Document:

Exhibit 10.16

			
	 	 	 
	Confidential
	 	Exhibit 10.16

	 	 	 	 	 

	 

	 	Purchase Order	 	992331
	Datron World Communications, Inc.
	 	Page	 	1
	3030 Enterprise Court
	 	Date
	 	11/30/2010
	Vista CA 92081
	 	Buyer
	 	HMontgomery

	Phone: (760) 597-1500
	 	 	 	 
	 

	 	Ship Via
	 	AMERICAN CARGO

	 

	 	FOB
	 	SHIPPING POINT

	 

	 	Terms
	 	NET 15

	 	 	 

	Vendor

	 	Ship To
	 
	 	 
	T000032

	 	Datron World Communications, Inc.
	MIKE MALONE

	 	3030 Enterprise Court
	TECHNICAL COMMUNICATIONS CORP

	 	Vista CA 92081
	100 DOMINO DRIVE

	 	Phone: (760) 597-1500
	CONCORD MA 01742-2892
	 	 
	 
	 	 
	Phone: 978-287-6219
	 	 

	 	 	 

	Fax Num: 978-287-6228

	 	Our Order Number Must Appear On Invoice,

B/L Bundles, Cases, Packing List and

Correspondence

Remit To

	 	 	 	 	 	 	 

	o

	 	Fax Sent Prior

Do Not Duplicate
	 	o
	 	Verbal Placed Prior

Do Not Duplicate

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Line	 	Qty Ordered	 	Qty Due	 	 	UOM	 	 	Item Description	 	Due Date	 	 	Unit Price	 	 	Ext. Price	 
	1
	 	 	*****	 	 	 	*****	 	 	EA	 	 	701614	 	 	 	 	******	 	 	 	******	 	 	 	******	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	AUDIO CIPHERING HANDSET, UNTESTED	 	 	 	 	 	 	 	 	 
	 
	 	 	Manufacturer	 	 	 	 	 	 	 	Mfg Part Number	 	 	 	 	 	 	 	 	 
	 
	 	 	TCC-CRYPT	 	 	 	 	 	 	 	401-25470	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	*****	 	 	 	*****	 	 	EA	 	 	701614	 	 	 	 	******	 	 	 	******	 	 	 	******	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	AUDIO CIPHERING HANDSET, UNTESTED	 	 	 	 	 	 	 	 	 
	 
	 	 	Manufacturer	 	 	 	 	 	 	 	Mfg Part Number	 	 	 	 	 	 	 	 	 
	 
	 	 	TCC-CRYPT	 	 	 	 	 	 	 	401-25470	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	FAR 52.244-6, entitled “Subcontracts for Commercial Items and Commercial Components” and the clauses
listed therein. The complete text of the Federal Acquisition Regulations (FARs) are available at
http://www.arnet.gov/far/. FAR 52.21 1-15, entitled “Defense Priority and Allocation Requirement”.
This is a DO rated order and the Supplier shall follow all the requirements of the Defense
Priorities and Allocations System regulation (15 CFR 700). The complete text of the Federal
Acquisition Regulations (FARs) are available at http://www.arnet.gov/far/. The complete text of
the Code of Federal Regulations (CFR) is available at http://ecfr.gpoaccess.gov/. This is
W15P7T-09-D-D212 DOA7 rated, corrected cost 11/30	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	SEE WWW.DTWC.COM FOR TERMS AND CONDITIONS	 	 	 
	 	 	 	AMERICAN CARGO SERVICES PHONE: 800-508-4888	 	 	 
	 	 	 	SEND ALL INVOICES TO: BILLUS@DTWC.COM	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total:	 	 	 	 	 	 	1,064,475.00	 

	 	 	 	 	 	 	 

	 	 	 
	Buyer/Purchasing Agent

	 	Date
	 	Manager
	 	Date

	 	 	 
	THE REGISTRANT HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION.

	 
	THE CONFIDENTIAL PORTIONS OF THIS EXHIBIT ARE MARKED WITH ASTERISKS (***) AND HAVE BEEN OMITTED.

	 
	THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.Exhibit 10.17

Exhibit 10.17

TECHNICAL COMMUNICATIONS CORPORATION

2010 EQUITY INCENTIVE PLAN

(as amended and restated)

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION
	 	 	1	 
	ARTICLE 2. DEFINITIONS
	 	 	1	 
	ARTICLE 3. ADMINISTRATION
	 	 	4	 
	ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS
	 	 	5	 
	ARTICLE 5. ELIGIBILITY AND PARTICIPATION
	 	 	6	 
	ARTICLE 6. STOCK OPTIONS
	 	 	6	 
	ARTICLE 7. STOCK APPRECIATION RIGHTS
	 	 	9	 
	ARTICLE 8. RESTRICTED STOCK
	 	 	11	 
	ARTICLE 9. PERFORMANCE MEASURES
	 	 	12	 
	ARTICLE 10. BENEFICIARY DESIGNATION
	 	 	13	 
	ARTICLE 11. DEFERRALS
	 	 	13	 
	ARTICLE 12. RETENTION RIGHTS; TERMINATION FOR CAUSE
	 	 	13	 
	ARTICLE 13. AMENDMENT, MODIFICATION, TERMINATION AND
ADJUSTMENTS
	 	 	14	 
	ARTICLE 14. PARACHUTE LIMITATIONS
	 	 	15	 
	ARTICLE 15. CHANGE IN CONTROL
	 	 	15	 
	ARTICLE 16. WITHHOLDING
	 	 	16	 
	ARTICLE 17. INDEMNIFICATION
	 	 	17	 
	ARTICLE 18. SUCCESSORS
	 	 	18	 
	ARTICLE 19. LEGAL CONSTRUCTION
	 	 	18	 

 

-i-

 

ARTICLE 1. ESTABLISHMENT, PURPOSE AND DURATION

1.1. Establishment of the Plan; Effective Date. Technical Communications Corporation,
a Massachusetts corporation (the “Company”), hereby establishes an incentive compensation
plan to be known as the “Technical Communications Corporation 2010 Equity Incentive Plan” (the
“Plan”), as set forth in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights, and Restricted Stock. The Plan was
originally adopted by the Board of Directors on July 29, 2010, subject to stockholder approval (the
“Effective Date”), and shall remain in effect as provided in Section 1.3 hereof.

1.2. Purpose of the Plan. The purpose of the Plan is to promote the success and
interests of the Company and its stockholders by permitting and encouraging Participants to obtain
a proprietary interest in the Company and its Subsidiaries through the grant of Awards that are
consistent with the Company’s goals and that link the personal interests of Participants to those
of the Company’s stockholders. The Plan is further intended to enable the Company to attract,
retain and motivate Participants whose services are critical to the success of the Company and
align the interests of such individuals with those of the Company.

1.3. Duration of the Plan. The Plan shall commence on the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the right of the Board of
Directors of the Company to amend or terminate the Plan at any time pursuant to Article 13 hereof,
until all Shares subject to the Plan shall have been purchased or acquired according to the Plan’s
provisions. However, in no event may an Award be granted under the Plan on or after July 29, 2020.

ARTICLE 2. DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings set forth below, and
when that meaning is intended, the initial letter of the word shall be capitalized:

2.1. “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations promulgated under the Exchange Act.

2.2. “Award” means, individually or collectively, a grant under the Plan of
Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights or Restricted Stock.

2.3. “Award Agreement” means an agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Award granted to the
Participant under this Plan.

2.4. “Beneficial Owner” or “Beneficial Ownership” shall have the meaning
ascribed to such terms in Rule 13d-3 of the General Rules and Regulations promulgated under the
Exchange Act.

2.5. “Benefit Arrangement” shall have the meaning set forth in Article 14 hereof.

 

 

 

2.6. “Board” or “Board of Directors” means the Board of Directors of the Company.

2.7. “Cause” shall have the meaning set forth in Section 12.3 hereof.

2.8. “Change in Control” shall have the meaning set forth in Section 15.1 hereof.

2.9. “Code” means the Internal Revenue Code of 1986, as amended from time to time, or
any successor thereto.

2.10. “Committee” means any committee appointed by the Board to administer the Plan in
accordance with and as specified in Article 3 hereof.

2.11. “Common Stock” means the common stock, $0.10 par value per share, of the
Company.

2.12. “Company” shall have the meaning ascribed to such term in Section 1.1 hereof,
and shall include any and all Subsidiaries and Affiliates, and any successor thereto as provided in
Article 15 hereof.

2.13. “Consultant” means any person who is engaged by the Company or any Subsidiary as
a consultant or advisor who provides bona fide services to the Company or any Subsidiary as an
independent contractor. Service as a Consultant shall be considered employment for all purposes of
the Plan, except for purposes of an ISO grant under Article 6 hereof.

2.14. “Covered Employee” means a Participant who, as of the date of vesting and/or
payout of an Award, as applicable, is one of the group of “covered employees,” as such term is
defined in the regulations promulgated under Code Section 162(m), or any successor statute.

2.15. “Director” means any individual who is a member of the Board of Directors of the
Company or any Subsidiary or Affiliate.

2.16. “Disability” shall have the meaning ascribed to such term in the Participant’s
governing long-term disability plan, or if no such plan exists, shall mean a disability described
in Section 422(c)(6) of the Code, the existence of which is determined at the discretion of the
Committee.

2.17. “Effective Date” shall have the meaning ascribed to such term in Section 1.1
hereof.

2.18. “Employee” means any full-time, active employee of the Company or its
Subsidiaries or Affiliates, including officers and Directors.

2.19. “Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, or any successor thereto.

 

2

 

2.20. “Fair Market Value” of a share of Common Stock means, as of any given date, (a)
the closing sales price of a share of Common Stock on the Composite Tape, as reported by The
Wall Street Journal, on such date on the principal national securities exchange on which the
Common Stock is then traded or, (b) if the Common Stock is not then traded on a national securities
exchange, the average of the closing bid and asked prices of the Common Stock on such date as
furnished by the Over-the-Counter Bulletin Board (“OTCBB”) or Pink Sheets, LLC (the
“Pink Sheets”); provided, however, that if there are no sales reported on
such date, fair market value shall be computed as of the last trading date preceding such date on
which a sale was reported; provided, further, that if any such exchange or
quotation system is closed on the date of determination, fair market value shall be determined as
of the first day immediately preceding such date on which such exchange or quotation system was
open for trading. If the Common Stock is not admitted to trade on a securities exchange or quoted
on the OTCBB or Pink Sheets, the fair market value shall be as determined in good faith by the
Committee, taking into account such facts and circumstances deemed to be material to the value of
the Common Stock.

2.21. “Freestanding SAR” means an SAR that is granted independently of any options, as
described in Article 7 hereof.

2.22. “Incentive Stock Option” or “ISO” means an option to purchase Shares
granted under Article 6 hereof that is designated as an Incentive Stock Option and that is intended
to meet the requirements of Code Section 422.

2.23. “Non-Employee Director” shall mean a Director who is not also an Employee.
Service as a Non-Employee Director shall be considered employment for all purposes of the Plan,
except for purposes of an ISO grant under Article 6 hereof.

2.24. “Non-Qualified Stock Option” or “NQSO” means an option to purchase
Shares granted under Article 6 hereof that is not intended to meet the requirements of Code Section
422 or otherwise qualify as an Incentive Stock Option.

2.25. “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as
described in Article 6 hereof.

2.26. “Option Price” means the price at which a Share may be purchased by a
Participant pursuant to an Option.

2.27. “OTCBB” shall have the meaning set forth in the definition of Fair Market Value
in Section 2.20 herein.

2.28. “Other Agreement” shall have the meaning set forth in Article 14 hereof.

2.29. “Parachute Payment” shall have the meaning set forth in Article 14 hereof.

2.30. “Participant” means an Employee, Non-Employee Director or Consultant who has
been selected to receive an Award or who has outstanding an Award granted under the Plan.

2.31. “Performance-Based Exception” means the performance-based exception from the tax
deductibility limitations of Code Section 162(m).

 

3

 

2.32. “Period of Restriction” means the period during which the transfer of Shares of
Restricted Stock is limited in some way (based on the passage of time, the achievement of
performance goals or upon the occurrence of other events as determined by the Committee, at its
discretion), and the Shares are subject to a substantial risk of forfeiture, as provided in Article
8 hereof.

2.33. “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d) thereof.

2.34. “Pink Sheets” shall have the meaning set forth in the definition of Fair Market
Value in Section 2.20 herein.

2.35. “Plan” shall have the meaning ascribed to such term in Section 1.1 hereof, as
the same is amended from time to time.

2.36. “Restricted Stock” means an Award granted to a Participant pursuant to Article 8
hereof.

2.37. “Securities Act” means the Securities Act of 1933, as amended from time to time,
or any successor thereto.

2.38. “Shares” means the shares of the Common Stock of the Company, as the same may be
adjusted in accordance with Section 4.3 herein.

2.39. “Stock Appreciation Right” or “SAR” means an Award designated as an SAR
pursuant to the terms of Article 7 hereof.

2.40. “Subsidiary” shall have the meaning given to the term “subsidiary corporation”
in Section 424(f) of the Code.

ARTICLE 3. ADMINISTRATION

3.1. The Committee. The Plan shall be administered by the Compensation, Nominating
and Governance Committee of the Board (or any successor thereto) consisting of not less than two
(2) members who meet the “non-employee director” requirements of Rule 16b-3 promulgated under the
Exchange Act and the “outside director” requirements of Code Section 162(m); by any other committee
appointed by the Board, provided the members of such committee meet such requirements; or
by the full Board acting as the Committee with the powers and duties set forth herein. No member
of the Committee shall be liable for any action or determination made in good faith with respect to
the Plan or any Awards granted under the Plan. A majority of the members of the Committee shall
constitute a quorum, and all determinations of the Committee under the Plan may be made at a
meeting at which a quorum is present by the vote of a majority of the members of the Committee or
by a writing in lieu of a meeting signed by all members of the Committee. Meetings may be held by
telephone conference or similar communication equipment by means of which all persons participating
can hear each other.

 

4

 

3.2. Authority of the Committee. Except as limited by law or by the Articles of
Organization or Bylaws of the Company, and subject to the provisions hereof, the Committee shall
have full power to (a) determine the Participants to whom Awards shall be granted under the Plan;
(b) determine the timing, size and type of Awards; (c) determine the terms, conditions and
restrictions applicable to Awards in a manner consistent with the Plan, including but not limited
to price, method of payment, vesting, exercisability and termination; (d) establish the Fair Market
Value of a Share in accordance with the Plan; (e) establish one or more form agreements to evidence
and memorialize the grant of an Award; (f) construe and interpret the Plan and any agreement or
instrument entered into under the Plan; (g) establish, amend or waive rules and regulations for the
Plan’s administration; and, (f) subject to the provisions of Article 13 and Section 19.6 hereof,
amend, modify or adjust the terms and conditions of any outstanding Award, including acceleration
of vesting and extension of exercise terms, to the extent such terms and conditions are within the
discretion of the Committee as provided in the Plan. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the Plan. As permitted
by law, the Committee may delegate its authority as identified herein.

3.3. Decisions Binding. All determinations, decisions and interpretations made by the
Committee pursuant to the provisions of the Plan and all related orders and resolutions of the
Board and the Committee shall be final, conclusive and binding on all persons, including the
Company, its stockholders, Employees, Participants and their estates and beneficiaries.

ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

4.1. Number of Shares Available For Grant. Subject to Sections 4.2 and 4.3 hereof,
the maximum number of Shares that may be issued in the aggregate pursuant to Awards granted to
Participants under the Plan shall be Two Hundred Thousand (200,000) Shares. Shares issued under the Plan
shall be authorized but unissued Common Stock. Unless the Committee determines that an Award to a
Covered Employee shall not be designed to comply with the Performance-Based Exception, the
following rules shall apply to all grants of such Awards under the Plan, subject to Sections 4.2
and 4.3 hereof:

(a) Stock Options and SARS: The maximum aggregate number of Shares that may be issued
pursuant to Stock Options, with or without Freestanding SARs, granted in any one fiscal year to any
one Participant shall be Forty Thousand (40,000).

(b) Restricted Stock: The maximum aggregate grant with respect to Awards of
Restricted Stock that are intended to qualify for the Performance-Based Exception, and that are
granted in any one fiscal year to any one Participant shall be Forty Thousand (40,000) Shares.

4.2. Lapsed Awards. If any Award granted under this Plan is canceled, terminates,
expires or lapses for any reason without having been exercised in full, any Shares subject to such
Award that remain unpurchased shall be available for the future grant of an Award under the Plan.
In addition, any Shares retained by the Company upon exercise of an Award in order to satisfy the
exercise price of such Award, or any withholding taxes due with respect to such exercise, shall be
treated as not issued and shall continue to be available under the Plan.
Notwithstanding any other provision of the Plan, shares issued and later repurchased by the
Company shall not become available for future grant or sale under the Plan.

 

5

 

4.3. Adjustments to Common Stock. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination of shares, exchange of shares,
liquidation, spin-off, split-up, or other similar change in capitalization or event, (a) the number
and class of securities available for Awards under the Plan and the per Participant share limit,
(b) the number and class of securities, vesting schedule and exercise price per share subject to
each outstanding Award, (iii) the repurchase price per security subject to repurchase, and (iv) the
terms of each other outstanding stock-based Award shall be adjusted (or substituted Awards may be
made) to the extent the Committee shall determine, in good faith, that such an adjustment (or
substitution) is appropriate. Notwithstanding the foregoing, such adjustments shall be made to the
extent necessary and in such a manner as to avoid any Award granted hereunder being classified as a
deferral of compensation within the meaning of Code Section 409A, and the regulations and/or
guidance issued thereunder.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

5.1. Eligibility. Persons eligible to participate in this Plan include Consultants,
Non-Employee Directors and Employees of the Company with the potential to contribute to the success
of the Company or its Subsidiaries, including Employees who are members of the Board.

5.2. Actual Participation. Subject to the provisions of the Plan, the Committee may,
from time to time, select from all eligible Participants those to whom Awards shall be granted, and
shall determine the nature and amount of each Award. The Committee shall consider such factors as
it deems relevant in selecting Participants to receive Awards and the terms, provisions and
restrictions with respect thereto. The grant of an Award in one year or at any particular time
shall not require the grant of an Award in any other year or at any other time. Notwithstanding
the foregoing, Options that the Committee intends to be ISOs shall be granted only to Employees of
the Company or any Subsidiary. Any Option or portion thereof that does not qualify as an ISO shall
be and shall be treated as a NQSO.

ARTICLE 6. STOCK OPTIONS

6.1. Grant of Options; Timing. Subject to the terms and provisions of the Plan,
Options may be granted at any time and from time to time to Participants in such number, at such
Option Price, and upon such terms and conditions as shall be determined by the Committee. The date
of grant of an Option shall, for all purposes, be the date on which the Board makes the
determination to grant such Option. Notice of the determination shall be given to the Participant
within a reasonable time after the date of grant.

6.2. Option Award Agreement. Each Option grant shall be evidenced by an Award
Agreement in such form or forms as the Committee shall approve, which shall specify the Option
Price, the duration of the option, the number of Shares to which the option pertains, and such
other provisions as the Committee shall determine, including but not limited to vesting periods,
performance targets and restrictions on transfer. The Award Agreement shall also specify whether
the option is intended to be an ISO within the meaning of Code Section 422, or an
NQSO, whose grant is intended not to fall under the provisions of Code Section 422. In the
event of a conflict between any Option Award Agreement and the Plan, the Plan shall control, and in
no event shall the Committee have the power to grant an Option or execute an Option Award Agreement
that is contrary to the provisions of the Plan.

 

6

 

6.3. Option Price. The Option Price for each grant of an Option under this Plan shall
be at least equal to one hundred percent (100%) of the Fair Market Value of a Share on the date the
Option is granted. If any Participant to whom an Incentive Stock Option is to be granted under the
Plan is, at the time of the grant of such Incentive Stock Option, the owner of stock possessing
more than ten percent (10%) of the total combined voting power of all classes of stock of the
Company (after taking into account the attribution of stock ownership rules of Section 424(d) of
the Code), then the Option Price per Share subject to such ISO shall not be less than one hundred
ten percent (110%) of the Fair Market Value of a share of Common Stock at the time of grant.

6.4. Duration of Options. Each Option granted to a Participant shall expire at such
time as the Committee shall determine at the time of grant; provided, however, that
no Option shall have a term greater than, or be exercisable after, the tenth anniversary date of
its grant and provided further that no Option shall be exercisable later than the
fifth anniversary date of its date of grant for an ISO granted to a Participant who at the time of
such grant owns stock possessing more than ten percent (10%) or more of the total combined voting
power of all classes of stock of the Company.

6.5. Exercise of Options. Options granted under this Article 6 shall be exercisable
in whole or in part at such times and be subject to such restrictions and conditions as the
Committee shall in each instance approve, subject to Section 6.10 herein, which restrictions and
conditions need not be the same for each grant or for each Participant. Options granted under this
Article 6 shall be deemed to be exercised when written notice of such exercise has been given to
the Company at its principal office (Attention: Chief Financial Officer) in accordance with the
terms of the Option Award Agreement by the person entitled to exercise the Option, setting forth
the number of Shares with respect to which the Option is to be exercised, full payment for such
Shares in accordance with Section 6.6 herein has been received by the Company, and all conditions
to exercise have been satisfied or waived.

6.6. Payment.

(a) The Option Price upon exercise of any Option shall be payable to the Company in full in a
form as determined by the Committee either: (i) in cash (or its equivalent) or bank or cashier’s
check made payable to the Company; (ii) by tendering previously acquired Shares having an aggregate
Fair Market Value at the time of exercise equal to the total Option Price (provided that,
under certain circumstances, the Shares that are tendered must have been held by the Participant
for at least six (6) months prior to their tender); (iii) by withholding Shares that otherwise
would be acquired on exercise having an aggregate Fair Market Value at the time of exercise equal
to the total Option Price; or (iv) by any combination of the foregoing methods of payment. If the
Company is then allowing the exercise of Options pursuant to a same-day sale/cashless exercise
program, the consideration received by the Company from a broker pursuant to such program
(provided that such program shall not involve the Company’s
extending or arranging for the extension of credit to a Participant) may also be acceptable
consideration hereunder. In no circumstance shall a Participant be entitled to pay the Option
Price with a promissory note.

 

7

 

(b) Subject to any governing laws, rules or regulations, as soon as practicable after receipt
of a written notification of exercise and full payment, the Company shall deliver to the
Participant, in the Participant’s name, Share certificates in an appropriate amount based upon the
number of Shares purchased under the Option(s). Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate or certificates representing such Shares, no right to vote or receive dividends
or any other right of a shareholder shall exist with respect to the Shares, notwithstanding the
exercise of the Option. No adjustment shall be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued, except as otherwise provided in
this Plan.

6.7. Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option granted under this
Article 6 as it may deem advisable, including, without limitation, restrictions under applicable
federal securities laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to
such Shares.

6.8. Termination of Employment or Consulting Arrangement. Subject to Sections 6.10
below with respect to ISOs and Section 12.3 generally, each Option Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the Option following
termination of the Participant’s employment or consulting arrangement with the Company. Such
provisions shall be determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with each Participant, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons for termination of
employment.

6.9. Non-transferability of Options.

(a) Incentive Stock Options. No ISO granted under the Plan may be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, all ISOs granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant or the Participant’s legal
representative (to the extent permitted under Code Section 422).

(b) Nonqualified Stock Options. No NQSO granted under this Article 6 may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, all NQSOs granted to a Participant under this Article 6
shall be exercisable during his or her lifetime only by such Participant or the Participant’s legal
representative. Notwithstanding the foregoing, the Committee may in its sole discretion permit a
Participant to transfer all or some of such Participant’s NQSOs to such Participant’s immediate
family members or a trust or trusts for the benefit of such immediate
family members. For purposes hereof, “immediate family members” means a Participant’s spouse,
children and grandchildren.

 

8

 

6.10. Incentive Stock Options.

(a) Limitations. For as long as the Code shall so provide, Options granted to any
Participant under the Plan which are intended to constitute Incentive Stock Options shall not
constitute Incentive Stock Options to the extent that such Options, in the aggregate, become
exercisable for the first time in any one (1) calendar year for shares of Common Stock with an
aggregate Fair Market Value (determined as of the respective date or dates of grant) of more than
$100,000 (or such other maximum limit imposed from time to time under Code Section 422), but rather
Options in excess of such limit shall be treated as NQSOs. In such an event, the determination of
which Options shall remain ISOs and which shall be treated as NQSOs shall be based on the order in
which such Options were granted. All other terms and conditions of such Options that are deemed to
be NQSOs shall remain unchanged.

(b) Employment Rules. No Incentive Stock Option may be exercised unless, at the time
of such exercise, the Participant is, and has been continuously since the date of grant of his or
her Option, an Employee of the Company, except that:

(i) an Incentive Stock Option may be exercised within the period of three (3) months after the
date the Participant ceases to be an Employee of the Company (or within such lesser period as may
be specified in the applicable Award Agreement) if and only to the extent that the Incentive Stock
Option was exercisable at the date of employment termination, provided that the Option
Award Agreement with respect to such Option may designate a longer exercise period, and any
exercise after such three-month period shall be treated as the exercise of a NQSO under the Plan;

(ii) if the Participant dies while an Employee of the Company, or within three (3) months
after the Participant ceases to be an Employee, the Incentive Stock Option may be exercised by the
person to whom it is transferred by will or the laws of descent and distribution within the period
of one year after the date of death (or within such lesser period as may be specified in the
applicable Option Award Agreement) if and only to the extent that the ISO was exercisable at the
date of death; and

(iii) if the Participant becomes disabled (within the meaning of Section 22(e)(3) or any
successor section of the Code) while an Employee of the Company, the Incentive Stock Option may be
exercised within the period of one (1) year after the date the Participant ceases to be an Employee
because of such Disability (or within such lesser period as may be specified in the applicable
Option Award Agreement) if and only to the extent that the ISO was exercisable at the date of
employment termination.

ARTICLE 7. STOCK APPRECIATION RIGHTS

7.1. Grant of SARS. Subject to the terms and conditions of the Plan, SARs may be
granted to Participants at any time and from time to time as shall be determined by the Committee.
The Committee shall have complete discretion in determining the number of SARs granted to each
Participant (subject to Article 4 hereof) and, consistent with the provisions of the
Plan, in determining the terms and conditions pertaining to such SARs. The grant price of a
Freestanding SAR shall equal the Fair Market Value of a Share on the date of grant of the SAR.

 

9

 

7.2. Exercise of SARS. Freestanding SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon them. SARS shall be deemed to be
exercised when written notice of such exercise has been given to the Company at its principal
office (Attention: Chief Financial Officer) in accordance with the terms of the SAR Award Agreement
by the person entitled to exercise the SAR, setting forth the number of Shares with respect to
which the SAR is to be exercised, and the other provisions of this Article 7 with respect to
exercise have been satisfied or waived.

7.3. SAR Agreements. Each SAR grant shall be evidenced by an Award Agreement in such
form or forms as the Committee shall approve, which shall specify the grant price, the term of the
SAR, and such other provisions as the Committee shall determine. In the event of a conflict
between any SAR Award Agreement and the Plan, the Plan shall control, and in no event shall the
Committee have the power to grant a SAR or execute a SAR Award Agreement that is contrary to the
provisions of the Plan.

7.4. Term of SARS. The term of an SAR granted under the Plan shall be determined by
the Committee, in its sole discretion; provided, however, that such term shall not
exceed ten (10) years from the date of grant.

7.5. Payment of SAR Amount. Upon exercise of an SAR, a Participant shall be entitled
to receive payment from the Company in an amount determined by multiplying:

(a) the difference between the Fair Market Value of a Share on the date of exercise and the
grant price; by

(b) the number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of
equivalent value or in some combination thereof. The Committee’s determination regarding the form
of SAR payout shall be set forth in the Award Agreement pertaining to the grant of the SAR.

7.6. Termination of Employment or Consulting Arrangement. Each SAR Award Agreement
shall set forth the extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant’s employment or consulting arrangement with the Company
and/or its Subsidiaries. Subject to Section 12.3 herein, such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all SARs issued pursuant to the Plan and may reflect
distinctions based on the reasons for termination of employment.

7.7. Non-transferability of SARS. No SAR granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, all SARs granted to a Participant under the Plan shall
be exercisable during his or her lifetime only by such Participant or the Participant’s legal
representative. Notwithstanding the foregoing, the Committee may in its sole discretion permit a
Participant to transfer all or some of such Participant’s SARs to such Participant’s immediate
family members or a trust or trusts for the benefit of such immediate family members. Following
any such transfer, any transferred SARs shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer.

 

10

 

ARTICLE 8. RESTRICTED STOCK

8.1. Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant Shares of Restricted Stock to Participants
in such amounts, at such prices and upon such terms and conditions as the Committee shall
determine.

8.2. Restricted Stock Agreement. Each Restricted Stock grant shall be evidenced by a
Restricted Stock Award Agreement in such form or forms as the Committee shall approve, which shall
specify the Period(s) of Restriction, the number of Shares of Restricted Stock granted and such
other provisions as the Committee shall determine. In the event of a conflict between any
Restricted Stock Award Agreement and the Plan, the Plan shall control, and in no event shall the
Committee have the power to grant Shares of Restricted Stock or execute a Restricted Stock Award
Agreement that is contrary to the provisions of the Plan.

8.3. Transferability. The Shares of Restricted Stock granted under the Plan may not
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and specified in the Restricted Stock
Award Agreement, or upon earlier satisfaction of any other conditions, as specified by the
Committee in its sole discretion and set forth in the Restricted Stock Award Agreement. All rights
with respect to the Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant or the Participant’s legal representatives.

8.4. Other Restrictions. Subject to Article 9 hereof, the Committee shall impose such
other conditions and/or restrictions on any Shares of Restricted Stock granted pursuant to the Plan
as it may deem advisable including, without limitation, a requirement that Participants pay a
stipulated purchase price for each share of Restricted Stock, restrictions based upon the
achievement of specific performance goals (Company-wide, divisional and/or individual), time-based
restrictions on vesting following the attainment of the performance goals and/or restrictions under
applicable federal or state securities laws. The Company may retain the certificates representing
Shares of Restricted Stock in the Company’s possession, along with a stock power endorsed in blank,
until such time as all conditions and/or restrictions applicable to such Shares have been satisfied
and may imprint on such certificates appropriate legends referring to the term, conditions and
restrictions applicable to such Shares. Except as otherwise provided in this Article 8, Shares of
Restricted Stock covered by each Restricted Stock grant made under the Plan shall become freely
transferable by the Participant after the last day of the applicable Period of Restriction. Upon
the expiration of the Period of Restriction or other lapse or waiver of any restrictions relating
to Shares of Restricted Stock, the Company shall deliver certificates without legends (other than
those required by applicable securities laws) to the Participant.

 

11

 

8.5. Voting Rights; Dividends and other Distributions. The Participant shall have the
right to vote all Shares of Restricted Stock during the Period of Restriction. During the Period
of Restriction, Participants holding Shares of Restricted Stock granted hereunder may be credited
with dividends and distributions paid with respect to the underlying Shares while they are so held.
The Committee may apply any restrictions to the dividends and distributions that the Committee
deems appropriate. Without limiting the generality of the preceding sentence, if the grant or
vesting of Restricted Shares granted to a Covered Employee is designed to comply with the
requirements of the Performance-Based Exception, the Committee may apply any restrictions it deems
appropriate to the payment of dividends declared with respect to such Restricted Shares, such that
the dividends and/or the Restricted Shares maintain eligibility for the Performance-Based
Exception.

8.6. Termination of Employment or Consulting Arrangement. Each Restricted Stock Award
Agreement shall set forth the extent to which the Participant shall have the right to receive
unvested Restricted Shares following termination of the Participant’s employment or consulting
arrangement with the Company. Subject to Section 12.3 herein, such provisions shall be determined
in the sole discretion of the Committee, shall be included in the Award Agreement entered into with
each Participant, need not be uniform among all Shares of Restricted Stock issued pursuant to the
Plan and may reflect distinctions based on the reasons for termination of employment;
provided, however, that except in the cases of terminations by reason of death or
Disability, the vesting of Shares of Restricted Stock that qualify for the Performance-Based
Exception and that are held by Covered Employees shall occur at the time they otherwise would have,
but for the employment termination.

ARTICLE 9. PERFORMANCE MEASURES

Unless and until the Committee proposes for stockholder vote and stockholders approve a change
in the general performance measures set forth in this Article 9, the attainment of which may
determine the degree of payout and/or vesting with respect to Awards to Covered Employees that are
designed to qualify for the Performance-Based Exception, the performance measure(s) to be used for
purposes of such grants shall be chosen from among net income either before or after taxes, market
share, customer satisfaction, profits, share price, earnings per share, total stockholder return,
return on assets, return on equity, operating income, return on capital or investments, or economic
value added (including, but not limited to, any or all of such measures in comparison to the
Company’s competitors, the industry or some other comparable group).

The Committee shall have the discretion to adjust the determinations of the degree of
attainment of the pre-established performance goals; provided, however, that Awards
that are designed to qualify for the Performance-Based Exception, and that are held by Covered
Employees, may not be adjusted upward (the Committee shall retain the discretion to adjust such
Awards downward, however).

In the event that applicable tax and/or securities laws change to permit Committee discretion
to alter the governing performance measures without obtaining stockholder approval of such changes,
the Committee shall have sole discretion to make such changes without obtaining stockholder
approval. In addition, in the event that the Committee determines that it is
advisable to grant Awards that shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code Section 162(m).

 

12

 

ARTICLE 10. BENEFICIARY DESIGNATION

Each Participant under the Plan may, from time to time, designate any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is
to be paid in case of his or her death before he or she receives any or all of such benefit. Each
such designation shall revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the Participant in writing with
the Company during the Participant’s lifetime. In the absence of any such designation, the
Participant’s benefits shall be paid to the Participant’s estate.

ARTICLE 11. DEFERRALS

The Committee may permit or require a Participant to defer such Participant’s receipt of the
payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue
of the exercise of an Option or SAR, or the lapse or waiver of restrictions with respect to
Restricted Stock. If any such deferral election is required or permitted, the Committee shall, in
its sole discretion, establish rules and procedures for such payment deferrals. Any such deferrals
shall be made in a manner that complies with Code Section 409A.

ARTICLE 12. RETENTION RIGHTS; TERMINATION FOR CAUSE

12.1. Employment. Neither the Plan nor any Award granted hereunder shall confer upon
any Participant any right with respect to continuation of employment, consulting or advisory
relationship or directorship with the Company, nor shall it interfere in any way with his or her
right or the Company’s right to terminate his or her employment, consulting or advisory
relationship or directorship at any time.

12.2. Participation. No Participant shall have the right, in and of itself, to be
selected to receive an Award under this Plan or, having been so selected, to be selected to receive
a future Award.

12.3. Terminations for Cause. Notwithstanding anything herein to the contrary, in the
event of the termination of a Participant’s employment or consulting arrangement with the Company
for Cause (as defined herein), then such Participant’s rights under any then-outstanding Awards
shall immediately terminate as of the time of such termination. Termination for Cause
shall mean any termination for Cause as defined in any employment or similar agreement by and
between the Company and the Participant and, if no such agreement is then in effect, shall include
but not be limited to Participant’s (a) commission of an act of fraud, embezzlement,
misappropriation or theft or a felony, (b) gross negligence, willful misconduct, insubordination or
habitual neglect of duty in carrying out his or her duties as a Employee, Consultant or
Non-Employee Director; (c) non-compliance with any policy of the Company or the Company’s Code of
Business Conduct and Ethics and failure to cure such noncompliance within 15 days of notice thereof
from the Company, or (d) breach of any material term of any agreement, contract or other
arrangement between the Participant and the Company regarding Participant’s employment by or
engagement with the Company, or breach of any duty owed by
the Participant to the Company and/or its stockholders, in each case as determined by the
Board. In addition to and not in lieu of the foregoing, if the Board reasonably believes that a
Participant has engaged in any of the activities described in clauses (a) — (d) of this Section
12.3, the Board may suspend the Participant’s right to exercise or receive any Award pending a
determination by the Board.

 

13

 

ARTICLE 13. AMENDMENT, MODIFICATION, TERMINATION AND ADJUSTMENTS

13.1. Amendment, Modification and Termination. Subject to the terms of the Plan, the
Board, upon recommendation of the Committee, may at any time and from time to time, alter, amend,
suspend or terminate the Plan in whole or in part; provided, that the Board shall not amend
the Plan in any manner that requires stockholder, regulatory or other approval(s) under applicable
law, rule or regulation without obtaining such approval(s).

13.2. Adjustment of Awards Upon the Occurrence of Certain Unusual or Non-recurring
Events. The Committee may make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or non-recurring events (including, without
limitation, the events described in Section 4.3 hereof) affecting the Company or the financial
statements of the Company or of changes in applicable laws, rules, regulations or accounting
principles, whenever the Committee determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan; provided that unless the Committee determines otherwise, no such adjustment
shall be authorized to the extent that such authority would be inconsistent with the Plan or Awards
meeting the requirements of Code Section 162(m), as from time to time amended.

13.3. Awards Previously Granted. Notwithstanding any other provision of the Plan to
the contrary (but subject to Section 13.2 hereof), no termination, amendment or modification of the
Plan shall adversely affect or impair in any material way any Award previously granted under the
Plan without the written consent of the Participant holding such Award, except that the Plan may be
amended in a manner that does not affect Awards granted prior to the date of amendment or
termination if such amendment is necessary to retain the benefits of Rule 16b-3 or Section 162(m)
of the Code or to otherwise comply with applicable law, or such amendment does not adversely affect
the rights of the Participant.

13.4. Compliance with Code Section 162(m). At all times when Code Section 162(m) is
applicable, all Awards granted under this Plan shall comply with the requirements of Code Section
162(m); provided, however, that in the event the Committee determines that such
compliance is not desired with respect to any Award or Awards available for grant under the Plan,
then compliance with Code Section 162(m) will not be required. In addition, in the event that
changes are made to Code Section 162(m) to permit greater flexibility with respect to any Award or
Awards available under the Plan, or in the event that modifications are necessary to the Plan or
any Awards to comply with Section 162(m), the Committee may, subject to this Article 13, make any
adjustments and amendments to the Plan and any Awards that the Committee deems appropriate. If any
provision of the Plan would be in violation of Section 162(m) if applied as written, such provision
shall not have effect as written and shall be given effect so as to comply with Section 162(m) as
determined by the Committee in its discretion.

 

14

 

ARTICLE 14. PARACHUTE LIMITATIONS

Notwithstanding any other provision of this Plan or of any other agreement, contract or
understanding heretofore or hereafter entered into by a Participant with the Company or any
Subsidiary or Affiliate, except an agreement, contract or understanding hereafter entered into that
expressly modifies or excludes application of this Article 14 (hereinafter referred to as an
“Other Agreement”), and notwithstanding any formal or informal plan or other arrangement
for the direct or indirect provision of compensation to the Participant (including groups or
classes of Participants or beneficiaries of which the Participant is a member), whether or not such
compensation is deferred, is in cash or is in the form of a benefit to or for the Participant
(hereinafter referred to as a “Benefit Arrangement”), if the Participant is a “disqualified
individual,” as defined in Code Section 280G(c), any Option or Restricted Stock held by the
Participant and any right to receive any payment or other benefit under this Plan shall not become
exercisable or vested (i) to the extent that such right to exercise, vesting, payment or benefit,
taking into account all other rights, payments or benefits to or for the Participant under this
Plan, all Other Agreements and all Benefit Arrangements, would cause any payment or benefit to the
Participant under this Plan to be considered a “parachute payment” within the meaning of Code
Section 280G(b) as then in effect (a “Parachute Payment”), and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the Participant from the
Company under this Plan, all Other Agreements and all Benefit Arrangements would be less than the
maximum after-tax amount that could be received by the Participant without causing any such payment
or benefit to be considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment or benefit under this Plan, in conjunction with all other rights,
payments or benefits to or for the Participant under any Other Agreements or any Benefit
Arrangement would cause the Participant to be considered to have received a Parachute Payment under
this Plan that would have the effect of decreasing the after-tax amount received by the Participant
as described in clause (ii) of the preceding sentence, then the Participant shall have the right,
in the Participant’s sole discretion, to designate those rights, payments or benefits under this
Plan, any Other Agreements and any Benefit Arrangements that should be reduced or eliminated so as
to avoid having the payment or benefit to the Participant under this Plan be deemed to be a
Parachute Payment.

ARTICLE 15. CHANGE IN CONTROL

15.1. Definition. For purposes of this Plan, a “Change in Control” of the
Company shall mean any of the following:

(a) the Beneficial Ownership of securities representing more than thirty-three percent (33%)
of the combined voting power of the Company is acquired by any “person” or “group”, as such terms
are defined in Section 13(d) and 14(d) of the Exchange Act, other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the Company, or any
corporation owned, directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company; or

(b) the stockholders of the Company approve a definitive agreement to merge or consolidate the
Company with or into another entity (other than a merger or consolidation which would result in the
voting securities of the Company immediately prior to such transaction
continuing to represent 50% or more of the combined voting power of the surviving entity
immediately after such transaction), or to sell, exchange, transfer or otherwise dispose of all or
substantially all of the Company’s assets, or adopt a plan of liquidation; or

 

15

 

(c) during any period of three (3) consecutive years, individuals who at the beginning of such
period were members of the Board cease for any reason to constitute at least a majority thereof
(unless the election, or the nomination for election by the Company’s stockholders, of each new
director was approved by a vote of at least a majority of the directors then still in office who
were directors at the beginning of such period or whose election or nomination was previously so
approved).

15.2. Treatment of Outstanding Awards. Subject to Section 15.3 hereof, upon the
occurrence of a Change in Control, the Committee may:

(a) provide for the assumption of all outstanding Awards, or the substitution of outstanding
Awards for new Awards, for equity securities of the surviving, successor or purchasing Person, or a
parent or Subsidiary thereof, with appropriate adjustments as to the number, kind and prices of
Shares subject to such Awards as determined in good faith by the Board;

(b) provide that the vesting of any and all Options and SARs granted hereunder that remain
outstanding shall be accelerated that such Awards shall become fully and immediately exercisable;

(c) provide that any restrictions and deferral limitations applicable to any Restricted Stock
shall lapse and all such shares shall be deemed fully vested and free of all restrictions;

(d) in the case of the proposed liquidation of the Company, provide that each outstanding
Award shall terminate immediately prior to the consummation of such action or such other date as
fixed by the Board and provide Participants the right to exercise such Award prior to such date;
and/or

(e) make any and all other adjustments and/or settlements of outstanding Awards as it deems
appropriate and consistent with the Plan’s purposes.

15.3. Termination, Amendment and Modifications of Change-in-Control Provisions.
Notwithstanding any other provision of the Plan or any Award Agreement provision, the provisions of
this Article 15 may not be terminated, amended or modified on or after the date of an event that is
likely to give rise to a Change in Control to affect adversely any Award theretofore granted under
the Plan without the prior written consent of the Participant with respect to said Participant’s
outstanding Awards.

ARTICLE 16. WITHHOLDING

16.1. Tax Withholding. The Company shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company in lieu of withholding, an amount
sufficient to satisfy federal, state and local taxes, domestic or foreign, required by law or
regulation to be withheld or paid with respect to any taxable event arising as a result of this
Plan,
and the Company may defer issuance of Common Stock upon the grant or exercise of an Award
unless indemnified to its satisfaction against any liability for any such tax.

 

16

 

16.2. Share Withholding. With respect to withholding required upon the exercise of
Options or SARs, upon the lapse of restrictions on Restricted Stock, or upon any other taxable
event arising as a result of Awards granted hereunder, Participants may elect, subject to the
approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having
the Company withhold Shares having a Fair Market Value on the date the tax is to be determined
equal to the total tax that could be imposed with respect to said transaction. All such elections
shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any
restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

16.3. Determinations; Procedure. The amount of withholding or tax payment shall be
determined by the Committee or its delegate and shall be payable by the Participant at such time or
times as the Board determines. An Participant shall be permitted to satisfy his or her tax or
withholding obligation by (a) having cash withheld from the Participant’s salary or other
compensation payable by the Company or a Subsidiary, (b) the payment of cash by the Participant to
the Company, (c) the payment in shares of Common Stock already owned by the Participant valued at
Fair Market Value, and/or (d) the withholding from the Award, at the appropriate time, of a number
of shares of Common Stock sufficient, based upon the Fair Market Value of such Common Stock, to
satisfy such tax or withholding requirements as set forth in Section 16.2 above. The Committee
shall be authorized, in its sole and absolute discretion, to establish rules and procedures
relating to any such withholding methods it deems necessary or appropriate (including, without
limitation, rules and procedures relating to elections by Participants who are subject to the
provisions of Section 16 of the Exchange Act to have shares of Common Stock withheld from an award
to meet those withholding obligations).

ARTICLE 17. INDEMNIFICATION

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
(including attorneys’ fees) 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 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 and provided further that
indemnification shall not be available for any action taken or failure to act by such person in bad
faith or any fraud on the part of such person. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be entitled under the
Company’s Articles of Organization or Bylaws, as a matter of law or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.

 

17

 

ARTICLE 18. SUCCESSORS

All obligations of the Company under the Plan with respect to Awards granted hereunder shall
be binding on any successor to the Company, whether the existence of such successor is the result
of a direct or indirect acquisition by purchase, merger, consolidation or otherwise, of the Company
or all or substantially all of its business or assets.

ARTICLE 19. LEGAL CONSTRUCTION

19.1. Reservation of Shares. The Company, during the term of the Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan and outstanding Awards granted under the Plan. The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed
by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.

19.2. Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall include the singular,
and the singular shall include the plural.

19.3. Severability. In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.

19.4. Requirements of Law.

(a) The granting of Awards and the issuance of Shares under the Plan shall be subject to all
applicable laws, rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required. Shares shall not be issued pursuant to the
exercise or receipt of an Award unless the exercise or receipt of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant provisions of applicable
law, including, without limitation, the Securities Act, the Exchange Act, the rules and regulations
promulgated thereunder, the so-called state “blue sky” or securities laws, and the requirements of
any stock exchange upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a condition to the exercise
or receipt of an Award, the Company may require the person exercising or receiving such Award to
represent and warrant at the time of any such exercise or receipt that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

(b) In addition to and not in lieu of subsection (a) above, each Award shall be subject to the
requirement that if at any time the Committee shall determine, in its discretion, that the listing,
registration or qualification of the Shares subject to the Award upon any securities exchange or
under any federal, state or foreign securities or other law or regulation, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a condition to or in
connection with the granting of such Award or the issue or purchase of shares thereunder, no such
Award may be exercised or paid in shares of Common Stock in whole or in
part unless such listing, registration, qualification, consent or approval shall have been
effected or obtained, and the holder of each such Award will supply the Company with such
certificates, representations and information as the Company shall request which are reasonably
necessary or desirable in order for the Company to obtain such required listing, and shall
otherwise cooperate with the Company in obtaining such required listing.

 

18

 

19.5. Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then
subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 under the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

19.6. Code Section 409A Compliance. The Company, acting through the Board or the
Committee, intends to comply with Code Section 409A, or an exemption to Code Section 409A, with
regard to Awards hereunder that constitute nonqualified deferred compensation within the meaning of
Code Section 409A, and any ambiguities in construction shall be interpreted in order to effectuate
such intent. To the extent that the Board or Committee determines that a Participant would be
subject to the additional tax imposed on certain nonqualified deferred compensation plans pursuant
to Code Section 409A as a result of any provision of any Award granted under this Plan, such
provision shall be deemed amended to the minimum extent necessary to avoid application of such
additional tax. The nature of any such amendment shall be determined by the Board or the
Committee. Notwithstanding the foregoing, neither the Company nor any Affiliate makes any
representation with respect to the application of Code Section 409A to any Award hereunder and, by
acceptance of any such Award, the Participant agrees to accept the potential application of Code
Section 409A to the Award and any tax consequences associated therewith. In the event that, after
the issuance of an Award under the Plan, Section 409A of the Code or the regulations thereunder are
amended, or the Internal Revenue Service or Treasury Department issues additional guidance
interpreting Section 409A of the Code, the Committee (or, in the absence of the Committee, the
Board) may modify the terms of any such previously issued Award to the extent the Committee (or, in
the absence of the Committee, the Board) determines that such modification is necessary to comply
with the requirements of Section 409A of the Code. The Committee shall also have the authority to
amend and administer the Plan and amend any Award issued hereunder in order to assure that such
Awards do not provide a deferral of compensation that would be subject to Code Section 409A.

19.7. Governing Law. To the extent not preempted by federal law, the Plan, and all
agreements entered into, actions taken and determinations made hereunder, shall be construed in
accordance with and governed by the laws of the Commonwealth of Massachusetts, without regard to
such jurisdiction’s conflicts of laws principles.

19.8. Stockholder Approval. The Plan shall have been approved by the stockholders of
the Company within twelve (12) months of the Effective Date. Awards may be granted under the Plan
at any time prior to the receipt of such stockholder approval, provided that each such
grant shall be subject to such approval. Without limitation of the foregoing, no Award may be
exercised by a Participant, and no share certificates shall be issued by the Company, prior to
the receipt of such approval. If the Plan is not approved by July 29, 2011, then the Plan and all
Awards then outstanding shall automatically terminate and be of no force or effect.

 

19

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