connection
with which a stock appreciation right has been granted, the number of shares
subject to the stock appreciation right shall be reduced by the number of
shares with respect to which the option is exercised.

 

(d)           Option Exercise Price.  Each Grant Certificate with respect to an
option shall set forth the amount (the “option exercise price”) payable by the
grantee to the Company upon exercise of the option evidenced thereby.  The option exercise price per share shall be
determined by the Committee in its sole discretion; provided, however, that the
option exercise price of an incentive stock option shall be at least 100% of
the Fair Market Value of a share of Common Stock on the date the option is
granted, and provided further that in no event shall the option exercise price
be less than the par value of a share of Common Stock.

 

(e)           Exercise Period. 
Each Grant Certificate with respect to an option or stock appreciation
right shall set forth the periods during which the award evidenced thereby
shall be exercisable, whether in whole or in part.  Such periods shall be determined by the
Committee in its sole discretion; provided, however, that no incentive stock
option (or a stock appreciation right granted in connection with an incentive
stock option) shall be exercisable more than 10 years after the date of
grant.  (See the default exercise period
provided for under Sections 2.3(a) and (b).)

 

(f)            Reload Options. 
The Committee may in its sole discretion include in any Grant
Certificate with respect to an option (the “original option”) a provision that
an additional option (the “reload option”) shall be granted to any grantee who,
pursuant to Section 2.3(e)(ii), delivers shares of Common Stock in partial or
full payment of the exercise price of the original option.  The reload option shall be for a number of
shares of Common Stock equal to the number thus delivered, shall have an
exercise price equal to the Fair Market Value of a share of Common Stock on the
date of exercise of the original option, and shall have an expiration date no
later than the expiration date of the original option.  In the event that a Grant Certificate
provides for the grant of a reload option, such Agreement shall also provide
that the exercise price of the original option be no less than the Fair Market
Value of a share of Common Stock on its date of grant, and that any shares that
are delivered pursuant to Section 2.3(e)(ii) in payment of such exercise price
shall have been held for at least six months.

 

(g)           Dividend Equivalent Rights.  The Committee may in its sole discretion
include in any Grant Certificate with respect to an option, stock appreciation
right or performance shares, a dividend equivalent right entitling the grantee
to receive amounts equal to the ordinary dividends that would be paid, during
the time such award is outstanding and unexercised, on the shares of Common
Stock covered by such award if such shares were then outstanding.  In the event such a provision is included in
a Grant Certificate, the Committee shall determine whether such payments shall
be made in cash or in shares of Common Stock, whether they shall be conditioned
upon the exercise of the award to which they relate, the time or times at which
they shall be made, and such other vesting and forfeiture provisions and other
terms and conditions as the Committee shall deem appropriate.  Notwithstanding the foregoing, no dividend
equivalent rights shall be conditioned on the exercise of any option or stock
appreciation right if and to the extent that such dividend equivalent right
would cause the compensation represented by such option or stock appreciation
right not to constitute performance-based compensation under section 162(m) of
the Code and no dividend equivalent right shall be granted if and to the extent
that it would cause the grantee to be subject to tax under section 409A of the
Code.

 

(h)           Incentive Stock Option Limitation:  Exercisability.  To the extent that the aggregate Fair Market
Value (determined as of the time the option is granted) of the stock with
respect to which incentive stock options are first exercisable by any employee
during any calendar year shall exceed $100,000, or such other amount as may be

 

5

 

specified from time to time under section 422 of the
Code, such options shall be treated as non-qualified stock options.

 

(i)            Incentive Stock Option Limitation: 10% Owners.  Notwithstanding the provisions of paragraphs
(d) and (e) of this Section 2.2, an incentive stock option may not be granted
under the Plan to an individual who, at the time the option is granted, owns
stock possessing more than 10% of the total combined voting power of all
classes of stock of his employer corporation or of its parent or subsidiary
corporations (as such ownership may be determined for purposes of section
422(b) (6) of the Code) unless (i) at the time such incentive stock option is
granted the option exercise price is at least 110% of the Fair Market Value of
the shares subject thereto and (ii) the incentive stock option by its terms is
not exercisable after the expiration of 5 years from the date it is granted.

 

2.3          Exercise of Options and Stock
Appreciation Rights

 

Subject to the other provisions of this Article II,
each option or stock appreciation right granted under the Plan shall be
exercisable as follows:

 

(a)           Beginning of Exercise Period.  Unless the applicable Grant Certificate
otherwise provides, an option or stock appreciation right shall become
exercisable in four equal installments of 25% of the shares subject to such
option or stock appreciation right; one installment shall become exercisable on
each successive anniversary of the date of grant.

 

(b)           End of Exercise Period.  Unless the applicable Grant Certificate
otherwise provides, once an installment becomes exercisable, it shall remain
exercisable until the earlier of (i) the tenth anniversary of the date of grant
of the award or (ii) the expiration, cancellation or termination of the award.

 

(c)           Timing and Extent of Exercise.  Unless the applicable Grant Certificate
otherwise provides, an option or stock appreciation right may be exercised from
time to time as to all or part of the shares as to which such award is then
exercisable.  A stock appreciation right
granted in connection with an option may be exercised at any time when, and to
the same extent that, the related option may be exercised.

 

(d)           Notice of Exercise. 
An option or stock appreciation right shall be exercised by the filing
of a written notice with the Company or the Company’s designated exchange agent
(the “exchange agent”), on such form and in such manner as the Committee shall
in its sole discretion prescribe.

 

(e)           Payment of Exercise Price.  Any written notice of exercise of an option
shall be accompanied by payment for the shares being purchased.  Such payment shall be made: (i) by certified
or official bank check (or the equivalent thereof acceptable to the Company or
its exchange agent) for the full option exercise price; or (ii) with the
consent of the Committee, by delivery of shares of Common Stock having a Fair Market
Value (determined as of the exercise date) equal to all or part of the option
exercise price and a certified or official bank check (or the equivalent
thereof acceptable to the Company or its exchange agent) for any remaining
portion of the full option exercise price; or (iii) at the discretion of the
Committee and to the extent permitted by law, by such other provision,
consistent with the terms of the Plan, as the Committee may from time to time
prescribe (whether directly or indirectly through the exchange agent).

 

(f)            Delivery of Certificates Upon Exercise.  Promptly after receiving payment of the full
option exercise price, or after receiving notice of the exercise of a stock
appreciation right for which payment will be made partly or entirely in shares,
the Company or its exchange agent shall, subject to the provisions of Section
3.2, deliver to the grantee or to such other person as may then have the right
to exercise the award, a certificate or certificates for the shares of Common
Stock for which the award has been exercised. 
If the method of payment employed upon option exercise so requires, and
if applicable law permits, an optionee may direct the Company, or its exchange
agent as the case may be, to deliver the stock certificate(s) to the optionee’s
stockbroker.

 

(g)           No Stockholder Rights.  No grantee of an option or stock appreciation
right (or other person having the right to exercise such award) shall have any
of the rights of a stockholder of the Company with respect to shares subject to
such award until the issuance of a stock certificate to such person for such
shares.  Except as

 

6

 

otherwise provided in Section 1.5(b), no adjustment
shall be made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which the
record date is prior to the date such stock certificate is issued.

 

2.4          Compensation in Lieu of Exercise of an
Option

 

Upon written application of the grantee of an option,
the Committee may in its sole discretion determine to substitute, for the
exercise of such option, compensation to the grantee not in excess of the
difference between the option exercise price and the Fair Market Value of the
shares covered by such written application on the date of such
application.  Such compensation may be in
cash, in shares of Common Stock, or both, and the payment thereof may be
subject to conditions, all as the Committee shall determine in its sole
discretion.  In the event compensation is
substituted pursuant to this Section 2.4 for the exercise, in whole or in part,
of an option, the number of shares subject to the option shall be reduced by
the number of shares for which such compensation is substituted.

 

2.5          Termination of Employment; Death
Subsequent to a Termination of Employment

 

(a)           General Rule. 
Except to the extent otherwise provided in paragraphs (b), (c), (d) or
(e) of this Section 2.5 or Section 3.8(b)(iii), a grantee who incurs a
termination of employment may exercise any outstanding option or stock
appreciation right on the following terms and conditions: (i) exercise may be
made only to the extent that the grantee was entitled to exercise the award on
the termination of employment date; and (ii) exercise must occur within three
months after termination of employment but in no event after the original
expiration date of the award.

 

(b)           Dismissal for Cause; Resignation.  If a grantee incurs a termination of
employment as the result of a dismissal for cause or resignation without the
Company’s prior consent, all options and stock appreciation rights not
theretofore exercised shall terminate upon the grantee’s termination of
employment.

 

(c)           Retirement. 
If a grantee incurs a termination of employment as the result of his
retirement, then any outstanding option or stock appreciation right shall be
exercisable on the following terms and conditions: (i) exercise may be made
only to the extent that the grantee was entitled to exercise the award on the
termination of employment date; and (ii) exercise must occur by the earlier of
(A) the third anniversary of such termination of employment, or (B) the
original expiration date of the award. 
For this purpose “retirement” shall mean a grantee’s termination of employment,
under circumstances other than those described in paragraph (b) above, on or
after: (x) his 65th birthday, (y) the date on which he has attained age 60 and
completed at least five years of service with the Company (using any method of
calculation the Committee deems appropriate) or (z) if approved by the
Committee, on or after he has completed at least 20 years of service.

 

(d)           Disability.
If a grantee incurs a termination of employment by reason of a disability (as
defined below), then any outstanding option or stock appreciation right shall
be exercisable on the following terms and conditions: (i) exercise may be made
only to the extent that the grantee was entitled to exercise the award on such
termination of employment; and (ii) exercise must occur by the earlier of (A)
the first anniversary of the grantee’s termination of employment, or (B) the
original expiration date of the award. For this purpose “disability” shall
mean:  (x) except in connection with an
incentive stock option, any physical or mental condition that would qualify a
grantee for a disability benefit under the long-term disability plan maintained
by the Company or, if there is no such plan, a physical or mental condition
that prevents the grantee from performing the essential functions of the
grantee’s position (with or without reasonable accommodation) for a period of
six consecutive months and (y) in connection with an incentive stock option, a
disability described in section 422(c)(6) of the Code.  The existence of a disability shall be
determined by the Committee in its absolute discretion.

 

(e)           Death.

 

(i)            Termination
of Employment as a Result of Grantee’s Death.  If a grantee incurs a termination of
employment as the result of his death, then any outstanding option or stock appreciation
right shall be exercisable on the following terms and conditions: (A) exercise
may be made only to the extent that the grantee was entitled to exercise the
award on such termination of employment; and (B)

 

7

 

exercise must occur by the earlier of (1) the first
anniversary of the grantee’s termination of employment, or (2) the original
expiration date of the award.

 

(ii)           Death
Subsequent to a Termination of Employment. 
If a grantee dies subsequent to incurring a termination of employment
but prior to the expiration of the exercise period with respect to a stock
option or a stock appreciation right (as provided by paragraphs (a), (c), or
(d) above), then the award shall remain exercisable until the earlier to occur
of (A) the first anniversary of the grantee’s date of death or (B) the original
expiration date of the award.

 

(iii)          Restrictions
on Exercise Following Death.  Any
such exercise of an award following a grantee’s death shall be made only by the
grantee’s executor or administrator or other duly appointed representative
reasonably acceptable to the Committee, unless the grantee’s will specifically
disposes of such award, in which case such exercise shall be made only by the
recipient of such specific disposition. 
If a grantee’s personal representative or the recipient of a specific
disposition under the grantee’s will shall be entitled to exercise any award
pursuant to the preceding sentence, such representative or recipient shall be
bound by all the terms and conditions of the Plan and the applicable Grant
Certificate which would have applied to the grantee including, without
limitation, the provisions of Sections 3.2 and 3.8 hereof.

 

(f)            Special
Rules for Incentive Stock Options. 
No option that remains exercisable for more than three months following
a grantee’s termination of employment for any reason other than death or
disability (unless death occurs within the three months or within the one year
following termination of employment for disability), or for more than one year
following a grantee’s termination of employment as the result of his becoming
disabled, may be treated as an incentive stock option. 

 

(g)           Committee Discretion.  The Committee, in the applicable Grant
Certificate, may waive or modify the application of the foregoing provisions of
this Section 2.5.

 

2.6          Transferability of Options and Stock Appreciation Rights

 

Except
as otherwise provided in an applicable Grant Certificate evidencing an option
or stock appreciation right, during the lifetime of a grantee, each option or
stock appreciation right granted to a grantee shall be exercisable only by the
grantee and no option or stock appreciation right shall be assignable or
transferable otherwise than by will or by the laws of descent and
distribution.  The Committee may, in any
applicable Grant Certificate evidencing an option (other than an incentive
stock option to the extent inconsistent with the requirements of section 422 of
the Code applicable to incentive stock options), permit a grantee to transfer
all or some of the options to (A) the grantee’s spouse, children or
grandchildren (“Immediate Family Members”), (B) a trust or trusts for the
exclusive benefit of such Immediate Family Members, or (C) other parties
approved by the Committee in its absolute discretion.  Following any such transfer, any transferred
options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to the transfer.

 

2.7          Grant of Restricted Stock

 

(a)           Restricted Stock Grants.  The Committee may grant restricted shares of
Common Stock to such key persons, in such amounts, and subject to such vesting
and forfeiture provisions and other terms and conditions as the Committee shall
determine in its sole discretion, subject to the provisions of the Plan.  Restricted stock awards may be made
independently of or in connection with any other award under the Plan.  A grantee of a restricted stock award shall
have no rights with respect to such award unless such grantee accepts the award
within such period as the Committee shall specify by accepting delivery of a
restricted stock agreement in such form as the Committee shall determine and,
in the event the restricted shares are newly issued by the Company, makes
payment to the Company or its exchange agent as required by the Committee and
in accordance with the Marshall Islands Business Corporations Act.

 

(b)           Issuance of Stock Certificate(s).  Promptly after a grantee accepts a restricted
stock award, the Company or its exchange agent shall issue to the grantee a
stock certificate or stock certificates for the shares of Common Stock covered
by the award or shall establish an account evidencing ownership of the stock in

 

8

 

uncertificated form. 
Upon the issuance of such stock certificate(s), or establishment of such
account, the grantee shall have the rights of a stockholder with respect to the
restricted stock, subject to: (i) the nontransferability restrictions and
forfeiture provision described in paragraphs (d) and (e) of this Section 2.7;
(ii) in the Committee’s discretion, to a requirement that any dividends paid on
such shares shall be held in escrow until all restrictions on such shares have
lapsed; and (iii) any other restrictions and conditions contained in the
applicable restricted stock agreement.

 

(c)           Custody of Stock Certificate(s).  Unless the Committee shall otherwise
determine, any stock certificates issued evidencing shares of restricted stock
shall remain in the possession of the Company or another custodian designated
by the Company until such shares are free of any restrictions specified in the
applicable restricted stock agreement. 
The Committee may direct that such stock certificate(s) bear a legend
setting forth the applicable restrictions on transferability.

 

(d)           Nontransferability. 
Shares of restricted stock may not be sold, assigned, transferred,
pledged or otherwise encumbered or disposed of except as otherwise specifically
provided in this Plan or the applicable restricted stock agreement.  The Committee at the time of grant shall
specify the date or dates (which may depend upon or be related to the
attainment of performance goals and other conditions) on which the nontransferability
of the restricted stock shall lapse.

 

(e)           Consequence of Termination of Employment.  A grantee’s termination of employment for any
reason (including death) shall cause the immediate forfeiture of all shares of
restricted stock that have not yet vested prior to, and do not vest on account
of, such termination of employment. All dividends paid on such shares also
shall be forfeited, whether by termination of any escrow arrangement under
which such dividends are held, by the grantee’s repayment of dividends he
received directly, or otherwise.

 

2.8          Grant of Unrestricted Stock

 

The Committee may grant (or sell at a purchase price
at least equal to par value) shares of Common Stock free of restrictions under
the Plan, to such key persons and in such amounts and subject to such forfeiture
provisions as the Committee shall determine in its sole discretion.  Shares may be thus granted or sold in respect
of past services or other valid consideration.

 

2.9          Grant of Performance Shares

 

(a)           Performance Share Grants.  The Committee may grant performance share
awards to such key persons, and in such amounts and subject to such vesting and
forfeiture provisions and other terms and conditions, as the Committee shall in
its sole discretion determine, subject to the provisions of the Plan.  Such an award shall entitle the grantee to
acquire shares of Common Stock, or to be paid the value thereof in cash, as the
Committee shall determine, if specified performance goals are met.  Performance shares may be awarded independently
of, or in connection with, any other award under the Plan.  A grantee shall have no rights with respect
to a performance share award unless such grantee accepts the award by accepting
delivery of a Grant Certificate at such time and in such form as the Committee
shall determine.

 

(b)           Stockholder Rights. 
The grantee of a performance share award will have the rights of a
stockholder only as to shares for which a stock certificate has been issued
pursuant to the award and not with respect to any other shares subject to the
award.

 

(c)           Consequence of Termination of Employment.  Except as may otherwise be provided by the
Committee at any time prior to a grantee’s termination of employment, the
rights of a grantee of a performance share award shall automatically terminate
upon the grantee’s termination of employment by the Company and its
subsidiaries for any reason (including death).

 

(d)           Exercise Procedures; Automatic Exercise.  At the discretion of the Committee, the
applicable Grant Certificate may set out the procedures to be followed in
exercising a performance share award or it may provide that such exercise shall
be made automatically after satisfaction of the applicable performance goals.

 

9

 

(e)           Tandem Grants; Effect on Exercise.  Except as otherwise specified by the
Committee, (i) a performance share award granted in tandem with an option may
be exercised only while the option is exercisable, (ii) the exercise of a
performance share award granted in tandem with any other award shall reduce the
number of shares subject to such other award in the manner specified in the
applicable Grant Certificate, and (iii) the exercise of any award granted in
tandem with a performance share award shall reduce the number of shares subject
to the latter in the manner specified in the applicable Grant Certificate.

 

(f)            Nontransferability.
Performance shares may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as otherwise specifically provided in this
Plan or the applicable Grant Certificate. 
The Committee at the time of grant shall specify the date or dates
(which may depend upon or be related to the attainment of performance goals and
other conditions) on which the nontransferability of the performance shares shall
lapse.

 

ARTICLE III

 

Miscellaneous

 

3.1          Amendment of the Plan; Modification of
Awards

 

(a)           Amendment of the Plan.  The Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever, except that no
such amendment shall materially impair any rights or materially increase any
obligations under any award theretofore made under the Plan without the consent
of the grantee (or, upon the grantee’s death, the person having the right to
exercise the award).  For purposes of this
Section 3.1, any action of the Board or the Committee that in any way alters or
affects the tax treatment of any award or that in the sole discretion of the
Board is necessary to prevent the grantee from being subject to tax with
respect to an award under section 409A of the Code shall not be considered to
materially impair any rights of any grantee.

 

(b)           Stockholder Approval Requirement.  Stockholder approval shall be required with
respect to any amendment to the Plan (i) that increases the aggregate number of
shares which may be issued pursuant to incentive stock options or changes the
class of employees eligible to receive such options; (ii) that materially
increases the benefits under the Plan to persons whose transactions in Common
Stock are subject to section 16(b) of the 1934 Act or increases the benefits
under the Plan to someone who is, or who is anticipated to be a “162(m) covered
employee” (as defined in Section 3.9(a)(i)), materially increases the number of
shares which may be issued to such persons, or materially modifies the
eligibility requirements affecting such persons; or (iii) to the extent
required by law or stock exchange rules.

 

(c)           Modification of Awards.  The Committee may cancel any award under the
Plan. The Committee also may amend any outstanding Grant Certificate,
including, without limitation, by amendment which would: (i) accelerate the
time or times at which the award becomes unrestricted or may be exercised; (ii)
waive or amend any goals, restrictions or conditions set forth in the
Agreement; or (iii) waive or amend the operation of Section 2.5 with respect to
the termination of the award upon termination of employment.  However, any such cancellation or amendment
(other than an amendment pursuant to Sections 3.7 or 3.8(b)) that materially
impairs the rights or materially increases the obligations of a grantee under
an outstanding award shall be made only with the consent of the grantee (or,
upon the grantee’s death, the person having the right to exercise the
award).  Under no circumstances may the
Committee modify an award in a manner that would cause the grantee to be
subject to tax under section 409A of the Code.

 

3.2          Consent Requirement

 

(a)           No Plan Action without Required Consent.  If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the Plan,
the issuance or purchase of shares or other rights thereunder, or the taking of
any other action thereunder (each such action being hereinafter referred to as
a “Plan Action”), then such Plan Action shall not be taken, in whole or in
part, unless and until such Consent shall have been effected or obtained to the
full satisfaction of the Committee.

 

10

 

(b)           Consent Defined. 
The term “Consent” as used herein with respect to any Plan Action means
(i) any and all listings, registrations or qualifications in respect thereof
upon any securities exchange or under any federal, state or local law, rule or
regulation, (ii) any and all written agreements and representations by the
grantee with respect to the disposition of shares, or with respect to any other
matter, which the Committee shall deem necessary or desirable to comply with
the terms of any such listing, registration or qualification or to obtain an
exemption from the requirement that any such listing, qualification or
registration be made and (iii) any and all consents, clearances and approvals
in respect of a Plan Action by any governmental or other regulatory bodies.

 

3.3          Nonassignability

 

Except as provided in Sections 2.5(e), 2.6, 2.7(d) and
2.9(f): (a) no award or right granted to any person under the Plan or under any
Grant Certificate shall be assignable or transferable other than by will or by
the laws of descent and distribution; and (b) all rights granted under the Plan
or any Grant Certificate shall be exercisable during the life of the grantee
only by the grantee or the grantee’s legal representative.

 

3.4          Requirement of
Notification of Election Under Section 83(b) of the Code

 

If any grantee shall, in connection with the
acquisition of shares of Common Stock under the Plan, make the election
permitted under section 83(b) of the Code (i.e., an election to include in
gross income in the year of transfer the amounts specified in section 83(b) ),
such grantee shall notify the Company of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition to any filing
and notification required pursuant to regulations issued under the authority of
Code section 83(b).

 

3.5          Requirement of
Notification Upon Disqualifying Disposition Under Section 421(b) of the Code

 

The grantee of an incentive stock option shall notify
the Company of any disposition of shares of Common Stock issued pursuant to the
exercise of such option under the circumstances described in section 421(b) of
the Code (relating to certain disqualifying dispositions), within 10 days of
such disposition.

 

3.6          Withholding Taxes

 

(a)           With Respect to Cash Payments.  Whenever cash is to be paid pursuant to an
award under the Plan, the Company shall be entitled to deduct therefrom an
amount sufficient in its opinion to satisfy all federal, state and other governmental
tax withholding requirements related to such payment.

 

(b)           With
Respect to Delivery of Common Stock. 
Whenever shares of Common Stock are to be delivered pursuant to an award
under the Plan, the Company shall be entitled to require as a condition of
delivery that the grantee remit to the Company an amount sufficient in the
opinion of the Company to satisfy all federal, state and other governmental tax
withholding requirements related thereto. 
With the approval of the Committee, which the Committee shall have sole
discretion whether or not to give, the grantee may satisfy the foregoing
condition by electing to have the Company withhold from delivery shares having
a value equal to the amount of tax to be withheld.  Such shares shall be valued at their Fair
Market Value as of the date on which the amount of tax to be withheld is
determined.  Fractional share amounts
shall be settled in cash.  Such a
withholding election may be made with respect to all or any portion of the
shares to be delivered pursuant to an award.

 

3.7          Adjustment Upon Changes in
Common Stock

 

(a)           Shares
Available for Grants.  In the event
of any change in the number of shares of Common Stock outstanding by reason of
any stock dividend or split, reverse stock split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change,
the maximum number of shares of Common Stock with respect to which the
Committee may grant awards under Article II hereof, as described in Section
1.5(a), and the individual annual limit described in Section 1.5(d), shall be
appropriately adjusted by the Committee. 
In the event of any change in the number of shares of Common Stock
outstanding by reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of shares of Common
Stock with respect to which awards may be: 
(i) granted under Article II hereof and (ii) granted

 

11

 

to any one employee of the Company or a subsidiary
during any one calendar year, in each case as the Committee may deem
appropriate, unless such adjustment would cause any award that would otherwise
qualify as performance based compensation with respect to a “162(m) covered
employee” (as defined in Section 3.9(a)(i)), to cease to so qualify.

 

(b)           Outstanding
Restricted Stock and Performance Shares. 
Unless the Committee in its absolute discretion otherwise determines,
any securities or other property (including dividends paid in cash) received by
a grantee with respect to a share of restricted stock which has not vested as
of the date of such event, as a result of any dividend, stock split, reverse
stock split, recapitalization, merger, consolidation, combination, exchange of
shares or otherwise will not vest until such share of restricted stock vests,
and shall be promptly deposited with the Company or other custodian designated
pursuant to Section 2.7(c) hereof.

 

The Committee may, in its absolute discretion, adjust
any grant of shares of restricted stock (with respect to which such shares have
not yet been issued as of the date of the occurrence of any of the following
events) or any grant of performance shares, to reflect any dividend, stock
split, reverse stock split, recapitalization, merger, consolidation,
combination, exchange of shares or similar corporate change as the Committee
may deem appropriate to prevent the enlargement or dilution of rights of
grantees.

 

(c)           Outstanding
Options, Stock Appreciation Rights and Dividend Equivalent Rights — Increase or
Decrease in Issued Shares Without Consideration.  Subject to any required action by the
stockholders of the Company, in the event of any increase or decrease in the
number of issued shares of Common Stock resulting from a subdivision or consolidation
of shares of Common Stock or the payment of a stock dividend (but only on the
shares of Common Stock), or any other increase or decrease in the number of
such shares effected without receipt of consideration by the Company, the
Committee shall proportionally adjust the number of shares of Common Stock
subject to each outstanding option and stock appreciation right, and the
exercise price-per-share of Common Stock of each such option and stock
appreciation right and the number of any related dividend equivalent rights.

 

(d)           Outstanding
Options, Stock Appreciation Rights and Dividend Equivalent Rights — Certain
Mergers.  Subject to any required
action by the stockholders of the Company, in the event that the Company shall
be the surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Common Stock
receive securities of another corporation), each option, stock appreciation
right and dividend equivalent right outstanding on the date of such merger or
consolidation shall pertain to and apply to the securities which a holder of
the number of shares of Common Stock subject to such option, stock appreciation
right or dividend equivalent right would have received in such merger or consolidation.

 

(e)           Outstanding
Options, Stock Appreciation Rights and Dividend Equivalent Rights — Certain
Other Transactions.  In the event of
(i) a dissolution or liquidation of the Company, (ii) a sale of all or
substantially all of the Company’s assets, (iii) a merger or consolidation
involving the Company in which the Company is not the surviving corporation or
(iv) a merger or consolidation involving the Company in which the Company is
the surviving corporation but the holders of shares of Common Stock receive
securities of another corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the power to:

 

(A)  cancel,
effective immediately prior to the occurrence of such event, each option and
stock appreciation right (including each dividend equivalent right related
thereto) outstanding immediately prior to such event (whether or not then
exercisable), and, in full consideration of such cancellation, pay to the
grantee to whom such option or stock appreciation right was granted an amount
in cash, for each share of Common Stock subject to such option or stock
appreciation right, respectively, equal to the excess of (x) the value, as
determined by the Committee in its absolute discretion, of the property
(including cash) received by the holder of a share of Common Stock as a result
of such event over (y) the exercise price of such option or stock appreciation
right; or

 

(B)  provide for
the exchange of each option and stock appreciation right (including any related
dividend equivalent right) outstanding immediately prior to such event (whether
or not then exercisable) for an option on or stock appreciation right and
dividend equivalent right with respect to, as appropriate, some or all of the
property which a holder of the number of shares of

 

12

 

Common Stock subject to such option or stock
appreciation right would have received and, incident thereto, make an equitable
adjustment as determined by the Committee in its absolute discretion in the
exercise price of the option or stock appreciation right, or the number of
shares or amount of property subject to the option, stock appreciation right or
dividend equivalent right or, if appropriate, provide for a cash payment to the
grantee to whom such option or stock appreciation right was granted in partial
consideration for the exchange of the option or stock appreciation right.

 

(f)            Outstanding
Options, Stock Appreciation Rights and Dividend Equivalent Rights — Other
Changes.  In the event of any change
in the capitalization of the Company or a corporate change other than those
specifically referred to in Sections 3.7(c), (d) or (e) hereof, the Committee
may, in its absolute discretion, make such adjustments in the number and class
of shares subject to options, stock appreciation rights and dividend equivalent
rights outstanding on the date on which such change occurs and in the per-share
exercise price of each such option and stock appreciation right as the
Committee may consider appropriate to prevent dilution or enlargement of
rights.  In addition, if and to the
extent the Committee determines it is appropriate, the Committee may elect to
cancel each option and stock appreciation right (including each dividend
equivalent right related thereto) outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of such
cancellation, pay to the grantee to whom such option or stock appreciation
right was granted an amount in cash, for each share of Common Stock subject to
such option or stock appreciation right, respectively, equal to the excess of
(i) the Fair Market Value of Common Stock on the date of such cancellation over
(ii) the exercise price of such option or stock appreciation right.

 

(g)           No
Other Rights.  Except as expressly
provided in the Plan, no grantee shall have any rights by reason of any
subdivision or consolidation of shares of stock of any class, the payment of
any dividend, any increase or decrease in the number of shares of stock of any
class or any dissolution, liquidation, merger or consolidation of the Company
or any other corporation.  Except as
expressly provided in the Plan, no issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Common Stock subject to an award or the exercise
price of any option or stock appreciation right.

 

3.8          Change in Control

 

(a)           Change in Control Defined.  For purposes of this Section 3.8, “Change in
Control” shall mean the occurrence of any of the following:

 

(i)            any
“person” (as such term is used in Sections 3(a)(9) and 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) or “group” (within the
meaning of Section 13(d)(3) of the Exchange Act), other than Peter C.
Georgiopoulos or entities which he directly or indirectly controls (as defined
in Rule 12b-2 under the Exchange Act), acquiring “beneficial ownership” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of fifty
percent (50%) or more of the aggregate voting power of the capital stock
ordinarily entitled to elect directors of the Company;

 

(ii)           the
sale of all or substantially all of the Company’s assets in one or more related
transactions to a “person” (as such term is used in Sections 3(a)(9) and 13(d)
of the Exchange Act) other than such a sale (x) to a subsidiary of the Company
which does not involve a change in the equity holdings of the Company or (y) to
Peter C. Georgiopoulos or entities which he directly or indirectly controls; or

 

(iii)          any
merger, consolidation, reorganization or similar event of the Company, as a
result of which the holders of the voting stock of the Company immediately
prior to such merger, consolidation, reorganization or similar event do not
directly or indirectly hold at least fifty-one percent (51%) of the aggregate
voting power of the capital stock of the surviving entity;

 

(iv)          a
majority of the members of the Board of Directors are no longer Continuing
Directors; as used herein, a “Continuing Director” means any member of the
Board of Directors who was a member of such Board of Directors on the date
hereof; provided that any person becoming a director subsequent to

 

13

 

such
date whose election or nomination for election was supported by a majority of
the directors who then comprised the Continuing Directors shall be considered
to be a Continuing Director; or

 

(v)           the
Company adopts any plan of liquidation or dissolution providing for the
distribution of all or substantially all of its assets.

 

(b)           Effect of a Change in Control.  Unless the Committee provides otherwise in a
Grant Certificate, upon the occurrence of a Change in Control, notwithstanding
any other provision of this Plan:

 

(i)            any award then outstanding shall become fully vested and
any award in the form of an option or stock appreciation right shall be
immediately exercisable;

 

(ii)           to the extent permitted by law, the Committee may, in its
sole discretion, amend any Grant Certificate in such manner as it deems
appropriate;

 

(iii)          a
grantee who incurs a termination of employment for any reason, other than a
dismissal for cause, concurrent with or within one year following the Change in
Control may exercise any outstanding option or stock appreciation right, but
only to the extent that the grantee was entitled to exercise the award on his
termination of employment date, until the earlier of (A) the original
expiration date of the award and (B) the later of (x) the date provided for
under the terms of Section 2.5 without reference to this Section 3.8(b)(iii)
and (y) the first anniversary of the grantee’s termination of employment.

 

(c)           Miscellaneous. 
Whenever deemed appropriate by the Committee, any action referred to in
paragraph (b) (ii) of this Section 3.8 may be made conditional upon the
consummation of the applicable Change in Control transaction.

 

3.9          Limitations Imposed by Section 162(m)

 

(a)           Qualified
Performance-Based Compensation.  To
the extent the Committee determines it is desirable to grant an award to an
individual it anticipates might be a “162(m) covered employee” (as defined
below), with respect to which award the compensation realized by the grantee
will or may not otherwise be deductible by operation of section 162(m) of the
Code, the Committee may, as part of its effort to have such an award treated as
“qualified performance-based compensation” within the meaning of Code section
162(m), make the vesting of the award subject to the attainment of one or more
pre-established objective performance goals.

 

(i)  An
individual is a “162(m) covered employee” if, as of the last day of the Company’s
taxable year for which the compensation related to an award would otherwise be
deductible (without regard to section 162(m)), he or she is (A) the chief
executive officer of the Company (or is acting in such capacity) or (B) one of
the four highest compensated officers of the Company other than the chief
executive officer.  Whether an individual
is described in either clause (A) or (B) above shall be determined in
accordance with applicable regulations under section 162(m) of the Code.

 

(ii)  If the
Committee has determined to grant an award to an individual it anticipates
might be a 162(m) covered employee pursuant to this Section 3.9(a), then prior
to the earlier to occur of (A) the first day after 25% of each period of
service to which the performance goal relates has elapsed and (B) the ninety
first (91st) day of such period and, in either case, while the performance
outcome remains substantially uncertain, the Committee shall set one or more
objective performance goals for each such 162(m) covered person for such
period.  Such goals shall be expressed in
terms of (A) one or more corporate or divisional earnings-based measures (which
may be based on net income, operating income, cash flow,  residual income or any combination thereof)
and/or (B) one or more corporate or divisional sales-based measures.  Each such goal may be expressed on an
absolute and/or relative basis, may employ comparisons with past performance of
the Company (including one or more divisions) and/or the current or past
performance of other companies, and in the case of earnings-based measures, may
employ comparisons to capital, stockholders’ equity and shares
outstanding.  The terms of the award
shall state an

 

14

 

objective formula or standard for computing the amount
of compensation payable, and shall preclude discretion to increase the amount
of compensation payable, if the goal is attained.

 

(iii)  Except as
otherwise provided herein, the measures used in performance goals set under the
Plan shall be determined in accordance with generally accepted accounting
principles (“GAAP”) and in a manner consistent with the methods used in the
Company’s regular reports on Forms 10-K and 10-Q, without regard to any of the
following unless otherwise determined by the Committee consistent with the
requirements of section 162(m)(4)(C) and the regulations thereunder: (A) all
items of gain, loss or expense for the period that are related to special,
unusual or nonrecurring items, events or circumstances affecting the Company or
the financial statements of the Company; 
(B) all items of gain, loss or expense for the period that are related
to (x) the disposal of a business or discontinued operations or (y) the
operations of any business acquired by the Company during the period; and (C) all
items of gain, loss or expense for the period that are related to changes in
accounting principles or to changes in applicable law or regulations.

 

(b)           Nonqualified
Deferred Compensation. 
Notwithstanding any other provision hereunder, prior to a Change in
Control, if and to the extent that the Committee determines the Company’s
federal tax deduction in respect of an award may be limited as a result of
section 162(m) of the Code, the Committee may take the following actions:

 

(i)  With
respect to options, stock appreciation rights or dividend equivalent rights,
the Committee may delay the exercise or payment, as the case may be, in respect
of such options, stock appreciation rights or dividend equivalent rights until
a date that is within 30 days after the earlier to occur of (A) the date that
compensation paid to the grantee no longer is subject to the deduction
limitation under section 162(m) of the Code and (B) the occurrence of a Change
in Control.  In the event that a grantee
exercises an option, stock appreciation right or would receive a payment in
respect of a dividend equivalent right at a time when the grantee is a 162(m)
covered employee, and the Committee determines to delay the exercise or
payment, as the case may be, in respect of any such award, the Committee shall
credit cash or, in the case of an amount payable in Common Stock, the Fair
Market Value of the Common Stock, payable to the grantee to a book
account.  The grantee shall have no
rights in respect of such book account and the amount credited thereto shall
not be transferable by the grantee other than by will or laws of descent and
distribution.  The Committee may credit
additional amounts to such book account as it may determine in its sole discretion.  Any book account created hereunder shall
represent only an unfunded, unsecured promise by the Company to pay the amount
credited thereto to the grantee in the future.

 

(ii)  With
respect to restricted stock, unrestricted stock or performance shares, the
Committee may require the grantee to surrender to the Committee any
certificates with respect to restricted stock and unrestricted stock and
agreements with respect to performance shares, in order to cancel the awards of
such restricted stock, unrestricted stock and performance shares (and any
related dividend equivalent rights).  In
exchange for such cancellation, the Committee shall credit to a book account a
cash amount equal to the Fair Market Value of the shares of Common Stock
subject to such awards.  The amount
credited to the book account shall be paid to the grantee within 30 days after
the earlier to occur of (A) the date that compensation paid to the grantee no
longer is subject to the deduction limitation under section 162(m) of the Code
and (B) the occurrence of a Change in Control. 
The grantee shall have no rights in respect of such book account and the
amount credited thereto shall not be transferable by the grantee other than by
will or laws of descent and distribution. 
The Committee may credit additional amounts to such book account as it
may determine in its sole discretion. 
Any book account created hereunder shall represent only an unfunded,
unsecured promise by the Company to pay the amount credited thereto to the
grantee in the future.

 

3.10        Right of Discharge Reserved

 

Nothing in the Plan or in any Grant Certificate shall
confer upon any grantee the right to continue his employment or affect any
right which the Company may have to terminate such employment.

 

15

 

3.11        Nature of Payments

 

(a)           Consideration for Services Performed.  Any and all grants of awards and issuances of
shares of Common Stock under the Plan shall be in consideration of services
performed for the Company by the grantee.

 

(b)           Not Taken into Account for Benefits.  All such grants and issuances shall
constitute a special incentive payment to the grantee and shall not be taken
into account in computing the amount of salary or compensation of the grantee
for the purpose of determining any benefits under any pension, retirement,
profit-sharing, bonus, life insurance or other benefit plan of the Company or
under any agreement between the Company and the grantee, unless such plan or
agreement specifically otherwise provides.

 

3.12        Non-Uniform Determinations

 

The Committee’s determinations under the Plan need not
be uniform and may be made by it selectively among persons who receive, or who
are eligible to receive, awards under the Plan (whether or not such persons are
similarly situated).  Without limiting
the generality of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations, and to enter into
non-uniform and selective Grant Certificates, as to (a) the persons to receive
awards under the Plan, (b) the terms and provisions of awards under the Plan,
and (c) the treatment of leaves of absence pursuant to Section 1.6(c).

 

3.13        Other Payments or Awards

 

Nothing contained in the Plan shall be deemed in any
way to limit or restrict the Company from making any award or payment to any
person under any other plan, arrangement or understanding, whether now existing
or hereafter in effect.

 

3.14        Headings

 

Any section, subsection, paragraph or other
subdivision headings contained herein are for the purpose of convenience only
and are not intended to expand, limit or otherwise define the contents of such
subdivisions.

 

3.15        Effective Date and Term of Plan

 

(a)           Adoption; Stockholder Approval.  The Plan was adopted by the Board on June 10,
2001 and approved by the Company’s stockholders on June 12, 2001.  The Plan was amended and restated on December
12, 2002.  The Board increased the number
of shares available under the Plan from 2,900,000 to 4,400,000 on September 14,
2004 and approved the further amendment and restatement of the Plan on April
25, 2005, subject to approval by the Company’s stockholders.

 

(b)           Termination of Plan.  Unless sooner terminated by the Board or
pursuant to Paragraph (a) above, the provisions of the Plan respecting the
grant of incentive stock options shall terminate on June 10, 2011 with respect
to the initial 2,900,000 shares authorized under the Plan and on September 14,
2014 with respect to the additional 1,500,000 shares authorized on September
14, 2004.  No incentive stock option
awards shall be made under the Plan after such dates.  All such awards made under the Plan prior to
its termination shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the Plan and the
applicable Grant Certificates.

 

3.16        Restriction on Issuance of Stock
Pursuant to Awards

 

The Company shall not permit any shares of Common
Stock to be issued pursuant to Awards granted under the Plan unless such shares
of Common Stock are fully paid and non-assessable under applicable law.

 

3.17        Governing Law

 

Except to the extent preempted by any applicable
federal law, the Plan will be construed and administered in accordance with the
laws of the State of New York, without giving effect to principles of conflict
of laws.

 

16

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