Document:

exv10wff

 

POLARIS INDUSTRIES INC.

STOCK OPTION AGREEMENT

			
	«First» «Middle» «Last»
	 	SSN: «SSN»

In accordance with the terms of the Polaris Industries Inc. 2007 Omnibus Incentive Plan (the
“Plan”), Polaris Industries Inc. (the “Company”), as determined by and through the Compensation
Committee of the Company’s Board of Directors, hereby grants to you (the “Participant”), subject to
the terms and conditions set forth in this Stock Option Agreement (including Annex A hereto and all
documents incorporated herein by reference) the right and option (the “Option”) to purchase from
the Company shares of its common stock, $.01 par value, as set forth below:

			
	Number of shares of Common Stock for which the 

Option is exercisable:
	 	«Options»
	 	 	 
	Date of Grant:
	 	________, 20____
	 	 	 
	Option Price:
	 	$______
	 	 	 
	Vesting:
	 	100% on ________, 20____
	 	 	 
	Expiration Date:
	 	Close of business on ________, 20____
	 	 	 
	Exercise Period:
	 	Date of Vesting through Expiration Date

Further terms and conditions of the grant are set forth in Annex A hereto, which is an integral
part of this Stock Option Agreement.

All terms, provisions and conditions applicable to the Option set forth in the Plan and not set
forth herein are hereby incorporated by reference herein. To the extent any provision hereof is
inconsistent with a provision of the Plan, the provisions of the Plan will govern. The Participant
hereby acknowledges the receipt of a copy of this Stock Option Agreement, including Annex A hereto,
and a copy of the Plan, and agrees to be bound by all the terms and provisions hereof and thereof.

IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement to be executed by its Vice
President-Finance, Chief Financial Officer and Secretary, and the Participant has executed this
Stock Option Agreement, both effective as of the Date of Grant.

	 	 	 	 	 
	 	POLARIS INDUSTRIES INC.

 	 
	 	 	 
	 	Michael W. Malone 	 
	 	Vice President-Finance, Chief Financial Officer and
Secretary 	 
	 

Agreed:

________________________

Participant

Dated: __________________

Attachment: Annex A

 

 

ANNEX A

NONQUALIFIED STOCK OPTION

      I am pleased to inform you that you are the recipient of a stock option award under the
Polaris Industries Inc. 2007 Omnibus Incentive Plan (the “Plan”).

      This stock option award was approved by the Compensation Committee of the Board of Directors
of the Company (the “Committee”). Section 6.2 of the Plan provides that all stock option awards
under the Plan be made pursuant to an award agreement between the recipient and the Company. This
Annex A, together with the cover sheet hereto, sets forth a Stock Option Agreement (“Agreement”) to
confirm and formalize your agreement with the Company with respect to your stock option award and
is entered into under and pursuant to all of the terms and provisions of the Plan. In conformity
with the Plan, you and the Company agree as follows:

	 	1.	 	Subject to the terms and conditions of this Agreement and the Plan, the Company
hereby grants to you the right and option to purchase from the Company up to, but not
exceeding in the aggregate, the number of shares of the Common Stock, par value $.01
per share (“Common Stock”) of the Company set forth on the cover sheet to this
Agreement (the “Option”), at an exercise price of $_____ per share (the “Exercise
Price”) and for the period (the “Option Term”) beginning on ________, 20____ (the “Date
of Grant”) and ending on ________, 20____ (unless earlier terminated in accordance with
Paragraph 6 of this Agreement). The Exercise Price set forth herein equals the Fair
Market Value, as defined in the Plan, on the Date of Grant, of the shares of Common
Stock subject to the Option.
	 
	 	2.	 	This Agreement grants to you a nonqualified stock option.
	 
	 	3.	 	The Option granted to you hereunder shall become exercisable (“vest”) on the
third anniversary of the Date of Grant (the “Vesting Date”). Once the Option has
vested, it may be exercised, in whole or in part, at any time and from time to time
during the remainder of the Option Term except as set forth herein.
	 
	 	 	 	Notwithstanding the foregoing, the Option shall vest and become immediately
exercisable upon a “Change in Control” of the Company. A “Change in Control” shall
be deemed to have occurred if:

      (a) Any election has occurred of persons to the Board of Directors of
the Company (the “Board”) that causes at least one-half of the Board to
consist of persons other than (x) persons who were members of the Board on
January 1, 2008 and (y) persons who were nominated for election by the Board
as members of the Board at a time when more than one-half of the members of
the Board consisted of persons who were members of the Board on January 1,
2008; provided, however, that any person nominated for election by the Board
at a time when at least one-half of the members of the Board were persons
described in clauses (x) and/or (y) or by persons who were themselves
nominated by such Board shall, for this purpose, be deemed to have been
nominated by a Board composed of persons described in clause (x) (persons
described or deemed described in clauses (x) and/or (y) are referred to
herein as “Incumbent Directors”); or

      (b) The acquisition in one or more transactions, other than from the
Company, by any individual, entity or group (within the meaning of Section

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13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of a number of Company Voting Securities
(as defined below) equal to or greater than 35% of the Company Voting
Securities unless such acquisition has been designated by the Incumbent
Directors as an acquisition not constituting a Change in Control for
purposes hereof; or

      (c) Any of the following: (x) a liquidation or dissolution of the
Company; (y) a reorganization, merger or consolidation of the Company
unless, following such reorganization, merger or consolidation, (A) the
Company is the surviving entity resulting from such reorganization, merger
or consolidation or (B) at least one-half of the board of directors of the
entity resulting from such reorganization, merger or consolidation consists
of Incumbent Directors; or (z) a sale or other disposition of all or
substantially all of the assets of the Company unless, following such sale
or disposition, at least one-half of the board of directors of the
transferee consists of Incumbent Directors.

	 	 	 	As used herein, “Company Voting Securities” means the combined voting power of all
of outstanding voting securities of the Company entitled to vote generally in the
election of the Board.
	 
	 	4.	 	Except as otherwise provided in this Section 4, you may exercise the Option, in
whole or in part, by delivering to the Company a Notice of Exercise of Stock Option, in
the form set forth as Exhibit A hereto, together with (i) a check payable to the order
of the Company and/or (ii) shares of Common Stock with a stock power executed in blank,
equal in value to the Exercise Price of the shares of Common Stock being purchased.
You may not exercise the Option with respect to a fractional share of Common Stock.
Shares of Common Stock surrendered in exercise of the Option shall be valued at their
Fair Market Value, as such term is defined in the Plan, on the date of exercise. With
the approval of, and under the terms and conditions specified by, the Committee, you
also may exercise the Option in accordance with a cashless exercise program by electing
to have withheld from shares otherwise issuable to you upon exercise of the Option a
number of shares of Common Stock whose Fair Market Value, as such term is defined in
the Plan, on the date of exercise is equal to the Exercise Price of the shares of
Common Stock being purchased.
	 
	 	 	 	If permitted by the Company at the time of exercise, the Option may also be
exercised by providing a notice of exercise to a third party administrator (as the
Company’s agent) by or through any means permitted by such third party administrator
from time to time, including, without limitation, by providing notice of exercise to
the third party administrator by telephone or by using the third party
administrator’s Internet web site to provide notice of exercise, and in such event,
the notice of exercise may be provided, but shall not be required to be provided, in
writing. For purposes hereof, “third party administrator” means E*Trade Financial
Corporate Services as the Company’s third party stock option administrator, or, as
applicable, any successor third party stock option administrator designated by the
Committee. The transfer of shares of Common Stock issuable to you in connection
with the exercise of the Option may be affected on a noncertificated basis, to the
extent not prohibited by applicable law or the rules of any stock exchange.
	 
	 	5.	 	The Company will notify you of the amount of withholding tax, if any, that must
be paid under federal and, where applicable, state and local law in connection with the
exercise of

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	 	 	 	the Option. The Company may deduct such amount from your regular salary payments or
other compensation otherwise due and owing to you. If the full amount of the
withholding tax cannot be recovered in this manner, you must, promptly upon the
receipt of such notice, remit the deficiency to the Company. In the Committee’s
discretion, you may be permitted to elect to have withheld from shares otherwise
issuable to you upon exercise of the Option, or to tender to the Company, a number
of shares of Common Stock whose Fair Market Value, as such term is defined in the
Plan, on the date of exercise equals the amount required to be withheld.
	 
	 	6.	 	If your employment by the Company and its Affiliates terminates prior to the
expiration of the Option Term and before the Option has been exercised in full, the
following rules apply:

      (a) If your employment by the Company and its Affiliates terminates on
or before the Vesting Date for any reason other than disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986 (the
“Code”)), death, or retirement on or after normal retirement age or early
retirement in accordance with the applicable retirement policy of the
Company and its Affiliates, the Option shall terminate on the date of
termination of your employment and be of no further force and effect.

      (b) If your employment by the Company and its Affiliates terminates
after the Vesting Date for any reason other than disability (within the
meaning of Section 22(e)(3) of the Internal Revenue Code of 1986 (the
“Code”)), death, or retirement on or after normal retirement age or early
retirement in accordance with the applicable retirement policy of the
Company and its Affiliates, the portion of the Option that has not yet been
exercised on the date of termination shall continue to be exercisable for a
period of thirty (30) days after such date, but not after the expiration of
the Option Term.

      (c) If your employment by the Company and its Affiliates terminates on
or before the Vesting Date by reason of early retirement in accordance with
the applicable retirement policy of the Company and its Affiliates, the
Option shall terminate on the date of termination of your employment and be
of no further force and effect.

      (d) If your employment by the Company and its Affiliates terminates
after the Vesting Date by reason of early retirement in accordance with the
applicable retirement policy of the Company and its Affiliates, the portion
of the Option that has not yet been exercised on the date of termination
shall continue to be exercisable for a period of three (3) years after such
date, but not after the expiration of the Option Term.

      (e) If your employment with the Company and its Affiliates terminates
by reason of your death: (i) if such termination takes place on or before
the Vesting Date, the Option shall vest immediately and become exercisable
in accordance with its terms during the period specified in clause (ii) of
this Section 6(e) ; and (ii) irrespective of whether the Option vested prior
to such termination of employment or in accordance with the immediately
preceding clause (i), the portion of the Option that has not yet been
exercised shall continue to be exercisable for a period of one (1) year
following the date of termination of employment with the Company

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and its Affiliates by reason of your death, but not after the expiration of
the Option Term.

      (f) If your employment with the Company and its Affiliates terminates
by reason of your disability (within the meaning of Section 22(e)(3) of the
Code) or retirement on or after normal retirement age in accordance with the
applicable retirement policy of the Company and its Affiliates: (i) if such
termination takes place on or before the Vesting Date, the Option shall vest
immediately and become exercisable during the period specified in clause
(ii) of this Section 6(f); and (ii) irrespective of whether the Option
vested prior to such termination of employment or in accordance with the
immediately preceding clause (i), the portion of the Option that has not yet
been exercised shall continue to be exercisable for a period of three (3)
years following the date of termination of employment with the Company and
its Affiliates by reason of your disability (within the meaning of Section
22(e)(3) of the Code) or retirement on or after normal retirement age in
accordance with the applicable retirement policy of the Company and its
Affiliates, but not after the expiration of the Option Term.

	 	7.	 	In the event of any corporate event or transaction (including, but not limited
to, a change in the shares of Common Stock of the Company or the capitalization of the
Company) such as a merger, consolidation, reorganization, recapitalization, separation,
partial or complete liquidation, stock dividend, stock split, reverse stock split,
split up, spin-off, or other distribution of stock or property of the Company,
combination of shares of Common Stock, exchange of shares of Common Stock, dividend in
kind, or other like change in capital structure, number of outstanding shares of Common
Stock or distribution (other than normal cash dividends) to shareholders of the
Company, or any similar corporate event or transaction, the Committee, in order to
prevent dilution or enlargement of your rights under this Agreement, shall make
equitable and appropriate adjustments and substitutions, as applicable, to or of the
number and kind of shares of Common Stock that may be issued under this Agreement,
and/or the Exercise Price.
	 
	 	 	 	The Committee may also make appropriate adjustments in, or modify, the terms of the
Option in connection with, or in anticipation of, any of the foregoing corporate
events or transactions, including adjustments and/or modifications of the expiration
dates of the Option. The determination of the Committee as to the foregoing
adjustments if any, shall be conclusive and binding on you.
	 
	 	8.	 	Nothing contained in this Agreement or in the Plan shall be deemed to confer
upon you any right to prevent or to approve or vote upon any of the corporate actions
described in Section 7. The existence of the Option granted in this Agreement shall
not affect in any way the right or the power of the Company or its shareholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
	 
	 	9.	 	Whenever you are referred to in any provision of this Agreement under
circumstances where the provision should logically be construed to apply to the
executors, the administrators, or

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	 	 	 	the person or persons to whom the Option may be transferred by will or by the laws
of descent and distribution, such references will be deemed to include such person
or persons.
	 
	 	10.	 	You may not transfer the Option granted under this Agreement otherwise than by
will or the laws of descent and distribution and only you may exercise the Option
during your lifetime. No assignment or transfer of the Option granted under this
Agreement, or of the rights represented thereby, whether voluntary or involuntary, by
the operation of law or otherwise (except by will or the laws of descent and
distribution), shall vest in the assignee or transferee any interest or right herein
whatsoever, but immediately upon any such assignment or transfer the Option shall
terminate and become of no further effect.
	 
	 	11.	 	You shall not be deemed for any purpose to be a shareholder of the Company in
respect of shares of Common Stock as to which the Option has not been exercised as
provided in this Agreement.
	 
	 	12.	 	Nothing in this Agreement or the Plan shall confer upon you any right to
continue in the employ of the Company or shall affect the right of the Company to
terminate your employment with or without cause.
	 
	 	13.	 	Notwithstanding any other provision of this Agreement, no exercise of the
Option or issuance of shares of Common stock pursuant to this Agreement shall be
effective if (i) the shares of Common Stock reserved under the Plan are not subject to
an effective registration statement at the time of such exercise or issuance, or
otherwise eligible for an exception from registration, or (ii) such exercise or
issuance would violate any applicable securities or other law or regulation or a
Company trading policy. The Company shall in no event be obligated to register any
securities pursuant to the Securities Act of 1933 (as the same shall be in effect from
time to time) or to take any other affirmative action in order to cause the exercise of
the Option or the issuance of the shares of Common Stock pursuant thereto to comply
with any law or regulation of any governmental authority.
	 
	 	14.	 	No amounts of income received by you pursuant to this Agreement shall be
considered compensation for purposes of any pension or retirement plan, insurance plan
or any other employee benefit plan of the Company unless otherwise provided in such
plan.
	 
	 	15.	 	If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, if you knowingly or grossly
negligently engaged in the misconduct, or knowingly or grossly negligently failed to
prevent the misconduct, or if you are one of the individuals subject to automatic
forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, you shall forfeit and
return to the Company any shares of Common Stock issued to you pursuant to the exercise
of the Option during the twelve (12) month period following the first public issuance
or filing with the United States Securities and Exchange Commission (whichever just
occurred) of the financial document embodying such financial reporting requirement.
	 
	 	16.	 	Every notice or other communication relating to this Agreement shall be in
writing and shall be mailed to or delivered to the party for whom it is intended at
such address as may from time to time be designated by it in a notice mailed or
delivered to the other party as herein provided; provided, however, that unless and
until some other address be so designated, all notices or communications by you to the
Company shall be mailed or delivered to the

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	 	 	 	Company at its office at 2100 Highway 55, Medina, Minnesota 55340, and all notices
or communications by the Company to you may be given to you personally or may be
mailed to you at the address indicated in the Company’s records as your most recent
mailing address.
	 
	 	17.	 	This Agreement shall be construed, governed, and interpreted under the laws of
the State of Minnesota, except the conflicts of laws provisions thereof.
	 
	 	18.	 	This Agreement embodies the entire understanding of the parties hereof, and
supersedes all other oral or written agreements or understandings between you and the
Company regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in a writing, signed by each of the parties hereto.
	 
	 	19.	 	If any provision of this Agreement or the application of any provision hereof
is declared to be illegal, invalid, or otherwise unenforceable by a court of competent
jurisdiction, the remainder of this Agreement shall not be affected thereby.
	 
	 	20.	 	This Agreement shall be binding upon and inure to the benefit of any successor
or successors of the Company and your heirs and personal representatives.

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EXHIBIT A

NOTICE OF EXERCISE OF STOCK OPTION

      Pursuant to the provisions
of the Stock Option Agreement entered into as of
________, 20____ between Polaris Industries Inc. (the “Company”) and me (the “Agreement”), I hereby exercise the
nonqualified stock option granted under the terms of the Agreement to the extent of
____________ shares of the Common Stock of the Company. I deliver to the Company herewith the
following in payment for such shares:

	 	•	 	$_______________in cash
	 
	 	•	 	Stock certificates for _______________shares of Common Stock
	 
	 	•	 	Other consideration: _______________(i.e. cashless exercise, if
approved by the Company)

	 	 	 	 	 
	Date:  ____________________ 	 	 
	 	Optionee (Print Name)	 
	 
	 	
 	 
	 	Signature 	 
	 
	 	
 	 
	 
	 	
 	 
	 	Address 	 
	 
	 	
 	 
	 	Social Security Numberexv10w1

 

EXHIBIT 10.1

2000 MOLEX LONG-TERM STOCK PLAN

(as amended and restated)

	 	 	 	 	 
	PLAN HISTORY
	ACTION	 	BOARD ADOPTION	 	STOCKHOLDER ADOPTION
	Original

	 	July 28, 2000
	 	October 20, 2000
	Amendment & Restatement

	 	July 25, 2003
	 	October 24, 2003
	Amendment & Restatement

	 	July 29, 2005
	 	October 28, 2005
	Amendment & Restatement

	 	October 17, 2006
	 	N/A
	Amendment & Restatement

	 	August 10, 2007
	 	October 26, 2007

 

 

THE 2000 MOLEX LONG-TERM STOCK PLAN

(As of October 26, 2007)

ARTICLE I. GENERAL

1.1 Name of Plan. The name of the plan described in detail herein shall be The 2000 Molex
Long-Term Stock Plan (the “Plan”).

1.2 Purpose. The purpose of the Plan is to reward and induce certain designated key management
employees to remain in the employ of Molex Incorporated, a Delaware corporation (the “Company”),
and any of its subsidiaries, and to encourage such employees to secure or increase their stock
ownership in the Company through the grant of stock options and restricted stock (which can include
performance-based restricted stock) (the “Awards”). The Company believes the Plan will promote
continuity of management and increase incentive and personal interest in the welfare of the Company
by those who are primarily responsible for shaping, carrying out the long-range plans of the
Company and securing its continued growth and financial success.

1.3 Eligibility. Executive officers of the Company, as such are designated by the Board of
Directors from time to time, are eligible to participate in the Plan. In addition, other members
of senior management may be eligible to participate in the Plan at the discretion of the Committee
(as such term is defined herein).

ARTICLE II. TERM OF PLAN

2.1 Effective Date. The Plan shall become effective upon adoption by the Board of Directors of the
Company subject to the subsequent approval by the stockholders of the Company within one (1) year
of adoption by the Board of Directors. If the stockholders do not approve the Plan within one (1)
year of adoption, then this Plan shall cease to exist and all options granted hereunder shall
become void.

2.2 Expiration. This Plan shall expire October 31, 2010 and no Award shall be granted on or after
such expiration date. However, expiration of the Plan shall not affect outstanding unexpired
Awards.

ARTICLE III. STOCK SUBJECT TO PLAN

3.1 Class of Stock. The stock that shall be subject to award under the Plan shall be the Company’s
Class A Common Stock, par value 5¢ per share (the “Stock”).

3.2 Number of Shares. Twelve million (12,000,000) shares of the Stock shall be reserved for
issuance with respect to Awards granted under the Plan. The Stock issued under the Plan may be
treasury shares purchased on the open market or otherwise, authorized but unissued shares, or
reacquired shares.

3.3 Expired, Forfeited or Canceled Options. If any Awards granted under the Plan shall expire, be
forfeited, not distributed and/or canceled for any reason without having been exercised or
distributed in full, the unexercised shares (in the case of options) or the shares not distributed
(in the case of restricted stock) subject thereto shall again be available for the purpose of the
Plan.

ARTICLE IV. ADMINISTRATION

4.1 Committee. The Plan shall be administered by the Compensation Committee of the Board of
Directors (the “Committee”) under the terms and conditions and powers set forth herein.

4.2 Action by the Committee. A majority of the members of the Committee shall constitute a quorum.
All determinations of the Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by a majority of the members of the Committee shall be
fully as effective as if it had been made by a majority vote at a meeting duly called and held.

     If not specified in the Plan, the time at which the Committee must or may take any
determination shall be determined by the Committee, and such determination may thereafter by
modified by the Committee. Any action, determination, interpretation or other decision by the
Committee with respect to the Plan shall be final, conclusive and binding on all persons and
entities, including the Company, its affiliates, any eligible employee, any person claiming any
rights under the Plan from or through any grantee of an Award under the Plan, and stockholders,
except to the extent the Committee may subsequently modify, or take further action not inconsistent
with, its prior action.

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4.3 Power to Grant Awards. Subject to the express provisions of the Plan, the Committee shall have
complete authority, in its sole discretion, to determine the employees to whom, and the time(s) at
which, Awards shall be granted, the vesting schedule and the number of shares to be subject to each
Award, and such other terms and provisions of the award agreements (which need not be identical).
In making such determinations, the Committee may take into account the nature of the services
rendered by the respective employee, his or her present and potential contribution to the Company’s
success, and such other factors as the Committee in its discretion shall deem relevant. The
Committee shall also specifically have the power to change the vesting schedule of any previously
granted Award to a vesting schedule which is more favorable to the employee.

4.4 Overall Limitation on the Number of Shares Granted Annually. No one employee can receive
Awards exceeding five hundred thousand (500,000) shares of Stock (adjusted as set forth in Article
VIII) from the Plan in a single calendar year.

4.5 Other Powers. The express grant of any specific power to the Committee, or the taking of any
action of the Committee, shall not be construed as limiting any power or authority of the
Committee. Subject to and consistent with the provisions of the Plan, the Committee shall have full
power and authority, in its sole discretion, to:

	 	•	 	Correct any defect or supply any omission or reconcile any inconsistency,
	 
	 	•	 	Construe and interpret the Plan, the rules and regulations relating to it, or any
other instrument entered into or relating to an award under the Plan,
	 
	 	•	 	Make any determinations, provide any procedures or rules, enter into any agreements
necessary to comply with any applicable tax laws, rules and regulations,
	 
	 	•	 	Make all other determinations, including factual determinations, necessary or
advisable for the administration of the Plan.

4.6 Tax Withholding. Distribution of Stock under the Plan may be subject to income tax
withholding, and the Company is obligated to collect the tax applicable to such income. The
Company may, in its discretion, satisfy that tax obligation by withholding from the shares to be
delivered in connection with an award a number of shares having a value equal to the minimum
statutory federal and state income tax withholding, if applicable, and payroll taxes. The value of
each share to be withheld will be the closing price of the Stock on the date of distribution or
exercise as reported by the Wall Street Journal.

ARTICLE V. GRANT OF AWARDS

5.1 Stock Option Exercise Price. The stock option exercise price shall be the closing price of the
Stock on the grant date as reported by the Wall Street Journal.

5.2 Restricted Stock. Restricted stock, including performance-based restricted stock, granted
under this Plan shall be acquired by the employee without any monetary consideration subject to the
terms and conditions of the Plan. Restricted stock may be granted in tandem with stock options or
alone within the discretion of the Committee. Performance-based restricted stock grants are
governed by Article VII hereunder.

5.3 Evidence of Awards. Awards granted shall be evidenced by agreements, warrants, and/or other
instruments in such form as the Committee shall deem advisable and shall contain such terms,
provisions and conditions not inconsistent herewith as may be determined by the Committee.

ARTICLE VI. TERMS AND CONDITIONS OF STOCK OPTIONS AND RESTRICTED STOCK AWARDS OTHER THAN
PERFORMANCE-BASED RESTRICTED STOCK AWARDS

     6.1 Initial Waiting Period. No stock option or restricted stock shall vest until the first
anniversary of the grant date, unless one of the events set forth in Section 6.4 occurs.

     6.2 Vesting. After the initial waiting period, an employee may exercise a stock option and/or
receive distribution of restricted stock to the extent that such awards have vested. Unless
otherwise determined by the Committee, in its sole discretion, stock options and restricted stock
awards shall vest ratably over four years commencing on the first anniversary of the grant date.

     6.3 Cumulative Rights. The right to exercise any stock option shall be cumulative. That is, an
employee may exercise in any given year those unexpired vested stock options he could have
exercised in a previous year but did not.

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     6.4 Accelerated Vesting. Notwithstanding the foregoing, all stock options and restricted stock
awards shall immediately vest and become immediately exercisable or distributable for a period of
time set forth in Section 6.8 after one of the following events:

	 	a.	 	Death; or
	 
	 	b.	 	Total disablement; or
	 
	 	c.	 	Retirement, if all of the following conditions are met at the time of termination of
employment:

(1) The employee has reached age 591/2; and

(2) The employee was employed at least fifteen (15) consecutive years with the Company
and/or any of its subsidiaries; and

(3) The Committee, in its sole discretion, approves the accelerated vesting to any extent it
desires.

6.5 Expiration. No stock option may be exercised after six (6) years from the date the stock
option becomes one hundred percent (100%) vested.

6.6 Form of Exercise of Stock Options. Stock options may only be exercised according to the terms
and conditions established by the Company and the Committee, consistent with the limits set forth
herein, at the time the stock options are granted. Subject to the foregoing terms and conditions,
any shares covered by a stock option may be exercised by a notice delivered to the Company or the
Company’s agent of intent to exercise the stock option with respect to a specified number of shares
of Stock and payment to the Company of the aggregate amount of the stock option exercise price.
The payment may be either in cash or in stock of the Company. If stock is used for payment, such
stock shall be valued at the closing price of the applicable stock as reported by the Wall Street
Journal on the date of exercise.

6.7 Distribution of Restricted Stock. Restricted stock shall be distributed on the vesting dates
according to the vesting schedule set at the time of grant.

6.8 Termination of Stock Option or Restricted Stock. Stock option and restricted awards shall
terminate and expire at the earliest of:

	 	a.	 	The expiration date set when such stock option or restricted stock was granted; or
	 
	 	b.	 	Six (6) years after one of the events set forth in Section 6.4; or
	 
	 	c.	 	Immediately upon termination of employment with the Company or any of its subsidiaries for
any reason except if employment is terminated by reason of one of the events set forth in
Section 6.4.

6.9 Transferability. Stock options and restricted stock awards are not transferable and can only
be exercised by or distributed to the employee, or in the case of death to the employee’s personal
representative subject to Section 6.8.

ARTICLE VII. TERMS AND CONDITIONS OF PERFORMANCE SHARES

7.1 Definitions. For purposes of Performance Shares (as defined below), the following definitions
shall apply.

	 	a.	 	“Covered Employee” means any key employee who:

	 	(1)	 	Is or potentially may become a “Covered Employee” as defined in Code Section 162(m)(3),
and
	 
	 	(2)	 	Is designated, either as an individual employee or class of employees, by the
Committee as a “Covered Employee” for purposes of this Plan with respect to an
applicable Performance Period, by the earlier of:

	 	(i)	 	Ninety (90) days after the beginning of the applicable Performance Period, or
	 
	 	(ii)	 	The date on which twenty-five percent (25%) of the applicable Performance Period
has elapsed.

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	 	b.	 	“Fair Market Value” means the closing price of the Stock on the grant date of the
Performance Share as reported by the Wall Street Journal.
	 
	 	c.	 	“Performance-Based Compensation” means compensation under a Performance Share granted
under this Article VII that is intended to satisfy the requirements of Code Section 162(m)
for qualified performance-based compensation paid to Covered Employees.
	 
	 	d.	 	“Performance Measures” means measures as described in Section 7.6 on which the
performance goals are based and which are approved by the Company’s stockholders pursuant
to this Plan in order to qualify Performance Shares as Performance-Based Compensation.
	 
	 	e.	 	“Performance Period” means the period of time during which the performance goals must
be met in order to determine the degree of payout and/or vesting with respect to a
Performance Share award. Unless otherwise provided in the award agreement and/or other
instruments evidencing the award, the Performance Period shall be a twelve (12) month
period beginning on each July 1 and ending the immediately following June 30.
	 
	 	f.	 	“Performance Share” means a restricted stock award granted under this Article VII and
subject to the terms of this Plan, of which the number of shares which vest is determined
as a function of the extent to which corresponding performance criteria have been
achieved.

7.2 Grant of Performance Shares. Subject to the terms and provisions of this Plan, the Committee,
at any time and from time to time, may grant Performance Shares to employees in such number of
shares and upon such terms as the Committee shall determine.

7.3 Performance Share Award Agreement. Each Performance Share grant shall be evidenced by an award
agreement that shall specify:

	 	a.	 	the Performance Period;
	 
	 	b.	 	the Performance Measures;
	 
	 	c.	 	the number of shares of Stock subject to the Performance Share award; and
	 
	 	d.	 	such other provisions as the Committee shall determine.

7.4 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on
any Performance Shares granted pursuant to this Plan as it may deem advisable including, without
limitation, a requirement that time-based restrictions on vesting follow the attainment of the
performance goals, restrictions under applicable laws or under the requirements of any stock
exchange or market upon which such shares are listed or traded, or holding requirements or sale
restrictions placed on the shares by the Company upon vesting of such Performance Shares.

7.5 Termination of Employment.

	 	a.	 	General Rule. Except as set forth in Section 7.5(b), unvested Performance Shares
shall be cancelled immediately upon the employee’s termination of employment with the
Company, its affiliates, and/or its subsidiaries, as the case may be.
	 
	 	b.	 	Death, Disability and Retirement. Notwithstanding anything to the contrary in this
Plan or the respective Performance Share award agreement, the Committee, in its sole
discretion, may fully or partially vest an employee in his/her Performance Shares if such
employee terminates employment during the last six months of a Performance Period by
reason of death, disability or retirement (as defined in Section 6.4(c)); provided,
however, if the Committee does fully or partially vest such employee in his/her
Performance Shares in such situation, such determination to fully or partially vest shall
not be made until the end of the Performance Period and the lapse of any such restrictions
on such Performance Shares shall occur at the

5

 

	 	 	 	same time such restrictions lapse for all other employees holding Performance Shares
relating to the same Performance Period.

7.6 Performance Measures.

	 	a.	 	General Rule. The performance goals, upon which the payment or vesting of a
Performance Share award to a Covered Employee that is intended to qualify as
Performance-Based Compensation, shall be selected by the Committee in its complete and
sole discretion but shall be limited to one or more of the following Performance Measures:

	 	(1)	 	Net earnings or net income (before or after taxes);
	 
	 	(2)	 	Earnings per share;
	 
	 	(3)	 	Net sales or revenue growth;
	 
	 	(4)	 	Net operating profit;
	 
	 	(5)	 	Return measures (including, but not limited to, return on assets, return on net
assets, capital, invested capital, equity, sales, or revenue);
	 
	 	(6)	 	Cash flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity, and cash flow return on investment);
	 
	 	(7)	 	EBIT or earnings before or after taxes, interest, depreciation, and/or
amortization;
	 
	 	(8)	 	Gross or operating margins;

	 
	 	(9)	 	Productivity ratios;
	 
	 	(10)	 	Share price (including, but not limited to, growth measures and total
shareholder return);
	 
	 	(11)	 	Expense targets;
	 
	 	(12)	 	Margins;
	 
	 	(13)	 	Operating efficiency;
	 
	 	(14)	 	Market share;
	 
	 	(15)	 	Total shareholder return;
	 
	 	(16)	 	Customer satisfaction;
	 
	 	(17)	 	Working capital targets; and
	 
	 	(18)	 	Economic value added or EVA® (net operating profit after tax minus the sum of
capital multiplied by the cost of capital).

	 	 	 	Any Performance Measure(s) may be used to measure the performance of the Company, any
subsidiary, and/or any affiliate, as the case may be, as a whole or any business unit of the
Company, and subsidiary, and/or any affiliate, as the case may be, or any combination
thereof, as the Committee may deem appropriate, or any of the above Performance Measures as
compared to the performance of a group of comparator companies, or published or special
index that the Committee, in its sole discretion, deems appropriate, or the Company may
select Performance Measure (10) above as compared to various stock market indices. The
Committee also has the authority to provide for accelerated vesting of any Performance Share
award based on the achievement of performance goals pursuant to the Performance Measures
specified in this Section 7.6.

	 	b.	 	Evaluation of Performance. The Committee may provide in any such Performance Share
award that any evaluation of performance may include or exclude any of the following
events that occurs during a Performance Period:

	 	(1)	 	Asset write-downs;
	 
	 	(2)	 	Litigation or claim judgments or settlements;
	 
	 	(3)	 	The effect of changes in tax laws, accounting principles, or other laws or
provisions affecting reported results;
	 
	 	(4)	 	Any reorganization and restructuring programs;
	 
	 	(5)	 	Extraordinary nonrecurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management’s discussion and analysis of financial condition
and results of operations appearing in the Company’s annual report to shareholders for
the applicable year;
	 
	 	(6)	 	Acquisitions or divestitures; and
	 
	 	(7)	 	Foreign exchange gains and losses.

6

 

	 	 	 	To the extent such inclusions or exclusions affect Performance Share awards to Covered
Employees, they shall be prescribed in a form that meets the requirements of Code Section
162(m) for deductibility.
	 
	 	c.	 	Adjustment of Performance-Based Compensation. Awards that are intended to qualify as
Performance-Based Compensation may not be adjusted upward. The Committee shall retain the
discretion to adjust such Performance Share awards downward, either on a formula or
discretionary basis or any combination, as the Committee determines is necessary to reach
an equitable result. For Performance Share awards that are not intended to qualify as
Performance-Based Compensation, the Committee shall retain the discretion to adjust such
Performance Share awards upward or downward, either on a formula or discretionary basis or
any combination, as the Committee determines.
	 
	 	d.	 	Committee Discretion. In the event that applicable tax and/or securities laws change
to permit Committee discretion to alter the governing Performance Measures without
obtaining shareholder approval of such changes, the Committee shall have sole discretion
to make such changes without obtaining shareholder approval. In addition, in the event
that the Committee determines that it is advisable to grant Performance Share awards that
shall not qualify as Performance-Based Compensation, the Committee may make such grants
without satisfying the requirements of Code Section 162(m) and base vesting on Performance
Measures other than those set forth in paragraph (a) above.

7.7 Compliance with Code Section 162(m). The Company intends that the Performance Share awards
granted to Covered Employees shall satisfy the requirements of the performance-based exception
under Code Section 162(m), unless otherwise determined by the Committee when the Performance Share
award is granted. Accordingly, the terms of this Plan, including the definition of Covered
Employee and other terms used therein, shall be interpreted in a manner consistent with Code
Section 162(m) and regulations thereunder. Notwithstanding the foregoing, because the Committee
cannot determine with certainty whether a given employee will be a Covered Employee with respect to
a fiscal year that has not yet been completed, the term Covered Employee as used herein shall mean
only a person designated by the Committee as likely to be a Covered Employee with respect to a
fiscal year. If any provision of the Plan or any award agreement designated as intended to satisfy
the performance-based exception under Code Section 162(m) does not comply or is inconsistent with
the requirements of Code Section 162(m) or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer upon the Committee or any other person sole discretion to
increase the amount of compensation otherwise payable in connection with such Performance Share
award upon attainment of the applicable performance objectives.

7.8 Transferability. Performance Shares are not transferable until all conditions and restrictions
applicable to such Performance Shares under the respective award agreement have been satisfied or
lapse (including satisfaction of any applicable tax withholding obligations). In the event of the
death of an employee while having unexpired outstanding Performance Shares, the personal
representative of the estate of the employee may receive the distribution of vested Performance
Shares in accordance with Section 7.5(b).

ARTICLE VIII. ADJUSTMENT OF NUMBER OF SHARES

8.1 Stock Dividends. In the event that a dividend shall be declared upon the Stock payable in
shares of stock of the Company, the number of shares of Stock then subject to any Awards, and the
number of shares of Stock reserved for issuance pursuant to the Plan but not yet covered by an
Award, shall be adjusted by adding to each such share the number of shares which would be
distributable thereon (or any equivalent value of Stock as determined by the Committee in its sole
discretion) if such share had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend.

8.2 Reorganization. In the event that the outstanding shares of Stock shall be changed into or
exchanged for a different number or kind of shares of stock or other securities of the Company, or
of another corporation, whether through reorganization, recapitalization, stock split up,
combination of shares, merger or consolidation, then, there shall be substituted for each share of
Stock subject to any Award and for each share of Stock reserved for issuance pursuant to the Plan
but not yet covered by an Award, the number and kind of shares of stock or other securities into
which each outstanding share of Stock shall be so changed or for which each such share of Stock
shall be exchanged.

7

 

8.3 Other Changes. In the event there shall be any change, other than as specified above in this
Article, in the number or kind of outstanding shares of stock of the Company or of any stock or
other securities into which such stock shall have been changed or for which it shall have been
exchanged, then, if the Committee shall, in its sole discretion, determine that such change
equitably requires an adjustment in the number or kind of shares theretofore reserved for issuance
pursuant to the Plan but not yet covered by an Award and of the number or kind of shares then
subject to any Award, such adjustments shall be made by the Committee and shall be effective and
binding for all purposes of the Plan and of each award agreement.

8.4 Adjusted Stock Option Exercise Price. In the case of any substitution or adjustment as
provided for in this Article, the stock option exercise price of outstanding stock option grants
will be the stock option exercise price for all shares of Stock or other securities which shall
have been substituted for such share or to which such share shall have been adjusted pursuant to
this Article.

8.5 Fractional Shares. No adjustment or substitutions provided for in this Article shall require
the Company to sell a fractional share, and the total substitution or adjustment with respect to
each award agreement shall be limited accordingly.

ARTICLE IX. SECURITIES REGULATION

9.1 Registered Stock. The Company shall not be obligated to sell or issue any shares under any
Award unless and until the shares underlying such Award are effectively registered or exempt from
registration under the Securities Act of 1933, as amended, and from any other federal or state law
governing the sale and issuance of such shares or any securities exchange regulation to which the
Company might be subject.

9.2 Unregistered Stock. In the event the shares are not effectively registered, but, can be issued
by virtue of an exemption, the Company may issue shares to an employee if the employee represents
that he or she is acquiring such shares as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares. Shares of Stock thus issued shall bear an
appropriate legend reciting such representation.

ARTICLE X. MISCELLANEOUS

10.1 Rights as a Stockholder. An employee shall have no rights as a stockholder with respect to
shares covered by an Award under this plan until the shares underlying an Award are acquired or
distributed to the employee pursuant to the terms and conditions of this Plan and the respective
award agreement.

10.2 No Contract of Employment. Participation under the Plan shall not be construed as giving an
employee a future right of employment with the Company. Employment remains at the will of the
Company.

10.3 Governing Law. This Plan and all matters relating to the Plan shall be interpreted and
construed under the laws of the State of Illinois.

10.4 Amendment of Plan. The Board of Directors, at its discretion, may amend the Plan at any time,
subject to stockholder approval if required by SEC rules or the listing requirements of any
national securities exchanges or trading systems on which are listed any of the Company’s equity
securities.

10.5 Termination of Plan. The Board of Directors may, at its discretion, terminate the Plan at any
time for any reason. Termination of the Plan shall not affect unexpired outstanding options
previously granted.

8

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