Document:

Exhibit 10.5

 

Director Stock Option Agreement

 

This Director Stock Option
Agreement, dated as of                                    ,
between Hertz Global Holdings, Inc., a Delaware corporation, and the
Director, is being entered into pursuant to the Hertz Global Holdings, Inc.
2008 Omnibus Incentive Plan (the “Plan”).  The meaning of capitalized terms used in this
Agreement may be found in Section 6.

 

The Company and the Director hereby agree as follows:

 

Section 1.                                            Grant of Options

 

(a)                                  Confirmation of Grant.  The Company hereby evidences and confirms,
effective as of the date hereof, its grant to the Director of Options to
purchase the number of shares of Common Stock specified on the signature page hereof.  The Options are not intended to be incentive
stock options under the Code.  This
Agreement is entered into pursuant to, and the terms of the Options are subject
to, the terms of the Plan.  If there is
any inconsistency between this Agreement and the terms of the Plan, the terms
of the Plan shall govern.

 

(b)                                 Option Price.  Each share covered by an Option shall have
the Option Price specified on the signature page hereof.  The Option Price per share of Common Stock is
equal to the Fair Market Value of a share of Common Stock on the Grant Date.

 

Section 2.                                            Vesting and Exercisability

 

(a)                                  Vesting.  The Options shall be fully vested as of the
Grant Date.

 

(b)                                 Exercise.  The Options may be exercised at any time and
from time to time prior to the date the Options terminate pursuant to Section 3.  The Options may only be exercised with
respect to whole shares of Common Stock and must be exercised in accordance
with Section 4.

 

Section 3.                                            Termination of Options.  Unless earlier terminated pursuant to Section 5,
the Options shall terminate on the tenth anniversary of the Grant Date (the “Normal
Termination Date”), if not exercised prior to such date.

 

Section 4.                                            Manner of Exercise

 

(a)                                  General.  Subject to such reasonable administrative
regulations as the Committee may adopt from time to time, the Director may exercise
the Options by giving at least 10 business days prior written notice to the
Secretary of the Company specifying the proposed date on which the Director
desires to exercise a vested Option (the “ Exercise Date “), the number of
whole shares with respect to which the Options are being exercised (the “
Exercise Shares “) and the aggregate Option Price for such Exercise Shares (the
“ Exercise Price “). Unless otherwise determined by the Committee, (i) on
or before the Exercise Date the 

 

1

 

Director shall deliver to the Company
full payment for the Exercise Shares in United States dollars in cash, or cash
equivalents satisfactory to the Company, in an amount equal to the Exercise
Price plus (if applicable) any required withholding taxes or other similar
taxes, charges or fees and (ii) the Company shall register the
issuance of the Exercise Shares on its records (or direct such issuance to be
registered by the Company’s transfer agent). In lieu of delivering cash, the
Director may tender shares of Common Stock that have been owned by the Director
for any minimum period necessary to avoid any adverse accounting treatment,
having an aggregate Fair Market Value on the Exercise Date equal to the
Exercise Price or may deliver a combination of cash and such shares of Common
Stock having an aggregate Fair Market Value equal to the difference between the
Exercise Price and the amount of such cash as payment of the Exercise Price,
subject to such rules and regulations as may be adopted by the Committee
to provide for the compliance of such payment procedure with applicable law,
including Section 16(b) of the Exchange Act. If applicable, the
Director may pay the exercise price and any applicable withholdings through any
other procedures adopted by the Committee, including (if applicable)
broker-assisted cashless exercise procedures. 
The Company may require the Director to furnish or execute such other
documents as the Company shall reasonably deem necessary (i) to
evidence such exercise or (ii) to comply with or satisfy the
requirements of the Securities Act, applicable state or non-U.S. securities
laws or any other law.

 

(b)                                 Restrictions on Exercise.  Notwithstanding any other provision of this
Agreement, the Options may not be exercised in whole or in part, (i) (A) unless
all requisite approvals and consents of any governmental authority of any kind
shall have been secured, (B) unless the purchase of the Exercise
Shares shall be exempt from registration under applicable U.S. federal and
state securities laws, and applicable non-U.S. securities laws, or the Exercise
Shares shall have been registered under such laws, and (C) unless
all applicable U.S. federal, state and local and non-U.S. tax withholding
requirements shall have been satisfied or (ii) if such exercise
would result in a violation of the terms or provisions of or a default or an
event of default under, any of the financing or credit agreements of the
Company or any Subsidiary.  The Company
shall use its commercially reasonable efforts to obtain any consents or
approvals referred to in clause (i) (A) of the preceding sentence,
but shall otherwise have no obligations to take any steps to prevent or remove
any impediment to exercise described in such sentence.

 

(c)                                  Issuance of Shares.  The shares of Common Stock issued upon
exercise of the Options shall be registered in the Director’s name, or, if
applicable, in the names of the Director’s heirs or estate.  In the Company’s discretion, such shares may
be issued either in certificated form or in uncertificated, book entry
form.  The certificate or book entry
account shall bear such restrictive legends or restrictions as the Company, in
its sole discretion, shall require.  If
delivered in certificate form, the Company may deliver a share certificate to
the Director, or deliver shares electronically or in certificate form to the
Director’s designated 

 

2

 

broker on the Director’s behalf.  If the Director is deceased (or if Disabled
and if necessary) at the time that a delivery of share certificates is to be
made, the certificates will be delivered to the Director’s estate, executor,
administrator, legally authorized guardian or personal representative (as
applicable).

 

(d)                                 Other.  The Company may postpone the issuance and
delivery of any shares of Common Stock provided for under this Agreement for so
long as the Company determines to be necessary or advisable to satisfy the
following: (1) the completion or amendment of any registration of such
shares or satisfaction of any exemption from registration under any securities
law, rule, or regulation; (2) compliance with any requests for
representations; and receipt of proof satisfactory to the Company that a person
seeking such shares on the Director’s behalf upon the Director’s Disability (if
necessary), or upon the Director’s estate’s behalf after the death of the
Director, is appropriately authorized.

 

Section 5.                                            Change in Control

 

(a)                                  In General.  In the event of a Change in Control, the
Committee (as constituted immediately prior to the Change in Control) may
determine that all then-outstanding Options shall be canceled in exchange for a
payment having a value equal to the excess, if any, of (i) the
product of the Change in Control Price multiplied by the aggregate number of
shares covered by all such Options immediately prior to the Change in Control
over (ii) the aggregate Option Price for all such shares, to be
paid as soon as reasonably practicable, but in no event later than 30 days
following the Change in Control.

 

(b)                                 Cancellation.  Notwithstanding Section 5(a), the
Committee may, in its discretion, terminate any outstanding Options if (i) the
Company provides holders of such Options with reasonable advance notice to
exercise their outstanding and unexercised Options or (ii) the
Committee reasonably determines that the Change in Control Price is equal or
less than the Option Price for such Options.

 

(c)                                  Alternative Awards.  Notwithstanding Section 5(a), no
cancellation, termination, acceleration of exercisability or vesting, or
settlement or other payment shall occur with respect to the Options if the
Committee (as constituted immediately prior to the Change in Control)
reasonably determines, in good faith, prior to the Change in Control that the
Options shall be honored or assumed or new rights substituted therefor by an
Alternative Award, in accordance with the terms of Section 9.2 of the
Plan.

 

Section 6.                                            Certain Definitions.  As used in this Agreement, capitalized terms
that are not defined herein have the respective meaning given in the Plan, and
the following additional terms shall have the following meanings:

 

“Agreement” means this Director Stock Option Agreement, as amended from time to time in accordance
with the terms hereof.

 

3

 

“Company” means Hertz Global Holdings, Inc., provided that
for purposes of determining the status of Director’s position on the Board of
the “Company,” such term shall include the Company and its Subsidiaries.

 

“Director” means the grantee of the Options, whose name is set
forth on the signature page of this Agreement; provided that for purposes
of Section 4 and Section 7, following such person’s
death or following such person’s Disability, “Director” shall be deemed to
include the person’s
estate, executor, administrator, legally authorized guardian or personal
representative (as applicable).

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations
thereunder that are in effect at the time, and any reference to a particular
section thereof shall include a reference to the corresponding section, if any,
of such successor statute, and the rules and regulations.

 

“Exercise Date” has the meaning given in Section 4(a).

 

“Exercise Price” has the meaning given in Section 4(a).

 

“Exercise Shares” has the meaning given in Section 4(a).

 

“Grant Date” means the date hereof, which is the date on which
the Options are granted to the Director.

 

“Normal Termination Date” has the meaning given in Section 3.

 

“Option” means the right granted to the Director hereunder to
purchase one share of Common Stock for a purchase price equal to the Option
Price subject to the terms of this Agreement and the Plan.

 

“Option Price” means, with respect to each share of Common Stock
covered by an Option, the purchase price specified in Section 1(b) for
which the Director may purchase such share of Common Stock upon exercise of an
Option.

 

“Securities Act” means the United States Securities Act of 1933,
as amended, or any successor statute, and the rules and regulations
thereunder that are in effect at the time, and any reference to a particular
section thereof shall include a reference to the corresponding section, if any,
of such successor statute, and the rules and regulations thereunder.

 

Section 7.                                            Capital Adjustments.  Subject to the terms of the Plan, in the
event of any Adjustment Event affecting the Common Stock, the Committee shall
make an equitable and proportionate anti-dilution adjustment to offset any resultant
change in the pre-share price of the Common Stock and preserve the intrinsic
value of Options and any other Awards granted under the Plan.  Such mandatory adjustment may include a
change in any or all of (a) the number and kind of shares of Common
Stock which thereafter may be awarded or optioned and sold under the Plan
(including, but not limited to, adjusting any limits on the number and types of
Awards that may be made under the Plan), (b) the number and kind of
shares of Common Stock subject to outstanding Awards, and (c) the
grant, exercise or conversion price with respect to any Award.  

 

4

 

In addition, the Committee may make provisions
for a cash payment to the Director or a person who has an outstanding Award.  The number of shares of Common Stock subject
to any Award shall be rounded to the nearest whole number.  Any such adjustment shall be consistent with
sections 424, 409A and 162(m) of the Code to the extent the Awards subject
to adjustment are subject to such sections of the Code.

 

Section 8.                                            Miscellaneous.

 

(a)                                  Withholding.  The Company or one of its Subsidiaries may
require the Director to remit to the Company an amount in cash sufficient to
satisfy any applicable U.S. federal, state and local and non-U.S. tax
withholding or other similar charges or fees that may arise in connection with
the grant, vesting, exercise or purchase of the Options.

 

(b)                                 Authorization to Share Personal Data.  The Director
authorizes any Affiliate of the Company to which the Director serves on the
Board or that otherwise has or lawfully obtains personal data relating to the
Director to divulge or transfer such personal data to the Company or to a third
party, in each case in any jurisdiction, if and to the extent appropriate in
connection with this Agreement or the administration of the Plan.

 

(c)                                  No Rights as Stockholder; No Voting Rights.  The Director shall
have no rights as a stockholder of the Company with respect to any shares of
Common Stock covered by the Options until the exercise of the Options and
delivery of the shares.  No adjustment
shall be made for dividends or other rights for which the record date is prior
to the delivery of the shares.

 

(d)                                 No Right to Continued Services on the Board.  Nothing in this
Agreement shall be deemed to confer on the Director any right to continue
providing services as a Director of the Company or any Subsidiary, or to
interfere with or limit in any way the right of the Company
or any Subsidiary to terminate the Director’s services on the Board of the
Company or any Subsidiary at any time (regardless of whether such
termination results in (1) the failure of any Award to vest; (2) the
forfeiture of any unvested or vested portion of any Award; and/or (3) any
other adverse effect on the individual’s interests under the Plan).  Nothing in the Plan or this Agreement shall
confer on the Director the right to receive any future Awards under the Plan.

 

(e)                                  Non-Transferability of Options.  The Options may be
exercised only by the Director (or, if the Director is Disabled and if
necessary, the Director’s legally authorized guardian or personal
representative) during Director’s lifetime. 
The Options are not assignable or transferable, in whole or in part, and
they may not, directly or indirectly, be offered, transferred, sold, pledged,
assigned, alienated, hypothecated or otherwise disposed of or encumbered
(including, but not limited to, by gift, operation of law or otherwise) other
than by will or by the laws of descent and distribution to the estate of the
Director upon the Director’s 

 

5

 

death or with the Company’s consent.
The Company will not be required to recognize on its books any action taken in
contravention of these restrictions.

 

(f)                                    Notices.  All notices and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company or the Director, as
the case may be, at the following addresses or to such other address as the
Company or the Director, as the case may be, shall specify by notice to the
other:

 

(i)                                     if to the Company, to it at:

 

Hertz Global
Holdings, Inc.

c/o The Hertz
Corporation

225 Brae Boulevard

Park Ridge, New Jersey 07656

Attention:  General
Counsel

 

Fax: (201) 594-3122

 

(ii)                                  if to the Director, to the Director at his or her most
recent address as shown on the books and records of the Company.

 

All
such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof.

 

(g)                                 Binding Effect; Benefits.  This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns.  Nothing in this
Agreement, express or implied, is intended or shall be construed to give any
person other than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or in respect of
any agreement or any provision contained herein.

 

(h)                                 Waiver; Amendment.

 

(i)                                     Waiver.  Any party hereto or beneficiary hereof may by
written notice to the other parties (A) extend the time for the
performance of any of the obligations or other actions of the other parties
under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other parties contained in this Agreement and (C) waive
or modify performance of any of the obligations of the other parties under this
Agreement.  Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party or
beneficiary, shall be deemed to constitute 

 

6

 

a waiver by the party or beneficiary
taking such action of compliance with any representations, warranties,
covenants or agreements contained herein. 
The waiver by any party hereto or beneficiary hereof of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any preceding or succeeding breach and no failure by a party or beneficiary to
exercise any right or privilege hereunder shall be deemed a waiver of such
party’s or beneficiary’s rights or privileges hereunder or shall be deemed a
waiver of such party’s or beneficiary’s rights to exercise the same at any
subsequent time or times hereunder.

 

(ii)                                  Amendment.  This Agreement may be amended from time to
time by the Committee in its discretion; provided, however, that this Agreement
may not be modified in a manner that would have a materially adverse effect on
the Options as determined in the discretion of the Committee, except as
provided in the Plan, or in any other written document signed by the Director
and the Company.  This Agreement may not
be amended, modified or supplemented orally.

 

(i)                                     Assignability.  Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Director without the prior written consent of
the other party.

 

(j)                                     Interpretation.  The Committee shall have full power and
discretion to construe and interpret the Plan (and any rules and
regulations issued thereunder) and this Award. 
Any determination or interpretation by the Committee under or pursuant
to the Plan or this Award shall be final and binding and conclusive on all
persons affected hereby.

 

(k)                                  Limitation on Rights; No Right to Future Grants.  By entering into
this Agreement and accepting the Options evidenced hereby, the Director
acknowledges: (a) that the Plan is discretionary in nature and may
be suspended or terminated by the Company at any time; (b) that the
Award does not create any contractual or other right to receive future grants
of Awards; (c) that participation in the Plan is voluntary; and (d) that
the future value of the Common Stock is unknown and cannot be predicted with
certainty.

 

(l)                                     Consent to Electronic Delivery.  By entering into
this Agreement and accepting the Options evidenced hereby, the Director hereby
consents to the delivery of information (including, without limitation,
information required to be delivered to the Director pursuant to applicable
securities laws) regarding the Company and the Subsidiaries, the Plan, this
Agreement and the Options via Company web site or other electronic delivery.

 

(m)                               Compensation Recovery Policy.  Without limiting any other provision of this
Agreement, the Options granted hereunder shall be subject to the 

 

7

 

Compensation Recovery Policy under the
Company’s Standards of Business Conduct (as amended from time to time, and
including any successor or replacement policy or standard) to the extent
applicable.

 

(n)                                 Company Rights.  The existence of the Options does not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business, including that of
its Affiliates, or any merger or consolidation of the Company or any Affiliate,
or any issue of bonds, debentures, preferred or other stocks with preference
ahead of or convertible into, or otherwise affecting the Common Stock or the
rights thereof, or the dissolution or liquidation of the Company or any
Affiliate, or any sale or transfer of all or any part of the Company’s or any
Affiliate’s assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

 

(o)                                 Severability.  If a court of competent jurisdiction
determines that any portion of this Agreement is in violation of any statute or
public policy, then only the portions of this Agreement which violate such
statute or public policy shall be stricken, and all portions of this Agreement which
do not violate any statute or public policy shall continue in full force and
effect.   Further, it is the parties’
intent that any court order striking any portion of this Agreement should
modify the terms as narrowly as possible to give as much effect as possible to
the intentions of the parties’ under this Agreement.

 

(p)                                 Further Assurances.  The Director agrees to use his or her
reasonable and diligent best efforts to proceed promptly with the transactions
contemplated herein, to fulfill the conditions precedent for the Director’s
benefit or to cause the same to be fulfilled and to execute such further
documents and other papers and perform such further acts as may be reasonably
required or desirable to carry out the provisions hereof and the transactions
contemplated herein.

 

(q)                                 Applicable Law.  This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware regardless of the
application of rules of conflict of law that would apply the laws of any
other jurisdiction.

 

(r)                                    Section and Other Headings, etc.  The section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.

 

(s)                                  Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.

 

8

 

IN
WITNESS WHEREOF, the Company and the Director have executed this Agreement as
of the date first above written.

 

	
   

  	
  HERTZ GLOBAL HOLDINGS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DIRECTOR:

  
	
   

  	
   

  
	
   

  	
  «Name»

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address of the Director:

  
	
   

  	
   

  
	
   

  	
  «Address»

  
				

 

	
  Total
  Number of shares of Common

  Stock for the Purchase of Which

  Options have been Granted

  	
   

  	
  Option
  Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Shares

  	
   

  	
  $

  	
   

  

 

9Exhibit 10.6

 

HERTZ GLOBAL HOLDINGS, INC.

 

SENIOR EXECUTIVE BONUS PLAN

 

(Effective
as of January 1, 2010)

 

Section 1.               Purpose.
 The purposes of the Hertz Global
Holdings, Inc. Senior Executive Bonus Plan (the “Plan”) are (i) to
compensate certain members of senior management of the Company on an individual
basis for significant contributions to the Company and its subsidiaries and (ii) to
stimulate the efforts of such members by giving them a direct financial
interest in the performance of the Company.

 

Section 2.               Definitions.
 The following terms utilized in this
Plan shall have the following meanings:

 

“Board” shall mean the board of directors of the
Company.

 

“Cause” shall mean with respect to any Participant (as
determined by the Committee): (i) willful
and continued failure to perform substantially the Participant’s material
duties with the Company (other than any such failure resulting from the
Participant’s incapacity as a result of physical or mental illness) after a
written demand for substantial performance specifying the manner in which the
Participant has not performed such duties is delivered to the Participant by
the person or entity that supervises or manages the Participant, (ii) engaging in willful and serious misconduct that is
injurious to the Company or any of its subsidiaries, (iii) one
or more acts of fraud or personal dishonesty resulting in or intended to result
in personal enrichment at the expense of the Company or any of its
subsidiaries, (iv) substantial abusive use
of alcohol, drugs or similar substances that, in the sole judgment of the
Company, impairs the Participant’s job performance, (v) material
violation of any Company policy that results in harm to the Company or any of
its subsidiaries or (vi) indictment
for or conviction of (or plea of guilty or nolo contendere)
to a felony or of any crime (whether or not a felony) involving moral
turpitude.  A “termination for Cause”
shall include a determination by the Committee following a Participant’s
termination of employment for any other reason that, prior to such termination
of employment, circumstances constituting Cause existed with respect to such
Participant.

 

“Code” shall mean the Internal Revenue Code of 1986
and the regulations and guidance promulgated thereunder, all as amended from
time to time.

 

“Committee” shall mean the committee of the Board designed
by the Board to administer the Plan, provided that such committee shall consist
solely of two or more “outside directors” within the meaning of Code Section 162(m).

 

“Company” shall mean Hertz Global Holdings, Inc.,
a Delaware corporation, and any successor thereto.

 

“EBITDA” shall mean, for
a Performance Period, consolidated net income before net interest expense,
consolidated income taxes and consolidated depreciation and amortization;
provided, however, that EBITDA shall exclude any or all “extraordinary items”
as determined

 

 

under U.S. generally acceptable accounting principles including,
without limitation, the charges or costs associated with restructurings of the
Company, discontinued operations, other unusual or non-recurring items, and the
cumulative effects of accounting changes, and as identified in the Company’s
financial statements, notes to the Company’s financial statements or management’s
discussion and analysis of financial condition and results of operations
contained in the Company’s most recent report filed with the U.S. Securities
and Exchange Commission pursuant to the Exchange Act.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder.

 

“Executive Officer” means
each person who is an officer of the Company or any subsidiary and who is
subject to the reporting requirements under Section 16(a) of the
Exchange Act.

 

“Participant” shall mean, for a Performance Period, (i) all
Executive Officers, and (ii) officers of the Company or its subsidiaries who
are (or who, in the determination of the Committee, may reasonably be expected
to be) “covered employees” within the meaning of Code Section 162(m) for
such Performance Period and who are designated to participate in the Plan by
the Committee on or before the first March 30 of such Performance Period
(or such later date, if any, as permitted under Code Section 162(m)).

 

“Performance Period” shall mean the fiscal year of the
Company; provided, however, that the Committee may designate that the
Performance Period for an Incentive Award be more than one fiscal year (with
any such designation by the Committee to be made within the time period
permitted under Code Section 162(m)).

 

“Wrongful Conduct” shall mean any action whereby a
Participant:

 

(a) directly or indirectly, owns any interest in,
operates, joins, controls or participates as a partner, director, principal,
officer, or agent of, enters into the employment of, acts as a consultant to,
or performs any services for any entity which has operations that compete with
any business of the Company and its subsidiaries in which the Participant was
employed (in any capacity) in any jurisdiction in which such business is
engaged, or in which any of the Company and its subsidiaries have documented
plans to become engaged of which the Participant has knowledge at the time of
the Participant’s termination of employment (the “Business”), except where (x) the Participant’s interest or association with such
entity is unrelated to the Business, (y) such
entity’s gross revenue from the Business is less than 10% of such entity’s
total gross revenue, and ( z ) the
Participant’s interest is directly or indirectly less than two percent (2%) of
the Business;

 

(b) directly or indirectly, solicits for
employment, employs or otherwise interferes with the relationship of the
Company or any of its affiliates with any natural person throughout the world
who is or was employed by or otherwise engaged to perform services for the
Company or any of its affiliates at any

 

2

 

time during the Participant’s employment with the
Company or any subsidiary (in the case of any such activity during such time)
or during the twelve-month period preceding such solicitation, employment or
interference (in the case of any such activity after the termination of the
Participant’s employment); or

 

(c) directly or indirectly, discloses or misuses
any confidential information of the Company or any of its affiliates.

 

Section 3.               Term.  Subject to Section 10, the Plan shall be
applicable for the 2010 fiscal year and all future fiscal years of the Company
unless amended or terminated by the Company pursuant to Section 7.

 

Section 4.               Incentive Award.

 

4.1           For
each Performance Period of the Company, each Participant may be entitled to
receive an award payable in cash (“Incentive Award”) in an amount determined by
the Committee as provided in this Plan.  With
respect to each Performance Period, the Chief Executive Officer of the Company
shall be entitled to be paid an Incentive Award equal to 1% of the Company’s EBITDA
for such Performance Period of the Company. 
With respect to each Performance Period of the Company, each other
Participant shall be entitled to be paid an Incentive Award equal to 0.5% of EBITDA
for such Performance Period.  Except as
otherwise provided in the Plan, a Participant must be employed with the Company
on the last day of the Performance Period in order to receive an Incentive
Award with respect to such Performance Period.

 

Notwithstanding anything contained in this Plan to the
contrary, the Committee in its sole discretion may reduce any Incentive Award
to any Participant to any amount, including zero, prior to the written certification
of the Committee of the amount of such Incentive Award.

 

As a condition to the right of a Participant to
receive an Incentive Award, the Committee shall first certify in writing the
Company’s EBITDA and that the Incentive Award has been determined in accordance
with the provisions of this Plan.

 

Incentive Awards for any Performance Period shall be
determined as soon as practicable after such Performance Period and shall be
paid no later than the 15th day of the third month following such Performance
Period.

 

4.2           Unless
otherwise determined by the Committee (whether before or after the commencement
of an applicable Performance Period), if a Participant’s employment is
terminated for any reason prior to the end of a Performance Period, the
Participant shall cease being eligible for an Incentive Award in respect to
such Performance Period; provided, further, that the Committee shall have no
discretion to take such preceding action if the exercise of such action or the
ability to exercise such action would cause such Award to fail to qualify as “performance-based”
compensation under Code Section 162(m).

 

4.3           Incentive
Awards shall be payable in cash.

 

3

 

4.4           The
Company shall have the right and power to deduct from all amounts paid to a
Participant (whether under this Plan or otherwise) or to require a Participant
to remit to the Company promptly upon notification of the amount due, an amount
to satisfy the minimum federal, state or local or foreign taxes or other
obligations required by law to be withheld with respect thereto with respect to
any Incentive Award under this Plan.

 

4.5           Participation
in this Plan does not exclude Participants from participation in any other
benefit or compensation plans or arrangements of the Company, including other
bonus or incentive plans.  Nothing in the
Plan shall be construed to limit the right of the Company to establish other
plans or to pay compensation to its employees, in cash or property, in a manner
which is not expressly authorized under the Plan.

 

4.6           Unless
otherwise determined by the Committee, notwithstanding anything contained in
this Plan to the contrary, if, during the period commencing with a Participant’s
employment with the Company or any subsidiary, and continuing until the first
anniversary of the Participant’s employment termination, the Participant,
except with the prior written consent of the Committee, engages in Wrongful
Conduct, then any Incentive Award granted to the Participant hereunder, to the
extent they remain unpaid, shall automatically terminate and be canceled upon
the date on which the Participant first engaged in such Wrongful Conduct and,
in such case or in the case of the Participant’s termination for Cause, the
Participant shall pay to the Company in cash the amounts paid under any
Incentive Award hereunder within the twelve-month period ending on the date of
the Participant’s violation (or such other period as determined by the
Committee).

 

4.7           In
the event that a Participant commits misconduct, fraud or gross negligence
(whether or not such misconduct, fraud or gross negligence is deemed or could
be deemed to be an event constituting Cause) and as a result of, or in
connection with, such misconduct, fraud or gross negligence the Company
restates any of its financial statements, the Committee may require any or all
of the following: (i) any Incentive Award granted to the Participant
hereunder, to the extent they remain unpaid at the time of the restatement, be terminated
and be canceled, and (ii) the Participant pay to the Company in cash all
or a portion of the amounts paid under any Incentive Award hereunder during the
twelve-month period prior to the financial restatement (or such other period as
determined by the Committee).

 

4.8           Without
limiting the preceding, any Incentive Award hereunder shall be subject to the
Compensation Recovery Policy under the Company’s Standards of Business Conduct
(as amended from time to time, and including any successor or replacement
policy or standard).  The Participant’s
obligations under Sections 4.6 and 4.7 shall be cumulative (but not
duplicative) of any similar obligations the Participant has under this Plan,
any Company policy, standard or code (including, without limitation, the
Company’s Standards of Business Conduct), or any other agreement with the
Company or any subsidiary.

 

Section 5.               Administration and Interpretation.  The Committee shall
have authority to prescribe, amend and rescind rules and regulations
relating to the Plan, to provide for conditions deemed necessary or advisable
to protect the interests of the Company, to interpret the Plan and to make all
other determinations necessary or advisable for the administration and
interpretation of the Plan and to carry out its provisions and purposes.  Any determination, interpretation or 

 

4

 

other
action made or taken (including any failure to make any determination or
interpretation, or take any other action) by the Committee pursuant to the
provisions of the Plan, shall, to the greatest extent permitted by law, be
within its sole and absolute discretion and shall be final, binding and
conclusive for all purposes and upon all persons and shall be given deference
in any proceeding with respect thereto. 
The Committee may appoint accountants, actuaries, counsel, advisors and
other persons that it deems necessary or desirable in connection with the
administration of the Plan.  The
Committee’s determinations under the Plan need not be uniform and may be made
by the Committee selectively among persons who receive, or are eligible to
receive, Incentive Awards under the Plan, whether or not such persons are
similarly situated.  To the maximum
extent permitted by law, no member of the Committee shall be liable for any
action taken or decision made in good faith relating to the Plan or any
Incentive Award hereunder.

 

To the maximum extent provided by law and by the
Company’s Certificate of Incorporation and/or By-Laws, each person who is or
shall have been a member of the Committee or of the Board shall be indemnified
and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit or proceeding to
which he or she may be made a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan and against and
from any and all amounts paid by him or her in settlement thereof, with the
Company’s approval, or paid by him or her in satisfaction of any judgment in
any such action, suit or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to handle and defend
the same before he or she undertakes to handle and defend it on his or her own
behalf.  The foregoing right of
indemnification shall not be exclusive and shall be independent of any other
rights of indemnification to which such persons may be entitled under the
Company’s Certificate of Incorporation or By-laws, by contract, as a matter of
law, or otherwise.

 

Section 6.               Administrative Expenses.  Any expense incurred in the administration of
the Plan shall be borne by the Company out of its general funds.

 

Section 7.               Amendment or Termination.  The Committee of the Company may from time to
time amend the Plan in any respect or terminate the Plan in whole or in part,
provided that such action will not cause an Incentive Award to become subject
to the deduction limitations contained in Code Section 162(m).

 

Section 8.               No Assignment.  The rights hereunder, including without
limitation rights to receive an Incentive Award, shall not be pledged, assigned,
transferred, encumbered or hypothecated by an employee of the Company, and
during the lifetime of any Participant any payment of an Incentive Award shall
be payable only to such Participant.

 

Section 9.               The Company.  For purposes of this Plan, the “Company”
shall include the successors and assigns of the Company, and this Plan shall be
binding on any corporation or other person with which the Company is merged or
consolidated.

 

5

 

Section 10.             Stockholder Approval.  The effective date of the Plan is January 1,
2010.  The Plan shall be submitted to the
stockholders of the Company for approval at the 2010 stockholder meeting and
the effectiveness of the Plan is subject to stockholder approval.

 

Section 11.             No Right to Employment.  The designation of an officer as a Participant
or grant of an Incentive Award shall not be construed as giving a Participant
the right to be retained in the employ of the Company or any affiliate or
subsidiary.  Nothing in the Plan or any
Incentive Award Agreement shall interfere with or limit in any way the right of
the Company or any affiliate or subsidiary to terminate any Participant’s
employment at any time (regardless of whether such termination results in (1) the
failure of any Incentive Award to vest; (2) the forfeiture of any Incentive
Award; and/or (3) any other adverse effect on the individual’s interests
under the Plan).

 

Section 12.             No Impact on Benefits.  Except as may otherwise be specifically
stated under any employee benefit plan, policy or program, no amount payable in
respect of any Incentive Award shall be treated as compensation for purposes of
calculating a Participant’s right under any such plan, policy or program.  No amount payable in respect of any Incentive
Award shall be deemed part of a Participant’s regular, recurring compensation
for purposes of any termination, indemnity or severance pay laws.

 

Section 13.             Right to Offset.  Notwithstanding any provisions of the Plan to
the contrary, and to the extent permitted by applicable law (including Code Section 409A),
the Company may offset any amounts to be paid to a Participant (or, in the
event of the Participant’s death, to his beneficiary or estate) under the Plan
against any amounts that such Participant may owe to the Company or any
affiliate or subsidiary (including, without limitation, amounts owed pursuant
to Sections 4.6 and 4.7).

 

Section 14.             Furnishing Information.  A Participant will cooperate with the
Committee by furnishing any and all information requested by the Committee and
take such other actions as may be requested in order to facilitate the
administration of the Plan and the payments of benefits hereunder, including
but not limited to taking such physical examinations as the Committee may deem
necessary.

 

Section 15.             Governing Law.  The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be
determined in accordance with the laws of the State of Delaware and applicable
federal law, without reference to principles of conflict of laws which would
require application of the law of another jurisdiction.

 

Section 16.             Severability.  In the event that any one or more of the
provisions of this Plan shall be or become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby.

 

Section 17.             Headings; Gender; Number.  The headings and captions herein are provided
for reference and convenience only, shall not be considered part of this Plan,
and shall not be employed in the construction of this Plan.  Except when otherwise indicated by the
context, words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the plural shall
include the singular.

 

6

 

Section 18.             No Trust.  Neither the Plan nor any Incentive Award
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Participant.  To the extent any Participant acquires a right
to receive payments from the Company in respect to any Incentive Award, such
right shall be no greater than the right of any unsecured general creditor of
the Company.

 

Section 19.             Code Section 162(m) and Code Section 409A.  It is the intention
that Incentive Awards qualify as “performance-based” compensation under Code Section 162(m),
and all payments made under the Plan be excluded from the deduction limitations
contained in Code Section 162(m). 
The Plan shall be construed at all times in favor of its meeting the “performance-based”
compensation exception contained in Code Section 162(m).  Accordingly, the Committee shall have no
discretion under this Plan (including, without limitation, with respect to adjustments
to EBITDA) if the exercise of such discretion or the ability to exercise such
discretion would cause such Incentive Award to fail to qualify as “performance-based”
compensation under Code Section 162(m). 
Therefore, if any Plan provision is found not to be in compliance with
the “performance-based” compensation exception contained in Code Section 162(m),
that provision shall be deemed amended so that the Plan does so comply to the
extent permitted by law and deemed advisable by the Committee.

 

To the extent any provision of the Plan or action by
the Committee would subject any Participant to liability for interest or
additional taxes under Code Section 409A, it will be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.  It is intended that the Plan will be exempt
from Code Section 409A, and the Plan shall be interpreted and construed on
a basis consistent with such intent.  The
Plan may be amended in any respect deemed necessary (including retroactively)
by the Committee in order to preserve exemption from Code Section 409A.  The preceding shall not be construed as a
guarantee of any particular tax effect for Plan payments.  A Participant is solely responsible and
liable for the satisfaction of all taxes and penalties that may be imposed on
such person in connection with any distributions to such person under the Plan
(including any taxes and penalties under Code Section 409A), and the
Company (or any affiliate or subsidiary) shall have no obligation to indemnify
or otherwise hold a Participant harmless from any or all of such taxes or
penalties.

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00174-of-00352.parquet"}]]