Document:

Exhibit
10.2

Execution Copy

MUTUAL
SETTLEMENT AGREEMENT AND RELEASE

THIS MUTUAL SETTLEMENT AGREEMENT
AND RELEASE (This “Settlement Agreement”) is entered
into as of this 17th day of August, 2006 by and among Real Mex
Restaurants, Inc., a Delaware corporation (“Real Mex Restaurants”), CKR
Acquisition Corp., a Delaware corporation (“CKR, and, together with Real
Mex Restaurants, “Real Mex”), J.W.Childs Equity Partners, L.P., a
Delaware limited partnership (“JW Childs Partners”) and JWC Chevys
Co-Invest, LLC, a Delaware limited liability company (“JWC”, and
together with JW Childs Partners, “JW Childs”).

WHEREAS,
Real Mex, JW Childs Partners and certain other parties are party to an Asset
Purchase Agreement dated as of October 13, 2004 (the “Asset Purchase Agreement”);

WHEREAS,
on November 18, 2004, the Bankruptcy Court for the Northern District of
California, Oakland Division entered an order approving the sale of
substantially all of the assets of the Debtors (as such term is defined in the
Asset Purchase Agreement) to CKR pursuant to the terms of the Asset Purchase
Agreement;

WHEREAS,
on January 18, 2005, the Closing (as such term is defined in the Asset Purchase
Agreement) occurred and at the Closing Real Mex Restaurants issued certain
equity securities to JW Childs pursuant to Section 2.1(a) and 6.4 of the Asset
Purchase Agreement (including shares of Real Mex Restaurant’s Series A 12.5%
Cumulative Compounding Preferred Stock, par value $.001 per share (the “Series
A Preferred Stock”), Series B 13.5% Cumulative Compounding Preferred Stock,
par value $.001 per share (the “Series B Preferred Stock”) and Series C
15% Cumulative Compounding Participating Preferred Stock, par value $.001 per
share (the “Series C Preferred Stock,” and together with the Series A Preferred
Stock and Series B Preferred Stock, the “Preferred Shares”);

WHEREAS,
pursuant to Section 5 of the Indemnification Agreement, dated as of October 13,
2005, by and among Real Mex Restaurants, CKR and JW Childs Partners (the “Indemnification
Agreement”), JW Childs Partners has agreed to indemnify Real Mex in
connection with certain matters;

WHEREAS,
(i) Real Mex has asserted certain indemnification claims against JW Childs
pursuant to Section 5 of the Indemnification Agreement as described in the letters
from Real Mex to JW Childs dated as of January 9, 2005, April 8, 2006 and April
17, 2006 (the “Indemnification Claims”) and (ii) JW Childs has asserted
that Real Mex did not issue the correct amount of Preferred Shares to JWC at
the Closing and therefore is required pursuant to the terms of the Asset
Purchase Agreement to issue to JW Childs additional Preferred Shares (the “Preferred
Shares Claims”);

WHEREAS,
the parties have asserted differing positions with respect to the
Indemnification Claims and the Preferred Shares Claims, which differences could
lead to

 

litigation, and the parties believe that it is in the
best interests of these parties and their respective constituencies to
compromise and settle the controversies related to such matters;

WHEREAS, the
parties have agreed to resolve their disputes by having Real Mex Restaurants
issue shares of Series A Preferred Stock, Series B Preferred Stock and Series D
Preferred Stock to JW Childs in the amount of the shortfall claimed by JW
Childs less approximately $895,000 as consideration to resolve the
Indemnification Claims; and

WHEREAS, on or
prior to the date hereof, Real Mex Restaurants has approved and adopted the
Certificate of Increase of Shares Designated as Series A Preferred Stock and
Series B Preferred Stock and the Certificate of Designation, Preference and
Rights of Series D 15% Cumulative Compounding Preferred Shares (the “Series
D Preferred Stock”), attached hereto as Exhibit A and Exhibit B,
respectively.

NOW
THEREFORE, in consideration of and in reliance upon the terms
and conditions herein contained, as well as other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree
as follows:

1.             Within three (3)
business days after the date hereof but in no event later than immediately
prior to the effectiveness of the Merger, Real Mex Restaurants shall issue to
each of JW Childs Partners and JWC the number of shares of Series A Preferred
Stock, Series B Preferred Stock and Series D Preferred Stock of Real Mex
Restaurants set forth opposite each such party’s name on Schedule 1
hereto (the “Additional Shares”). 
Real Mex Restaurants shall file the Certificate of Designation of Series
D Preferred Stock of Real Mex Restaurants with the Secretary of State of the State
of Delaware, in substantially the form attached hereto as Exhibit B,
which filing is a condition of JW Childs’ obligations hereunder.  The parties hereby agree that (x) the date of
issuance of the Additional Shares shall be the date hereof and (y) such
Additional Shares shall begin to accrue dividends from and after the date
hereof.  The aggregate liquidation
preference for the Additional Shares as of the date of issuance thereof will be
$5,682,763.  All of the Preferred Shares
accrue dividends at the stated rates set forth in the applicable Certificate of
Designation for such Preferred Shares from the date of issuance of such
shares.  JW Childs hereby agrees that
receipt of the Additional Shares constitutes the full satisfaction of the
Preferred Shares Claims and that, upon receipt by JW Childs of the Additional
Shares, JW Childs shall not have any further right to any additional equity
securities of Real Mex Restaurants and no further payments of any kind shall be
due from or payable by Real Mex with respect to the Preferred Shares Claims or
the JW Childs Released Claims (as defined below).   Real Mex hereby agrees that the acceptance
by JW Childs of the Additional Shares as full satisfaction of Preferred Shares
Claims constitutes the full satisfaction of the Indemnification Claims and
that, upon receipt by JW Childs of the Additional Shares, no further payments
of any kind shall be due from or payable by JW Childs with respect to the
Indemnification Claims or the Real Mex Released Claims.

2.             JW Childs hereby
releases, discharges and forever holds harmless each of Real Mex Restaurants
and CKR and their respective successors, assigns, stockholders, affiliates,
partners, subsidiaries, divisions, directors, officers, employees, agents,
attorneys, and advisors,

 2
 

 

and
the heirs, executors, and personal representatives of each of the foregoing
(the “Real Mex Released Parties”) from and against any and all claims,
demands, causes of action, suits, debts, accounts, bills, liabilities,
contracts, controversies, agreements, promises, damages and/or obligations of
any nature whatsoever, from the beginning of time and running to and including
the date of execution of this Settlement Agreement, whether known or unknown,
arising from, relating to, or pertaining to the Indemnification Claims, the
Asset Purchase Agreement and the Indemnification Agreement, including, without
limitation, any claims for breach of contract, misrepresentation, fraud, breach
of duty, negligence, “bad faith” or violation of statute or regulation (to the
extent permitted by law) (collectively, the “JW Childs Released Claims”).  For the avoidance of doubt, the release in
this paragraph 2 (x) excludes claims of JW Childs to the extent such claims are
common to all stockholders of Real Mex Restaurants, (y) excludes the
representation and warranty contained in Section 2(a)(iv) of the
Indemnification Agreement (provided however, that the provisions of this clause
(y) shall terminate upon the Effective Time (as such term is defined in the
Merger Agreement (as defined below)), and (z) nothing in the Settlement
Agreement shall limit or modify the preemptive rights of JW Childs pursuant to
Section 6 of the Joinder Agreement dated as of January 11, 2005, by and among
Real Mex Restaurants, Inc., J.W. Childs, Equity Partners, L.P., JWC Co-Invest,
LLC, Bruckmann, Rosser, Sherrill & Co., L.P. and Bruckmann, Rosser,
Sherrill & Co. II, L.P.

3.             JW Childs further
covenants to not sue, institute or participate in any claim, demand, suit,
proceeding, arbitration or any action or proceeding in law or equity against
the Real Mex Released Parties, in any way relating to or arising out of the JW
Childs’ Released Claims.  JW Childs
further agrees to reimburse all costs, expenses and attorneys’ fees incurred by
the Real Mex Released Parties in the event of any breach by JW Childs of the
covenants contained in this Paragraph 3.

4.             Real Mex hereby
releases discharges and forever holds harmless JW Childs Partners and JWC and
their respective successors, assigns, stockholders, affiliates, partners,
subsidiaries, divisions, directors, officers, employees, agents, attorneys, and
advisors, and the heirs, executors and personal representatives of each of the
foregoing (the “JW Childs Released Parties”) from and against any and
all claims, demands, causes of action, suits, debts, accounts, bills,
liabilities, contracts, controversies, agreements, promises, damages and/or
obligations of any nature whatsoever, from the beginning of time and running to
and including the date of execution of this Settlement Agreement, whether known
or unknown, arising from, relating to, or pertaining to the Indemnification
Claims, the Asset Purchase Agreement and the Indemnification Agreement,
including, without limitation, any claims for breach of contract, misrepresentation,
fraud, breach of duty, negligence, “bad faith” or violation of statute or
regulation (to the extent permitted by law) (collectively, the “Real Mex
Released Claims”); provided, however, that nothing contained
herein shall operate to release any claim, demand, cause of action, suit, debt,
account, bill, liability, contract, controversies, agreement, promise, damage
and/or obligation of any nature whatsoever, arising from, relating to, or
pertaining to Section 2.1(f) of the Asset Purchase Agreement.  The Real Mex Released Claims and the JW
Childs Released Claims are collectively referred to herein as the “Released
Claims”).

5.             Real Mex further
covenants to not sue, institute or participate in any claim, demand, suit,
proceeding, arbitration or any action or proceeding in law or equity against
the JW

 3
 

 

Childs
Released Parties, in any way relating to or arising out of the Real Mex
Released Claims.  Real Mex further agrees
to reimburse all costs, expenses and attorneys’ fees incurred by the JW Childs
Released Parties in the event of any breach of the covenants by Real Mex
contained in this Paragraph 5.

6.             Real
Mex represents and warrants that it has paid (or will pay) the personal
property taxes described on Schedule 2 hereto.  Real Mex also covenants not to sue, institute
or participate in any claim, demand, suit, proceeding, arbitration or any
action or proceeding in law or equity against the Sellers (as that term is used
in the Asset Purchase Agreement) or the Debtors, the Trust Estate, the Trust and/or
the Trustee in In re Chevys, Inc. et al., Case No. 03-45879 RN11 (Bnkr. N.D.
Cal) (as jointly administered) arising out of the Indemnification Claims.

7.             Each
of JW Childs Partners and JWC agrees that it will vote or execute consents in
respect of each share of capital stock of Real Mex Restaurants (including,
without limitation, the Additional Shares) with respect to which it has voting power at
the time of a stockholders meeting or request for consent (and shall cause each
director of Real Mex Restaurants which it shall have the power to appoint or
designate at the time of a Board of Directors meeting or request for consent,
to vote or execute consents) in favor of the proposed merger involving RM
Restaurant Holdings Corp (or other affiliates of Sun Capital Partners Group IV,
Inc.) and Real Mex Restaurants (the “Merger”), upon the terms set forth
in the merger agreement substantially in the form attached as Exhibit C
hereto (the “Merger Agreement”). 
Additionally, each of JW Childs Partners and JWC hereby waives any and
all appraisal, dissenters and similar rights that it may have with respect to
such Merger, provided the Merger is consummated pursuant to the Merger
Agreement.

8.             Following
the consummation of the Merger, in the event that JW Childs shall be obligated
pursuant to Section 2.1(f)(iii) of the Asset Purchase Agreement to return an
amount of Stock Consideration to Real Mex Restaurants to satisfy Excess
Administrative and Exit Costs (as such term is defined in the Asset Purchase
Agreement), in lieu of returning such Stock Consideration, JW Childs shall
promptly pay an equivalent amount in cash to Real Mex Restaurants (calculated
in accordance with Section 2.1(f)(ii)(C) of the Asset Purchase Agreement).

9.             Each party hereto
acknowledges and agrees that this Settlement Agreement involves a compromise
settlement of certain claims and disputes between the parties and that the
agreements, covenants, provisions, terms and conditions in this Settlement
Agreement shall not constitute or be deemed to be an admission of any
liability, fault, or responsibility whatsoever on the part of any party
hereto.  This Settlement Agreement shall
not be admissible as evidence in any action except an action to interpret or
enforce this Settlement Agreement, including any amendments and modifications
thereto.

10.           Each party hereto
acknowledges and agrees that this Settlement Agreement is a complete compromise
of matters involving disputed issues of law and fact and fully assumes the risk
that the investigation conducted, if any, relating to the claims released
pursuant to this Settlement Agreement, may be inadequate and that the facts
with respect to which this Settlement Agreement is executed may hereafter by
found to be different from the

 4
 

 

facts that each party now believes to be true.  Each party assumes the risk of such possible
differences of facts and hereby agrees that this Settlement Agreement shall
remain in effect, notwithstanding such differences of fact.

11.           The parties hereto
represent and warrant to the other that (i) that they have all requisite power
and authority to enter into and execute this Settlement Agreement and to
consummate the transactions contemplated hereby and (ii) this Settlement
Agreement has been duly authorized, executed and delivered by such party and
constitutes the legal and valid obligation of each such party, enforceable
against such party in accordance with its terms.  Each of Real Mex and JW Childs represents and
warrants that such party is the owner of its respective Released Claims and has
not assigned any interest in them.  Each
of Real Mex and JW Childs shall indemnify and hold harmless the other with
respect to any action brought by any alleged assignee of their respective
interests in the Released Claims.

12.           It is the intention
of Real Mex and JW Childs, and each of them, in executing this Settlement
Agreement, that this instrument shall be effective as a full and final accord
and satisfaction, and a general release by each such party of each and every
Released Matter.  In furtherance of this
intention, Real Mex and JW Childs, and each of them, for themselves and their
agents, successors and assigns, and each of them, expressly waive any and all
rights under Section 1542 of the California Civil Code (or any other similar
law or regulation) with respect to the Released Matters, which provides as
follows:

“A general
release does not extend to claims which the creditor does not know or suspect
in his favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor.”

13.           This Settlement
Agreement constitutes, embodies and contains the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
other agreements, understandings, representations or undertakings, whether oral
or written, between the parties relating to the matters described herein.  The parties agree and represent that no
promises or representations of any kind apart from those expressed or stated in
this Settlement Agreement have been made to induce any party to enter into this
Settlement Agreement.

14.           This Settlement
Agreement has been prepared, and negotiations in connection therewith have been
carried on, by the joint efforts of the respective counsel for the parties, and
is not to be construed strictly for or against any of the parties hereto.

15.           This Settlement
Agreement may not be amended or modified, except by means of a written
agreement signed by each of the parties hereto.

16.           This Settlement
Agreement, and the terms, obligations and provisions hereof, shall be binding
upon, and shall inure to the benefit of, the parties hereto, and their
respective successors, executors, administrators and assigns.

17.           This
Settlement Agreement shall be governed and construed in accordance with the
laws of the State of New York without regard to any principle of conflict of
laws.

17.           This
Settlement Agreement may be executed in multiple originals or counterparts,
each of which shall be deemed an original for all purposes, but all such
multiple

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originals or counterparts together shall constitute one and the same
instrument.  Facsimile and PDF copies of
the parties’ signatures to this Settlement Agreement shall be considered
originals for all purposes.

 6

Execution
Copy

IN WITNESS WHEREOF, and
intending to be legally bound hereby, the parties have executed this Settlement
Agreement as of this 17th day of August, 2006.

 

	
  

  	
   

  	
  REAL MEX RESTAURANTS, INC. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven L. Tanner

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Steven L. Tanner

  	
   

  
	
   

  	
   

  	
   

  	
  Title: Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CKR ACQUISITION CORP 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Frederick Wolfe

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Frederick Wolfe

  	
   

  
	
   

  	
   

  	
   

  	
  Title: Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  J.W. CHILDS EQUITY PARTNERS, L.P. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  J.W. Childs Advisors, L.P., its

  General Partner 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  J.W. Childs Associates, L.P., its General

  Partner 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  J.W. Childs Associates, Inc., its General

  Partner 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Jeffrey J. Teschke

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Jeffrey J. Teschke

  	
   

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JWC CHEVYS CO-INVEST, LLC 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  J.W. Childs Associates, L.P., its Manager 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  J.W. Childs Associates, Inc., its General

  Partner 

  

 

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
  /s/ Jeffrey J. Teschke

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  Jeffrey J. Teschke

  	
   

  
	
   

  	
   

  	
   

  	
  Title: Vice President

  	
   

  

 

 8Exhibit 4A

	
  Haemonetics
  Corporation

  2005 Long-Term Incentive 

  Compensation Plan

  Effective July
  27, 2005

  

 

 

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
  Article
  1.

  	
   

  	
  Establishment,
  Objectives, and Duration

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  2.

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  3.

  	
   

  	
  Administration

  	
   

  	
  4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  4.

  	
   

  	
  Shares Subject
  to the Plan and Maximum Awards

  	
   

  	
  5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  5.

  	
   

  	
  Eligibility and
  Participation

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  6.

  	
   

  	
  Stock Options

  	
   

  	
  7

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  7.

  	
   

  	
  Stock
  Appreciation Rights

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  8.

  	
   

  	
  Restricted Stock

  	
   

  	
  9

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  9.

  	
   

  	
  Deferred
  Stock/Restricted Stock Units

  	
   

  	
  10

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  10.

  	
   

  	
  Other Stock Unit Awards

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  11.

  	
   

  	
  Performance
  Shares

  	
   

  	
  11

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  12.

  	
   

  	
  Performance
  Measures

  	
   

  	
  12

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  13.

  	
   

  	
  Rights of
  Participants

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  14.

  	
   

  	
  Termination of
  Employment/Directorship

  	
   

  	
  13

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  15.

  	
   

  	
  Change in
  Control

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  16.

  	
   

  	
  Amendment,
  Modification, and Termination

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  17.

  	
   

  	
  Withholding

  	
   

  	
  14

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article
  18.

  	
   

  	
  Successors

  	
   

  	
  15

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article 19.

  	
   

  	
  General Provisions

  	
   

  	
  15

  	
   

  

 

 i

 

Article 1.
Establishment, Objectives, and Duration

1.1        Establishment
of the Plan.  Haemonetics Corporation, a Massachusetts
corporation, hereby adopts the “Haemonetics Corporation 2005 Incentive
Compensation Plan” (hereinafter referred to as the “Plan”), as set forth
in this document. The Plan permits the grant of Nonqualified Stock
Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock/Restricted Stock Units, Other Stock Units and Performance
Shares.

Subject to approval by the Company’s
stockholders, this Plan shall become effective as of July 27, 2005 (the “Effective
Date”). Awards may be granted under this Plan prior to such stockholder
approval; provided, the effectiveness of such Awards shall be contingent on
such stockholder approval being obtained.

1.2        Objectives
of the Plan.
The objectives of the Plan are to optimize the profitability and growth of the
Company through incentives that are consistent with the Company’s goals and
that link the personal interests of Participants to those of the Company’s
stockholders, to provide Participants with an incentive for excellence in
individual performance, and to promote teamwork among Participants.

The Plan is further intended to provide
flexibility to the Company and its Subsidiaries in their ability to
motivate, attract, and retain the services of Participants who make significant
contributions to the Company’s success and to allow Participants to share in
that success.

1.3        Duration
of the Plan.
The Plan shall remain in effect, subject to the right of the Committee to amend
or terminate the Plan at any time pursuant to Article 16 hereof, until the
earlier of when (a) all Shares subject to it shall have been purchased or
acquired according to the Plan’s provisions or (b) the seventh (7th)
anniversary of the Effective Date. However (in case of any amendment to the
previous sentence), in no event may an Award of an Incentive Stock Option be
granted under the Plan on or after the tenth (10th) anniversary of the Effective Date.

Article 2.
Definitions

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

2.1        “Award” means, individually or collectively,
a grant under this Plan of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock/Restricted
Stock Units, Other Stock Units or Performance Shares.

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

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

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

2.5        “Change
in Control” shall
be deemed to have occurred if any person or any two or more persons acting as a
group, and all affiliates of such person or persons, who prior to such time
owned less than thirty-five percent (35%) of the then outstanding common stock
of the Company, shall acquire such additional shares of the Company’s common
stock in one or more transactions, or series of transactions, such that
following such transaction or transactions, such person or group and affiliates
beneficially own thirty-five percent (35%) or more of the Company’s common
stock outstanding.

2.6        “Code” means the Internal Revenue Code of 1986,
as amended from time to time.

 

 

2.7        “Committee” means the committee appointed from time
to time by the Company’s Board of Directors to administer the Plan. The full
Board of Directors, in its discretion, may act as the Committee under the Plan,
whether or not a Committee has been appointed, and shall do so with respect to
grants of Awards to non-employee Directors. The Committee may delegate to one
or more members of the Committee or officers of the Company, individually or
acting as a committee, any portion of its authority, except as otherwise
expressly provided in the Plan. In the event of a delegation to a member of the
Committee, officer or a committee thereof, the term “Committee” as used herein
shall include the member of the Committee, officer or committee with respect to
the delegated authority. Notwithstanding any such delegation of authority, the
Committee comprised of members of the Board of Directors and appointed by the
Board of Directors shall retain overall responsibility for the operation of the
Plan.

2.8        “Company” means Haemonetics Corporation, a
Massachusetts corporation, and any successor thereto as provided in
Article 18 hereof.

2.9        “Covered
Employee”
means a Participant who, as of the date of vesting and/or payout of an Award,
or the date the Company or any of its Subsidiaries is entitled to a tax
deduction as a result of the Award, as applicable, is one of the group of “covered
employees,” as defined in the regulations promulgated under Code Section
162(m), or any successor statute.

2.10      “Deferred
Stock Unit”
means an Award granted to a Participant pursuant to Article 9 hereof.

2.11      “Director” means any individual who is a member of
the Board of Directors of the Company; provided, however, that any Director who
is employed by the Company shall be treated as an Employee under the Plan.

2.12      “Disability” shall mean a condition whereby the
Participant is unable to engage in any substantial gainful activity by reason
of any medically determinable physical impairment which can be expected to result
in death or which is or can be expected to last for a continuous period of not
less than twelve months, all as verified by a physician acceptable to, or
selected by, the Company.

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

2.14      “Employee” means any employee of the Company or its
Subsidiaries.

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

2.16      “Fair
Market Value”
as of any date and in respect of any Share means the average of the high and
low trading prices for the Shares as reported on the New York Stock Exchange
for that date, or if no such prices are reported for that date, the average of
the high and low trading prices on the next preceding date for which such
prices were reported, unless otherwise determined by the Committee. In no event
shall the fair market value of any Share be less than its par value.

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

2.18      “Insider” shall mean an individual who is, on the
relevant date, an executive officer, director or ten percent (10%)
beneficial owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as defined
under Section 16 of the Exchange Act.

2.19      “Key
Employee” shall
mean an employee (as defined in Code Section 416(i) (but without regard to
paragraph (5) thereof)) of the Company.

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2.20      “Nonqualified
Stock Option”
or “NQSO” means an option to purchase
Shares granted under Article 6 hereof that is not intended to meet the
requirements of Code Section 422, or that otherwise does not meet such
requirements.

2.21      “Option” means an Incentive Stock Option or a
Nonqualified Stock Option.

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

2.23      “Other
Stock Unit Award”
means an Award granted to a Participant, as described in Article 10
hereof.

2.24      “Participant” means an Employee or Director who has
been selected to receive an Award or who has an outstanding Award granted under
the Plan.

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

2.26      “Performance
Share”
means an Award granted to a Participant, as described in Article 11
hereof.

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

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

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

2.30      “Restricted
Stock Unit”
means an Award granted to a Participant pursuant to Article 9 hereof.

2.31       “Shares” means shares of the Company’s common
stock, par value $.01 per share.

2.32      “Stock
Appreciation Right”
or “SAR” means an Award granted pursuant
to the terms of Article 7 hereof.

2.33      “Subsidiary” means any corporation, partnership,
joint venture, or other entity in which the Company, directly or indirectly,
has a majority voting interest.  With
respect to Incentive Stock Options, “Subsidiary” means any entity, domestic or
foreign, whether or not such entity now exists or is hereafter organized or
acquired by the Company or by a Subsidiary that is a “subsidiary corporation”
within the meaning of Code Section 424(d) and the rules thereunder.

2.34      “Ten
Percent Shareholder”
means an employee who at the time an ISO is granted owns Shares possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company or any Subsidiary, within the meaning of Code Section 422.

Article 3. Administration

3.1        General. Subject to the terms and conditions of
the Plan, the Plan shall be administered by the Committee. The members of the
Committee shall be appointed from time to time by, and shall serve at the
discretion of, the Board of Directors. The Committee shall have 

 4
 

 

 

the authority to delegate administrative duties to
officers of the Company. For purposes of making Awards intended to qualify for
the Performance Based Exception under Code Section 162(m), to the extent
required under such Code Section, the Committee shall be comprised solely of
two or more individuals who are “outside directors”, as that term is defined in
Code Section 162(m) and the regulations thereunder.

3.2         Authority of the Committee. Except as limited by law or by
the Certificate of Incorporation or Bylaws of the Company, and subject to the
provisions hereof, the Committee shall have full power to select Employees and
Directors who shall be offered the opportunity to participate in the Plan;
determine the sizes and types of Awards; determine the terms and conditions of
Awards in a manner consistent with the Plan (including, but not limited to,
termination provisions); construe and interpret the Plan and any agreement or
instrument entered into under the Plan; establish, amend, or waive rules and
regulations for the Plan’s administration; and amend the terms and conditions
of any outstanding Award as provided in the Plan. Further, the Committee shall
make all other determinations that it deems necessary or advisable for the administration
of the Plan. As permitted by law and the terms of the Plan, the Committee may
delegate its authority herein. No member of the Committee shall be liable for
any action taken or decision made in good faith relating to the Plan or any
Award granted hereunder.

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

Article 4. Shares
Subject to the Plan and Maximum Awards

4.1        Number
of Shares Available for Grants.  Subject
to adjustment as provided in Section 4.2 hereof, the number of Shares
hereby reserved for issuance to Participants under the Plan shall equal
3,100,000. Subject to adjustment as provided in Section 4.2 hereof, the maximum
number of Shares that may be issued pursuant to Incentive Stock Options shall
not exceed 500,000. Any Shares that are subject to Awards of Stock Options
shall be counted against this limit as one (1) Share for every one (1) Share
issued. Any Shares that are subject to Awards other than Stock Options shall be
counted against this limit as 2.1 Shares for every one (1) Share granted.

Any Shares covered by an Award (or portion of an
Award) granted under the Plan which is cashed out, forfeited, canceled or
expires shall be deemed not to have been delivered for purposes of determining
the maximum number of Shares available for delivery under the Plan. If a
Participant tenders shares (either actually, by attestation or otherwise) to
pay all or any part of the Option Price or purchase price on an Award or if any
shares payable with respect to any Award are retained by the Company in
satisfaction of the Participant’s obligation for taxes, the number of shares
actually tendered or retained shall not become or again be, as the case may be,
included in the Share limit described in this Section 4.1.

Shares may be authorized or unissued shares. The
Committee shall determine the appropriate methodology for calculating the
number of Shares issued pursuant to the Plan.

The following limitations shall apply to the
grant of any Award to a Participant in a fiscal year:

 5
 

 

 

(a)                            Stock Options: 
The maximum aggregate number of Shares that may be granted in the form
of Stock Options pursuant to Awards granted in any one fiscal year to any one
Participant shall be 600,000.

(b)                           SARs: 
The maximum aggregate number of Shares that may be granted in the form
of Stock Appreciation Rights pursuant to Awards granted in any one fiscal year
to any one Participant shall be 250,000.

(c)                            Restricted Stock: The maximum aggregate number of Shares
that may be granted with respect to Awards of Restricted Stock granted in any
one fiscal year to any one Participant shall be 250,000.

(d)                           Deferred Stock/Restricted Stock
Unit Awards:  The maximum aggregate grant or award with
respect to Awards of Deferred Stock Units made in any one fiscal year to any
one Participant may not exceed $7,000,000. The maximum aggregate grant with
respect to Awards of Restricted Stock Units made in any one fiscal year to any
one Participant may not exceed $7,000,000.

(e)                            Other Stock Unit Awards: 
The maximum aggregate grant with respect to Awards of Other Stock Units
made in any one fiscal year to any one Participant may not exceed $10,000,000.

(f)                              Performance Shares Awards:  The maximum aggregate grant with respect to
Awards of Performance Shares made in any one fiscal year to any one Participant
shall be equal to the Fair Market Value of 250,000 Shares (measured on the date of grant).

Notwithstanding anything in the Plan to the
contrary and subject to adjustment as provided in Section 4.2, the maximum
aggregate number of Shares that may be granted as Awards in any one fiscal year
to a Director shall be equal to the Fair Market Value of 10,000 Shares
(measured on the date of grant) and the maximum aggregate number of Shares that
may be granted as Awards to any Director cumulatively under this Plan is
350,000.

The maximum amount that may be paid under the
Annual Target Bonus Plan in any one fiscal year to a participant in that plan
shall be $2 million.

4.2        Adjustments
in Authorized Shares.  Upon a change in corporate capitalization,
such as a stock split, stock dividend or a corporate transaction, such as
any merger, consolidation, combination, exchange of shares or the like,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization (whether or not such reorganization comes
within the definition of such term in Code Section 368) or any partial or
complete liquidation of the Company, such adjustment shall be made in the
number and class of Shares that may be delivered under Section 4.1, in the
number and class of and/or price of Shares subject to outstanding Awards
granted under the Plan, and in the Award limits set forth in Section 4.1, as
may be determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights.

4.3        Adjustment
of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. 
The Committee may make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 4.2
hereof) affecting the Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that, unless the Committee determines
otherwise at the time 

 6
 

 

 

such adjustment is considered, no such adjustment
shall be authorized to the extent that such authority would be inconsistent
with the Plan’s or any Award’s meeting the requirements of Section 162(m) of
the Code, as from time to time amended.

Article 5.
Eligibility and Participation

5.1        Eligibility. Persons eligible to participate in this
Plan include all Employees and Directors of the Company and its Subsidiaries.

5.2        Actual
Participation.
Subject to the provisions of the Plan, the Committee may, from time to time,
select from all eligible Employees and Directors, those to whom Awards shall be
granted and shall determine the nature and amount of each Award, provided that
Incentive Stock Options shall only be awarded to Employees of the Company or
its Subsidiaries.

Article 6. Stock
Options

6.1        Grant
of Options.
Subject to the terms and provisions of the Plan, Options may be granted to
Participants in such number, and upon such terms, and at any time and from
time to time as shall be determined by the Committee.

6.2        Award
Agreement.
Each Option grant shall be evidenced by an Award Agreement that shall specify
the Option Price, the duration of the Option, the number of Shares to which the
Option pertains, and such other provisions as the Committee shall determine
which are not inconsistent with the terms of the Plan.

6.3        Option
Price.
The Option Price for each Option shall equal the Fair Market Value of the
Shares at the time such option is granted. No ISOs will be granted to a Ten
Percent Shareholder. The Option Price may not be decreased with respect to an
outstanding Option following the date of grant and no option will be replaced
with another option with a lower Option Price.

6.4        Duration
of Options.
Each Option granted to a Participant shall expire at such time as the Committee
shall determine at the time of grant, provided that an Option must expire no
later than the seventh (7th) anniversary of the date the Option was granted.

6.5        Exercise
of Options.  Options shall be exercisable at such times
and be subject to such restrictions and conditions as the Committee shall in
each instance approve, which need not be the same for each grant or for each
Participant.

6.6        Payment. Options shall be exercised by the
delivery of a written, electronic or telephonic notice of exercise to the
Company or its designated agent, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment of
the Option Price for the Shares.

Upon the exercise of any Option, the Option
Price for the Shares being purchased pursuant to the Option shall be payable to
the Company in full either: (a) in cash or its equivalent;
(b) subject to the Committee’s approval, by delivery of previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares that are delivered
must have been held by the Participant for at least six (6) months prior to
their delivery to satisfy the Option Price); (c) subject to the Committee’s
approval, by authorizing a third party to sell Shares (or a sufficient portion
of the Shares) acquired upon exercise of the Option and remitting to the
Company a sufficient portion of the sales proceeds to pay the Option Price; (d)
subject to the Committee’s approval, by a combination of (a), (b), or (c); or
(e) by any other method approved by the Committee in its sole discretion.
Unless 

 7
 

 

 

otherwise determined by the Committee, the delivery of
previously acquired Shares may be done through attestation. No fractional
shares may be tendered or accepted in payment of the Option Price.

Unless otherwise determined by the Committee,
cashless exercises are permitted pursuant to Federal Reserve Board’s Regulation
T, subject to applicable securities law restrictions, or by any other
means which the Committee determines to be consistent with the Plan’s purpose
and applicable law.

Subject to any governing rules or regulations,
as soon as practicable after receipt of notification of exercise and full
payment, the Company shall deliver to the Participant, in the Participant’s
name, Share certificates in an appropriate amount based upon the number of
Shares purchased pursuant to the Option(s).

Unless otherwise determined by the Committee,
all payments under all of the methods indicated above shall be paid in United
States dollars.

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

6.8        Nontransferability
of Options.

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

(b)                           Nonqualified Stock Options. 
Except as otherwise provided in the applicable Award Agreement, no NQSO
may be sold, transferred, pledged, assigned, encumbered or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution.
Further, except as otherwise provided in the applicable Award Agreement, all
NQSOs granted to a Participant shall be exercisable during such Participant’s
lifetime only by such Participant.

6.9        Special
Limitation on Grants of Incentive Stock Options.  No ISO shall be granted to an Employee under the
Plan or any other ISO plan of the Company or its Subsidiaries to purchase
Shares as to which the aggregate Fair Market Value (determined as of the date
of grant) of the Shares which first become exercisable by the Employee in any
calendar year exceeds $100,000. To the extent an Option initially designated as
an ISO exceeds the value limit of this Section 6.9 or otherwise fails to
satisfy the requirements applicable to ISOs, it shall be deemed a NQSO and
shall otherwise remain in full force and effect.

Article 7. Stock
Appreciation Rights

7.1        Grant
of SARs.
Subject to the terms and conditions of the Plan, SARs may be granted to
Participants at any time and from time to time as shall be determined by the
Committee.

 8
 

 

 

Subject to the terms and conditions of the Plan,
the Committee shall have complete discretion in determining the number of SARs
granted to each Participant and, consistent with the provisions of the Plan, in
determining the terms and conditions pertaining to such SARs.

The grant price of a SAR shall equal the Fair
Market Value of a Share on the date of grant.

7.2        SAR
Agreement.
Each SAR grant shall be evidenced by an Award Agreement that shall specify the
grant price, the term of the SAR, and such other provisions as the Committee
shall determine.

7.3        Term
of SARs.
The term of an SAR granted under the Plan shall be determined by the Committee,
in its sole discre­tion, provided that an SAR must expire no later than the
seventh (7th) anniversary of the date the SAR was granted.

7.4        Exercise
of SARs.
SARs may be exercised upon whatever terms and conditions the Committee, in its
sole discretion, imposes upon them.

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

(a)                            The amount by which the Fair Market Value
of a Share on the date of exercise exceeds the grant price of the SAR; by

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

The payment upon SAR exercise shall be in
Shares. Any Shares delivered in payment shall be deemed to have a value equal
to the Fair Market Value on the date of exercise of the SAR.

7.7        Nontransferability
of SARs.
Except as otherwise provided in a Participant’s Award Agreement, no SAR granted
under the Plan may be sold, transferred, pledged, assigned, encumbered, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Further, except as otherwise provided in a
Participant’s Award Agreement, all SARs granted to a Participant under the Plan
shall be exercisable during such Participant’s lifetime only by such
Participant.

Article 8.
Restricted Stock

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

8.2        Restricted
Stock Agreement.
Each Restricted Stock grant shall be evidenced by a Restricted Stock Award
Agreement that shall specify the Period(s) of Restriction, the number of Shares
of Restricted Stock granted, and such other provisions as the Committee shall
determine which are not inconsistent with the terms of this Plan.

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

 9

 

 

8.4        Other
Restrictions.
The Committee may impose such other conditions and/or restrictions on any
Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, a requirement that Participants pay a
stipulated purchase price for each Share of Restricted Stock, restrictions
based upon the achievement of specific performance goals, time-based
restrictions on vesting following the attainment of the performance goals,
time-based restrictions, and/or restrictions under applicable federal or state
securities laws.

To the extent deemed appropriate by the
Committee, the Company may retain the certificates representing Shares of
Restricted Stock in the Company’s possession until such time as all conditions
and/or restrictions applicable to such Shares have been satisfied.

Except as otherwise provided in the Award
Agreement, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the Participant after
the last day of the applicable Period of Restriction.

8.5        Voting
Rights.
If the Committee so determines, Participants holding Shares of Restricted Stock
granted hereunder may be granted the right to exercise full voting rights with
respect to those Shares during the Period of Restriction.

8.6        Dividends
and Other Distributions.
During the Period of Restriction, Participants holding Shares of Restricted
Stock granted hereunder (whether or not the Company holds the certificate(s)
representing such Shares) may, if the Committee so determines, be credited with
dividends paid with respect to the underlying Shares while they are so held.
The Committee may apply any restrictions to the dividends that the Committee
deems appropriate. Without limiting the generality of the preceding sentence,
if the grant or vesting of Restricted Shares granted to a Covered Employee
is designed to comply with the requirements of the Performance-Based Exception,
the Committee may apply any restrictions it deems appropriate to the payment of
dividends declared with respect to such Restricted Shares, such that the
dividends and/or the Restricted Shares maintain eligibility for the
Performance-Based Exception.

Article 9. Deferred Stock and
Restricted Stock Units

9.1        Award of Deferred Stock Units.  Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may award Deferred
Stock Units to Participants in lieu of payment of a bonus or other Award if so
elected by a Participant under such terms and conditions as the Committee shall
determine, including terms that provide for the grant of Deferred Stock Units
valued in excess of the bonus or Award deferred.

9.2        Election
to Receive Deferred Stock Units.  A
Participant must make an election to receive Deferred Stock Units in the
calendar year before the calendar year in which the services related to the
Award are first performed. The Committee may require a Participant to defer, or
permit (subject to any conditions as the Committee may from time to time
establish) a Participant to elect to defer, receipt of all or any portion of
any payment of cash or Shares that otherwise would be due to such Participant
in payment or settlement of an Award under the Plan, to the extent consistent
with Section 409A of the Code. (Such payments may include, without limitation,
provisions for the payment or crediting of reasonable interest in respect of
deferred payments credited in cash, and the payment or crediting of dividend
equivalents in respect of deferred amounts credited in stock equivalents.) Settlement
of any Deferred Stock Units shall be made in a single sum of cash or Shares.

 10
 

 

 

9.3        Grant
of Restricted Stock Units.  Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Restricted Stock Units to Participants in such amounts as the Committee
may determine.

9.4        Restricted Stock Units Agreement.  Each Restricted Stock Unit grant shall be
evidenced by a Restricted Stock Unit Award Agreement that shall specify the
date or dates and any other terms and conditions on which the Restricted Stock
Units may vest and such other terms and conditions of the grant as the
Committee shall determine.

9.5        Form and Timing of Payment of Restricted
Stock Units.   Payment of vested Restricted Stock Units,
or, if a Restricted Stock Unit Award is subject to partial vesting, the vested
portion of such Award, shall be made in a single sum of cash or Shares or a
combination thereof as soon as practicable after the Restricted Stock Units or
portion of the Award vests, but in no event later than 21⁄2 months after the
calendar year in which vesting occurs. It is intended that a Restricted Stock
Unit Award be exempt from the application of Section 409A of the Code as a “short-term
deferral.”

Article 10.  Other
Stock Unit Awards

10.1      Grant
of Other Stock Unit Awards.  Subject to the terms of the Plan, Other
Stock Unit Awards that are valued in whole or in part by reference to, or are
otherwise based on, Shares or other property, may be granted to Participants,
either alone or in addition to other Awards granted under the Plan, and such
Other Stock Units shall also be available as a form of payment in the
settlement of other Awards granted under the Plan. Other Stock Units shall be
granted upon such terms, and at any time and from time to time, as shall be
determined by the Committee.

10.2      Award
Agreement.  Each Other Stock Unit grant shall be
evidenced by an Other Stock Unit Agreement that shall specify the restrictions
upon such Other Stock Units, if any, the number of Other Stock Units granted,
and such other provisions as the Committee shall determine which are not
inconsistent with the terms of this Plan.

Article 11.  Performance Shares

11.1      Grant
of Performance Shares Awards. Subject to the terms of the Plan,
Performance Shares Awards may be granted to Participants in such amounts and
upon such terms, and at any time and from time to time, as shall be determined
by the Committee.

11.2      Award
Agreement.  At the Committee’s discretion, each grant of
Performance Shares Awards may be evidenced by an Award Agreement that shall
specify the initial value, the duration of the Award, the performance measures,
if any, applicable to the Award, and such other provisions as the Committee
shall determine which are not inconsistent with the terms of the Plan.

11.3      Value
of Performance Shares Awards.  Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number and/or value of Performance Shares Awards that will be paid out to
the Participant. For purposes of this Article 11, the time period during which
the performance goals must be met shall be called a “Performance Period.”

 11
 

 

 

11.4      Earning
of Performance Shares Awards.  Subject
to the terms of this Plan, after the applicable Performance Period has
ended, the holder of Performance Shares Awards shall be entitled to receive a
payout based on the number and value of Performance Shares Awards earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been achieved.

11.5      Form
and Timing of Payment of Performance Shares Awards. 
Payment of earned Performance Shares Awards shall be as determined by
the Committee and, if applicable, as evidenced in the related Award Agreement. Subject
to the terms of the Plan, the Committee, in its sole discretion, may
pay earned Performance Shares Awards in the form of cash or in Shares (or
in a combination thereof) that have an aggregate Fair Market Value equal to the
value of the earned Performance Shares Awards at the close of the applicable
Performance Period. Such Shares may be delivered subject to any restrictions
deemed appropriate by the Committee. No fractional shares will be issued. The
determination of the Committee with respect to the form of payout of such
Awards shall be set forth in the Award Agreement pertaining to the grant of the
Award or the resolutions establishing the Award.

Unless otherwise provided by the Committee,
Participants holding Performance Shares shall be entitled to receive dividend
units with respect to dividends declared with respect to the Shares represented
by such Performance Shares.

11.6      Nontransferability. Except as otherwise provided in a
Participant’s Award Agreement, Performance Shares Awards may not be sold,
transferred, pledged, assigned, encumbered, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution. Such dividends
may be subject to the same accrual, forfeiture, and payout restrictions as
apply to dividends earned with respect to Shares of Restricted Stock, as set
forth in Section 8.6 hereof, as determined by the Committee.

Article 12.
Performance Measures

Unless and until the Committee proposes for
shareholder vote and the Company’s shareholders approve a change in the general
performance measures set forth in this Article 12, the attainment of which may
determine the degree of payout and/or vesting with respect to Awards to Covered
Employees that are designed to qualify for the Performance-Based Exception, the
performance 

measure(s) to be used for purposes of such grants shall be chosen from
among: revenue, earnings per share, operating income, net income (before or
after taxes), cash flow (including, but not limited to, operating cash flow and
free cash flow), gross profit, growth in any of the preceding measures, gross
profit return on investment, gross margin return on investment, working
capital, gross margins, EBIT, EBITDA, return on equity, return on assets,
return on capital, revenue growth, total shareholder return, economic value
added, customer satisfaction, technology leadership, number of new patents,
employee retention, market share, market segment share, product release
schedules, new product innovation, cost reduction through advanced technology,
brand recognition/acceptance, and product ship targets. Additionally, the
Committee may exclude the impact of an event or occurrence which the Committee
determines should appropriately be excluded, including an event not within the
reasonable control of the Company’s management.

Performance measures may be set either at the
corporate level, subsidiary level, division level, or business unit level.

Awards that are designed to qualify for the
Performance-Based Exception, and that are held by Covered Employees, may not be
adjusted upward (the Committee shall retain the discretion to adjust such
Awards downward).

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If 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.

Article 13. Rights of Participants

13.1      Employment. Nothing in the Plan shall confer upon
any Participant any right to continue in the Company’s or its Subsidiaries’
employ, or as a Director, or interfere with or limit in any way the right of
the Company or its Subsidiaries to terminate any Participant’s employment or
directorship at any time.

13.2      Participation. No Employee or Director shall have the
right to be selected to receive an Award under this Plan, or, having been so
selected, to be selected to receive a future Award.

13.3      Rights
as a Stockholder.
Except as provided in Sections 8.5, 8.6 and 11.5 or in the applicable Award
Agreement consistent with Articles 8, 9, 10, or 11, a Participant shall have
none of the rights of a shareholder with respect to shares of Common Stock
covered by any Award until the Participant becomes the record holder of such
Shares.

Article 14.
Termination of Employment/Directorship

Upon termination
of the Participant’s employment or directorship for any reason other than
Disability, death, or, in the case of NQSOs, retirement, an Option granted to
the Participant may be exercised by the Participant or permitted transferee at
any time on or prior to the earlier of the expiration date of the Option or the
expiration of three (3) months after the date of termination but only if, and
to the extent that, the Participant was entitled to exercise the Option at the
date of termination. Upon termination of the Participant’s employment or
directorship due to retirement (as defined in the Award Agreement), a NQSO
granted to the Participant may be exercised by the Participant or permitted
transferee at any time on or prior to the earlier of the expiration date of the
Option or the expiration of two (2) years after the date of termination due to
retirement (as defined in the Award Agreement) but only if, and to the extent
that, the Participant was entitled to exercise the Nonqualified Stock Option at
the date of termination. Upon termination of the Participant’s employment or
directorship for any reason other than Disability or death, all Awards other
than Options shall be treated as set forth in the applicable Award Agreement. If
the employment or directorship of a Participant terminates by reason of the
Participant’s Disability or death, all Awards shall be treated as set forth in
the applicable Award Agreements.

Unless otherwise
determined by the Committee, an authorized leave of absence pursuant to a
written agreement or other leave entitling an Employee to reemployment in a
comparable position by law or rule shall not constitute a termination of
employment for purposes of the Plan unless the Employee does not return at or
before the end of the authorized leave or within the period for which
re-employment is guaranteed by law or rule. For purposes of this Article, a “termination”
includes an event which causes a Participant to lose his eligibility to
participate in the Plan (e.g., an individual is employed by a company that
ceases to be a Subsidiary). In the case of a nonemployee director, the meaning
of “termination” includes the date that the individual ceases to be a director
of the Company or its Subsidiaries.

Notwithstanding
the foregoing, the Committee has the authority to prescribe different rules
that apply upon the termination of employment of a particular Participant,
which shall be memorialized in the Participant’s original or amended Award
Agreement or similar document.

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An Award that
remains unexercised after the latest date it could have been exercised under
any of the foregoing provisions or under the terms of the Award shall be
forfeited.

Article 15. Change
in Control

In the event of (1) any sale or conveyance to
another entity of all or substantially all of the property and assets of the
Company or (2) a Change in Control, unless otherwise specifically prohibited
under applicable laws, or by the rules and regulations of any governing
governmental agencies or national securities exchange or trading system, or
unless the Committee shall otherwise specify in the Award Agreement, the Board,
in its sole discretion, may:

(a)                            elect to terminate Options or SARs in
exchange for a cash payment equal to the amount by which the Fair Market Value
of the Shares subject to such Option to the extent the Option or SAR has vested
exceeds the exercise price with respect to such Shares;

(b)                           elect to terminate Options or SARs
provided that each Participant is first notified of and given the opportunity
to exercise his/her vested Options for a specified period of time (of not less
than 15 days) from the date of notification and before the Option or SAR is
terminated;

(c)                            permit Awards to be assumed by a new
parent corporation or a successor corporation (or its parent) and replaced with
a comparable Award of the parent corporation or successor corporation (or its
parent);

(d)                           amend an Award Agreement or take such
other action with respect to an Award that it deems appropriate; or

(e)                            implement any combination of the
foregoing.

Article 16.
Amendment, Modification, and Termination

16.1      Amendment,
Modification, and Termination. Subject to the terms of the Plan, the Board
may at any time and from time to time, alter, amend, suspend, or terminate
the Plan in whole or in part.

16.2      Awards
Previously Granted.
Notwithstanding any other provision of the Plan to the contrary, no
termination, amendment, or modification of the Plan shall adversely affect
in any material way any Award previously granted under the Plan, without
the written consent of the Participant holding such Award.

16.3      Shareholder
Approval Required for Certain Amendments.  Shareholder approval will be
required for any amendment of the Plan that does any of the following: (a)
increases the maximum number of Shares subject to the Plan; (b) changes the
designation of the class of persons eligible to receive ISOs under the Plan; or
(c) modifies the Plan in a manner that requires shareholder approval under
applicable law or the rules of a stock exchange or trading system on which
Shares are traded.

Article 17.
Withholding

The Company shall have the power and the right
to deduct or withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy any applicable taxes (including social security or
social charges), domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of this Plan. The Participant may 

 14
 

 

 

satisfy, totally or in part, such Participant’s
obligations pursuant to this Section 17 by electing to have Shares withheld, to
redeliver Shares acquired under an Award, or to deliver previously owned Shares
that have been held for at least six (6) months, provided that the election is
made in writing on or prior to (i) the date of exercise, in the case of Options
or SARs; (ii) the date of payment, in the case of Performance Shares/Deferred
Stock Units/Restricted Stock Units; or (iii) the expiration of the Period of
Restriction in the case of Restricted Stock. Any election made under this
Section 17 may be disapproved by the Committee at any time in its sole
discretion. If an election is disapproved by the Committee, the Participant
must satisfy his obligations pursuant to this paragraph in cash.

Article 18.
Successors

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

Article 19.
General Provisions

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

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

19.3      Requirements
of Law.
The granting of Awards and the issuance of Shares under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.

19.4      Securities
Law Compliance.
With respect to Insiders, transactions under this Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under
the Exchange Act, unless determined otherwise by the Board. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Board.

19.5      Listing. The Company may use reasonable
endeavors to register Shares issued pursuant to Awards with the United States
Securities and Exchange Commission or to effect compliance with the
registration, qualification, and listing requirements of any state or foreign securities
laws, stock exchange, or trading system.

19.6      Inability
to Obtain Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

19.7      No
Additional Rights.
Neither the Award nor any benefits arising under this Plan shall constitute
part of an employment contract between the Participant and the Company or any
Subsidiary, and accordingly, subject to Section 16.2, this Plan and the
benefits hereunder may be 

 15
 

 

 

terminated at any time in the sole and exclusive
discretion of the Committee without giving rise to liability on the part of the
Company for severance payments.

19.8      Noncertificated
Shares.
To the extent that the Plan provides for issuance of certificates to reflect
the transfer of Shares, the transfer of such Shares may be effected on a
noncertificated basis, to the extent not prohibited by applicable law or the
rules of any stock exchange or trading system.

19.9      Governing
Law.
The Plan and each Award Agreement shall be governed by the laws of
Massachusetts, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction. Unless
otherwise provided in the Award Agreement, recipients of an Award under the
Plan are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts whose jurisdiction covers Massachusetts, to resolve any
and all issues that may arise out of or relate to the Plan or any related Award
Agreement.

19.10 
Compliance with Code Section 409A.  No
Award that is subject to Section 409A of the Code shall provide for deferral of
compensation that does not comply with Section 409A of the Code, unless the
Board, at the time of grant, specifically provides that the Award is not
intended to comply with Section 409A of the Code. Notwithstanding any provision
in the Plan to the contrary, with respect to any Award subject to Section 409A,
distributions on account of a separation from service may not be made to Key
Employees before the date which is six (6) months after the date of separation
from service (or, if earlier, the date of death of the employee).

	
  Dated as of July 27, 2005

  	
   

  	
  Haemonetics Corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/

  	
  Brad Nutter

  	
   

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  

 

Date of Shareholder Approval: July 27, 2005

 16

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