Document:

exv4w1

Exhibit 4.1

US AIRWAYS GROUP, INC.

2008 EQUITY INCENTIVE PLAN

Effective June 11, 2008

     1. Purpose.  The purpose of this US Airways Group, Inc. 2008 Equity Incentive Plan (the
“Plan”) is to further the long term stability and financial success of US Airways Group, Inc. and
our related companies by attracting and retaining employees and other service providers through the
use of cash and stock incentives. We believe that ownership of our common stock and the use of cash
incentives will stimulate the efforts of those service providers upon whose judgment and interests
we are and will be largely dependent for the successful conduct of our business. We also believe
that these awards will strengthen the desire of our service providers to remain with us and will
further identify their interests with those of our shareholders. We also intend to use the Plan to
grant stock incentives to compensate non-employee members of our Board of Directors.

     The Plan replaces and supersedes the US Airways Group, Inc. 2005 Equity Incentive Plan,
effective as of September 27, 2005 (the “Prior Plan”). Upon approval of the Plan by our
shareholders, no additional awards shall be made under the Prior Plan, although outstanding awards
previously made under the Prior Plan will continue to be governed by the terms and conditions of
the Prior Plan. Shares that are subject to outstanding awards under the Prior Plan that expire, are
forfeited or otherwise terminate unexercised may be subjected to new awards under the Plan as
provided in Section 4.

     2. Definitions.  As used in the Plan, the following terms have the meanings indicated:

     (a) “Act” means the Securities Exchange Act of 1934, as amended.

     (b) “Affected Corporation” means either (i) with respect to a Participant who at the time of
the event provides services to the Company or to any corporation in a chain of corporations in
which each corporation owns more than 50 percent of the total fair market value and total voting
power of another corporation in the chain beginning with the Company, the Company; or (ii) with
respect to a Participant who at the time of the event provides services to US Airways or to any
corporation in a chain of corporations in which each corporation owns more than 50 percent of the
total fair market value and total voting power of another corporation in the chain beginning with
US Airways, US Airways.

     (c) “Applicable Withholding Taxes” means the aggregate amount of federal, state and local
income and employment taxes that an Employer is required to withhold in connection with any
Performance Grant, Bonus Award, award of Performance Shares, Vested Shares or Vested Units, any
lapse of restrictions on Restricted Stock, any compensatory dividends paid on Restricted Stock,
any vesting of Restricted Stock Units, or any exercise of a Nonstatutory Stock Option or Stock
Appreciation Right.

     (d) “Award” means any Incentive Award or Director Award.

     (e) “Board” means the board of directors of the Company.

     (f) “Bonus Award” means a right to receive cash subject to an annual or other short- or
long-term bonus program as set forth under Section 7.

     (g) “Change of Control” means, unless otherwise provided in the Grant Agreement with respect
to a particular Award, the occurrence of any of the following:

     (i) within any 12-month period, the individuals who constitute the Board at the beginning
of such period (the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director subsequent to the
Effective Date whose election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent Board; or

1

 

     (ii) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Act, other than the Company, acquires (directly or indirectly) the beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Act) of more than 50% of the combined
voting power of the then outstanding voting securities of the Company or US Airways entitled to
vote generally in the election of directors (“Voting Power”); or

     (iii) the Company or US Airways consummates a merger, consolidation or reorganization of
the Company or US Airways or any other similar transaction or series of related transactions
(collectively, a “Transaction”) other than (A) a Transaction in which the voting securities of
the Company or US Airways outstanding immediately prior thereto become (by operation of law),
or are converted into or exchanged for, voting securities of the surviving corporation or its
parent corporation immediately after such Transaction that are owned by the same person or
entity or persons or entities as immediately prior thereto and possess at least 50% of the
Voting Power held by the voting securities of the surviving corporation or its parent
corporation, or (B) a Transaction effected to implement a recapitalization of the Company or US
Airways (or similar transaction) in which no person (excluding the Company or US Airways or any
person who held more than 50% of the Voting Power immediately prior to such Transaction)
acquires more than 50% of the Voting Power; or

     (iv) the Company or US Airways sells or otherwise disposes of, or consummates a
transaction or series of related transactions providing for the sale or other disposition of,
all or substantially all of the stock or assets of US Airways, or enters into a plan for the
complete liquidation of either the Company or US Airways.

     (h) “Code” means the Internal Revenue Code of 1986, as amended.

     (i) “Committee” means the Compensation and Human Resources Committee of the Board (or any
successor Board committee designated by the Board to administer the Plan), provided that, if any
member of the Compensation and Human Resources Committee does not qualify as (i) an outside
director for purposes of Code section 162(m), (ii) a non-employee director for purposes of
Rule 16b-3, and (iii) an independent director for purposes of the rules of the exchange on which
the Company Stock is traded, the remaining members of the committee (but not less than two
members) shall be constituted as a subcommittee to act as the Committee for purposes of the Plan.

     (j) “Company” means US Airways Group, Inc.

     (k) “Company Stock” means the common stock of the Company, par value $.01 per share. In the
event of a change in the capital structure of the Company (as provided in Section 19), the shares
resulting from the change shall be deemed to be Company Stock within the meaning of the Plan.
Shares of Company Stock may be issued under this Plan without cash consideration.

     (l) “Date of Grant” means (i) with respect to a Non-Option Award, the date on which the
Committee (or, with respect to a Director Award, the Board) grants the award; (ii) with respect
to a Nonstatutory Option or Stock Appreciation Right, the date on which the Committee (or, with
respect to a Director Award, the Board) completes the corporate action necessary to create a
legally binding right constituting the Nonstatutory Stock Option or Stock Appreciation Right; or
(iii) with respect to an Incentive Stock Option, the date on which the Committee completes the
corporate action constituting an offer of stock for sale to a Participant under the terms and
conditions of the Incentive Stock Option. With respect to any Award, the Committee (and, with
respect to any Director Award, the Board) may specify a future date on which the grant is to be
granted or become effective.

     (m) “Director Award” means any Nonstatutory Option, Stock Appreciation Right, share of
Restricted Stock, Vested Share, Restricted Stock Unit or Vested Unit awarded to an Outside
Director under the Plan.

     (n) “Disability” means, as to an Incentive Stock Option, a Disability within the meaning of
Code section 22(e)(3). As to all other Awards, Disability (or variations thereof) means, unless
otherwise provided in the Grant Agreement with respect to the award, a Disability within the
meaning of Code section 409A(a)(2)(C) and Treasury Regulations section 1.409A-3(i)(4) (or any
successor provision). The Committee (or, with respect to a Director Award, the Board) shall
determine whether a Disability exists and the determination shall be conclusive.

     (o) “Effective Date” means the date described in Section 16.

2

 

     (p) “Employee” means an individual employed by the Company or a Related Company as a
common-law employee.

     (q) “Employer” means the Company or Related Company with respect to which an Employee
provides services.

     (r) “Fair Market Value” means the closing price per share of Company Stock on the exchange
on which the Company Stock has the highest trading volume on the Date of Grant or any other date
for which the value of Company Stock must be determined under the Plan, or, if the determination
date is not a trading day, on the most recent trading day immediately preceding the determination
date.

     (s) “Grant Agreement” means the written agreement between the Company and a Participant
containing the terms and conditions with respect to an Award.

     (t) “Incentive Award” means any Performance Grant, Bonus Award, Performance Share, Option,
Stock Appreciation Right, share of Restricted Stock, Vested Share, Restricted Stock Unit or
Vested Unit awarded to a Service Provider under the Plan.

     (u) “Incentive Stock Option” means an Option intended to meet the requirements of, and
qualify for favorable federal income tax treatment under, Code section 422.

     (v) “Non-Option Award” means an Award other than an Option or Stock Appreciation Right.

     (w) “Nonstatutory Stock Option” means an Option that does not meet the requirements of Code
section 422, or, even if meeting the requirements of Code section 422, is not intended to be an
Incentive Stock Option and is so designated.

     (x) “Option” means a right to purchase Company Stock granted under the Plan, at a price
determined in accordance with the Plan granted under Section 13.

     (y) “Outside Director” means a member of the Board who is not an Employee and who meets any
other qualifications that may be established by the Board to be treated as an Outside Director
under the Plan.

     (z) “Participant” means any Service Provider or Outside Director who receives an Award under
the Plan.

     (aa) “Performance Criteria” means the performance of the Company, any Related Company, any
subsidiary, division, business unit thereof, or any individual using one or more of the following
measures, either on an operating or GAAP basis where applicable, including or excluding
nonrecurring or extraordinary items where applicable, and including measuring the performance of
any of the following relative to a defined peer group of companies or an index or, where
applicable, on a per-share or per seat-mile basis: (i) earnings before interest, taxes,
depreciation, rent and amortization expenses (“EBITDAR”); (ii) earnings before interest, taxes,
depreciation and amortization (“EBITDA”); (iii) earnings before interest and taxes (“EBIT”);
(iv) EBITDAR, EBITDA, EBIT or earnings before taxes and unusual or nonrecurring items as measured
either against the annual budget or as a ratio to revenue or return on total capital; (v) net
earnings; (vi) earnings per share; (vii) net income (before or after taxes); (viii) profit
margin; (ix) operating margin; (x) operating income; (xi) net operating income; (xii) net
operating income after taxes; (xiii) growth; (xiv) net worth; (xv) cash flow; (xvi) cash flow per
share; (xvii) total stockholder return; (xviii) return on capital, assets, equity or investment;
(xix) stock price performance; (xx) revenues; (xxi) revenues per available seat mile;
(xxii) costs; (xxiii) costs per available seat mile; (xxiv) working capital; (xxv) capital
expenditures; (xxvi) improvements in capital structure; (xxvii) economic value added; (xxviii)
industry indices; (xxix) regulatory ratings; (xxx) customer satisfaction ratings; (xxxi) expenses
and expense ratio management; (xxxii) debt reduction; (xxxiii) profitability of an identifiable
business unit or product; (xxxiv) levels of expense, cost or liability by category, operating
unit or any other delineation; (xxxv) implementation or completion of projects or processes;
(xxxvi) combination of airline operating certificates within a specified period;
(xxxvii) measures of operational performance (including, without limitation, U.S. Department of
Transportation performance rankings in operational areas), quality, safety, productivity or
process improvement; (xxxviii) measures of employee satisfaction or employee engagement.

3

 

     (bb) “Performance Goal” means an objectively determinable performance goal established by
the Committee that relates to one or more Performance Criteria.

     (cc) “Performance Grant” means a right to receive cash or Company Stock subject to the
attainment of Performance Goals as set forth under Section 6.

     (dd) “Performance Share” means a right to receive a share of Company Stock subject to the
satisfaction of performance conditions as set forth in Section 8.

     (ee) “Plan” means this US Airways Group, Inc. 2008 Equity Incentive Plan, as it may be
amended from time to time.

     (ff) “Plan Year” means the calendar year.

     (gg) “Qualifying Change of Control” means the date on which the Affected Corporation
experiences a change in ownership (as described in subsection (i)), a change in effective control
(as described in subsection (ii)), or a change in the ownership of a substantial portion of its
assets (as described in subsection (iii)):

     (i) any person or more than one person acting as a group acquires beneficial ownership of
Affected Corporation stock that, together with the Affected Corporation stock already held by
such person or group, represents more than 50 percent of the total fair market value or total
voting power of the Affected Corporation stock; provided, however, that if any one person or
more than one person acting as a group is considered to own more than 50 percent of the total
fair market value or total voting power of the Affected Corporation stock, the acquisition of
additional stock by the same person or persons is not considered to cause a change in the
ownership of the Affected Corporation for purposes of this subsection (i) or to cause a change
in effective control of the Affected Corporation for purposes of subsection (ii);

     (ii) (1) any person or more than one person acting as a group acquires (or has acquired
during the twelve-consecutive-month period ending on the date of the most recent acquisition by
such person or persons) beneficial ownership of Affected Corporation stock possessing
30 percent or more of the total voting power of the Affected Corporation stock; or (2) a
majority of members of the Board is replaced during a twelve-consecutive-month period by
directors whose appointment or election is not endorsed by a majority of the members of the
Board before the date of the appointment or election; provided, however, that if any one person
or more than one person acting as a group is considered to effectively control the Affected
Corporation for purposes of this subsection (ii), the acquisition of additional control of the
corporation by the same person or persons is not considered to cause a change in the effective
control for purposes of this subsection (ii) or to cause a change in ownership of the Affected
Corporation for purposes of subsection (i); or

     (iii) any person or more than one person acting as a group acquires (or has acquired
during the twelve-consecutive-month period ending on the date of the most recent acquisition by
such person or group) assets from the Affected Corporation having a total gross fair market
value equal to 40 percent or more of the total gross fair market value of all of the assets of
the Affected Corporation immediately prior to such acquisition or acquisitions; provided that a
transfer of assets by an Affected Corporation is not treated as a change in the ownership of
such assets if the assets are transferred to (I) a shareholder of the Affected Corporation
immediately before the asset transfer in exchange for or with respect to Affected Corporation
stock; (II) an entity, 50 percent or more of the total fair market value or total voting power
of which is owned, directly or indirectly, by the Affected Corporation; (III) a person or more
than one person acting as a group that owns, directly or indirectly, 50 percent or more of the
total fair market value or total voting power of all outstanding Affected Corporation stock; or
(IV) an entity, at least 50 percent of the total fair market value or total voting power of
which is owned, directly or indirectly, by a person described in (III) above. Except as
otherwise provided in this subsection (iii), a person’s status is determined immediately after
the transfer of the assets. For purposes of this subsection (iii), “gross fair market value“
means the value of the assets of the Affected Corporation, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such assets.

4

 

     For purposes of this Section 2(gg), the term “group“ shall have the meaning provided in
Sections 1.409A-3(i)(5)(v)(B), (vi)(D) or (vii)(C) of the Treasury Regulations (or any successor
provisions), as applicable. The term “beneficial ownership“ shall have the meaning provided in
Section 1.409A-3(i)(5)(v)(iii) of the Treasury Regulations (or any successor provision).
Notwithstanding anything in this Section 2(gg) to the contrary, unless otherwise provided in the
Grant Agreement with respect to a particular Award, an event which does not constitute a change
in the ownership, a change in the effective control, or a change in the ownership of a
substantial portion of the assets of the Affected Corporation, each as defined in
Section 1.409A-3(i)(5) of the Treasury Regulations (or any successor provision), shall not
constitute a Qualifying Change of Control for purposes of this Plan.

     (hh) “Related Company” means, (i) for purposes of determining eligibility to receive an
Incentive Stock Option, any “parent corporation“ with respect to the Company within the meaning
of Code section 424(e) or any “subsidiary corporation“ with respect to the Company within the
meaning of Code section 424(f); (ii) for purposes of determining eligibility to receive a
Nonstatutory Stock Option or Stock Appreciation Right, any corporation or other entity in a chain
of corporations or other entities in which each corporation or other entity has a controlling
interest (within the meaning of Treasury Regulations section 1.409A-1(b)(5)(E)(1) (or any
successor provision)) in another corporation or other entity in the chain, beginning with a
corporation or other entity in which the Company has a controlling interest; and (iii) for all
other purposes under the Plan, any corporation, trade or business that would be required to be
treated as a single employer with the Company under Code sections 414(b) or (c), provided that,
in applying Code sections 1563(a)(1), (2) and (3) for purposes of determining a controlled group
of corporations, or in applying Treasury Regulations section 1.414(c)-2 for purposes of
determining trades or businesses under common control, the phrase “at least 50%“ shall replace
the phrase “at least 80%“ each time it appears in those sections.

     (ii) “Repricing” means, with respect to an Option or Stock Appreciation Right, any of the
following: (i) the lowering of the exercise price after the Date of Grant; (ii) the taking of any
other action that is treated as a repricing under generally accepted accounting principles; or
(iii) the cancellation of the Option or Stock Appreciation Right at a time when its exercise
price (or, with respect to the Stock Appreciation Right, the Fair Market Value of the Company
Stock covered by the Stock Appreciation Right on the Date of Grant) exceeds the Fair Market Value
of the underlying Company Stock in exchange for any other Award, unless the cancellation and
exchange occurs in connection with a Corporate Event (as defined in Section 19(b) below).

     (jj) “Restricted Stock” means Company Stock awarded upon the terms and subject to
restrictions as set forth in Section 9.

     (kk) “Restricted Stock Unit” means a right to receive Company Stock or cash awarded upon the
terms and subject to vesting conditions as set forth in Section 11.

     (ll) “Retirement” means, unless otherwise provided in the Grant Agreement for a particular
Award, a Participant’s termination of employment or other separation from service on or after
age 65.

     (mm) “Rule 16b-3” means Rule 16b-3 of the Securities and Exchange Commission promulgated
under the Act, as amended from time to time.

     (nn) “Service Provider” means an Employee, advisor, consultant or other natural person
employed by or providing bona fide services to the Company or a Related Company, excluding any
Outside Director.

     (oo) “Stock Appreciation Right” means a right to receive Company Stock or cash granted under
Section 14.

     (pp) “Tandem Right” means a kind of Stock Appreciation Right granted in connection with a
Nonstatutory Stock Option as described in Section 14.

     (qq) “Taxable Year” means the fiscal period used by the Company for reporting taxes on its
income under the Code.

     (rr) “Ten Percent Shareholder” means a person who owns, directly or indirectly, stock
possessing more than ten percent of the total combined voting power of all classes of stock of
the Company or any Related Company. Indirect ownership of stock shall be determined in accordance
with Code section 424(d).

5

 

     (ss) “Treasury Regulations” mean the final, temporary or proposed regulations issued by the
Treasury Department and/or Internal Revenue Service as codified in Title 26 of the United States
Code of Federal Regulations.

     (tt) “US Airways” means US Airways, Inc., a Delaware corporation.

     (uu) “Vested Share” means a share of Company Stock awarded upon the terms set forth in
Section 10.

     (vv) “Vested Unit” means a vested right to receive Company Stock or cash granted under
Section 12.

     3. General.  The following types of Awards may be granted under the Plan: Performance Grants,
Bonus Awards, Performance Shares, shares of Restricted Stock, Vested Shares, Restricted Stock
Units, Vested Units, Options, or Stock Appreciation Rights. Options granted under the Plan may be
Incentive Stock Options or Nonstatutory Stock Options.

     4. Stock.

     (a) Reserve.  Subject to Section 19 of the Plan, there shall be reserved for issuance under
the Plan an aggregate of 6,700,000 shares of Company Stock, which shall be authorized but
unissued shares. Each share of Company Stock issued pursuant to an Option or Stock Appreciation
Right shall be counted against the shares reserved for issuance as one share. Each share of
Company Stock issued pursuant to a Non-Option Award shall be counted against the shares reserved
for issuance as one and one-half (1.5) shares. Any shares subject to an award under the US
Airways Group, Inc. 2005 Equity Incentive Plan, effective as of September 27, 2005 (the “Prior
Plan”) outstanding as of the date on which the Plan was approved by the Board that expire, are
forfeited or otherwise terminate unexercised shall be added to the shares reserved for issuance
under the Plan.

     (b) Share Use.  Shares allocable to Awards or portions thereof granted under the Plan or to
incentive awards granted under the Prior Plan that expire, are forfeited, or that terminate
unexercised may be subjected to a new Award under the Plan. Any shares of Company Stock tendered
or exchanged by a Participant as full or partial payment to the Company of the exercise price
under an Option and any shares retained or withheld by the Employer in satisfaction of an
Employee’s obligations to pay Applicable Withholding Taxes with respect to any Incentive Award
shall not be available for issuance, subjected to new awards or otherwise used to increase the
share reserve under the Plan. The cash proceeds from Option exercises shall not be used to
repurchase shares on the open market for reuse under the Plan.

     (c) Prior Plan.  Upon approval of the Plan by shareholders, no additional grants of
incentive awards shall be made under the Prior Plan.

     (d) Plan Limits.  All of the shares of Company Stock that may be issued under this Plan may
be issued upon the exercise of Options that qualify as Incentive Stock Options. No more than
335,000 shares of Company Stock may be issued under the Plan as Vested Shares or Vested Units. No
more than 2,200,000 shares may be allocated to Awards, including the maximum amounts payable
under a Performance Grant, that are granted to any individual Participant during any single
Taxable Year. The aggregate maximum cash amount payable under the Plan to any Participant in any
single Taxable Year shall not exceed $5,000,000.

     5. Eligibility.

     (a) Incentive Awards.  All present and future Service Providers of the Company or any
Related Company (whether now existing or hereafter created or acquired) who have contributed or
who can be expected to contribute significantly to the Company or a Related Company shall be
eligible to receive Incentive Awards under the Plan. The Committee shall have the power and
complete discretion, as provided in Section 20, to select eligible Service Providers to receive
Incentive Awards and to determine for each Service Provider the nature of the award and the terms
and conditions of each Incentive Award.

     (b) Director Awards.  All present and future Outside Directors shall be eligible to receive
Director Awards under the Plan. The Board shall have the power and complete discretion to select
eligible Outside Directors to

6

 

receive Director Awards and to determine for each Outside Director the nature of the award
and the terms and conditions of each Director Award.

     (c) No Contract of Employment or Services.  The grant of an Award shall not obligate the
Company or any Related Company to pay any Service Provider or Outside Director any particular
amount of remuneration, to continue the employment or services of the Service Provider or Outside
Director after the grant or to make further grants to the Service Provider or Outside Director at
any time thereafter.

     (d) Foreign Awards.  When granting Awards to Service Providers or Outside Directors who are
not United States residents, the Committee (or with respect to Director Awards, the Board) shall
have complete discretion and authority to grant such Awards in compliance with all present and
future laws of the country or countries with laws that may apply to the grant of the Award or the
issuance of Company Stock pursuant to the Award. Such authorization shall extend to and include
establishing one or more separate sub-plans which include provisions not inconsistent with the
Plan that comply with statutory or regulatory requirements imposed by the foreign country or
countries in which the Participant resides.

     6. Performance Grants.

     (a) The Committee may make Performance Grants to eligible Service Providers. Each
Performance Grant shall include the Performance Goals for the award, the Performance Criteria
with respect to which such goals are to be measured, the target and maximum amounts payable under
the award, the period over which the award is to be earned, and any other terms and conditions as
are applicable to the Performance Grant. The terms of a Performance Grant may be set in an annual
or long-term bonus plan or other similar document. In the event of any conflict between such
document and the Plan, the terms of the Plan shall control. Performance Grants shall be granted
and administered in such a way as to qualify as “performance-based compensation“ for purposes of
Code section 162(m).

     (b) The Committee shall establish the Performance Goals for Performance Grants. The
Committee shall determine the extent to which any Performance Criteria shall be used and weighted
in determining Performance Grants. The Committee may vary the Performance Criteria, Performance
Goals and weightings from Participant to Participant, Performance Grant to Performance Grant and
Plan Year to Plan Year. The Committee may increase, but not decrease, the minimum and target
levels (but not increase the amount payable) with respect to any Performance Goal after the start
of a Performance Period.

     (c) The Committee shall establish for each Performance Grant the amount of cash or Company
Stock payable at specified levels of performance, based on the Performance Goal or Goals with
respect to each Performance Criterion. Any Performance Grant shall be made not later than the
earlier of (i) 90 days after the start of the period for which the Performance Grant relates and
(ii) the completion of 25% of such period. All determinations regarding the achievement of any
Performance Goals will be made by the Committee. The Committee may not increase during a Plan
Year the amount of cash or Company Stock that would otherwise be payable upon achievement of the
Performance Goal or Goals but may reduce or eliminate the payments unless otherwise provided in a
Performance Grant. The Committee may provide for a Performance Grant to be payable at the target
level (or other level as determined by the Committee in its discretion) prior to the attainment
of a Performance Goal or Goals solely upon the Participant’s death, Disability, or the occurrence
of a Change of Control or Qualifying Change of Control.

     (d) The actual payments to a Participant under a Performance Grant will be calculated by
measuring the achievement of the Performance Goals with respect to the Performance Criteria as
established in the Performance Grant. All calculations of actual payments shall be made by the
Committee and the Committee shall certify in minutes of a meeting or other writing the extent, if
any, to which the Performance Goals have been met.

     (e) Performance Grants may be paid in cash, Company Stock, or a fixed combination of Company
Stock or cash as provided by the Committee at the time of grant, or the Committee may reserve the
right to determine the manner of payment at the time the Performance Grant becomes payable. The
Committee may provide in the Grant Agreement that the Participant may make an election to defer
the payment under a Performance Grant subject to such terms as the Committee may determine in
accordance with Code section 409A.

7

 

     (f) A Participant who receives a Performance Grant payable in Company Stock shall have no
rights as a shareholder until the Company Stock is issued pursuant to the terms of the
Performance Grant and all requirements with respect to the issuance of such shares have been
satisfied.

     (g) A Participant’s interest in a Performance Grant may not be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered.

     (h) Whenever payments under a Performance Grant are to be made in cash to a Participant who
is an Employee, his Employer will withhold therefrom an amount sufficient to satisfy any
Applicable Withholding Taxes. Each Participant who is an Employee shall agree as a condition of
receiving a Performance Grant payable in Company Stock to pay to his Employer, or make
arrangements satisfactory to his Employer regarding the payment to his Employer of, Applicable
Withholding Taxes. Until the amount has been paid or arrangements satisfactory to the Employer
have been made, no stock certificate shall be issued to the Participant. Payment to the Employer
in satisfaction of Applicable Withholding Taxes may be in cash. In addition, if the Committee
allows or the Grant Agreement so provides, (A) payment to the Employer in satisfaction of
Applicable Withholding Taxes may be made in shares of Company Stock (valued at their Fair Market
Value as of the date of payment) to which the Participant has good title, free and clear of all
liens and encumbrances; (B) the Participant may elect to have his Employer retain that number of
shares of Company Stock (valued at their Fair Market Value as of the date of such retention) that
would satisfy all or a specified portion of the Applicable Withholding Taxes; or (C) unless
prohibited by law, the Participant may deliver irrevocable instructions to a broker to deliver
promptly to the Employer, from the sale or loan proceeds with respect to the sale of Company
Stock or a loan secured by Company Stock, the amount necessary to pay the Applicable Withholding
Taxes.

     7. Bonus Awards.

     (a) The Committee may make Bonus Awards to eligible Service Providers. The terms of a Bonus
Award may be set in an annual or other short- or long-term bonus plan or other similar document.
In the event of any conflict between such document and the Plan, the terms of the Plan shall
control. Bonus Awards are not intended to qualify as “performance-based compensation“ for
purposes of Code section 162(m).

     (b) The Committee shall establish the performance or other conditions to which each Bonus
Award shall be subject. The performance conditions need not be objective and may be based on any
performance conditions selected by the Committee in its discretion. The Committee may vary the
performance and other terms and conditions of the Bonus Award from Participant to Participant,
grant to grant and Plan Year to Plan Year. The Committee may increase or decrease the minimum,
target or maximum levels with respect to any performance goal in its discretion.

     (c) All determinations regarding the achievement of any performance goals will be made by
the Committee. The actual amount to be paid to a Participant under a Bonus Award will be
calculated by measuring the achievement of the performance goal(s) with respect to the
performance criteria as established by the Committee. All calculations of actual payments shall
be made by the Committee whose decision shall be final and binding on all parties.

     (d) All Bonus Awards shall be paid in cash.

     (e) A Participant’s interest in a Bonus Award may not be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered

     (f) The Employer will withhold from the amount payable under any Bonus Award an amount
sufficient to satisfy any Applicable Withholding Taxes.

     8. Performance Shares.

     (a) The Committee may grant Performance Shares to eligible Service Providers. Whenever the
Committee grants Performance Shares, notice shall be given to the Service Provider stating the
number of Performance Shares granted and the terms and conditions to which the grant of
Performance Shares is subject. This notice shall become the Grant Agreement between the Company
and the Service Provider and, at that time, the Service

8

 

Provider shall become a Participant. Performance Shares may or may not be intended to
qualify as “performance-based compensation“ for purposes of Code section 162(m). If intended to
so qualify, the award shall be governed by the provisions of Section 6.

     (b) The Committee shall establish the performance goals to which each award of Performance
Shares shall be subject. The performance goals need not be objective and may be based on any
performance conditions selected by the Committee in its discretion. The performance period with
respect to an award shall not be less than twelve consecutive months in length and the
performance goals with respect to such award may be established at any time after the start of
such period in the Committee’s discretion. The Committee may vary the performance and other terms
and conditions from Participant to Participant, grant to grant and Plan Year to Plan Year. The
Committee may increase or decrease the minimum, target or maximum levels with respect to any
performance goal after the start of a performance period in its discretion.

     (c) The Committee shall establish for each award the number of shares of Company Stock
payable at specified levels of performance. All determinations regarding the achievement of any
performance goals will be made by the Committee. The actual number of shares to be paid to a
Participant under an award will be calculated by measuring the achievement of the performance
goal(s) with respect to the performance criteria as established by the Committee. All
calculations of actual payments shall be made by the Committee whose decision shall be final and
binding on all parties.

     (d) The Committee may reserve the right in a Grant Agreement to settle all or portion of an
award of Performance Shares in cash instead of shares of Company Stock, with the cash portion to
be determined based on the Fair Market Value as of the date of payment of the shares of Company
Stock otherwise payable under the award, or to allow the Participant to defer payment under the
award, subject to such terms as the Committee may determine in accordance with Code section 409A.

     (e) A Participant shall have no rights as a shareholder until shares of Company Stock are
issued under the award and all requirements with respect to the issuance of such shares have been
satisfied.

     (f) A Participant’s interest in an award of Performance Shares may not be sold, assigned,
transferred, pledged, hypothecated, or otherwise encumbered.

     (g) Each Participant who is an Employee shall agree at the time of receiving an award of
Performance Shares, and as a condition thereof, to pay to the Employer, or make arrangements
satisfactory to the Employer regarding the payment to the Employer of, Applicable Withholding
Taxes. Until the amount has been paid or arrangements satisfactory to the Employer have been
made, no stock certificate shall be issued to the Participant. Payment to the Employer in
satisfaction of Applicable Withholding Taxes may be in cash. In addition, if the Committee allows
or the Grant Agreement so provides, (A) payment to the Employer in satisfaction of Applicable
Withholding Taxes may be made in shares of Company Stock (valued at their Fair Market Value as of
the date of payment) to which the Participant has good title, free and clear of all liens and
encumbrances; (B) the Participant may elect to have his Employer retain that number of shares of
Company Stock (valued at their Fair Market Value as of the date of such retention) that would
satisfy all or a specified portion of the Applicable Withholding Taxes; or (C) unless prohibited
by law, the Participant may deliver irrevocable instructions to a broker to deliver promptly to
the Employer, from the sale or loan proceeds with respect to the sale of Company Stock or a loan
secured by Company Stock, the amount necessary to pay the Applicable Withholding Taxes.

     9. Restricted Stock Awards.

     (a) The Committee may grant Restricted Stock to eligible Service Providers. Whenever the
Committee deems it appropriate to grant Restricted Stock, notice shall be given to the Service
Provider stating the number of shares of Restricted Stock granted and the terms and conditions to
which the Restricted Stock is subject. This notice shall become the Grant Agreement between the
Company and the Service Provider and, at that time, the Service Provider shall become a
Participant.

     (b) The Committee shall establish as to each award of Restricted Stock the terms and
conditions upon which the restrictions set forth in paragraph (c) below shall lapse. The terms
and conditions may include the continued performance of services or the achievement of
performance conditions measured on an individual, corporate or

9

 

other basis, or any combination thereof. Any service period shall not be less than three
consecutive years in length and any performance period shall not be less than twelve consecutive
months in length; provided, however, that the Committee may, in its discretion and without
limitation, provide in the Grant Agreement that restrictions will lapse prior to the expiration
of the service or performance period as a result of the Disability, death or Retirement of the
Participant or the occurrence of a Change of Control or Qualifying Change of Control. If the
award is intended to qualify as “performance-based compensation“ for purposes of Code
section 162(m), the award shall be governed by the provisions of Section 6.

     (c) No shares of Restricted Stock may be sold, assigned, transferred, pledged, hypothecated,
or otherwise encumbered or disposed of until the restrictions on the shares established by the
Committee have lapsed or been removed.

     (d) Upon the acceptance by a Participant of an award of Restricted Stock, the Participant
shall, subject to the restrictions set forth in paragraph (c) above, have all the rights of a
shareholder with respect to the shares of Restricted Stock, including, but not limited to, the
right to vote the shares of Restricted Stock and the right to receive all dividends and other
distributions paid thereon. Unless otherwise provided in the Grant Agreement, (i) dividends or
other distributions paid in shares of Company Stock shall be subject to the same restrictions set
forth in paragraph (c) as the shares of Restricted Stock with respect to which the dividends or
other distributions are paid and (ii) dividends or other distributions paid in cash shall be paid
at the same time and under the same conditions as such dividends or other distributions are paid
to the shareholders of record of Company Stock. Certificates representing Restricted Stock shall
be held by the Company until the restrictions lapse and upon request the Participant shall
provide the Company with appropriate stock powers endorsed in blank.

     (e) Each Participant who is an Employee shall agree at the time his or her Restricted Stock
is granted, and as a condition thereof, to pay to his Employer, or make arrangements satisfactory
to his Employer regarding the payment to his Employer of, Applicable Withholding Taxes. Until the
amount has been paid or arrangements satisfactory to the Employer have been made, no stock
certificate shall be issued to the Participant. Payment to the Employer in satisfaction of
Applicable Withholding Taxes may be in cash. In addition, if the Committee allows or the Grant
Agreement so provides, (A) payment to the Employer in satisfaction of Applicable Withholding
Taxes may be made in shares of Company Stock (valued at their Fair Market Value as of the date of
payment) to which the Participant has good title, free and clear of all liens and encumbrances;
(B) the Participant may elect to have his Employer retain that number of shares of Company Stock
(valued at their Fair Market Value as of the date of such retention) that would satisfy all or a
specified portion of the Applicable Withholding Taxes; or (C) unless prohibited by law, the
Participant may deliver irrevocable instructions to a broker to deliver promptly to the Employer,
from the sale or loan proceeds with respect to the sale of Company Stock or a loan secured by
Company Stock, the amount necessary to pay the Applicable Withholding Taxes.

     10. Vested Shares.

     (a) The Committee may grant Vested Shares to eligible Service Providers. Vested Shares shall
be immediately transferable (subject to compliance with any applicable securities laws) and the
Participant receiving an award of Vested Shares shall have all the rights of a shareholder with
respect to such shares as of the Date of Grant.

     (b) Each Participant who is an Employee shall agree at the time his or her Vested Shares are
granted, and as a condition thereof, to pay to his Employer, or make arrangements satisfactory to
his Employer regarding the payment to his Employer of, Applicable Withholding Taxes. Until the
amount has been paid or arrangements satisfactory to the Employer have been made, no stock
certificate shall be issued to the Participant. Payment to the Employer in satisfaction of
Applicable Withholding Taxes may be in cash. In addition, if the Committee allows or the Grant
Agreement so provides, (A) payment to the Employer in satisfaction of Applicable Withholding
Taxes may be made in shares of Company Stock (valued at their Fair Market Value as of the date of
payment) to which the Participant has good title, free and clear of all liens and encumbrances;
(B) the Participant may elect to have his Employer retain that number of shares of Company Stock
(valued at their Fair Market Value as of the date of such retention) that would satisfy all or a
specified portion of the Applicable Withholding Taxes; or (C) unless prohibited by law, the
Participant may deliver irrevocable instructions to a broker to deliver promptly to the Employer,
from the sale or loan proceeds with respect to the sale of Company Stock or a loan secured by
Company Stock, the amount necessary to pay the Applicable Withholding Taxes.

10

 

     11. Restricted Stock Units.

     (a) The Committee may grant Restricted Stock Units to eligible Service Providers. Whenever
the Committee deems it appropriate to grant Restricted Stock Units, notice shall be given to the
Service Provider stating the number of Restricted Stock Units granted and the terms and
conditions to which the Restricted Stock Units are subject. This notice shall become the Grant
Agreement between the Company and the Service Provider and, at that time, the Service Provider
shall become a Participant.

     (b) The Committee shall establish as to each award of Restricted Stock Units the terms and
conditions upon which the Restricted Stock Units shall vest and be paid. Vesting may be
conditioned on the continued performance of services or the achievement of performance conditions
measured on an individual, corporate or other basis, or any combination thereof. Any service
period shall not be less than three consecutive years in length and any performance period shall
not be less than twelve consecutive months in length; provided, however, that the Committee may,
in its discretion and without limitation, provide in the Grant Agreement that restrictions will
lapse prior to the expiration of the service or performance period as a result of the Disability,
death or Retirement of the Participant or the occurrence of a Change of Control or Qualifying
Change of Control. If the award is intended to qualify as “performance-based compensation“ for
purposes of Code section 162(m), the award shall be governed by the provisions of Section 6.

     (c) Restricted Stock Units may be paid in cash, Company Stock, or a fixed combination of
Company Stock or cash as provided in the Grant Agreement, or the Committee may reserve the right
to determine the manner of payment at the time the Restricted Stock Units become payable. The
delivery of Company Stock in payment of Restricted Stock Units may be subject to additional
conditions established in the Grant Agreement.

     (d) A Participant who receives Restricted Stock Units payable in Company Stock shall have no
rights as a shareholder until the Company Stock is issued pursuant to the terms of the Grant
Agreement and all requirements with respect to the issuance of such shares have been satisfied.
The Committee may, in its discretion, provide that a Participant shall be entitled to receive
dividend equivalents on outstanding Restricted Stock Units. Dividend equivalents may be (i) paid
in cash, (ii) credited to the Participant as additional Restricted Stock Units, or (iii) a fixed
combination of cash and additional Restricted Stock Units as provided in the Grant Agreement, or
the Committee may reserve the right to determine the manner of payment at the time dividends are
paid to shareholders of record. Unless otherwise provided in the Grant Agreement, (i) dividend
equivalents with respect to dividends or other distributions that are paid in shares of Company
Stock shall be credited to the Participant as additional Restricted Stock Units subject to the
same restrictions as the Restricted Stock Units with respect to which the dividend equivalents
are paid and (ii) dividend equivalents with respect to dividends or other distributions that are
paid in cash shall be paid at the same time and under the same conditions as such dividends or
other distributions are paid to the shareholders of record of Company Stock.

     (e) A Participant’s interest in Restricted Stock Units may not be sold, assigned,
transferred, pledged, hypothecated, or otherwise encumbered.

     (f) Whenever payments under Restricted Stock Units are to be made in cash to a Participant
who is an Employee, his Employer will withhold therefrom an amount sufficient to satisfy any
Applicable Withholding Taxes. Each Participant who is an Employee shall agree as a condition of
receiving Restricted Stock Units payable in the form of Company Stock to pay to his Employer, or
make arrangements satisfactory to his Employer regarding the payment to his Employer of,
Applicable Withholding Taxes. Until the amount has been paid or arrangements satisfactory to the
Employer have been made, no stock certificate shall be issued to the Participant. Payment to the
Employer in satisfaction of Applicable Withholding Taxes may be in cash. In addition, if the
Committee allows or the Grant Agreement so provides, (A) payment to the Employer in satisfaction
of Applicable Withholding Taxes may be made in shares of Company Stock (valued at their Fair
Market Value as of the date of payment) to which the Participant has good title, free and clear
of all liens and encumbrances; (B) the Participant may elect to have his Employer retain that
number of shares of Company Stock (valued at their Fair Market Value as of the date of such
retention) that would satisfy all or a specified portion of the Applicable Withholding Taxes; or
(C) unless prohibited by law, the Participant may deliver irrevocable instructions to a broker to
deliver promptly to the Employer, from the sale or loan proceeds with respect to the sale of
Company Stock or a loan secured by Company Stock, the amount necessary to pay the Applicable
Withholding Taxes.

11

 

     12. Vested Units.

     (a) The Committee may grant Vested Units to eligible Service Providers. Whenever the
Committee deems it appropriate to grant Vested Units, notice shall be given to the Service
Provider stating the number of Vested Units granted and the terms and conditions to which the
Vested Units are subject. This notice shall become the Grant Agreement between the Company and
the Service Provider and, at that time, the Service Provider shall become a Participant.

     (b) The Committee shall establish as to each Vested Unit the fixed time(s), schedule or
event(s) and the other terms and conditions upon which the Vested Unit shall be paid in
accordance with Code section 409A. Vested Units may be paid in cash, Company Stock, or a fixed
combination of Company Stock or cash as provided in the Grant Agreement, or the Committee may
reserve the right to determine the manner of payment at the time the Vested Unit become payable.
The delivery of Company Stock in payment of Vested Units may be subject to additional conditions
established in the Grant Agreement.

     (c) A Participant who receives Vested Units payable in Company Stock shall have no rights as
a shareholder until the Company Stock is issued pursuant to the terms of the Grant Agreement and
all requirements with respect to the issuance of such shares have been satisfied. The Committee
may, in its discretion, provide that a Participant shall be entitled to receive dividend
equivalents on outstanding Vested Units. Dividend equivalents may be (i) paid in cash,
(ii) credited to the Participant as additional Vested Units, or (iii) a fixed combination of cash
and additional Vested Units as provided in the Grant Agreement, or the Committee may reserve the
right to determine the manner of payment at the time dividends are paid to shareholders of
record. Unless otherwise provided in the Grant Agreement, (i) dividend equivalents with respect
to dividends or other distributions that are paid in shares of Company Stock shall be credited to
the Participant as additional Vested Units payable at the same time(s), schedule or event(s) as
the Vested Units with respect to which the dividend equivalents are paid and (ii) dividend
equivalents with respect to dividends or other distributions that are paid in cash shall be paid
at the same time and under the same conditions as such dividends or other distributions are paid
to the shareholders of record of Company Stock.

     (d) A Participant’s interest in Vested Units may not be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered.

     (e) Whenever payments under Vested Units are to be made in cash to a Participant who is an
Employee, his Employer will withhold therefrom an amount sufficient to satisfy any Applicable
Withholding Taxes. Each Participant who is an Employee shall agree as a condition of receiving
Vested Units payable in the form of Company Stock to pay to his Employer, or make arrangements
satisfactory to his Employer regarding the payment to his Employer of, Applicable Withholding
Taxes. Until the amount has been paid or arrangements satisfactory to the Employer have been
made, no stock certificate shall be issued to the Participant. Payment to the Employer in
satisfaction of Applicable Withholding Taxes may be in cash. In addition, if the Committee allows
or the Grant Agreement so provides, (A) payment to the Employer in satisfaction of Applicable
Withholding Taxes may be made in shares of Company Stock (valued at their Fair Market Value as of
the date of payment) to which the Participant has good title, free and clear of all liens and
encumbrances; (B) the Participant may elect to have his Employer retain that number of shares of
Company Stock (valued at their Fair Market Value as of the date of such retention) that would
satisfy all or a specified portion of the Applicable Withholding Taxes; or (C) unless prohibited
by law, the Participant may deliver irrevocable instructions to a broker to deliver promptly to
the Employer, from the sale or loan proceeds with respect to the sale of Company Stock or a loan
secured by Company Stock, the amount necessary to pay the Applicable Withholding Taxes.

     13. Stock Options.

     (a) The Committee may grant Options to eligible Service Providers. Whenever the Committee
grants Options, notice shall be given to the Service Provider stating the number of shares for
which Options are granted, the Option exercise price per share, whether the Options are Incentive
Stock Options or Nonstatutory Stock Options, the extent, if any, to which associated Stock
Appreciation Rights are granted, and the conditions to which the grant and exercise of the
Options are subject. This notice shall become the Grant Agreement between the Company and the
Service Provider and, at that time, the Service Provider shall become a Participant.

     (b) The exercise price of shares of Company Stock covered by an Option shall not be, and
shall never become, less than 100 percent of the Fair Market Value of the shares on the Date of
Grant, except as may be provided in

12

 

Section 19. If the Participant is a Ten Percent Shareholder and the Option is intended to
qualify as an Incentive Stock Option, the exercise price shall be not less than 110 percent of
the Fair Market Value of such shares on the Date of Grant.

     (c) Options may be exercised in whole or in part at the times as may be specified by the
Committee in the Participant’s Grant Agreement; provided that no Option may be exercised after
the expiration of ten (10) years from the Date of Grant. If the Participant is a Ten Percent
Shareholder and the Option is intended to qualify as an Incentive Stock Option, the Option may
not be exercised after the expiration of five (5) years from the Date of Grant.

     (d) Options shall not be transferable except to the extent specifically provided in the
Grant Agreement in accordance with applicable securities laws. Incentive Stock Options, by their
terms, shall not be transferable except by will or the laws of descent and distribution and shall
be exercisable, during the Participant’s lifetime, only by the Participant.

     (e) Options that are intended to qualify as Incentive Stock Options shall be granted only to
Employees who meet the eligibility requirements of Section 5.

     (f) Options that are intended to qualify as Incentive Stock Options shall, by their terms,
not be exercisable after the first to occur of (x) ten years from the Date of Grant (five years
if the Participant to whom the Option has been granted is a Ten Percent Shareholder), (y) three
months following the date of the Participant’s termination of employment with the Company and all
Related Companies for reasons other than Disability or death, or (z) one year following the date
of the Participant’s termination of employment on account of Disability or death.

     (g) Options that are intended to qualify as Incentive Stock Options shall, by their terms,
be exercisable in any calendar year only to the extent that the aggregate Fair Market Value
(determined as of the Date of Grant) of the Company Stock with respect to which Incentive Stock
Options are exercisable for the first time during the Plan Year does not exceed $100,000 (the
“Limitation Amount”). Incentive Stock Options granted under the Plan and all other plans of the
Company and all Related Companies shall be aggregated for purposes of determining whether the
Limitation Amount has been exceeded. The Committee may impose any conditions as it deems
appropriate on an Incentive Stock Option to ensure that the foregoing requirement is met. If
Incentive Stock Options that first become exercisable in a Plan Year exceed the Limitation
Amount, the excess Options shall be treated as Nonstatutory Stock Options to the extent permitted
by law.

     (h) A Participant who purchases shares of Company Stock under an Option shall have no rights
as a shareholder until the Company Stock is issued pursuant to the terms of the Grant Agreement
and all requirements with respect to the issuance of such shares have been satisfied.

     (i) Options may be exercised by the Participant giving written notice of the exercise to the
Company, stating the number of shares the Participant has elected to purchase under the Option.
The notice shall be effective only if accompanied by the exercise price in full in cash;
provided, however, that if the terms of an Option or the Committee in its discretion so permits,
the Participant (i), unless prohibited by law, may deliver a properly executed exercise notice
together with irrevocable instructions to a broker to deliver promptly to the Company, from the
sale or loan proceeds with respect to the sale of Company Stock or a loan secured by Company
Stock, the amount necessary to pay the exercise price and, if required by the terms of the Option
or the Committee in its discretion, Applicable Withholding Taxes, (ii) may deliver shares of
Company Stock for which the holder thereof has good title, free and clear of all liens and
encumbrances (valued at their Fair Market Value on the date of exercise) in satisfaction of all
or any part of the exercise price, or (iii) may cause to be withheld from the Option shares,
shares of Company Stock (valued at their Fair Market Value on the date of exercise) in
satisfaction of all or any part of the exercise price; or (iv) may use any other methods of
payment as the Committee, at its discretion, deems appropriate. Until the Participant has paid
the exercise price and any Applicable Withholding Taxes, no stock certificate shall be issued.

     (j) Each Participant who is an Employee shall agree as a condition of the exercise of an
Option to pay to his Employer, or make arrangements satisfactory to his Employer regarding the
payment to his Employer of, Applicable Withholding Taxes. Until the amount has been paid or
arrangements satisfactory to the Employer have been made, no stock certificate shall be issued
upon the exercise of an Option. Payment to the Employer in

13

 

satisfaction of Applicable Withholding Taxes may be in cash. In addition, if the Committee
allows or the Grant Agreement so provides, (A) payment to the Employer in satisfaction of
Applicable Withholding Taxes may be made in shares of Company Stock (valued at their Fair Market
Value as of the date of payment) to which the Participant has good title, free and clear of all
liens and encumbrances; (B) the Participant may elect to have his Employer retain that number of
shares of Company Stock (valued at their Fair Market Value as of the date of such retention) that
would satisfy all or a specified portion of the Applicable Withholding Taxes, or (C) unless
prohibited by law, the Participant may deliver irrevocable instructions to a broker to deliver
promptly to the Employer, from the sale or loan proceeds with respect to the sale of Company
Stock or a loan secured by Company Stock, the amount necessary to pay the Applicable Withholding
Taxes.

     (k) Unless specifically provided in the discretion of the Committee in a writing that
references and supersedes this Section 13(k), (i) no Modification shall be made in respect to any
Option if such Modification would result in the Option constituting a deferral of compensation,
and (ii) no Extension shall be made in respect to any Option if such Extension would result in
the Option having an additional deferral feature from the Date of Grant, in each case within the
meaning of applicable Treasury Regulations under Code section 409A. Subject to the remaining part
of this subsection (k), (i) a “Modification“ means any change in the terms of the Option (or
change in the terms of the Plan or applicable Grant Agreement) that may provide the holder of the
Option with a direct or indirect reduction in the exercise price of the Option, regardless of
whether the holder in fact benefits from the change in terms; and (ii) an “Extension“ means
either (A) the provision to the holder of an additional period of time within which to exercise
the Option beyond the time originally prescribed, (B) the conversion or exchange of the Option
for a legally binding right to compensation in a future taxable year, (C) the addition of any
feature for the deferral of compensation to the terms of the Option, or (D) any renewal of the
Option that has the effect of (A) through (C) above. Notwithstanding the preceding sentence, it
shall not be a Modification or an Extension, respectively, to change the terms of an Option in
accordance with Section 19 of the Plan, or in any of the other ways or for any of the other
purposes provided in applicable Treasury Regulations or other generally applicable guidance under
Code section 409A as not resulting in a Modification or Extension for purposes of that section.
In particular, it shall not be an Extension to extend the exercise period of an Option to a date
no later than the earlier of (i) the latest date upon which the Option could have expired by its
original terms under any circumstances or (ii) the tenth anniversary of the original Date of
Grant.

     14. Stock Appreciation Rights.

     (a) The Committee may grant Stock Appreciation Rights to eligible Service Providers.
Whenever the Committee grants Stock Appreciation Rights, notice shall be given to the Service
Provider stating the number of shares with respect to which Stock Appreciation Rights are
granted, the extent, if any, to which the Stock Appreciation Rights are granted in connection
with all or any part of a Nonstatutory Stock Option (“Tandem Rights”), and the conditions to
which the grant and exercise of the Stock Appreciation Rights are subject. This notice shall
become the Grant Agreement between the Company and the Service Provider and, at that time, the
Service Provider shall become a Participant.

     (b) Stock Appreciation Rights (other than Tandem Rights) shall entitle the Participant, upon
exercise of all or any part of the Stock Appreciation Rights, to receive in exchange from the
Company an amount equal to the excess of (x) the Fair Market Value on the date of exercise of the
Company Stock covered by the surrendered Stock Appreciation Right over (y) the Fair Market Value
of the Company Stock on the Date of Grant of the Stock Appreciation Right.

     (c) Tandem Rights shall entitle the Participant, upon exercise of all or any part of the
Tandem Rights, to surrender to the Company unexercised that portion of the underlying
Nonstatutory Stock Option relating to the same number of shares of Company Stock as is covered by
the Tandem Right (or the portion of the Tandem Right so exercised) and to receive in exchange
from the Company an amount equal to the excess of (x) the Fair Market Value on the date of
exercise of the Company Stock covered by the surrendered portion of the underlying Nonstatutory
Stock Option over (y) the exercise price of the Company Stock covered by the surrendered portion
of the underlying Nonstatutory Stock Option.

     (d) Upon the exercise of a Tandem Right and surrender of the related portion of the
underlying Nonstatutory Stock Option, the Nonstatutory Stock Option, to the extent surrendered,
shall not thereafter be exercisable.

14

 

     (e) Subject to any further conditions upon exercise imposed by the Committee, a Tandem Right
shall be granted on the same Date of Grant as the related Nonstatutory Stock Option, be
transferable only to the extent that the related Nonstatutory Stock Option is transferable, be
exercisable only to the extent that the related Nonstatutory Stock Option is exercisable and
shall expire no later than the date on which the related Nonstatutory Stock Option expires.

     (f) The Committee may limit the amount that the Participant will be entitled to receive upon
exercise of Stock Appreciation Rights.

     (g) Stock Appreciation Rights shall not be transferable except to the extent specifically
provided in the Grant Agreement in accordance with applicable securities laws.

     (h) Stock Appreciation Rights may be exercised in whole or in part at the times as may be
specified by the Committee in the Participant’s Grant Agreement; provided that no Stock
Appreciation Right may be exercised after the expiration of ten (10) years from the Date of
Grant.

     (i) A Stock Appreciation Right may only be exercised at a time when the Fair Market Value of
the Company Stock covered by the Stock Appreciation Right exceeds the Fair Market Value of the
Company Stock on the Date of Grant of the Stock Appreciation Right (or, in the case of a Tandem
Right, only to the extent it exceeds the exercise price of the Company Stock covered by the
underlying Nonstatutory Stock Option).

     (j) The manner in which the Company’s obligation arising upon the exercise of a Stock
Appreciation Right shall be paid shall be determined by the Committee and shall be set forth in
the Grant Agreement. The Grant Agreement may provide for payment in Company Stock or cash, or a
fixed combination of Company Stock or cash, or the Committee may reserve the right to determine
the manner of payment at the time the Stock Appreciation Right is exercised. Shares of Company
Stock issued upon the exercise of a Stock Appreciation Right shall be valued at their Fair Market
Value on the date of exercise.

     (k) A Participant who acquires shares of Company Stock upon exercise of a Stock Appreciation
Right shall have no rights as a shareholder until the Company Stock is issued pursuant to the
terms of the Grant Agreement and all requirements with respect to the issuance of such shares
have been satisfied.

     (l) Stock Appreciation Rights may be exercised by the Participant giving written notice of
the exercise to the Company, stating the number of Stock Appreciation Rights the Participant has
elected to exercise.

     (m) Whenever payments upon exercise of Stock Appreciation Rights are to be made in cash to a
Participant who is an Employee, the Employer will withhold therefrom an amount sufficient to
satisfy any Applicable Withholding Taxes. Each Participant who is an Employee shall agree as a
condition of receiving Stock Appreciation Rights payable in the form of Company Stock to pay to
his Employer, or make arrangements satisfactory to his Employer regarding the payment to his
Employer of, Applicable Withholding Taxes. Until the amount has been paid or arrangements
satisfactory to the Employer have been made, no stock certificate shall be issued to the
Participant. Payment to the Employer in satisfaction of Applicable Withholding Taxes may be in
cash. In addition, if the Committee allows or the Grant Agreement so provides, (A) payment to the
Employer in satisfaction of Applicable Withholding Taxes may be made in shares of Company Stock
(valued at their Fair Market Value as of the date of payment) to which the Participant has good
title, free and clear of all liens and encumbrances; (B) the Participant may elect to have his
Employer retain that number of shares of Company Stock (valued at their Fair Market Value as of
the date of such retention) that would satisfy all or a specified portion of the Applicable
Withholding Taxes; or (C) unless prohibited by law, the Participant may deliver irrevocable
instructions to a broker to deliver promptly to the Employer, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company Stock, the amount necessary to
pay the Applicable Withholding Taxes.

     (n) Unless specifically provided in the discretion of the Committee in a writing that
references and supersedes this Section 14(n), (i) no Modification shall be made in respect to any
Stock Appreciation Right if such Modification would result in the Stock Appreciation Right
constituting a deferral of compensation, and (ii) no Extension shall be made in respect to any
Stock Appreciation Right if such Extension would result in the Stock Appreciation Right having an
additional deferral feature from the Date of Grant, in each case within the meaning

15

 

of applicable Treasury Regulations under Code section 409A. Subject to the remaining part of
this subsection (n), (i) a “Modification“ means any change in the terms of the Stock Appreciation
Right (or change in the terms of the Plan or applicable Grant Agreement) that may provide the
holder of the Stock Appreciation Right with a direct or indirect reduction in the exercise price
of the Stock Appreciation Right, regardless of whether the holder in fact benefits from the
change in terms; and (ii) an “Extension“ means either (A) the provision to the holder of an
additional period of time within which to exercise the Stock Appreciation Right beyond the time
originally prescribed, (B) the conversion or exchange of the Stock Appreciation Right for a
legally binding right to compensation in a future taxable year, (C) the addition of any feature
for the deferral of compensation to the terms of the Stock Appreciation Right, or (D) any renewal
of the Stock Appreciation Right that has the effect of (A) through (C) above. Notwithstanding the
preceding sentence, it shall not be a Modification or an Extension, respectively, to change the
terms of a Stock Appreciation Right in accordance with Section 19 of the Plan, or in any of the
other ways or for any of the other purposes provided in applicable Treasury Regulations or other
generally applicable guidance under Code section 409A as not resulting in a Modification or
Extension for purposes of that section. In particular, it shall not be an Extension to extend the
exercise period of a Stock Appreciation Right to a date no later than the earlier of (i) the
latest date upon which the Stock Appreciation Right could have expired by its original terms
under any circumstances or (ii) the tenth anniversary of the original Date of Grant.

     15. Director Awards.

     (a) The Board may grant Director Awards in the form of shares of Restricted Stock, Vested
Shares, Restricted Stock Units, Vested Units, Nonstatutory Options or Stock Appreciation Rights
to Outside Directors. Whenever the Board grants a Director Award, notice shall be given to the
Outside Director stating the type of award being made, the number of shares with respect to which
the award is granted and the terms and conditions to which the award and (where applicable) the
exercise of the award is subject. This notice shall become the Grant Agreement between the
Company and the Outside Director and, at that time, the Outside Director shall become a
Participant.

     (b) Director Awards shall otherwise be subject to the terms of the Plan applicable to each
type of award as set forth in Sections 9 through 14 above; provided, however, that where context
reasonably requires, references throughout these sections to the “Committee“ shall be read instead
as references to the Board wherever the award is to be granted to an Outside Director. The Board
shall have all the same rights and powers with respect to the administration of Director Awards as
the Committee has with respect to Incentive Awards as provided in Section 20 below, and the Board
shall be subject to the same limitations with respect to the modification and Repricing of
outstanding Director Awards as provided therein.

     (c) For purposes of this Section 15, the term “Board“ shall mean any committee of the board of
directors of the Company, or any subcommittee thereof, each member of which is (i) an outside
director for purposes of Code section 162(m), (ii) a non-employee director for purposes of
Rule 16b-3, and (iii) an independent director for purposes of the rules of the exchange on which
the Company Stock is traded.

     16. Effective Date of the Plan.  The Plan was approved by the Board on April 10, 2008, and
shall become effective as of the date on which it is approved by the shareholders of the Company.
Until (i) the Plan has been approved by the Company’s shareholders, and (ii) the requirements of
any applicable federal or state securities laws have been met, no shares of Company Stock issuable
under Non-Option Awards shall be issued and no Options or Stock Appreciation Rights shall be
exercisable that, in either case, are not contingent on the occurrence of both such events.

     17. Continuing Securities Law Compliance.  If at any time on or after the effective date of
the Plan as described in Section 16 above, the requirements of any applicable federal or state
securities laws should fail to be met, no shares of Company Stock issuable under Non-Option Awards
shall be issued and no Options or Stock Appreciation Rights shall be exercisable until the
Committee (or, with respect to a Director Award, the Board) has determined that these requirements
have again been met. The Committee (or, with respect to a Director Award, the Board) may suspend
the right to exercise an Option or Stock Appreciation Right at any time when it determines that
allowing the exercise and issuance of Company Stock would violate any federal or state securities
or other laws, and may provide that any time periods to exercise the Option or Stock Appreciation
Right are extended during a period of suspension.

16

 

     18. Termination, Modification, Change.  If not sooner terminated by the Board, this Plan shall
terminate at the close of business on the date that immediately follows the tenth anniversary of
the date on which the Plan was approved by the Board. No new Awards shall be granted under the Plan
after its termination. The Board may terminate the Plan at any time and may amend the Plan at any
time in any respect as it shall deem advisable; provided that no change shall be made that
increases the total number of shares of Company Stock reserved for issuance under the Plan (except
pursuant to Section 19), materially modifies the requirements as to eligibility for participation
in the Plan, or that would otherwise be considered a material revision or amendment under Code
section 422 or the listing standards of the exchange on which the Company Stock is traded, unless
the change is authorized by the shareholders of the Company. Notwithstanding the foregoing, the
Board may unilaterally amend the Plan and outstanding Awards with respect to Participants as it
deems appropriate to ensure compliance with Rule 16b-3 and other applicable federal or state
securities laws and to meet the requirements of the Code and applicable regulations or other
generally applicable guidance thereunder. Except as provided in the preceding sentence, a
termination or amendment of the Plan shall not, without the consent of the Participant, adversely
affect a Participant’s rights under an Award previously granted to him or her.

     19. Change in Capital Structure.

     (a) The Committee (or, with respect to a Director Award, the Board) shall proportionately
adjust the number and kind of shares of stock or securities of the Company to be subject to the
Plan and to Awards then outstanding or to be granted thereunder, the maximum number of shares or
securities which may be delivered under the Plan (including the maximum limit on Non-Option Awards
or Incentive Stock Options under Section 4), the maximum number of shares or securities that can be
granted to an individual Participant under Section 4, the exercise price of Options, the initial
Fair Market Value of Company Stock under Stock Appreciation Rights, and other relevant terms of the
Plan and any Awards whenever, in the event of a stock dividend, stock split or combination of
shares, recapitalization or merger in which the Company is the surviving corporation, or other
change in the Company’s corporate structure or capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or warrants for the purchase of
common stock or preferred stock of the Company), it deems any such adjustment necessary or
desirable to preserve the intended benefits of the Plan and any outstanding Awards for the Company
and the Participants. The Committee’s (or, with respect to a Director Award, the Board’s)
determination in this regard shall be binding on all persons. If the adjustment would produce
fractional shares with respect to any unexercised Option or Stock Appreciation Right or fractional
cents with respect to the exercise price thereof, the Committee (or, with respect to a Director
Award, the Board) shall round down the number of shares covered by the Option or Stock Appreciation
Right to the nearest whole share and round up the exercise price to the nearest whole cent.

     (b) In the event of a Change of Control as described in Sections 2(g)(ii), (iii) or (iv) or a
Qualifying Change of Control as described in Sections 2(gg)(i) or (iii), or if the Company is
otherwise a party to a consolidation or a merger in which the Company is not the surviving
corporation, a transaction that results in the acquisition of substantially all of the Company’s
outstanding stock by a single person or entity, or a sale or transfer of substantially all of the
Company’s assets occurs (in any such case, a “Corporate Event”), then the Committee (or, with
respect to a Director Award, the Board) may take any actions with respect to outstanding Awards as
it deems appropriate, consistent with applicable provisions of the Code and any applicable federal
or state securities laws.

     (c) Notwithstanding anything in the Plan to the contrary, the Committee (or, with respect to a
Director Award, the Board) may take the foregoing actions without the consent of any Participant,
and its determination shall be conclusive and binding on all persons and for all purposes.

     20. Administration of the Plan.

     (a) The Plan shall be administered by the Committee. Subject to the express provisions and
limitations set forth in this Plan or the Committee’s charter or as otherwise established by the
Board, the Committee shall be authorized and empowered to do all things necessary or desirable, in
its sole discretion, in connection with the administration of this Plan, including, without
limitation, the following:

     (i) to prescribe, amend and rescind policies relating to this Plan, and to interpret the
Plan, including defining terms not otherwise defined;

17

 

     (ii) to determine which persons are eligible Service Providers, to which of the Service
Providers, if any, Incentive Awards shall be granted hereunder and the timing of any Incentive
Awards;

     (iii) to grant Incentive Awards to Service Providers and determine the terms and conditions
thereof, including the number of shares of Company Stock subject to Incentive Awards and the
exercise or purchase price of the shares of Company Stock and the circumstances under which
Incentive Awards become exercisable or vested or are forfeited or expire, which terms may but
need not be conditioned upon the passage of time, continued employment, the satisfaction of
performance conditions (including Performance Goals), the occurrence of certain events, or other
factors;

     (iv) to establish or verify the extent of satisfaction of any Performance Goals or other
conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain
any Incentive Award;

     (v) to prescribe and amend the terms of the Grant Agreements or other documents evidencing
Incentive Awards made under this Plan (which need not be identical);

     (vi) to determine whether, and the extent to which, adjustments are required pursuant to
Section 19;

     (vii) to interpret and construe this Plan, any policies under this Plan and the terms and
conditions of any Incentive Award granted hereunder;

     (viii) to delegate, to the extent permitted by Section 157(c) of the Delaware General
Corporation Law, any portion of its authority under the Plan to make Incentive Awards to an
executive officer of the Company, subject to any conditions that the Committee may establish
(including but not limited to conditions on such officer’s ability to make awards to “executive
officers“ within the meaning of Section 16 of the Act or to “covered employees“ within the
meaning of Code section 162(m)(3)); and

     (ix) to make all other determinations deemed necessary or advisable for the administration
of this Plan.

     The Committee may amend the terms of previously granted Incentive Awards so long as the terms
as amended are consistent with the terms of the Plan and provided that the consent of the
Participant is obtained with respect to any amendment that would be detrimental to him or her,
except that the consent will not be required if the amendment is for the purpose of complying with
applicable provisions of the Code or any federal or state securities laws.

     The Committee is prohibited from Repricing any Option or Stock Appreciation Right without the
prior approval of the shareholders of the Company with respect to the proposed Repricing.

     (b) The interpretation and construction of any provision of the Plan by the Committee shall be
final and conclusive as to any Participant. The Committee may consult with counsel, who may be
counsel to the Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel.

     (c) A majority of the members of the Committee shall constitute a quorum, and all actions of
the Committee shall be taken by a majority of the members present. Any action may be taken by the
Committee in writing or by electronic transmission or transmissions as permitted by the Bylaws of
the Company, and any action so taken shall be fully effective as if it had been taken at a meeting.

     (d) The Committee may delegate the administration of the Plan to an officer or officers of the
Company, and such officer(s) may have the authority to execute and distribute agreements or other
documents evidencing or relating to Incentive Awards granted by the Committee under this Plan, to
maintain records relating to the grant, vesting, exercise, forfeiture or expiration of Incentive
Awards, to process or oversee the issuance of shares of Company Stock upon the exercise, vesting
and/or settlement of an Incentive Award, to interpret the terms of Incentive Awards and to take any
other actions as the Committee may specify, provided that in no case shall any such officer(s) be
authorized to grant Incentive Awards under the Plan, except in accordance with Section 20(a)(viii)
above. Any action by an administrator within the scope of its delegation shall be deemed for all
purposes to have been taken by the Committee and references in this Plan to the Committee shall
include any such officer(s), provided that the actions and interpretations of any such officer(s)
shall be subject to review and approval, disapproval or modification by the Committee.

18

 

     21. Notice.  All notices and other communications required or permitted to be given under this
Plan shall be in writing and shall be deemed to have been duly given if delivered personally or
mailed first class, postage prepaid, as follows (a) if to the Company — at the principal business
address of the Company to the attention of the Corporate Secretary of the Company; and (b) if to
any Participant — at the last address of the Participant known to the sender at the time the notice
or other communication is sent.

     22. No Effect on Other Plans.  Except as provided in Section 4(c), nothing contained in the
Plan will be deemed in any way to limit or restrict the Company or any Related Company from making
any award or payment to any person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.

     23. Interpretation.  The Plan is intended to operate in compliance with the provisions of
Rule 16b-3 and to facilitate compliance with, and optimize the benefits from, Code section 162(m).
The terms of this Plan are subject to all present and future regulations and rulings of the
Secretary of the Treasury of the United States or his or her delegate relating to the qualification
of Incentive Stock Options under the Code. This Plan and the individual Awards under the Plan are
intended to comply with any applicable requirements of Code section 409A and shall be interpreted
to the extent context reasonably permits in accordance with such requirements. If any provision of
the Plan conflicts with any such regulation or ruling, then that provision of the Plan shall be
void and of no effect. The terms of this Plan shall be governed by the laws of the State of
Delaware.

19e60324550ex10_1.htm

    Exhibit
10.1

    

    

    Chindex
International, Inc.

    Executive
Management Incentive Program (EMIP)

    For the
Fiscal Year Ending March 31, 2009

    

    

    Recognizing
that the principal reason for the existence of a corporate entity is to increase
shareholder wealth and that this generally translates into the maximization of
profits over time and is or should be the primary goal of a publicly held
corporation, Chindex International, Inc. (Parent Company) has adopted this
Executive Management Incentive Program (EMIP) to help align remunerative
management incentives with the interests of the company’s shareholding
public.

    

    Enrollment

    The three
executive officers of the Parent Company and the President of the Parent
Company’s principal subsidiary are automatically enrolled in and are
beneficiaries of this EMIP.   They are the Chief Executive
Officer (CEO), the Chief Financial Officer (CFO), the Executive Vice President
(EVP) in charge of the Medical Products Division (MPD) and the President of
United Family Hospitals (PUFH).

    

    Weighting

    There are
two parts to the plan.  Most of the incentive payout is based on the
achievement of objective annual performance criteria.  An additional
payout based on the evaluation of the Compensation Committee may be awarded
individual executives at the discretion of the committee as explained
below.

    

    Annual Objective Performance
Criteria

    The
principal metric of annual performance is the Budgeted Operating Income as
Adjusted (OI).  Incentive payments to executives enrolled in the EMIP
shall be calculated in accordance with the following table and, if earned, shall
be paid as soon as practical following the close of the Company’s fiscal year
and in any event within 180 days following such close.  Incentive
payments for the CEO and CFO shall be based on the OI of the Parent Company. The
incentive payment for the EVP of MPD shall be based 50% on the OI of MPD and 50%
on the OI of the Parent Company. The incentive payment for the PUFH shall be
based on the OI of UFH.

    

    
      	
              OI
      Achieved

              as
      a % of annual

              approved
      budget

            	
              Cash
      Bonus

              as
      a % of

              Base
      Salary*

            	
              Grant
      of

              Non
      Qualified

              Stock
      Options**

            
	 
      	 
      	 
      
	
              90
      % or Less

            	
              0%

            	
              0

            
	
              91%
      to 99%

            	
              10%

            	
              0

            
	
              100%
      to 110%

            	
              25%

            	
              22,500

            
	
              111%
      and above

            	
              35%

            	
              30,000

            

    

    

    Additional Discretionary
Bonus

    Apart
from the payouts based on the Annual Objective Performance Criteria shown above,
a payout not to exceed 25% of base salary may be granted to an individual at the
discretion of the Compensation Committee based on the achievement of various
non-financial objectives such as developmental and transformational projects,
human resources and successor development and other objectives agreed with the
Compensation Committee at the beginning of or during the relevant fiscal year,
or in acknowledgement of certain possible events altogether beyond the control
of the executives which prevents complete achievement of quantified
goals.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Compensation Committee
Determination

    

    The
determination of meeting any annual performance criteria shall be made in the
sole judgment of the Compensation Committee based on year-end financial
information provided by management, which determination shall be made within 120
days after the fiscal year-end.  Entitlement to any payments under
this EMIP shall be contingent on the participants being employed by the company
on the date of such determination.

    

    

    *
Base salary in effect on April 1, 2008.

    **Grant
date is the date hereof, vesting ratably each July 1 in 2010-2, subject to
acceleration, at an exercise price equal to the Fair Market Value on the grant
date pursuant to the Company's 2007 Stock Incentive Plan and granted pursuant
thereto.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00144-of-00352.parquet"}]]