Document:

Exhibit 10.1

ev3
Inc.

SECOND
AMENDED AND RESTATED

2005 INCENTIVE STOCK PLAN

(March
30, 2007)

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  BACKGROUND AND PURPOSE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
  2.1.

  	
  Affiliate

  	
   

  	
  1

  
	
   

  	
  2.2.

  	
  Board

  	
   

  	
  1

  
	
   

  	
  2.3.

  	
  Change Effective Date

  	
   

  	
  1

  
	
   

  	
  2.4.

  	
  Change in Control

  	
   

  	
  1

  
	
   

  	
  2.5.

  	
  Code

  	
   

  	
  3

  
	
   

  	
  2.6.

  	
  Committee

  	
   

  	
  3

  
	
   

  	
  2.7.

  	
  Company

  	
   

  	
  3

  
	
   

  	
  2.8.

  	
  Director

  	
   

  	
  3

  
	
   

  	
  2.9.

  	
  Eligible Employee

  	
   

  	
  3

  
	
   

  	
  2.10.

  	
  Fair Market Value

  	
   

  	
  3

  
	
   

  	
  2.11.

  	
  ISO

  	
   

  	
  4

  
	
   

  	
  2.12.

  	
  1933 Act

  	
   

  	
  4

  
	
   

  	
  2.13.

  	
  1934 Act

  	
   

  	
  4

  
	
   

  	
  2.14.

  	
  Non-ISO

  	
   

  	
  4

  
	
   

  	
  2.15.

  	
  Option

  	
   

  	
  4

  
	
   

  	
  2.16.

  	
  Option Certificate

  	
   

  	
  4

  
	
   

  	
  2.17.

  	
  Option Price

  	
   

  	
  4

  
	
   

  	
  2.18.

  	
  Parent

  	
   

  	
  4

  
	
   

  	
  2.19.

  	
  Plan

  	
   

  	
  4

  
	
   

  	
  2.20.

  	
  Rule 16b-3

  	
   

  	
  4

  
	
   

  	
  2.21.

  	
  SAR Value

  	
   

  	
  4

  
	
   

  	
  2.22.

  	
  Stock

  	
   

  	
  5

  
	
   

  	
  2.23.

  	
  Stock Appreciation Right

  	
   

  	
  5

  
	
   

  	
  2.24.

  	
  Stock Appreciation Right Certificate

  	
   

  	
  5

  
	
   

  	
  2.25.

  	
  Stock Grant

  	
   

  	
  5

  
	
   

  	
  2.26.

  	
  Stock Grant Certificate

  	
   

  	
  5

  
	
   

  	
  2.27.

  	
  Stock Unit Grant

  	
   

  	
  5

  
	
   

  	
  2.28.

  	
  Subsidiary

  	
   

  	
  5

  
	
   

  	
  2.29.

  	
  Ten Percent Shareholder

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  SHARES AND GRANT LIMITS

  	
   

  	
  6

  
	
   

  	
  3.1.

  	
  Shares Reserved

  	
   

  	
  6

  
	
   

  	
  3.2.

  	
  Source of Shares

  	
   

  	
  6

  
	
   

  	
  3.3.

  	
  Use of Proceeds

  	
   

  	
  7

  
	
   

  	
  3.4.

  	
  Grant Limits

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  EFFECTIVE DATE

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  COMMITTEE

  	
   

  	
  7

  

 

  
  
 

 

	
  6.

  	
  ELIGIBILITY

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  OPTIONS

  	
   

  	
  9

  
	
   

  	
  7.1.

  	
  Committee Action

  	
   

  	
  9

  
	
   

  	
  7.2.

  	
  $100,000 Limit

  	
   

  	
  9

  
	
   

  	
  7.3.

  	
  Option Price

  	
   

  	
  10

  
	
   

  	
  7.4.

  	
  Payment

  	
   

  	
  10

  
	
   

  	
  7.5.

  	
  Exercise

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  STOCK APPRECIATION RIGHTS

  	
   

  	
  12

  
	
   

  	
  8.1.

  	
  Committee Action

  	
   

  	
  12

  
	
   

  	
  8.2.

  	
  Terms and Conditions

  	
   

  	
  12

  
	
   

  	
  8.3.

  	
  Exercise

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  STOCK GRANTS

  	
   

  	
  14

  
	
   

  	
  9.1.

  	
  Committee Action

  	
   

  	
  14

  
	
   

  	
  9.2.

  	
  Conditions

  	
   

  	
  14

  
	
   

  	
  9.3.

  	
  Dividends, Voting Rights and Creditor Status

  	
   

  	
  16

  
	
   

  	
  9.4.

  	
  Satisfaction of Forfeiture Conditions

  	
   

  	
  18

  
	
   

  	
  9.5.

  	
  Performance Based Awards

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  NON-TRANSFERABILITY

  	
   

  	
  23

  
	
   

  	
  10.1.

  	
  General Rule

  	
   

  	
  23

  
	
   

  	
  10.2.

  	
  Transfers to Family Members

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  SECURITIES REGISTRATION

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  LIFE OF PLAN

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  ADJUSTMENT

  	
   

  	
  25

  
	
   

  	
  13.1.

  	
  Capital Structure

  	
   

  	
  25

  
	
   

  	
  13.2.

  	
  Available Shares

  	
   

  	
  25

  
	
   

  	
  13.3.

  	
  Transactions Described in § 424 of the Code

  	
   

  	
  26

  
	
   

  	
  13.4.

  	
  Fractional Shares

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  CHANGE IN CONTROL

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
  AMENDMENT OR TERMINATION

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
  MISCELLANEOUS

  	
   

  	
  28

  
	
   

  	
  16.1.

  	
  Shareholder Rights

  	
   

  	
  28

  
	
   

  	
  16.2.

  	
  No Contract of Employment

  	
   

  	
  29

  
	
   

  	
  16.3.

  	
  Withholding

  	
   

  	
  29

  
	
   

  	
  16.4.

  	
  Construction

  	
   

  	
  29

  
	
   

  	
  16.5.

  	
  Other Conditions

  	
   

  	
  30

  
	
   

  	
  16.6.

  	
  Rule 16b-3

  	
   

  	
  30

  
	
   

  	
  16.7.

  	
  Coordination with Employment Agreements and Other
  Agreements

  	
   

  	
  30

  

 

 ii

1.    BACKGROUND
AND PURPOSE

The purpose of this Plan is to promote the interest of the Company by
authorizing the Committee to grant Options and Stock Appreciation Rights and to
make Stock Grants and Stock Unit Grants to Eligible Employees and Directors or
consultants in order (1) to attract and retain Eligible Employees,
Directors or consultants, (2) to provide an additional incentive to each
Eligible Employee, Director or consultant to work to increase the value of
Stock and (3) to provide each Eligible Employee, Director or consultant
with a stake in the future of the Company which corresponds to the stake of
each of the Company’s shareholders.

2.    DEFINITIONS

2.1.          Affiliate.  Affiliate means any organization (other than
a Subsidiary) that would be treated as under common control with the Company
under § 414(c) of the Code if “50 percent” were substituted for “80
percent” in the income tax regulations under § 414(c) of the Code.

2.2.          Board.  Board means the Board of Directors of the
Company.

2.3.          Change
Effective Date.  Change Effective
Date means either the date which includes the “closing” of the transaction
which makes a Change in Control effective if the Change in Control is made
effective through a transaction which has a “closing” or the date a Change in
Control is reported in accordance with applicable law as effective to the
Securities and Exchange Commission if the Change in Control is made effective
other than through a transaction which has a “closing”.

2.4.          Change
in Control.  Change in Control means
a change in control of the Company occurring after the effective date of this
Plan of a nature that would be required to be reported in response to Item 6(e)
of Schedule 14A of Regulation 14A (or in response to any similar item on

any similar schedule or form) promulgated
under the 1934 Act, whether or not the Company is then subject to such
reporting requirement; provided, however, that, without
limitation, a Change in Control shall include: 
(i) the acquisition (other than from the Company) after the date hereof
by any person, entity or “group” within the meaning of Section 13(d)(3) or
14(d)(2) of the 1934 Act (excluding, for this purpose, the Company or its
subsidiaries, any employee benefit plan of the Company or its subsidiaries
which acquires beneficial ownership of voting securities of the Company, any
qualified institutional investor who meets the requirements of
Rule 13d-1(b)(1) promulgated under the 1934 Act, Warburg Pincus LLC and
its affiliates, and The Vertical Group, L.P. and its affiliates) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934
Act) of 20% or more of either the then-outstanding shares of common stock or
the combined voting power of the Company’s then-outstanding capital stock
entitled to vote generally in the election of directors; (ii) individuals who,
as of the date hereof, constitute the Board (the “Incumbent Board”) ceasing for
any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the directors of the Company) shall be, for purposes of this
Agreement, considered as though such person were a member of the Incumbent Board;
or (iii) approval by the stockholders of the Company of (A) a reorganization,
merger, or consolidation, in each case, with respect to which persons who were
the stockholders of the Company immediately prior to such reorganization,
merger, or consolidation do not, immediately thereafter, own more than 50% of
the combined voting power

 2
 

entitled to vote generally in the election of
directors of the reorganized, merged, consolidated or other surviving
corporation’s then-outstanding voting securities, (B) a liquidation or
dissolution of the Company, or (C) the sale of all or substantially all of the
assets of the Company.

2.5.          Code.  Code means the Internal Revenue Code of 1986,
as amended.

2.6.          Committee.  Committee means a committee of the Board
which shall have at least 2 members, each of whom shall be appointed by and
shall serve at the pleasure of the Board and, if at any time the Company
desires to exempt issuances within the meaning of Section 162(m) of the Code,
each of whom shall be an “outside director” within the meaning of Section
162(m)(4)(C) of the Code.

2.7.          Company.  Company means ev3 Inc. and any successor to
ev3 Inc.

2.8.          Director.  Director means any member of the Board who is
not an employee of the Company or a Parent or Subsidiary or affiliate (as such
term is defined in Rule 405 of the 1933 Act) of the Company.

2.9.          Eligible
Employee.  Eligible Employee means an
employee of the Company or any Subsidiary or Parent or Affiliate to whom the
Committee decides for reasons sufficient to the Committee to make a grant under
this Plan.

2.10.        Fair
Market Value.  Fair Market Value
means either (a) the closing price on any date for a share of Stock as
reported by The Wall Street Journal or, if The Wall Street Journal
no longer reports such closing price, such closing price as reported by a
newspaper or trade journal selected by the Committee or, if no such closing
price is available on such date, (b) such closing price as so reported in
accordance with § 2.10(a) for the immediately preceding business day, or,
if no newspaper or trade journal reports such closing price or if no such price
quotation is available, (c) the price which the Committee acting in good
faith determines through any

 3
 

reasonable valuation method that a share of
Stock might change hands between a willing buyer and a willing seller, neither
being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.

2.11.        ISO.  ISO means an option granted under this Plan
to purchase Stock which is intended to satisfy the requirements of § 422
of the Code.

2.12.        1933
Act.  1933 Act means the Securities
Act of 1933, as amended.

2.13.        1934
Act.  1934 Act means the Securities
Exchange Act of 1934, as amended.

2.14.        Non-ISO.  Non-ISO means an option granted under this
Plan to purchase Stock which is intended to fail to satisfy the requirements of
§ 422 of the Code.

2.15.        Option.  Option means an ISO or a Non-ISO which is
granted under § 7.

2.16.        Option
Certificate.  Option Certificate
means the certificate (whether in electronic or written form) which sets forth
the terms and conditions of an Option granted under this Plan.

2.17.        Option
Price.  Option Price means the price
which shall be paid to purchase one share of Stock upon the exercise of an
Option granted under this Plan.

2.18.        Parent.  Parent means any corporation which is a
parent corporation (within the meaning of § 424(e) of the Code) of the
Company.

2.19.        Plan.  Plan means this ev3 Inc. Amended and Restated
2005 Incentive Stock Plan as effective as of the date approved by the
shareholders of the Company as amended from time to time thereafter and any
Subsidiary plans under § 5.2.

2.20.        Rule
16b-3.  Rule 16b-3 means the
exemption under Rule 16b-3 to Section 16(b) of the 1934 Act or
any successor to such rule.

2.21.        SAR
Value.  SAR Value means the value
assigned by the Committee to a share of Stock in connection with the grant of a
Stock Appreciation Right under § 8.

 4
 

2.22.        Stock.  Stock means the common stock of the Company.

2.23.        Stock
Appreciation Right.  Stock
Appreciation Right means a right which is granted under § 8 to receive the
appreciation in a share of Stock.

2.24.        Stock
Appreciation Right Certificate. 
Stock Appreciation Right Certificate means the certificate (whether in
electronic or written form) which sets forth the terms and conditions of a
Stock Appreciation Right which is not granted as part of an Option.

2.25.        Stock
Grant.  Stock Grant means a grant
under § 9 which is designed to result in the issuance of the number of
shares of Stock described in such grant rather than a payment in cash based on
the Fair Market Value of such shares of Stock.

2.26.        Stock
Grant Certificate.  Stock Grant
Certificate means the certificate (whether in electronic or written form) which
sets forth the terms and conditions of a Stock Grant or a Stock Unit Grant.

2.27.        Stock
Unit Grant.  Stock Unit Grant means a
grant under § 9 which is designed to result in the payment of cash based
on the Fair Market Value of the number of shares of Stock described in such
grant rather than the issuance of the number of shares of Stock described in
such grant.

2.28.        Subsidiary.  Subsidiary means a corporation which is a
subsidiary corporation (within the meaning of § 424(f) of the Code) of the
Company.

2.29.        Ten
Percent Shareholder.  Ten Percent
Shareholder means a person who owns (after taking into account the attribution
rules of § 424(d) of the Code) more than ten percent of the total combined
voting power of all classes of stock of either the Company, a Subsidiary or
Parent.

 5
 

3.             SHARES
AND GRANT LIMITS

3.1.          Shares
Reserved.  Subject to adjustment as
provided in § 13 of the Plan, the maximum number of shares of Stock that will
be available for issuance under the Plan will be the sum of:

(a)           8,000,000;

(b)           The number of shares
issued or Incentive Awards granted under the Plan in connection with the
settlement, assumption or substitution of outstanding awards or obligations to
grant future awards as a condition of the Company and/or any Subsidiar(ies)
acquiring, merging or consolidating with another entity; and

(c)           The number of shares
that are unallocated and available for grant under a stock plan assumed by the
Company or any Subsidiary(ies) in connection with the merger, consolidation, or
acquisition of another entity by the Company and/or any of its Subsidiaries,
based on the applicable exchange ratio and other transaction terms, but only to
the extent that such shares may be utilized by the Company or its Subsidiaries
following the transaction pursuant to the rules and regulations of the Nasdaq
Stock Market (or other applicable market or exchange on which the Company’s
Common Stock may be quoted or traded);

provided,
however that no more than 2,000,000 shares of Stock may be issued in connection
with the exercise of ISOs.

3.2.          Source
of Shares.  The shares of Stock
described in § 3.1 shall be reserved to the extent that the Company deems
appropriate from authorized but unissued shares of Stock and

 6
 

from shares of Stock which have been
reacquired by the Company.  All shares of
Stock described in § 3.1 shall remain available for issuance under this
Plan until issued pursuant to the exercise of an Option or a Stock Appreciation
Right or issued pursuant to a Stock Grant, and any such shares of stock which
are issued pursuant to an Option, a Stock Appreciation Right or a Stock Grant
which are forfeited thereafter shall again become available for issuance under
this Plan.

3.3.          Use
of Proceeds.  The proceeds which the
Company receives from the sale of any shares of Stock under this Plan shall be
used for general corporate purposes and shall be added to the general funds of
the Company.

3.4.          Grant
Limits.  No Eligible Employee,
Director or consultant in any calendar year shall be granted an Option to
purchase (subject to § 13) more than 300,000 shares of Stock or a Stock
Appreciation Right based on the appreciation with respect to (subject to
§ 13) more than 300,000 shares of Stock, and no Stock Grant or Stock Unit
Grant shall be made to any Eligible Employee, Director or consultant in any
calendar year where the Fair Market Value of the Stock subject to such grant on
the date of the grant exceeds $10,000,000.

4.    EFFECTIVE
DATE

The effective date of this Plan shall be the date the
shareholders of the Company (acting at a duly called meeting of such
shareholders) approve the adoption of this Plan as amended and restated.

5.    COMMITTEE

5.1.          This
Plan shall be administered by the Committee. 
The Committee acting in its absolute discretion shall exercise such
powers and take such action as expressly called for under this Plan and,
further, the Committee shall have the power to interpret this Plan and (subject
to

 7
 

§ 14 and § 15 and Rule 16b-3) to
take such other action in the administration and operation of this Plan as the
Committee deems equitable under the circumstances, which action shall be
binding on the Company, on each affected Eligible Employee, Director or
consultant and on each other person directly or indirectly affected by such
action.  Furthermore, the Committee as a
condition to making any grant under this Plan to any Eligible Employee,
Director or consultant shall have the right to require him or her to execute an
agreement which makes the Eligible Employee, Director or consultant subject to
non-competition provisions and other restrictive covenants which run in favor
of the Company.

5.2.          In
addition to the authority of the Committee under § 5 and notwithstanding
any other provision of the Plan, the Committee may, in its sole discretion,
amend the terms of the Plan or Incentive Awards with respect to Participants
resident outside of the United States or employed by a non-U.S. Subsidiary in
order to comply with local legal requirements, to otherwise protect the Company’s
or Subsidiary’s interests, or to meet objectives of the Plan, and may, where
appropriate, establish one or more sub-plans (including the adoption of any
required rules and regulations) for the purposes of qualifying for preferred
tax treatment under foreign tax laws. 
The Committee shall have no authority, however, to take action pursuant
to this § 5.2: (i) to reserve shares or grant Incentive Awards in excess
of the limitations provided in the Plan; (ii) to effect any re-pricing in
violation of § 7.1; (iii) to grant Options having an exercise price less
than 100% of the Fair Market Value of one share of Common Stock on the date of
grant in violation of the Plan; or (iv) for which stockholder approval would
then be required pursuant to § 15.

 8
 

6.    ELIGIBILITY

Only Eligible Employees
who are employed by the Company or a Subsidiary or Parent shall be eligible for
the grant of ISOs under this Plan.  All
Eligible Employees, Directors and consultants shall be eligible for the grant
of Non-ISOs and Stock Appreciation Rights and for Stock Grants and Stock Unit
Grants under this Plan.

7.    OPTIONS

7.1.          Committee
Action.  The Committee acting in its
absolute discretion shall have the right to grant Options to Eligible
Employees, Directors and consultants under this Plan from time to time to
purchase shares of Stock, but the Committee shall not (subject to § 13)
take any action, whether through amendment, cancellation, replacement grants,
or any other means, to reduce the Option Price of any outstanding Options
absent the approval of the Company’s shareholders.  Each grant of an Option to an Eligible
Employee, Director or consultant shall be evidenced by an Option Certificate,
and each Option Certificate shall set forth whether the Option is an ISO or a
Non-ISO and shall set forth such other terms and conditions of such grant as
the Committee acting in its absolute discretion deems consistent with the terms
of this Plan; however, (a) if the Committee grants an ISO and a Non-ISO to an
Eligible Employee on the same date, the right of the Eligible Employee to
exercise the ISO shall not be conditioned on his or her failure to exercise the
Non-ISO and (b) if the only condition to exercise of the Option is the
completion of a period of service, such period of service shall be no less than
the one (1) year period  which
starts on the date as of which the Option is granted unless the Committee
determines that a shorter period of service (or no period of service) better
serves the Company’s interest.

7.2.          $100,000
Limit.  No Option shall be treated as
an ISO to the extent that the aggregate Fair Market Value of the Stock subject
to the Option which would first become

 9
 

exercisable in
any calendar year exceeds $100,000.  Any
such excess shall instead automatically be treated as a Non-ISO.  The Committee shall interpret and administer
the ISO limitation set forth in this § 7.2 in accordance with
§ 422(d) of the Code, and the Committee shall treat this § 7.2 as in
effect only for those periods for which § 422(d) of the Code is in effect.

7.3.          Option
Price.  The Option Price for each
share of Stock subject to an Option shall be no less than the Fair Market Value
of a share of Stock on the date the Option is granted; provided, however, if
the Option is an ISO granted to an Eligible Employee who is a Ten Percent
Shareholder, the Option Price for each share of Stock subject to such ISO shall
be no less than 110% of the Fair Market Value of a share of Stock on the date
such ISO is granted.

7.4.          Payment.

(a)           The Option Price shall
be payable in full upon the exercise of any Option and, at the discretion of
the Committee, an Option Certificate can provide for the payment of the Option
Price either in cash (including check, bank draft or money order); provided,
however, that the Committee, in its sole discretion, may allow such payments to
be made, in whole or in part, by (i) by tender, or attestation as to ownership,
of Shares that are already owned by the Eligible Employee that are acceptable
to the Committee (“Previously Acquired Shares”); (ii) by a “net exercise” of
the Option (as further described in paragraph (b), below); (iii) through
cashless exercise procedure which is effected by an unrelated broker through a
sale of Stock in the open market; 
or  (iv) by a combination of such
methods.

(b)           In the case of a “net
exercise” of an Option, the Company will not require a payment of the exercise
price of the Option from the Eligible Employee

 10
 

but will reduce the number of shares of
Common Stock issued upon the exercise by the largest number of whole shares
that has a Fair Market Value that does not exceed the aggregate exercise price
for the shares exercised under this method. Shares of Common Stock will no
longer be outstanding under an Option (and will therefore not thereafter be
exercisable) following the exercise of such Option to the extent of (i) shares
used to pay the exercise price of an Option under the “net exercise,” (ii)
shares actually delivered to the Participant as a result of such exercise and
(iii) any shares withheld for purposes of tax withholding.

(c)           Previously Acquired
Shares tendered or covered by an attestation as payment of an Option exercise
price will be valued at their Fair Market Value on the exercise date.

7.5.          Exercise.

(a)           Exercise Period.  Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Option Certificate, but no Option Certificate shall make an Option
exercisable on or after the earlier of

(1)           the date which is the
fifth anniversary of the date the Option is granted, if the Option is an ISO
and the Eligible Employee is a Ten Percent Shareholder on the date the Option
is granted, or

(2)           the date which is the
tenth anniversary of the date the Option is granted, if the Option is (a) a
Non-ISO or (b) an ISO which is

 11
 

granted to an Eligible Employee who is not a
Ten Percent Shareholder on the date the Option is granted.

(b)           Termination of
Status as Eligible Employee or Director. 
Subject to § 7.5(a), an Option Certificate may provide for the
exercise of an Option after an Eligible Employee’s, Director’s or consultant’s
status as such has terminated for any reason whatsoever, including death or
disability.

8.    STOCK
APPRECIATION RIGHTS

8.1.          Committee
Action.  The Committee acting in its
absolute discretion shall have the right to grant Stock Appreciation Rights to Eligible
Employees, Directors and consultants under this Plan from time to time, and
each Stock Appreciation Right grant shall be evidenced by a Stock Appreciation
Right Certificate or, if such Stock Appreciation Right is granted as part of an
Option, shall be evidenced by the Option Certificate for the related Option.

8.2.          Terms
and Conditions.

(a)           Stock Appreciation
Right Certificate.  If a Stock
Appreciation Right is granted independent of an Option, such Stock Appreciation
Right shall be evidenced by a Stock Appreciation Right Certificate, and such
certificate shall set forth the number of shares of Stock on which the Eligible
Employee’s, Director’s or consultant’s right to appreciation shall be based and
the SAR Value of each share of Stock. 
Such SAR Value shall be no less than the Fair Market Value of a share of
Stock on the date that the Stock Appreciation Right is granted.  The Stock Appreciation Right Certificate
shall set forth such other terms and conditions for the exercise of the Stock
Appreciation Right as the Committee deems appropriate 

 12
 

under the circumstances, but no Stock
Appreciation Right Certificate shall make a Stock Appreciation Right
exercisable on or after the date which is the tenth anniversary of the date
such Stock Appreciation Right is granted.

(b)           Option Certificate.  If a Stock Appreciation Right is granted
together with an Option, such Stock Appreciation Right shall be evidenced by an
Option Certificate, the number of shares of Stock on which the Eligible
Employee’s, Director’s or consultant’s right to appreciation shall be based
shall be the same as the number of shares of Stock subject to the related
Option, and the SAR Value for each such share of Stock shall be no less than
the Option Price under the related Option. 
Each such Option Certificate shall provide that the exercise of the
Stock Appreciation Right with respect to any share of Stock shall cancel the
Eligible Employee’s, Director’s or consultant’s right to exercise his or her
Option with respect to such share and, conversely, that the exercise of the
Option with respect to any share of Stock shall cancel the Eligible Employee’s,
Director’s or consultant’s right to exercise his or her Stock Appreciation
Right with respect to such share.  A
Stock Appreciation Right which is granted as part of an Option shall be
exercisable only while the related Option is exercisable.  The Option Certificate shall set forth such
other terms and conditions for the exercise of the Stock Appreciation Right as
the Committee deems appropriate under the circumstances.

(c)           Minimum Period of
Service.  If the only condition to
exercise of a Stock Appreciation Right is the completion of a period of 

 13
 

service, such period of service shall be no
less than the one (1) year period which starts on the date as of which the
Stock Appreciation Right is granted unless the Committee determines that a
shorter period of service (or no period of service) better serves the Company’s
interest.

8.3.          Exercise.  A Stock Appreciation Right shall be
exercisable only when the Fair Market Value of a share of Stock on which the
right to appreciation is based exceeds the SAR Value for such share, and the
payment due on exercise shall be based on such excess with respect to the
number of shares of Stock to which the exercise relates.  An Eligible Employee, Director or consultant
upon the exercise of his or her Stock Appreciation Right shall receive a
payment from the Company in cash or in Stock issued under this Plan, or in a
combination of cash and Stock, and the number of shares of Stock issued shall
be based on the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is exercised.  The
Committee acting in its absolute discretion shall have the right to determine
the form and time of any payment under this § 8.3.

9.             STOCK GRANTS

9.1.          Committee
Action.  The Committee acting in its
absolute discretion shall have the right to make Stock Grants and Stock Unit
Grants to Eligible Employees, Directors or consultants.  Each Stock Grant and each Stock Unit Grant
shall be evidenced by a Stock Grant Certificate, and each Stock Grant
Certificate shall set forth the conditions, if any, under which Stock will be
issued under the Stock Grant or cash will be paid under the Stock Unit Grant
and the conditions under which the Eligible Employee’s, Director’s or
consultant’s interest in any Stock which has been issued will become
non-forfeitable.

 14
 

9.2.          Conditions.

(a)           Conditions to
Issuance of Stock.  The Committee
acting in its absolute discretion may make the issuance of Stock under a Stock
Grant subject to the satisfaction of one, or more than one, condition which the
Committee deems appropriate under the circumstances for Eligible Employees,
Directors or consultants generally or for an Eligible Employee, a Director or a
consultant in particular, and the related Stock Grant Certificate shall set
forth each such condition and the deadline for satisfying each such
condition.  Stock subject to a Stock
Grant shall be issued in the name of an Eligible Employee, Director or consultant
only after each such condition, if any, has been timely satisfied, and any
Stock which is so issued shall be held by the Company pending the satisfaction
of the forfeiture conditions, if any, under § 9.2(b) for the related Stock
Grant.

(b)           Conditions on
Forfeiture of Stock or Cash Payment. 
The Committee acting in its absolute discretion may make any cash
payment due under a Stock Unit Grant or Stock issued in the name of an Eligible
Employee, Director or consultant under a Stock Grant non-forfeitable subject to
the satisfaction of one, or more than one, objective employment, performance or
other condition that the Committee acting in its absolute discretion deems
appropriate under the circumstances for Eligible Employees, Directors or
consultants generally or for an Eligible Employee, a Director or a consultant
in particular, and the related Stock Grant Certificate shall set forth each
such  condition, if any, and the
deadline, if any, for satisfying each such condition.  An Eligible Employee’s, Director’s or 

 15
 

consultant’s non-forfeitable interest in the
shares of Stock underlying a Stock Grant or the cash payable under a Stock Unit
Grant shall depend on the extent to which he or she timely satisfies each such
condition.  If a share of Stock is issued
under this § 9.2(b) before an Eligible Employee’s, Director’s or
consultant’s interest in such share of Stock is non-forfeitable, (1) such share
of Stock shall not be available for re-issuance under § 3 until such time,
if any, as such share of Stock thereafter is forfeited as a result of a failure
to timely satisfy a forfeiture condition and (2) the Company shall have the
right to condition any such issuance on the Eligible Employee, Director or
consultant first signing an irrevocable stock power in favor of the Company
with respect to the forfeitable shares of Stock issued to such Eligible
Employee, Director or consultant in order for the Company to effect any
forfeiture called for under the related Stock Grant Certificate.

(c)           Minimum Period of
Service.  If the only condition to
the forfeiture of a Stock Grant or a Stock Unit Grant is the completion of a
period of service, such period of service shall be no less than the three (3)
year period which starts on the date as of which the Stock Grant or Stock Unit
Grant is made unless the Committee determines that a shorter period of service
(or no period of service) better serves the Company’s interest.

9.3.          Dividends,
Voting Rights and Creditor Status.

(a)           Cash Dividends.  Except as otherwise set forth in a Stock
Grant Certificate, if a dividend is paid in cash on a share of Stock after such

 16
 

Stock has been issued under a Stock Grant but
before the first date that an Eligible Employee’s, Director’s or consultant’s
interest in such Stock (1) is forfeited completely or (2) becomes
completely non-forfeitable, the Company shall pay such cash dividend directly
to such Eligible Employee, Director or consultant.

(b)           Stock Dividends.  If a dividend is paid on a share of Stock in
Stock after such Stock has been issued under a Stock Grant but before the first
date that an Eligible Employee’s, Director’s or consultant’s interest in such
Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall hold such dividend Stock subject to the same
conditions under § 9.2(b) as the related Stock Grant.

(c)           Other.  If a dividend (other than a dividend
described in § 9.3(a) or § 9.3(b)) is paid with respect to a share of
Stock after such Stock has been issued under a Stock Grant but before the first
date that an Eligible Employee’s, Director’s or consultant’s interest in such
Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall hold such dividend in accordance with such
rules as the Committee shall adopt with respect to each such dividend.

(d)           Voting.  Except as otherwise set forth in a Stock
Grant Certificate, an Eligible Employee, Director or consultant shall have the
right to vote the Stock issued under his or her Stock Grant during the period
which comes after such Stock has been issued under a Stock Grant but before the
first date that an Eligible Employee’s, Director’s or consultant’s interest in

 17

such Stock (1) is forfeited completely or (2)
becomes completely non-forfeitable.

(e)                                  General
Creditor Status.  Each Eligible
Employee and each Director and each consultant to whom a Stock Unit grant is
made shall be no more than a general and unsecured creditor of the Company with
respect to any cash payable under such Stock Unit Grant.

9.4.          Satisfaction
of Forfeiture Conditions.  A share of
Stock shall cease to be subject to a Stock Grant at such time as an Eligible
Employee’s, Director’s or consultant’s interest in such Stock becomes
non-forfeitable under this Plan, and the certificate or other evidence of
ownership representing such share shall be transferred to the Eligible
Employee, Director or consultant as soon as practicable thereafter.

9.5.          Performance
Based Awards.

(a)                                  General.  The Committee shall have the sole and
absolute authority to make Stock Grants and Stock Unit Grants to Eligible
Employees subject to at least one condition related to one, or more than one,
performance goal based on the performance goals described in
§ 9.5(b).  A performance goal may be
set in any manner determined by the Committee, including looking to achievement
on an absolute basis or by relative comparison to peer groups or indexes.  A performance goal may be described in terms
of Company, subsidiary, major business segment, division or departmental
performance.

(b)                                 Performance
Goals.  A performance goal is one or
more objectively determinable measures related to (1) the Company’s return
over capital

 18
 

costs or increases in return over capital
costs, (2) the Company’s total earnings or the growth in such earnings, (3) the
Company’s consolidated earnings or the growth in such earnings, (4) the Company’s
earnings per share or the growth in such earnings, (5) the Company’s net
earnings or the growth in such earnings, (6) the Company’s earnings before
interest expense, taxes, depreciation, amortization and other non-cash items or
the growth in such earnings, (7) the Company’s earnings before interest and
taxes or the growth in such earnings, (8) the Company’s consolidated net income
or the growth in such income, (9) the value of the Company’s common stock or
the growth in such value, (10) the Company’s stock price or the growth in such
price, (11) the Company’s return on assets or the growth on such return, (12)
the Company’s cash flow or the growth in such cash flow, (13) the Company’s
total shareholder return or the growth in such return, (14) the Company’s
expenses or the reduction of such expenses, (15) the Company’s sales growth,
(16) the Company’s overhead ratios or changes in such ratios, (17) the Company’s
expense-to-sales ratios or the changes in such ratios, or (18) the Company’s
economic value added or changes in such value added.

(c)                                  Adjustments.  Subject to Section 9.5(d), when the Committee
determines whether a performance goal has been satisfied for any period, the
Committee may exclude any or all “extraordinary items” as determined under U.S.
generally accepted accounting principles and any other unusual or non-recurring
items, including, without limitation, the charges or costs

 19
 

associated with restructurings of the
Company, discontinued operations, and the cumulative effects of accounting
changes.  The Committee may also adjust
any performance goal for a period as it deems equitable in recognition of
unusual or non-recurring events affecting the Company, changes in applicable
tax laws or accounting principles, or such other factors as the Committee may
determine.

(d)                                 Covered
Employee Awards.  Notwithstanding any
other provisions of this Plan to the contrary, the following provisions shall
control with respect to any performance-based Stock Grant or Stock Unit Grant
that is made to an Eligible Employee who is a “covered employee” within the
meaning of Section 162(m)(4)(C)(ii) of the Code:

(1)                                  The
Committee shall establish the related performance goal(s) for each year not
later than the latest date permissible under Section 162(m) of the Code,
provided that the outcome is substantially uncertain at the time the Committee
actually establishes the performance goals.

(2)                                  The
Committee shall determine and certify in writing prior to payment of a
performance-based Stock Grant or Stock Unit Grant whether and to what extent
the selected performance goal(s) has (have) been satisfied.

(3)                                  Notwithstanding
the foregoing, the Committee, in its sole discretion, may reduce a
performance-based Stock Grant or Stock Unit Grant otherwise determined under
the Plan.

 20
 

(4)                                  In
the event of (a) any merger, consolidation, reorganization, recapitalization,
liquidation, reclassification, stock dividend, stock split, reverse stock
split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off), exchange, or any other similar change in
the corporate structure or capitalization of the Company affecting the Stock,
or (b) any purchase, acquisition, sale or disposition of a significant amount
of assets or a significant business, in each case with respect to the Company
or any other entity whose performance is relevant to the achievement of any
performance goal included in a performance award, the committee (or, if the
Company is not the surviving corporation in any such transaction, a committee
of the board of directors of the surviving corporation consisting solely of two
or more “outside directors” within the meaning of Section 162(m)(4)(C)(i) of
the Code) may, without the consent of any affected Participant, amend or modify
the terms of any outstanding performance award that includes any performance
goal based in whole or in part on the financial performance of the Company (or
any Subsidiary or division thereof) or such other entity so as equitably to
reflect such event, such that the criteria for evaluating such financial
performance of the Company or such other entity (and the achievement of the
corresponding performance goals) will be substantially the same (as determined
by the Committee or the

 21
 

committee of the board of directors of the
surviving corporation) following such event as prior to such event; provided,
however, that any such change to any outstanding performance award pursuant to
this Section 9.5(d) must be made in such a manner that it is independently
determinable by a hypothetical third party having knowledge of the relevant
facts, and the Committee shall take no action pursuant to this Section 9.5(d)
which would constitute an impermissible exercise of discretion within the
meaning of Section 162(m) of the Code, or would otherwise cause the Covered
Award to not be deductible under Section 162(m) of the Code.

(5)                                  The
maximum amount of a performance-based Stock Grant or Stock Unit Grant under
this Section 9.5(d) for any calendar year shall not exceed $10,000,000 limit
from Section 3.  This maximum amount may
not be increased without shareholder approval if failure to obtain such
approval could result in an award not being tax deductible to the Company.

(6)                                  The
Committee does not have any authority to amend or modify the terms of any
performance-based award under Section 9.5(d) in any manner that would impair
its deductibility under Section 162(m) of the Code.

 22
 

10.    NON-TRANSFERABILITY

10.1.        General
Rule.  Except as provided in
§ 10.2, no Option, Stock Grant, Stock Unit Grant or Stock Appreciation
Right shall be transferable by an Eligible Employee, Director or consultant
other than by will or by the laws of descent and distribution, and any Option
or Stock Appreciation Right shall be exercisable during an Eligible Employee’s,
Director’s or consultant’s lifetime only by the Eligible Employee, Director or
consultant.  The person or persons to
whom an Option or Stock Grant or Stock Unit Grant or Stock Appreciation Right
is transferred by will or by the laws of descent and distribution or pursuant
to § 10.2, thereafter shall be treated as the Eligible Employee, Director
or consultant.

10.2.        Transfers
to Family Members.  An Option or
Stock Grant, Stock Unit Grant or Stock Appreciation Right may be transferred by
an Eligible Employee, Director or consultant to a “family member” (as defined
for purposes of Form S-8 under the 1933 Act) of such Eligible Employee,
Director or consultant or to a trust exclusively for the benefit of one or more
of such family members of such Eligible Employee, Director or consultant;
provided such transfer is made as a gift without consideration, and such
transfer complies with applicable securities laws.

11.    SECURITIES
REGISTRATION

As a condition to
the receipt of shares of Stock under this Plan, the Eligible Employee, Director
or consultant shall, if so requested by the Company, agree to hold such shares
of Stock for investment and not with a view of resale or distribution to the
public and, if so requested by the Company, shall deliver to the Company a
written statement satisfactory to the Company to that effect.  Furthermore, if so requested by the Company,
the Eligible Employee, Director or consultant shall make a written
representation to the Company that he or she will not sell or offer for sale
any of such Stock unless a registration statement shall be in effect with respect
to such

 23
 

Stock under the 1933 Act
and any applicable state securities law or he or she shall have furnished to
the Company an opinion in form and substance satisfactory to the Company of
legal counsel satisfactory to the Company that such registration is not
required.  Certificates or other evidence
of ownership representing the Stock transferred upon the exercise of an Option
or Stock Appreciation Right or upon the lapse of the forfeiture conditions, if
any, on any Stock Grant may at the discretion of the Company bear a legend to
the effect that such Stock has not been registered under the 1933 Act or any
applicable state securities law and that such Stock cannot be sold or offered
for sale in the absence of an effective registration statement as to such Stock
under the 1933 Act and any applicable state securities law or an opinion in
form and substance satisfactory to the Company of legal counsel satisfactory to
the Company that such registration is not required.

12.    LIFE
OF PLAN

No Option or Stock
Appreciation Right shall be granted or Stock Grant or Stock Unit Grant made
under this Plan on or after the earlier of:

(1)                                  the
tenth anniversary of the effective date of this Plan (as determined under
§ 4), in which event this Plan otherwise thereafter shall continue in
effect until all outstanding Options and Stock Appreciation Rights have been
exercised in full or no longer are exercisable and all Stock issued under any
Stock Grants under this Plan have been forfeited or have become
non-forfeitable, or

(2)                                  the
date on which all of the Stock reserved under § 3 has (as a result of the
exercise of Options or Stock Appreciation Rights granted under this Plan or the
satisfaction of the forfeiture conditions, if any, on Stock Grants)

 24
 

been issued or no longer is available for use under
this Plan, in which event this Plan also shall terminate on such date.

13.    ADJUSTMENT

13.1.        Capital
Structure.  The grant caps described
in § 3.4, the number, kind or class (or any combination thereof) of shares of
Stock subject to outstanding Options and Stock Appreciation Rights granted
under this Plan and the Option Price of such Options and the SAR Value of such
Stock Appreciation Rights as well as the number, kind or class (or any
combination thereof) of shares of Stock subject to outstanding Stock Grants and
Stock Unit Grants made under this Plan shall be adjusted by the Committee in a
reasonable and equitable manner to preserve immediately after

(a)                                  any
equity restructuring or change in the capitalization of the Company, including,
but not limited to, spin offs, stock dividends, large non-reoccurring
dividends, rights offerings or stock splits, or

(b)                                 any
other transaction described in § 424(a) of the Code which does not
constitute a Change in Control of the Company

the aggregate
intrinsic value of each such outstanding Option, Stock Appreciation Right,
Stock Grant and Stock Unit Grant immediately before such restructuring or
recapitalization or other transaction.

13.2.        Available
Shares.  If any adjustment is made
with respect to any outstanding Option, Stock Appreciation Right, Stock Grant
or Stock Unit Grant under § 13.1, then the Committee shall adjust the
number, kind or class (or any combination thereof) of shares of Stock reserved
under § 3.1 so that there is a sufficient number, kind and class of shares
of Stock available for issuance pursuant to each such Option, Stock
Appreciation Right, Stock Grant and

 25
 

Stock Unit
Grant as adjusted under § 13.1 without seeking the approval of the Company’s
shareholders for such adjustment unless such approval is required under
applicable law or the rules of the stock exchange on which shares of Stock are
traded.  Furthermore, the Committee shall
have the absolute discretion to further adjust such number, kind or class (or
any combination thereof) of shares of Stock reserved under § 3.1 in light
of any of the events described in § 13.1(a) and § 13.1(b) to the
extent the Committee acting in good faith determines that a further adjustment
would be appropriate and proper under the circumstances and in keeping with the
purposes of this Plan without seeking the approval of the Company’s
shareholders for such adjustment unless such approval is required under
applicable law or the rules of the stock exchange on which shares of Stock are
traded.

13.3.        Transactions
Described in § 424 of the Code. 
If there is a corporate transaction described in § 424(a) of the
Code which does not constitute a Change in Control of the Company, the
Committee as part of any such transaction shall have the right to make Stock
Grants, Stock Unit Grants and Option and Stock Appreciation Right grants
(without regard to any limitations set forth under 3.4 of this Plan) to effect
the assumption of, or the substitution for, outstanding stock grants, stock
unit grants and option and stock appreciation right grants previously made by
any other corporation to the extent that such corporate transaction calls for
such substitution or assumption of such outstanding stock grants, stock unit
grants and stock option and stock appreciation right grants.  Furthermore, if the Committee makes any such
grants as part of any such transaction, the Committee shall have the right to
increase the number of shares of Stock available for issuance under § 3.1
by the number of shares of Stock subject to such grants without seeking the
approval of the Company’s shareholders for such adjustment

 26
 

unless such
approval is required under applicable law or the rules of the stock exchange on
which shares of Stock are traded.

13.4.        Fractional
Shares.  If any adjustment under this
§ 13 would create a fractional share of Stock or a right to acquire a
fractional share of Stock under any Option, Stock Appreciation Right or Stock
Grant, such fractional share shall be disregarded and the number of shares of
Stock reserved under this Plan and the number subject to any Options or Stock
Appreciation Right grants and Stock Grants shall be the next lower number of
shares of Stock, rounding all fractions downward.  An adjustment made under this § 13 by
the Committee shall be conclusive and binding on all affected persons.

14.    CHANGE
IN CONTROL

If there is a
Change in Control of the Company, then as of the Change Effective Date for such
Change in Control any and all conditions to the exercise of all outstanding
Options and Stock Appreciation Rights on such date and any and all outstanding
issuance and forfeiture conditions on any Stock Grants and Stock Unit Grants on
such date automatically shall be deemed 100% satisfied as of such Change
Effective Date, and the Board shall have the right (to the extent expressly
required as part of such transaction) to cancel such Options, Stock
Appreciation Rights, Stock Grants and Stock Unit Grants after providing each
Eligible Employee, Director and consultant a reasonable period to exercise his
or her Options and Stock Appreciation Rights and to take such other action as
necessary or appropriate to receive the Stock subject to any Stock Grants and
the cash payable under any Stock Unit Grants; provided, if any issuance or
forfeiture condition described in this § 14 relates to satisfying any
performance goal and there is a target for such goal, then, subject to the
limitations under Section 9.5(d), such issuance or forfeiture condition shall
be deemed satisfied under this § 14 only to the extent of

 27
 

such target unless such
target has been exceeded before the Change Effective Date, in which event such
issuance or forfeiture condition shall be deemed satisfied to the extent such
target had been so exceeded.

15.AMENDMENT OR
TERMINATION

This Plan may be
amended by the Board from time to time to the extent that the Board deems
necessary or appropriate; provided, however, (a) no amendment shall be made
absent the approval of the shareholders of the Company to the extent such
approval is required under applicable law or the rules of the stock exchange on
which shares of Stock are listed and (b) no amendment shall be made to
§ 14 on or after the date of any Change in Control which might adversely
affect any rights which otherwise would vest on the related Change Effective
Date.  The Board also may suspend
granting Options or Stock Appreciation Rights or making Stock Grants or Stock
Unit Grants under this Plan at any time and may terminate this Plan at any
time; provided, however, the Board shall not have the right unilaterally to
modify, amend or cancel any Option or Stock Appreciation Right granted or Stock
Grant made before such suspension or termination unless (1) the Eligible
Employee, Director or consultant consents in writing to such modification, amendment
or cancellation or (2) there is a dissolution or liquidation of the
Company or a transaction described in § 13.1 or § 14.

16.MISCELLANEOUS

16.1.        Shareholder
Rights.  No Eligible Employee,
Director or consultant shall have any rights as a shareholder of the Company as
a result of the grant of an Option or a Stock Appreciation Right pending the
actual delivery of the Stock subject to such Option or Stock Appreciation Right
to such Eligible Employee, Director or consultant.  An Eligible Employee’s,

 28
 

Director’s or
consultant’s rights as a shareholder in the shares of Stock which remain
subject to forfeiture under § 9.2(b) shall be set forth in the related
Stock Grant Certificate.

16.2.        No
Contract of Employment.  The grant of
an Option or a Stock Appreciation Right or a Stock Grant or Stock Unit Grant to
an Eligible Employee, Director or consultant under this Plan shall not
constitute a contract of employment or a right to continue to serve on the
Board and shall not confer on an Eligible Employee, Director or consultant any
rights upon his or her termination of employment or service in addition to
those rights, if any, expressly set forth in this Plan or the related Option
Certificate, Stock Appreciation Right Certificate, or Stock Grant Certificate.

16.3.        Withholding.  Each Option, Stock Appreciation Right, Stock
Grant and Stock Unit Grant shall be made subject to the condition that the
Eligible Employee, Director or consultant consents to whatever action the
Committee directs to satisfy the minimum statutory federal and state tax
withholding requirements, if any, which the Company determines are applicable
to the exercise of such Option or Stock Appreciation Right or to the
satisfaction of any forfeiture conditions with respect to Stock subject to a Stock
Grant or Stock Unit Grant issued in the name of the Eligible Employee, Director
or consultant.  No withholding shall be
effected under this Plan which exceeds the minimum statutory federal and state
withholding requirements.

16.4.        Construction.  All references to sections (§) are to
sections (§) of this Plan unless otherwise indicated.  This Plan shall be construed under the laws
of the State of Delaware.  Each term set
forth in § 2 shall, unless otherwise stated, have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.  Finally, if there is any
conflict between the terms

 29
 

of this Plan
and the terms of any Option Certificate, Stock Appreciation Right Certificate
or Stock Grant Certificate, the terms of this Plan shall control.

16.5.        Other
Conditions.  Each Option Certificate,
Stock Appreciation Right Certificate or Stock Grant Certificate may require
that an Eligible Employee, Director or consultant (as a condition to the
exercise of an Option or a Stock Appreciation Right or the issuance of Stock
subject to a Stock Grant) enter into any agreement or make such representations
prepared by the Company, including (without limitation) any agreement which
restricts the transfer of Stock acquired pursuant to the exercise of an Option
or a Stock Appreciation Right or a Stock Grant or provides for the repurchase
of such Stock by the Company.

16.6.        Rule
16b-3.  The Committee shall have the
right to amend any Option, Stock Grant or Stock Appreciation Right to withhold
or otherwise restrict the transfer of any Stock or cash under this Plan to an
Eligible Employee, Director or consultant as the Committee deems appropriate in
order to satisfy any condition or requirement under Rule 16b-3 to the extent
Rule 16 of the 1934 Act might be applicable to such grant or transfer.

16.7.        Coordination
with Employment Agreements and Other Agreements.  If the Company enters into an employment
agreement or other agreement with an Eligible Employee, Director or consultant
which expressly provides for the acceleration in vesting of an outstanding
Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant or for the
extension of the deadline to exercise any rights under an outstanding Option,
Stock Appreciation Right, Stock Grant or Stock Unit Grant, any such
acceleration or extension shall be deemed effected pursuant to, and in
accordance with, the terms of such outstanding Option, Stock Appreciation Right,
Stock Grant or Stock Unit Grant and this Plan even if such employment agreement
or other agreement is first effective after the date the outstanding Option or
Stock Appreciation Right was

 30
 

granted or the
Stock Grant or Stock Unit Grant was made; provided, however, no extension of
the deadline to exercise any rights under an outstanding Option or Stock
Appreciation Right shall be permitted to the extent such extension would cause
the Option or Stock Appreciation Right to become subject to the requirements of
Section 409A of the Code.

 31Exhibit
10.1

FIFTH
AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

THIS
FIFTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is
entered into as of May 7, 2007, among UNIVERSAL
AMERICAN FINANCIAL CORP., a New York corporation (the “Borrower”), the Banks party to the
Credit Agreement (hereinafter defined) and BANK OF AMERICA, N.A.,
as the Administrative Agent for the Banks.

The
Borrower, the Banks and the Administrative Agent are party to the Amended and
Restated Credit Agreement dated as of May 28, 2004, as amended by the
First Amendment to Amended and Restated Credit Agreement dated as of June 2,
2005, the Waiver and Second Amendment to Amended and Restated Credit Agreement
dated as of December 30, 2005, the Third Amendment to Amended and Restated
Credit Agreement dated as of November 29, 2006 and the Fourth Amendment to
Amended and Restated Credit Agreement dated as of March 22, 2007 (the “Credit Agreement”), and
have agreed, upon the following terms and conditions, to amend the Credit
Agreement in certain respects. 
Accordingly, for valuable and acknowledged consideration, the Borrower,
the Banks and the Administrative Agent agree as follows:

1.             Terms and
References.  Unless
otherwise stated in this Amendment, (a) terms defined in the Credit Agreement
have the same meanings when used in this Amendment and (b) references to “Sections” are to the Credit
Agreement’s sections.

2.             Amendment.
Section 7.15(a)(ii)(x) is amended to read in its entirety as follows:

“(x) no part of such preferred stock is
mandatorily redeemable (whether on a scheduled basis or as a result of the
occurrence of any event or circumstance) prior to June 1, 2029 and”

3.             Acknowledgment.  The Banks and the Administrative Agent
acknowledge that no prepayment of the Term Loans shall be required under
Section 3.03(i)(e) in connection with the issuance, anticipated to occur on or
before June 1, 2007 pursuant to that certain Securities Purchase Agreement
dated as of the date hereof, among the Borrower and certain investors, of the
Borrower’s Series A Preferred Stock and Series B Preferred Stock for an
aggregate purchase price of $100,000,000; provided that the proceeds of
issuance are used in accordance with the requirements of the Credit Agreement.

4.             Conditions
Precedent to Effectiveness of Amendment.  This Amendment shall not be effective until
the Administrative Agent receives: (a) counterparts of this Amendment executed
by the Borrower, the Subsidiary Guarantors, the Required Banks and the
Administrative Agent; (b) payment
of all expenses, including legal fees and expenses of counsel to the
Administrative Agent, incurred by the Administrative Agent in connection with
this Amendment, to the extent invoiced to the Borrower on or prior to the date
hereof; and (c) such other agreements, documents, instruments and items as the
Administrative Agent may reasonably request, including, without limitation,
documents evidencing the due authorization of the execution, delivery and
performance by the Borrower and each of the Subsidiary Guarantors of this
Amendment, the incumbency of the officer of the Borrower and each of the
Subsidiary Guarantors executing this Amendment, and any other matters relevant
thereto.

5.             Representations.  The Borrower represents and warrants to the Administrative Agent
and the Banks as follows:  (a) the
execution, delivery and performance by the Borrower of this Amendment and the
Credit Agreement, as amended hereby, have been duly authorized by all necessary
corporate action; (b) all representations and warranties made or deemed made by
the Borrower in the Credit Documents are true and correct as of the date
hereof, except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and warranties

were true and
accurate on and as of such earlier date) and except for changes in factual
circumstances not prohibited by the Credit Agreement; and (c) no Default or
Event of Default has occurred and is continuing as of the date hereof.

6.             Effect of Amendment.  This Amendment is a Credit Document.  Except as expressly modified and amended by
this Amendment, all of the terms, provisions and conditions of the Credit
Documents shall remain unchanged and in full force and effect.  If any part of this Amendment is for any
reason found to be unenforceable, all other portions of it shall nevertheless
remain enforceable.  The Credit Documents
and any and all other documents heretofore, now or hereafter executed and delivered
pursuant to the terms of the Credit Agreement are hereby amended so that any
reference to the Credit Agreement shall mean a reference to the Credit
Agreement as amended hereby.

7.             Expenses.  The Borrower shall pay all reasonable fees
and expenses paid or incurred by the Administrative Agent incident to this
Amendment, including, without limitation, the reasonable fees and expenses of
the Administrative Agent’s counsel in connection with the negotiation,
preparation, delivery and execution of this Amendment and any related
documents.

8.             Governing Law.  This Amendment shall be governed by and
construed in accordance with and be governed by the laws of the State of New
York, without regard to conflict of laws principles.

9.             Counterparts.  This
Amendment may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.

10.           ENTIRETY. 
THIS AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER CREDIT DOCUMENTS
EMBODY THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERCEDE ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT MATTER
HEREOF.  THESE CREDIT DOCUMENTS REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

11.           Parties.  This Amendment binds and inures to the
benefit of the Borrower, the Subsidiary Guarantors, the Administrative Agent,
the Banks and their respective permitted successors and assigns.

[REMAINDER OF PAGE INTENTIONALLY
BLANK.

SIGNATURE PAGES FOLLOW.]

Signature
Page to that certain Fifth Amendment to Amended and Restated Credit Agreement
dated as of the date first set forth above, among Universal American Financial
Corp., as the Borrower, Bank of America, N.A., as the Administrative Agent, and
certain Banks party thereto.

 

	
  

  	
   

  	
  UNIVERSAL AMERICAN FINANCIAL CORP., 

  as the Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert A. Waegelein

  
	
   

  	
   

  	
   

  	
  Robert Waegelein, Executive Vice President and
  Chief Financial Officer

  
	
   

  	
   

  	
   

  

 

Signature
Page to that certain Fifth Amendment to Amended and Restated Credit Agreement
dated as of the date first set forth above, among Universal American Financial
Corp., as the Borrower, Bank of America, N.A., as the Administrative Agent, and
certain Banks party thereto.

	
  

  	
   

  	
  BANK OF AMERICA, N.A., as a
  Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Joseph L. Corah

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Joseph L. Corah

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ACKNOWLEDGED:

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A., as the

  
	
   

  	
   

  	
  Administrative Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Aamir Saleem

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Aamir Saleem

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
							

 

Signature
Page to that certain Fifth Amendment to Amended and Restated Credit Agreement
dated as of the date first set forth above, among Universal American Financial
Corp., as the Borrower, Bank of America, N.A., as the Administrative Agent, and
certain Banks party thereto.

	
  

  	
   

  	
   

  
	
   

  	
  THE CIT GROUP/EQUIPMENT FINANCING, INC.,
  as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David H. Selden

  
	
   

  	
   

  	
  Name:

  	
  David H. Selden

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

 

Signature Page to that
certain Fifth Amendment to Amended and Restated Credit Agreement dated as of
the date first set forth above, among Universal American Financial Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain Banks
party thereto.

	
  

  
	
   

  
	
   

  	
  LASALLE BANK, N.A., as a Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew C. Haak

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Andrew C. Haak

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  

 

 

 

Signature Page to that certain Fifth Amendment to
Amended and Restated Credit Agreement dated as of the date first set forth
above, among Universal American Financial Corp., as the Borrower, Bank of
America, N.A., as the Administrative Agent, and certain Banks party thereto.

	
  

  
	
   

  	
  THE BANK OF NEW YORK, as a Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Lokay, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  John M. Lokay, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

Signature Page to that certain Fifth Amendment to Amended and Restated
Credit Agreement dated as of the date first set forth above, among Universal
American Financial Corp., as the Borrower, Bank of America, N.A., as the
Administrative Agent, and certain Banks party thereto.

 

	
  

  
	
   

  	
  ING CAPITAL LLC, as a Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary Forstner

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mary Forstner

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  	
   

  

 

 

Signature Page to that certain Fifth Amendment to Amended and Restated
Credit Agreement dated as of the date first set forth above, among Universal
American Financial Corp., as the Borrower, Bank of America, N.A., as the
Administrative Agent, and certain Banks party thereto.

 

	
  

  
	
   

  	
  SUNTRUST BANK, as a Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christine E. Moss

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Christine E. Moss

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  First Vice President

  	
   

  

 

 

 

 

Signature Page to that
certain Fifth Amendment to Amended and Restated Credit Agreement dated as of
the date first set forth above, among Universal American Financial Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain Banks
party thereto.

	
  

  
	
   

  
	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,
  as a Bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter I. Bystol

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter I. Bystol

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  	
   

  

 

 

Signature Page to that
certain Fifth Amendment to Amended and Restated Credit Agreement dated as of
the date first set forth above, among Universal American Financial Corp., as
the Borrower, Bank of America, N.A., as the Administrative Agent, and certain
Banks party thereto.

	
  

  
	
   

  
	
   

  	
  RAYMOND JAMES BANK, FSB,
  as a Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A. Ciccolini

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Joseph A. Ciccolini

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President-Senior Corporate Banker

  	
   

  

 

To induce the
Administrative Agent and the Banks to enter into this Amendment, the
undersigned consent and agree (a) to its execution and delivery and terms and
conditions thereof, (b) that this document in no way releases, diminishes,
impairs, reduces, or otherwise adversely affects any Liens, Subsidiary
Guaranties, assurances, or other obligations or undertakings of any of the
undersigned under any Credit Documents, and (c) that this Amendment binds each
of the undersigned and its successors and permitted assigns and inures to the
benefit of the Administrative Agent, the Banks, and their respective successors
and permitted assigns.

 

	
  WORLDNET SERVICES CORP., as a 

  	
   

  	
  HERITAGE HEALTH SYSTEMS OF TEXAS, 

  
	
  Guarantor

  	
   

  	
  INC., as a
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert A. Waegelein

  	
   

  	
  By:

  	
  /s/ Theodore M. Carpenter, Jr.

  
	
   

  	
  Name:

  	
  Robert A. Waegelein

  	
   

  	
   

  	
  Name:

  	
  Theodore M. Carpenter, Jr.

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UNIVERSAL AMERICAN FINANCIAL

  	
   

  	
  HHS TEXAS MANAGEMENT, INC.,
  as a

  
	
  SERVICES, INC.,
  as a Guarantor

  	
   

  	
  Guarantor

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert A. Waegelein

  	
   

  	
  By:

  	
  /s/ Theodore M. Carpenter, Jr.

  
	
   

  	
  Name:

  	
  Robert
  A. Waegelein

  	
   

  	
   

  	
  Name:

  	
  Theodore M. Carpenter, Jr.

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  QUINCY COVERAGE CORPORATION,
  as a 

  	
   

  	
  CHCS SERVICES INC.,
  as a Guarantor 

  
	
  Guarantor

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert A. Waegelein

  	
   

  	
  By:

  	
  /s/ Robert A. Waegelein

  
	
   

  	
  Name:

  	
  Robert
  A. Waegelein

  	
   

  	
   

  	
  Name:

  	
  Robert A. Waegelein

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HERITAGE HEALTH SYSTEMS, INC., as
  a

  	
   

  	
   

  	
   

  	
   

  
	
  Guarantor

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Theodore M. Carpenter, Jr.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Theodore M. Carpenter, Jr.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  

 

 

 

	
  PSO
  MANAGEMENT OF TEXAS, LLC, as a 

  	
   

  	
  HHS TEXAS MANAGEMENT, L.P.,
  as a 

  
	
  Guarantor 

  	
   

  	
  Guarantor 

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Theodore M. Carpenter, Jr.

  	
   

  	
  By:

  	
  HHS Texas Management, Inc.,
  its 

  
	
   

  	
  Name:

  	
  Theodore M. Carpenter, Jr.

  	
   

  	
   

  	
  general partner

  
	
   

  	
  Title:

  	
  President

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Theodore
  M. Carpenter, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Theodore M. Carpenter, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]