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  Exhibit 10.1    
    

 
    Annex A    
    

         TUESDAY MORNING CORPORATION

  

  

2008 LONG-TERM EQUITY INCENTIVE PLAN  

 

  TABLE OF CONTENTS  

							
	 
	 	 
	 	Page 
	 ARTICLE I
	 	 ESTABLISHMENT, PURPOSE AND DURATION 
	 	A-1
	 	 	 1.1
	 	 Establishment
	 	

A-1
	 	 	 1.2
	 	 Purpose of the Plan
	 	A-1
	 	 	 1.3
	 	 Duration of the Plan
	 	A-1
	 ARTICLE II
	 	 DEFINITIONS 
	 	

A-1
	 	 	 2.1
	 	 Affiliate
	 	

A-1
	 	 	 2.2
	 	 Award
	 	A-1
	 	 	 2.3
	 	 Award Agreement
	 	A-1
	 	 	 2.4
	 	 Board
	 	A-1
	 	 	 2.5
	 	 Change of Control
	 	A-1
	 	 	 2.6
	 	 Code
	 	A-2
	 	 	 2.7
	 	 Committee
	 	A-2
	 	 	 2.8
	 	 Company
	 	A-2
	 	 	 2.9
	 	 Corporate Change
	 	A-2
	 	 	 2.10
	 	 Covered Employee
	 	A-2
	 	 	 2.11
	 	 Director
	 	A-2
	 	 	 2.12
	 	 Disability
	 	A-2
	 	 	 2.13
	 	 Dividend Equivalent
	 	A-3
	 	 	 2.14
	 	 Effective Date
	 	A-3
	 	 	 2.15
	 	 Employee
	 	A-3
	 	 	 2.16
	 	 Exchange Act
	 	A-3
	 	 	 2.17
	 	 Exempt Person
	 	A-3
	 	 	 2.18
	 	 Fair Market Value
	 	A-3
	 	 	 2.19
	 	 Fiscal Year
	 	A-3
	 	 	 2.20
	 	 Freestanding SAR
	 	A-3
	 	 	 2.21
	 	 Full Value Award
	 	A-3
	 	 	 2.22
	 	 Holder
	 	A-3
	 	 	 2.23
	 	 Incumbent Director
	 	A-4
	 	 	 2.24
	 	 ISO
	 	A-4
	 	 	 2.25
	 	 Minimum Statutory Tax Withholding Obligation
	 	A-4
	 	 	 2.26
	 	 NSO
	 	A-4
	 	 	 2.27
	 	 Option
	 	A-4
	 	 	 2.28
	 	 Optionee
	 	A-4
	 	 	 2.29
	 	 Option Price
	 	A-4
	 	 	 2.30
	 	 Other Stock-Based Award
	 	A-4
	 	 	 2.31
	 	 Parent Corporation
	 	A-4
	 	 	 2.32
	 	 Performance-Based Compensation
	 	A-4
	 	 	 2.33
	 	 Performance Goals
	 	A-4
	 	 	 2.34
	 	 Performance Stock Award
	 	A-4
	 	 	 2.35
	 	 Performance Unit Award
	 	A-4
	 	 	 2.36
	 	 Period of Restriction
	 	A-4
	 	 	 2.37
	 	 Plan
	 	A-4
	 	 	 2.38
	 	 Restricted Stock
	 	A-5
	 	 	 2.39
	 	 Restricted Stock Award
	 	A-5
	 	 	 2.40
	 	 RSU
	 	A-5
	 	 	 2.41
	 	 RSU Award
	 	A-5

A-i

 

							
	 
	 	 
	 	Page 
	 	 	 2.42
	 	 SAR
	 	A-5
	 	 	 2.43
	 	 Section 409A
	 	A-5
	 	 	 2.44
	 	 Stock
	 	A-5
	 	 	 2.45
	 	 Subsidiary Corporation
	 	A-5
	 	 	 2.46
	 	 Substantial Risk of Forfeiture
	 	A-5
	 	 	 2.47
	 	 Tandem SAR
	 	A-5
	 	 	 2.48
	 	 Ten Percent Stockholder
	 	A-5
	 	 	 2.49
	 	 Termination of Employment
	 	A-5
	 	 	 2.50
	 	 Third Party Service Provider
	 	A-5
	 ARTICLE III
	 	 ELIGIBILITY AND PARTICIPATION 
	 	

A-5
	 	 	 3.1
	 	 Eligibility
	 	

A-5
	 	 	 3.2
	 	 Participation
	 	A-6
	 ARTICLE IV
	 	 GENERAL PROVISIONS RELATING TO AWARDS 
	 	

A-6
	 	 	 4.1
	 	 Authority to Grant Awards
	 	

A-6
	 	 	 4.2
	 	 Dedicated Shares; Maximum Awards
	 	A-6
	 	 	 4.3
	 	 Shares That Count Against Limit
	 	A-6
	 	 	 4.4
	 	 Non-Transferability
	 	A-7
	 	 	 4.5
	 	 Requirements of Law
	 	A-7
	 	 	 4.6
	 	 Changes in the Company's Capital Structure
	 	A-7
	 	 	 4.7
	 	 Election Under Section 83(b) of the Code
	 	A-10
	 	 	 4.8
	 	 Forfeiture for Cause
	 	A-10
	 	 	 4.9
	 	 Forfeiture Events
	 	A-10
	 	 	 4.10
	 	 Award Agreements
	 	A-10
	 	 	 4.11
	 	 Amendments of Award Agreements
	 	A-10
	 	 	 4.12
	 	 Rights as Stockholder
	 	A-11
	 	 	 4.13
	 	 Issuance of Shares of Stock
	 	A-11
	 	 	 4.14
	 	 Restrictions on Stock Received
	 	A-11
	 	 	 4.15
	 	 Compliance With Section 409A
	 	A-11
	 	 	 4.16
	 	 Source of Shares Deliverable Under Awards
	 	A-11
	 	 	 4.17
	 	 Date of Grant
	 	A-11
	 ARTICLE V
	 	 OPTIONS 
	 	

A-11
	 	 	 5.1
	 	 Authority to Grant Options
	 	

A-11
	 	 	 5.2
	 	 Type of Options Available
	 	A-11
	 	 	 5.3
	 	 Option Agreement
	 	A-11
	 	 	 5.4
	 	 Option Price
	 	A-12
	 	 	 5.5
	 	 Duration of Option
	 	A-12
	 	 	 5.6
	 	 Amount Exercisable
	 	A-12
	 	 	 5.7
	 	 Exercise of Option
	 	A-12
	 	 	 5.8
	 	 Notification of Disqualifying Disposition
	 	A-12
	 	 	 5.9
	 	 No Rights as Stockholder
	 	A-12
	 	 	 5.10
	 	 $100,000 Limitation on ISOs
	 	A-13
	 ARTICLE VI
	 	 STOCK APPRECIATION RIGHTS 
	 	

A-13
	 	 	 6.1
	 	 Authority to Grant SAR Awards
	 	

A-13
	 	 	 6.2
	 	 Type of Stock Appreciation Rights Available
	 	A-13
	 	 	 6.3
	 	 General Terms
	 	A-13
	 	 	 6.4
	 	 SAR Agreement
	 	A-13

A-ii

 

							
	 
	 	 
	 	Page 
	 	 	 6.5
	 	 Term of SAR
	 	A-13
	 	 	 6.6
	 	 Exercise of Freestanding SARs
	 	A-13
	 	 	 6.7
	 	 Exercise of Tandem SARs
	 	A-14
	 	 	 6.8
	 	 Payment of SAR Amount
	 	A-14
	 	 	 6.9
	 	 Termination of Employment or Affiliation
	 	A-14
	 ARTICLE VII
	 	 RESTRICTED STOCK AWARDS 
	 	

A-14
	 	 	 7.1
	 	 Restricted Stock Awards
	 	

A-14
	 	 	 7.2
	 	 Restricted Stock Award Agreement
	 	A-14
	 	 	 7.3
	 	 Holder's Rights as Stockholder
	 	A-15
	 ARTICLE VIII
	 	 RESTRICTED STOCK UNIT AWARDS 
	 	

A-15
	 	 	 8.1
	 	 Authority to Grant RSU Awards
	 	

A-15
	 	 	 8.2
	 	 RSU Award
	 	A-15
	 	 	 8.3
	 	 RSU Award Agreement
	 	A-15
	 	 	 8.4
	 	 Dividend Equivalents
	 	A-15
	 	 	 8.5
	 	 Form of Payment Under RSU Award
	 	A-15
	 	 	 8.6
	 	 Time of Payment Under RSU Award
	 	A-15
	 ARTICLE IX
	 	 PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS 
	 	

A-15
	 	 	 9.1
	 	 Authority to Grant Performance Stock Awards and Performance Unit Awards
	 	

A-15
	 	 	 9.2
	 	 Performance Goals
	 	A-16
	 	 	 9.3
	 	 Time of Establishment of Performance Goals
	 	A-16
	 	 	 9.4
	 	 Written Agreement
	 	A-17
	 	 	 9.5
	 	 Form of Payment Under Performance Unit Award
	 	A-17
	 	 	 9.6
	 	 Time of Payment Under Performance Unit Award
	 	A-17
	 	 	 9.7
	 	 Holder's Rights as Stockholder With Respect to a Performance Stock Award
	 	A-17
	 	 	 9.8
	 	 Increases Prohibited
	 	A-17
	 	 	 9.9
	 	 Stockholder Approval
	 	A-17
	 	 	 9.10
	 	 Dividend Equivalents
	 	A-17
	 ARTICLE X
	 	 OTHER STOCK-BASED AWARDS 
	 	

A-17
	 	 	 10.1
	 	 Authority to Grant Other Stock-Based Awards
	 	

A-17
	 	 	 10.2
	 	 Value of Other Stock-Based Award
	 	A-17
	 	 	 10.3
	 	 Payment of Other Stock-Based Award
	 	A-17
	 	 	 10.4
	 	 Termination of Employment or Affiliation
	 	A-17
	 ARTICLE XI
	 	 SUBSTITUTION AWARDS 
	 	

A-18
	 ARTICLE XII
	 	 ADMINISTRATION 
	 	

A-18
	 	 	 12.1
	 	 Awards
	 	

A-18
	 	 	 12.2
	 	 Authority of the Committee
	 	A-18
	 	 	 12.3
	 	 Decisions Binding
	 	A-19
	 	 	 12.4
	 	 No Liability
	 	A-19
	 ARTICLE XIII
	 	 AMENDMENT OR TERMINATION OF PLAN 
	 	

A-19
	 	 	 13.1
	 	 Amendment, Modification, Suspension, and Termination
	 	

A-19
	 	 	 13.2
	 	 Awards Previously Granted
	 	A-19
	 ARTICLE XIV
	 	 ACCELERATION OF VESTING FOR CERTAIN AWARDS ON CHANGE IN CONTROL OF THE COMPANY 
	 	

A-19

A-iii

 

							
	 
	 	 
	 	Page 
	 ARTICLE XV
	 	 MISCELLANEOUS
	 	A-20
	 	 	 15.1
	 	 Unfunded Plan/No Establishment of a Trust Fund
	 	

A-20
	 	 	 15.2
	 	 No Employment Obligation
	 	A-20
	 	 	 15.3
	 	 Tax Withholding
	 	A-20
	 	 	 15.4
	 	 Indemnification of the Committee
	 	A-21
	 	 	 15.5
	 	 Gender and Number
	 	A-21
	 	 	 15.6
	 	 Severability
	 	A-21
	 	 	 15.7
	 	 Headings
	 	A-21
	 	 	 15.8
	 	 Other Compensation Plans
	 	A-21
	 	 	 15.9
	 	 Retirement and Welfare Plans
	 	A-21
	 	 	 15.10
	 	 Other Awards
	 	A-21
	 	 	 15.11
	 	 Successors
	 	A-22
	 	 	 15.12
	 	 Law Limitations/Governmental Approvals
	 	A-22
	 	 	 15.13
	 	 Delivery of Title
	 	A-22
	 	 	 15.14
	 	 Inability to Obtain Authority
	 	A-22
	 	 	 15.15
	 	 Investment Representations
	 	A-22
	 	 	 15.16
	 	 Persons Residing Outside of the United States
	 	A-22
	 	 	 15.17
	 	 Arbitration of Disputes
	 	A-22
	 	 	 15.18
	 	 No Fractional Shares
	 	A-22
	 	 	 15.19
	 	 Governing Law
	 	A-22

A-iv

 

 TUESDAY MORNING CORPORATION

2008 LONG-TERM EQUITY INCENTIVE PLAN  

 
 

  ARTICLE I
  
    ESTABLISHMENT, PURPOSE AND DURATION    
    

        1.1    Establishment.    The Company hereby establishes an incentive compensation plan, to be
known as the "Tuesday Morning Corporation 2008 Long-Term Equity Incentive Plan", as set forth in this document. The Plan permits the grant of Options, SARs, Restricted Stock, RSUs, Performance Stock
Awards, Performance Unit Awards and Other Stock-Based Awards. The Plan shall become effective on the later of (a) the date the Plan is approved by the Board and (b) the date the Plan is
approved by the stockholders of the Company (the "Effective Date"). 

        1.2    Purpose of the Plan.    The Plan is intended to promote the long-term growth and
profitability of the Company by providing certain directors, officers, and key Employees of, and certain other key individuals who perform services for, the Company and its Affiliates with incentives
to maximize stockholder value and otherwise contribute to the success of the Company and enabling the Company to attract, retain and reward the best available persons for positions of substantial
responsibility. 

        1.3    Duration of the Plan.    The Plan shall continue indefinitely until it is terminated
pursuant to Section 13.1. No Awards may be granted under the Plan on or after the tenth anniversary of the Effective Date. The applicable provisions of the Plan will continue in effect with
respect to an Award granted under the Plan for as long as such Award remains outstanding. 

 
 

  ARTICLE II
  
    DEFINITIONS    
    

        The words and phrases defined in this Article shall have the meaning set out below throughout the Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower or different meaning. 

        2.1   "Affiliate" means any corporation, partnership, limited liability company or association, trust or other entity or
organization which, directly or indirectly, controls, is controlled by, or is under common control with, the Company. For purposes of the preceding sentence, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used with respect to any entity or organization, shall mean the possession, directly or indirectly, of the power (a) to
vote more than fifty percent (50%) of the securities having ordinary voting power for the election of directors of the controlled entity or organization, or (b) to direct or cause the direction
of the management and policies of the controlled entity or organization, whether through the ownership of voting securities or by contract or otherwise. 

        2.2   "Award" means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, RSUs, Performance
Stock Awards, Performance Unit Awards, and Other Stock-Based Awards, in each case subject to the terms and provisions of the Plan. 

        2.3   "Award Agreement" means an agreement that sets forth the terms and conditions applicable to an Award granted under the
Plan. 

        2.4   "Board" means the board of directors of the Company. 

        2.5   "Change in Control" means the occurrence of one of the following events: 

        (a)   if
any "person" or "group" as those terms are used in Sections 13(d) and 14(d) of the Exchange Act, other than an Exempt Person, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company 

A-1

 

representing
50% or more of the combined voting power of the Company's then outstanding securities; or 

        (b)   the
stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation (1) which would
result in all or a portion of the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation or (2) by which the corporate existence of the Company is not affected and following which the Company's chief executive officer and directors retain their positions with the
Company (and constitute at least a majority of the Board); 

        (c)   the
stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially
all the Company's assets, other than a sale to an Exempt Person; or 

        (d)   the
individuals who are Incumbent Directors cease for any reason to constitute a majority of the members of the Board. 

        2.6   "Code" means the United States Internal Revenue Code of 1986, as amended from time to time. 

        2.7   "Committee" means (a) in the case of an Award granted to a Director, the Board, and (b) in the case of any
other Award granted under the Plan, a committee of at least two persons, who are members of the Compensation Committee of the Board and are appointed by the Compensation Committee of the Board, or, to
the extent it chooses to operate as the Committee, the Compensation Committee of the Board. Each member of the Committee in respect of his or her participation in any decision with respect to an Award
that is intended to satisfy the requirements of section 162(m) of the Code must satisfy the requirements of "outside director" status within the meaning of section 162(m) of the Code;
provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. For all purposes of the
Plan, the Chief Executive Officer of the Company shall be deemed to be the "Committee" with respect to Awards granted by him or her pursuant to
Section 4.1. 

        2.8   "Company" means Tuesday Morning Corporation, a Delaware corporation, or any successor (by reincorporation, merger or
otherwise). 

        2.9   "Corporate Change" shall have the meaning ascribed to that term in Section 4.6(c). 

        2.10 "Covered Employee" means an Employee who is a "covered employee," as defined in section 162(m) of the Code and
the regulations or other guidance promulgated by the Internal Revenue Service under section 162(m) of the Code, or any successor statute. 

        2.11 "Director" means a director of the Company who is not an Employee. 

        2.12 "Disability" means as determined by the Committee in its discretion exercised in good faith, (a) in the case of
an Award that is exempt from the application of the requirements of Section 409A, a physical or mental condition of the Holder that would entitle him to payment of disability income payments
under the Company's long-term disability insurance policy or plan for employees as then in effect; or in the event that the Holder is a Director or is not covered, for whatever reason, under the
Company's long-term disability insurance policy or plan for employees or in the event the Company does not maintain such a long-term disability insurance policy,
"Disability" means a permanent and total disability as defined in section 22(e)(3) of the Code and (b) in the case of an Award that is not
exempt from the application of the requirements of Section 409A, (i) the Holder is unable to engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less 

A-2

 

than
12 months, or (ii) the Holder is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the
Company. A determination of Disability may be made by a physician selected or approved by the Committee and, in this respect, the Holder shall submit to an examination by such physician upon request
by the Committee. 

        2.13 "Dividend Equivalent" means a payment equivalent in amount to dividends paid to the Company's stockholders. 

        2.14 "Effective Date" shall have the meaning ascribed to that term in Section 1.1. 

        2.15 "Employee" means (a) a person employed by the Company or any Affiliate as a common law employee or (b) a
person who has agreed to become a common law employee of the Company or any Affiliate and is expected to become such within six (6) months from the date of a determination made for purposes of
the Plan. 

        2.16 "Exchange Act" means the Securities Exchange Act of 1934, or any successor act, and the rules and regulations
thereunder, as such laws, rules and regulations may be amended from time to time. 

        2.17 "Exempt Person" means (a) Madison Dearborn Capital Partners II, L.P., (b) any person, entity
or group controlling, controlled by or under common control with the entity named in clause (a), or (c) any employee benefit plan of the Company or a trustee or other administrator or
fiduciary holding securities under an employee benefit plan of the Company. 

        2.18 "Fair Market Value" of the Stock as of any particular date means, 

        (a)   if
the Stock is traded on a stock exchange, 

          (i)  and
if the Stock is traded on that date, the closing sale price of the Stock on that date; or 

         (ii)  and
if the Stock is not traded on that date, the closing sale price of the Stock on the last trading date immediately preceding that date; 

        as
reported on the principal securities exchange on which the Stock is traded; or 

        (b)   if
the Stock is traded in the over-the-counter market, 

          (i)  and
if the Stock is traded on that date, the average between the high bid and low asked price on that date; or 

         (ii)  and
if the Stock is not traded on that date, the average between the high bid and low asked price on the last trading date immediately preceding that date; 

as
reported in such over-the-counter market; provided, however, that (x) if the Stock is not so traded, or (y) if, in the discretion of the Committee, another means of determining the
fair market value of a share of Stock at such date shall be necessary or advisable, the Committee may provide for another method or means for determining such fair market value, which method or means
shall comply with the requirements of a reasonable valuation method as described under Section 409A. 

        2.19 "Fiscal Year" means the Company's fiscal year. 

        2.20 "Freestanding SAR" means a SAR that is granted pursuant to Article VI independently of any Option. 

        2.21 "Full Value Award" means an Award other than in the form of an ISO, NSO, or SAR, and which is settled by the issuance of
shares of Stock. 

        2.22 "Holder" means a person who has been granted an Award or any person who is entitled to receive shares of Stock or cash
under an Award. 

A-3

 

        2.23 "Incumbent Director" means: 

        (a)   a
member of the Board on the Effective Date; or 

        (b)   an
individual: 

        (1)   who
becomes a member of the Board after the Effective Date; 

        (2)   whose
appointment or election by the Board or nomination for election by the Company's stockholders is approved or recommended by a vote of at least two-thirds of the
then serving Incumbent Directors (as defined herein); and 

        (3)   whose
initial assumption of service on the Board is not in connection with an actual or threatened election contest. 

        2.24 "ISO" means an Option that is intended to be an "incentive stock option" that satisfies the requirements of
section 422 of the Code. 

        2.25 "Minimum Statutory Tax Withholding Obligation" means, with respect to an Award, the amount the Company or an Affiliate
is required to withhold for federal, state, local and foreign taxes based upon the applicable minimum statutory withholding rates required by the relevant tax authorities. 

        2.26 "NSO" means an Option that is intended to be a "nonqualified stock option" that does not satisfy the requirements of
section 422 of the Code. 

        2.27 "Option" means an option to purchase Stock granted pursuant to Article V. 

        2.28 "Optionee" means a person who has been granted an Option or any other person who is entitled to exercise an Option under
the Plan. 

        2.29 "Option Price" shall have the meaning ascribed to that term in Section 5.4. 

        2.30 "Other Stock-Based Award" means an equity-based or equity-related Award not otherwise described by the terms and
provisions of the Plan that is granted pursuant to Article X. 

        2.31 "Parent Corporation" means any corporation (other than the Company) in an unbroken chain of corporations ending with the
Company if, at the time of the action or transaction, each of the corporations other than the Company owns stock possessing 50 percent or more of the total combined voting power of all classes
of stock in one of the other corporations in the chain. 

        2.32 "Performance-Based Compensation" means compensation under an Award that satisfies the requirements of
section 162(m) of the Code for deductibility of remuneration paid to Covered Employees. 

        2.33 "Performance Goals" means one or more of the criteria described in Section 9.2 on which the performance goals
applicable to an Award are based. 

        2.34 "Performance Stock Award" means an Award designated as a performance stock award granted pursuant to Article IX. 

        2.35 "Performance Unit Award" means an Award designated as a performance unit award granted pursuant to Article IX. 

        2.36 "Period of Restriction" means the period during which Restricted Stock is subject to a substantial risk of forfeiture
(based on the passage of time, the achievement of Performance Goals, or upon the occurrence of other events as determined by the Committee, in its discretion), as provided in Article VII. 

        2.37 "Plan" means the Tuesday Morning Corporation 2008 Long-Term Equity Incentive Plan, as set forth in this document as it
may be amended from time to time. 

A-4

 

        2.38 "Restricted Stock" means shares of restricted Stock issued or granted under the Plan pursuant to Article VII. 

        2.39 "Restricted Stock Award" means an authorization by the Committee to issue or transfer Restricted Stock to a Holder. 

        2.40 "RSU" means a restricted stock unit credited to a Holder's ledger account maintained by the Company pursuant to
Article VIII. 

        2.41 "RSU Award" means an Award granted pursuant to Article VIII. 

        2.42 "SAR" means a stock appreciation right granted under the Plan pursuant to Article VI. 

        2.43 "Section 409A" means section 409A of the Code and Department of Treasury rules and regulations issued thereunder. 

        2.44 "Stock" means the common stock of the Company, $0.01 par value per share (or such other par value as may be designated
by act of the Company's stockholders). 

        2.45 "Subsidiary Corporation" means any corporation (other than the Company) in an unbroken chain of corporations beginning
with the Company if, at the time of the action or transaction, each of the corporations other than the last corporation in an unbroken chain owns stock possessing 50 percent or more of the
total combined voting power of all classes of stock in one of the other corporations in the chain. 

        2.46 "Substantial Risk of Forfeiture" shall have the meaning ascribed to that term in Section 409A. 

        2.47 "Tandem SAR" means a SAR that is granted in connection with a related Option pursuant to Article VI, the exercise
of which shall require forfeiture of the right to purchase a share of the Stock under the related Option (and when a share of the Stock is purchased under the Option, the Tandem SAR shall similarly be
canceled). 

        2.48 "Ten Percent Stockholder" means an individual who, at the time the Option is granted, owns stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock or series of the Company or of any Parent Corporation or Subsidiary Corporation. An individual shall be considered as
owning the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants; and stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust, shall be considered as being owned proportionately by or for its stockholders, partners or beneficiaries. 

        2.49 "Termination of Employment" means, in the case of an Award other than an ISO, the termination of the Award recipient's
employment relationship with the Company and all Affiliates. "Termination of Employment" means, in the case of an ISO, the termination of the Employee's
employment relationship with all of the Company, any Parent Corporation, any Subsidiary Corporation and any parent or subsidiary corporation (within the meaning of section 422(a)(2) of the
Code) of any such corporation that issues or assumes an ISO in a transaction to which section 424(a) of the Code applies. 

        2.50 "Third Party Service Provider" means any consultant, agent, representative, advisor, or independent contractor who
renders services to the Company or an Affiliate. 

 
 

  ARTICLE III
  
    ELIGIBILITY AND PARTICIPATION    
    

        3.1    Eligibility.    Except as otherwise specified in this Section 3.1, the persons
who are eligible to receive Awards under the Plan, other than ISOs, are key Employees, Directors and Third Party Service Providers. Only those persons who are, on the dates of grant, key employees of
the Company or any Parent Corporation or Subsidiary Corporation are eligible for grants of ISOs under the Plan. Awards 

A-5

 

other
than ISOs, Performance Stock Awards or Performance Units Awards may also be granted to a person who is expected to become a key Employee within six months. 

        3.2    Participation.    Subject to the terms and provisions of the Plan, the Committee may,
from time to time, select the eligible persons to whom Awards shall be granted and shall determine the nature and amount of each Award. 

 
 

  ARTICLE IV
  
    GENERAL PROVISIONS RELATING TO AWARDS    
    

        4.1    Authority to Grant Awards.    The Committee may grant Awards to those key Employees and
other eligible persons as the Committee shall from time to time determine, under the terms and conditions of the Plan. Subject only to any applicable limitations set out in the Plan, the number of
shares of Stock or other value to be covered by any Award to be granted under the Plan shall be as determined by the Committee in its sole discretion. The Chief Executive Officer of the Company is
authorized to grant Awards (other than awards pursuant to Article IX) as inducements to hire prospective Employees who will not be officers of the Company or any Affiliate and subject to
Section 16 of the Exchange Act but such awards shall not exceed 100,000 shares of Stock per Fiscal Year. On an annual basis, the Committee also may delegate to the Chief Executive Officer of
the Company the ability to grant
Awards (other than Awards pursuant to Article IX) to eligible persons who are not officers or Directors of the Company or any Affiliate and subject to the provisions of the Exchange Act. 

        4.2    Dedicated Shares; Maximum Awards.    

        (a)   The
aggregate number of shares of Stock with respect to which Awards may be granted under the Plan is 2,500.000. 

        (b)   The
aggregate number of shares of Stock with respect to which Full Value Awards may be granted under the Plan is 2,500,000. 

        (c)   The
aggregate number of shares of Stock with respect to which ISOs may be granted under the Plan is 2,500,000. 

        (d)   The
maximum number of shares of Stock with respect to which ISOs may be granted to an Employee during a Fiscal Year is 1,000,000. The maximum number of shares of Stock
with respect to which NSOs may be granted to an Employee, Director or Third Party Service Provider during a Fiscal Year is 1,000,000. The maximum number of shares of Stock with respect to which SARs
may be granted to an Employee, Director or Third Party Service Provider during a Fiscal Year is 1,000,000. The maximum number of shares of Stock with respect to which Performance Stock Awards may be
granted to an Employee, Director or Third Party Service Provider during a Fiscal Year is 1,000,000. The maximum number of shares of Stock with respect to which Performance Unit Awards payable in
shares of Stock may be granted to an Employee, Director or Third Party Service Provider during a Fiscal Year is 1,000,000. The maximum value of cash with respect to which Performance Unit Awards
payable in cash may be granted to an Employee, Director or Third Party Service Provider during a Fiscal Year, determined as of the dates of grants of the Performance Unit Awards, is $5,000,000. 

        (e)   Each
of the foregoing numerical limits stated in this Section 4.2 shall be subject to adjustment in accordance with the provisions of Section 4.6. 

        4.3    Shares That Count Against Limit.    

        (a)   If
shares of Stock are withheld from payment of an Award to satisfy tax obligations with respect to the Award, such shares of Stock will count against the aggregate
number of shares of Stock with respect to which Awards may be granted under the Plan. 

A-6

 

        (b)   If
shares of Stock are tendered in payment of an Option Price of an Option, such shares of Stock will not be added to the aggregate number of shares of Stock with
respect to which Awards may be granted under the Plan. 

        (c)   To
the extent that any outstanding Award is forfeited or cancelled for any reason or is settled in cash in lieu of shares of Stock, the shares of Stock allocable to such
portion of the Award may again be subject to an Award granted under the Plan. 

        (d)   When
a SAR is settled in shares of Stock, the number of shares of Stock subject to the SAR under the SAR Award Agreement will be counted against the aggregate number of
shares of Stock with respect to which Awards may be granted under the Plan as one share for every share subject to the SAR, regardless of the number of shares used to settle the SAR upon exercise. 

        4.4    Non-Transferability.    Except as specified in the applicable Award Agreement or in a
domestic relations court order, an Award shall not be transferable by the Holder (whether for consideration or otherwise) other than by will or under the laws of descent and distribution, and shall be
exercisable, during the Holder's lifetime, only by him or her. Any attempted assignment of an Award in violation of this Section 4.4 shall be null and void. In the discretion of the Committee,
any attempt to transfer an Award other than under the terms of the Plan and the applicable Award Agreement may terminate the Award. No ISO granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to an Employee under the Plan shall be exercisable during his
or her lifetime only by the Employee, and after that time, by the Employee's heirs or estate. 

        4.5    Requirements of Law.    The Company shall not be required to sell or issue any shares
of Stock under any Award if issuing those shares of Stock would constitute or result in a violation by the Holder or the Company of any provision of any law, statute or regulation of any governmental
authority. Specifically, in connection with any applicable statute or regulation relating to the registration of securities, upon exercise of any Option or pursuant to any other Award, the Company
shall not be required to issue any shares of Stock unless the Committee has received evidence satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in
accordance with applicable law, including receipt of an opinion of counsel satisfactory to the Company to the effect that any proposed transfer complies with applicable law. The determination by the
Committee on this matter shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register any shares of Stock covered by the Plan pursuant to applicable
securities laws of any country or any political subdivision. In the event the shares of Stock issuable on exercise of an Option or pursuant to any other Award are not registered, the Company may
imprint on the certificate evidencing the shares of Stock any legend that counsel for the Company considers necessary or advisable to comply with applicable law, or, should the
shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law. The Company shall not be obligated to take any other affirmative action in order to cause or enable the exercise of an Option or any other Award,
or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of any governmental authority. 

        4.6    Changes in the Company's Capital Structure.    

        (a)   The
existence of outstanding Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of bonds, debentures, preferred or prior
preference shares ahead of or affecting the Stock or Stock rights, the dissolution or liquidation of the Company, 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. 

A-7

 

        (b)   If
the Company shall effect a subdivision or consolidation of Stock or other capital readjustment, the payment of a Stock dividend, or other increase or reduction of the
number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (1) the number, class or series and per share price of Stock subject to
outstanding Options or other Awards under the Plan shall be appropriately adjusted (subject to the restriction in Section 4.11 prohibiting repricing) in such a manner as to entitle a Holder to
receive upon exercise of an Option or other Award, for the same aggregate cash consideration, the equivalent total number and class or series of Stock the Holder would have received had the Holder
exercised his or her Option or other Award in full immediately prior to the event requiring the adjustment, and (2) the number and class or series of Stock then reserved to be issued under the
Plan shall be adjusted by substituting for the total number and class or series of Stock then reserved that number and class or series of Stock that would have been received by the owner of an equal
number of outstanding shares of Stock of each class or series of Stock as the result of the event requiring the adjustment. 

        (c)   If
while unexercised Options or other Awards remain outstanding under the Plan (1) the Company shall not be the surviving entity in any merger, consolidation or
other reorganization (or survives only as a subsidiary of an entity other than an entity that was wholly-owned by the Company immediately prior to such merger, consolidation or other reorganization),
(2) the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all of its assets to any other person or entity (other than an entity wholly-owned by the
Company), (3) the Company is to be dissolved or (4) the Company is a party to any other corporate transaction (as defined under section 424(a) of the Code and applicable
Department of Treasury regulations) that is not described in clauses (1), (2) or (3) of this
sentence (each such event is referred to herein as a "Corporate Change"), then, except as otherwise provided in Article XIV, an Award Agreement
or another agreement between the Holder and the Company (provided that such exceptions shall not apply in the case of a reincorporation merger or conversion), or as a result of the Committee's
effectuation of one or more of the alternatives described below, there shall be no acceleration of the time at which any Award then outstanding may be exercised, and no later than ten days after the
approval by the stockholders of the Company of such Corporate Change, the Committee, acting in its sole and absolute discretion without the consent or approval of any Holder, shall act to effect one
or more of the following alternatives, which may vary among individual Holders and which may vary among Awards held by any individual Holder (provided that, with respect to a reincorporation merger or
conversion in which Holders of the Company's ordinary shares will receive the same percentage of shares of the successor corporation as such percentage of shares of the Company held by the Holder,
none of such alternatives shall apply and, without Committee action, each Award shall automatically convert into a similar award of the successor corporation exercisable for the same percentage of
ordinary shares of the successor as the Award was exercisable for ordinary shares of Stock of the Company): 

        (1)   accelerate
the time at which some or all of the Awards then outstanding may be exercised so that such Awards may be exercised in full for a limited period of time on or
before a specified date (before or after such Corporate Change) fixed by the Committee, after which specified date all such Awards that remain unexercised and all rights of Holders thereunder shall
terminate; 

        (2)   require
the mandatory surrender to the Company by all or selected Holders of some or all of the then outstanding Awards held by such Holders (irrespective of whether
such Awards are then exercisable under the provisions of the Plan or the applicable Award Agreement evidencing such Award) as of a date, before or after such Corporate Change, specified by the
Committee, in which event the Committee shall thereupon cancel such Award and the Company shall pay to each such Holder an amount of cash per share equal to the 

A-8

 

excess,
if any, of the per share price offered to stockholders of the Company in connection with such Corporate Change over the exercise prices under such Award for such shares; 

        (3)   with
respect to all or selected Holders, have some or all of their then outstanding Awards (whether vested or unvested) assumed or have a new award of a similar nature
substituted for some or all of their then outstanding Awards under the Plan (whether vested or unvested) by an entity which is a party to the transaction resulting in such Corporate Change and which
is then employing such Holder or which is affiliated or associated with such Holder in the same or a substantially similar manner as the Company prior to the Corporate Change, or a parent or
subsidiary of such entity, provided that (A) such assumption or substitution is on a basis where the excess of the aggregate fair market value of the Stock subject to the Award immediately
after the assumption or substitution over the aggregate exercise price of such Stock is equal to the excess of the aggregate fair market value of all Stock subject to the Award immediately before such
assumption or substitution over the aggregate exercise price of such Stock, and (B) the assumed rights under such existing Award or the substituted rights under such new Award, as the case may
be, will have the same terms and conditions as the rights under the existing Award assumed or substituted for, as the case may be; 

        (4)   provide
that the number and class or series of Stock covered by an Award (whether vested or unvested) theretofore granted shall be adjusted so that such Award when
exercised shall thereafter cover the number and class or series of Stock or other securities or property (including, without limitation, cash) to which the Holder would have been entitled pursuant to
the terms of the agreement or plan relating to such Corporate Change if, immediately prior to such Corporate Change, the Holder had been the holder of record of the number of shares of Stock then
covered by such Award; or 

        (5)   make
such adjustments to Awards then outstanding as the Committee deems appropriate to reflect such Corporate Change (provided, however, that the Committee may determine
in its sole and absolute discretion that no such adjustment is necessary). 

        In
effecting one or more of the alternatives set out in paragraphs (3), (4) or (5) immediately above, and except as otherwise may be provided in an Award Agreement, the Committee,
in its sole and absolute discretion and without the consent or approval of any Holder, may accelerate the time at which some or all Awards then outstanding may be exercised. 

        (d)   In
the event of changes in the outstanding Stock by reason of recapitalizations, reorganizations, mergers, consolidations, conversion, combinations, exchanges or other
relevant changes in capitalization occurring after the date of the grant of any Award and not otherwise provided for by this Section 4.6, any outstanding Award and any Award Agreement
evidencing such Award shall be subject to adjustment by the Committee in its sole and absolute discretion as to the number and price of Stock or other consideration subject to such Award. In the event
of any such change in the outstanding Stock, the aggregate number of shares of Stock available under the Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive. 

        (e)   After
a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the
surviving corporation, each Holder shall be entitled to have his Restricted Stock appropriately adjusted based on the manner in which the shares of Stock were adjusted under the terms of the agreement
of merger or consolidation. 

        (f)    The
issuance by the Company of stock of any class or series, or securities convertible into, or exchangeable for, stock of any class or series, for cash or property, or
for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe for them, or upon 

A-9

 

conversion
or exchange of stock or obligations of the Company convertible into, or exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such issuance shall be
made with respect to, the number, class or series, or price of shares of Stock then subject to outstanding Options or other Awards. 

        4.7    Election Under Section 83(b) of the Code.    No Holder shall exercise the
election permitted under section 83(b) of the Code with respect to any Award without the prior written approval of the Chief Financial Officer of the Company. Any Holder who makes an election
under section 83(b) of the Code with respect to any Award without the prior written approval of the Chief Financial Officer of the Company may, in the discretion of the Committee, forfeit any
or all Awards granted to him or her under the Plan. 

        4.8    Forfeiture for Cause.    Notwithstanding any other provision of the Plan or an Award
Agreement, if the Committee finds by a majority vote that a Holder, before or after his Termination of Employment or severance of affiliation relationship with the Company and all Affiliates,
(a) committed fraud, embezzlement, theft, felony or an act of dishonesty in the course of his employment by or affiliation with the Company or an Affiliate which conduct damaged the Company or
an Affiliate, (b) disclosed trade secrets of the Company or an Affiliate or (c) violated the terms of any non-competition, non-disclosure or similar agreement with respect to the Company
or any Affiliate to which the Holder is a party, then as of the date the Committee makes its finding some or all Awards awarded to the Holder (including vested Awards that have been exercised, vested
Awards that have not been exercised and Awards that have not yet vested), as determined by the Committee in its sole discretion, and all net proceeds realized with respect to any such Awards, will be
forfeited to the Company on such terms as determined by the Committee. The findings and decision of the Committee with respect to such matter, including those regarding the acts of the Holder and the
damage done to the Company, will be final for all purposes. No decision of the Committee, however, will affect the finality of the discharge of the individual by the Company or an Affiliate or
severance of the individual's affiliation with the Company and all Affiliates. 

        4.9    Forfeiture Events.    The Committee may specify in an Award Agreement that the Holder's
rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any
otherwise applicable vesting or performance conditions of an Award. Such events may include, but shall not be limited to, Termination of Employment for cause, termination of the Holder's provision of
services to the Company or its Affiliates, violation of material policies of the Company and its Affiliates, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to
the Holder, or other conduct by the Holder that is detrimental to the business or reputation of the Company and its Affiliates. 

        4.10    Award Agreements.    Each Award shall be embodied in a written Award Agreement that
shall be subject to the terms and conditions of the Plan. The Award Agreement shall be signed by an executive officer of the Company, other than the Holder, on behalf of the Company, and may be signed
by the Holder to the extent required by the Committee. The Award Agreement may specify the effect of a Change in Control of the Company on the Award. The Award Agreement may contain any other
provisions that the Committee in its discretion shall deem advisable which are not inconsistent with the terms and provisions of the Plan. 

        4.11    Amendments of Award Agreements.    The terms of any outstanding Award under the Plan
may be amended from time to time by the Committee in its discretion in any manner that it deems appropriate
and that is consistent with the terms of the Plan. However, no such amendment shall adversely affect in a material manner any right of a Holder without his or her written consent. Except as specified
in Section 4.6(b), the Committee may not directly or indirectly lower the exercise price of a previously granted Option or the grant price of a previously granted SAR. 

A-10

 

        4.12    Rights as Stockholder.    A Holder shall not have any rights as a stockholder with
respect to Stock covered by an Option, a SAR, an RSU, a Performance Unit, or an Other Stock-Based Award payable in Stock until the date, if any, such Stock is issued by the Company; and, except as
otherwise provided in Section 4.6, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such Stock. 

        4.13    Issuance of Shares of Stock.    Shares of Stock, when issued, may be represented by a
certificate or by book or electronic entry. 

        4.14    Restrictions on Stock Received.    The Committee may impose such conditions and/or
restrictions on any shares of Stock issued pursuant to an Award as it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a requirement that the Holder hold
the shares of Stock for a specified period of time. 

        4.15    Compliance With Section 409A.    Awards shall be designed, granted and administered in
such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A. The Plan and each Award Agreement under the Plan that is intended to comply
the requirements of Section 409A shall be construed and interpreted in accordance with such intent. If the Committee determines that an Award, Award Agreement, payment, distribution, deferral
election, transaction, or any other action or arrangement contemplated by the provisions of the Plan would, if undertaken, cause a Holder to become subject to additional taxes under
Section 409A, then unless the Committee specifically provides otherwise, such Award, Award Agreement, payment, distribution, deferral election, transaction or other action or arrangement shall
not be given effect to the extent it causes such result and the related provisions of the Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply with the
requirements of Section 409A to the extent determined appropriate by the Committee, in each case without the consent of or notice to the Holder. The exercisability of an Option or a SAR shall
not be extended to the extent that such extension would subject the Holder to additional taxes under Section 409A. 

        4.16    Source of Shares Deliverable Under Awards.    Any shares of Stock delivered pursuant
to an Award may consist, in whole or in part, of authorized and unissued shares of Stock or of treasury shares of Stock. 

        4.17    Date of Grant.    The date on which an option or SAR is granted shall be the date the
Company completes the corporate action constituting an offer of stock for sale to a Holder under the terms and conditions of the Option or SAR; provided
that such corporate action shall not be considered complete until the date on which the maximum number of shares that can be purchased under the Option
and the minimum Option price are fixed or determinable. If the corporate action contemplates an immediate offer of stock for sale to a class of individuals, then the date of the granting of an Option
is the time or date of that corporate action, if the offer is to be made immediately. If the corporate action contemplates a particular date on which the offer is to be made, then the date of grant is
the contemplated date of the offer. 

 
 

  ARTICLE V
  
    OPTIONS    
    

        5.1    Authority to Grant Options.    Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons in such number and upon such terms as the Committee shall determine. 

        5.2    Type of Options Available.    Options granted under the Plan may be NSOs or ISOs. 

        5.3    Option Agreement.    Each Option grant under the Plan shall be evidenced by an Award
Agreement that shall specify (a) whether the Option is intended to be an ISO or an NSO, (b) the Option Price, (c) the duration of the Option, (d) the number of shares of
Stock to which the Option 

A-11

 

pertains,
(e) the exercise restrictions applicable to the Option and (f) such other provisions as the Committee shall determine that are not inconsistent with the terms and provisions of
the Plan. Notwithstanding the designation of an Option as an ISO in the applicable Award Agreement for such Option, to the extent the limitations of Section 5.10 of the Plan are exceeded with
respect to the Option, the portion of the Option in excess of the limitation shall be treated as a NSO. An Option granted under the Plan may not be granted with any Dividend Equivalents rights. 

        5.4    Option Price.    The price at which shares of Stock may be purchased under an Option
(the "Option Price") shall not be less than 100 percent (100%) of the Fair Market Value of the shares of Stock on
the date the Option is granted. However, in the case of a Ten Percent Stockholder, the Option Price for an ISO shall not be less than 110 percent (110%) of the Fair Market Value of the shares
of Stock on the date the ISO is granted. Subject to the limitations set forth in the preceding sentences of this Section 5.4, the Committee shall determine the Option Price for each grant of an
Option under the Plan. 

        5.5    Duration of Option.    An Option shall not be exercisable after the earlier of
(i) the general term of the Option specified in the applicable Award Agreement (which shall not exceed ten years) or (ii) the period of time specified in the applicable Award Agreement
that follows the Holder's Termination of Employment or severance of affiliation relationship with the Company. Unless the applicable Award Agreement specifies a shorter term, in the case of an ISO
granted to a Ten Percent Stockholder, the Option shall expire on the fifth anniversary of the date the Option is granted. 

        5.6    Amount Exercisable.    Each Option may be exercised at the time, in the manner and
subject to the conditions the Committee specifies in the Award Agreement in its sole discretion. 

        5.7    Exercise of Option.    

        (a)   General Method of Exercise.    Subject to the terms and provisions of the Plan and the applicable Award
Agreement, Options may be exercised in whole or in part from time to time by the delivery of written notice in the manner designated by the Committee stating (1) that the Holder wishes to
exercise such Option on the date such notice is so delivered, (2) the number of shares of Stock with respect to which the Option is to be exercised and (3) the address to which any
certificate representing such shares of Stock should be mailed or delivered. Except in the case of exercise by a third party broker as provided below, in order for the notice to be effective the
notice must be accompanied by payment of the Option Price by any combination of the following: (a) cash, certified check, bank draft or postal or express money order for an amount equal to the
Option Price under the Option, (b) an election to make a cashless exercise through a registered broker-dealer (if approved in advance by the Committee or an executive officer of the Company) or
(c) any other form of payment which is acceptable to the Committee. 

        (b)   Exercise Through Third-Party Broker.    The Committee may permit a Holder to elect to pay the Option Price and
any applicable tax withholding resulting from such exercise by authorizing a third-party broker to sell all or a portion of the shares of Stock acquired upon exercise of the Option and remit to the
Company a sufficient portion of the sale proceeds to pay the Option Price and any applicable tax withholding resulting from such exercise. 

        5.8    Notification of Disqualifying Disposition.    If any Optionee shall make any
disposition of shares of Stock issued pursuant to the exercise of an ISO under the circumstances described in section 421(b) of the Code (relating to certain disqualifying dispositions), such
Optionee shall notify the Company of such disposition within ten (10) days thereof. 

        5.9    No Rights as Stockholder.    An Optionee shall not have any rights as a stockholder
with respect to Stock covered by an Option until the date a stock certificate for such Stock is issued by the Company; and, except as otherwise provided in Section 4.6, no adjustment for
dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 

A-12

 

 

        5.10    $100,000 Limitation on ISOs.    To the extent that the aggregate Fair Market
Value of
Stock with respect to which ISOs first become exercisable by a Holder in any calendar year exceeds $100,000, taking into account both shares of Stock subject to ISOs under the Plan and Stock subject
to ISOs under all other plans of the Company, such Options shall be treated as NSOs. For this purpose, the "Fair Market Value" of the Stock subject to Options shall be determined as of the date the
Options were awarded. In reducing the number of Options treated as ISOs to meet the $100,000 limit, the most recently granted Options shall be reduced first. To the extent a reduction of
simultaneously granted Options is necessary to meet the $100,000 limit, the Committee may, in the manner and to the extent permitted by law, designate which shares of Stock are to be treated as shares
acquired pursuant to the exercise of an ISO. 

 
 

  ARTICLE VI
  
    STOCK APPRECIATION RIGHTS    
    

        6.1    Authority to Grant SAR Awards.    Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant SARs under the Plan to eligible persons in such number and upon such terms as the Committee shall determine. Subject to the terms and
conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Holder and, consistent with the provisions of the Plan, in determining the terms
and conditions pertaining to such SARs. 

        6.2    Type of Stock Appreciation Rights Available.    SARs granted under the Plan may be
Freestanding SARs, Tandem SARs or any combination of these forms of SARs. 

        6.3    General Terms.    Subject to the terms and conditions of the Plan, a SAR granted under
the Plan shall confer on the recipient a right to receive, upon exercise thereof, an amount equal to the excess of (a) the Fair Market Value of one share of the Stock on the date of exercise over (b)
the grant price of the SAR, which shall not be less than one hundred percent (100%) of the Fair Market Value of one share of the Stock on the date of grant of the SAR. The grant price of a
Freestanding SAR shall not be less than the Fair Market Value of a share of the Stock on the date of grant of the SAR. The grant price of a Tandem SAR shall equal the Option Price of the Option which
is related to the Tandem SAR. A SAR granted under the Plan may not be granted with any Dividend Equivalents rights. 

        6.4    SAR Agreement.    Each Award of SARs granted under the Plan shall be evidenced by an
Award Agreement that shall specify (a) whether the SAR is intended to be a Freestanding SAR or a Tandem SAR, (b) the grant price of the SAR, (c) the term of the SAR, (d) the vesting and termination
provisions of the SAR and (e) such other provisions as the Committee shall determine that are not inconsistent with the terms and provisions of the Plan. The Committee may impose such additional
conditions or restrictions on the exercise of any SAR as it may deem appropriate. 

        6.5    Term of SAR.    The term of a SAR granted under the Plan shall be determined by the
Committee, in its sole discretion; provided that no SAR shall be exercisable on or after the tenth anniversary date of its grant. Notwithstanding any other provision of this Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will expire no later than the expiration of the underlying ISO; (b) the value of the payout with respect to the Tandem SAR
may be for no more than one hundred percent (100%) of the excess of the Fair Market Value of the shares of Stock subject to the underlying ISO at the time the Tandem SAR is exercised over the Option
Price of the underlying ISO; and (c) the Tandem SAR may be exercised only when the Fair Market Value of the shares of Stock subject to the ISO exceeds the Option Price of the ISO. 

        6.6    Exercise of Freestanding SARs.    Subject to the terms and provisions of the Plan and
the applicable Award Agreement, Freestanding SARs may be exercised in whole or in part from time to 

A-13

 

time
by the delivery of written notice in the manner designated by the Committee stating (a) that the Holder wishes to exercise such SAR on the date such notice is so delivered, (b) the number of
shares of Stock with respect to which the SAR is to be exercised and (c) the address to which the payment due under such SAR should be mailed. In accordance with applicable law, a Freestanding SAR may
be exercised upon whatever additional terms and conditions the Committee, in its sole discretion, imposes. 

        6.7    Exercise of Tandem SARs.    Subject to the terms and provisions of the Plan and the
applicable Award Agreement, Tandem SARs may be exercised for all or part of the shares of Stock subject to the related Option upon the surrender of the right to exercise the equivalent portion of the
related Option and by the delivery of written notice in the manner designated by the Committee stating (a) that the Holder wishes to exercise such SAR on the date such notice is so delivered, (b) the
number of shares of Stock with respect to which the SAR is to be exercised and (c) the address to which the payment due under
such SAR should be mailed. A Tandem SAR may be exercised only with respect to the shares of Stock for which its related Option is then exercisable. In accordance with applicable law, a Tandem SAR may
be exercised upon whatever additional terms and conditions the Committee, in its sole discretion, imposes. 

        6.8    Payment of SAR Amount.    Upon the exercise of a SAR, a Holder shall be entitled to
receive payment from the Company in an amount determined by multiplying the excess of the Fair Market Value of a share of Stock on the date of exercise over the grant price of the SAR by the number of
shares of Stock with respect to which the SAR is exercised. At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Stock of equivalent value, in some combination thereof
or in any other manner approved by the Committee in its sole discretion. The Committee's determination regarding the form of SAR payout shall be set forth in the Award Agreement pertaining to the
grant of the SAR. 

        6.9    Termination of Employment or Affiliation.    Each Award Agreement shall set forth the
extent to which the Holder of a SAR shall have the right to exercise the SAR following the Holder's Termination of Employment or severance of affiliation relationship with the Company. Such provisions
shall be determined in the sole discretion of the Committee, may be included in the Award Agreement entered into with the Holder, need not be uniform among all SARs issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination or severance. 

 
 

  ARTICLE VII
  
    RESTRICTED STOCK AWARDS    
    

        7.1    Restricted Stock Awards.    Subject to the terms and provisions
of the Plan, the Committee, at any time, and from time to time, may make Awards of Restricted Stock under the Plan to eligible persons in such number and upon such terms as the Committee shall
determine. The amount of, the vesting and the transferability restrictions applicable to any Restricted Stock Award shall be determined by the Committee in its sole discretion. If the Committee
imposes vesting or transferability restrictions on a Holder's rights with respect to Restricted Stock, the Committee may issue such instructions to the Company's share transfer agent in connection
therewith as it deems appropriate. The Committee may also cause the certificate for shares of Stock issued pursuant to a Restricted Stock Award to be imprinted with any legend which counsel for the
Company considers advisable with respect to the restrictions or, should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the Company considers necessary or advisable to comply with applicable law. 

        7.2    Restricted Stock Award Agreement.    Each Restricted Stock Award shall be evidenced by
an Award Agreement that contains any vesting, transferability restrictions and other provisions not inconsistent with the Plan as the Committee may specify. 

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        7.3    Holder's Rights as Stockholder.    Subject to the terms and conditions of the Plan,
each recipient of a Restricted Stock Award shall have all the rights of a stockholder with respect to the shares of Restricted Stock included in the Restricted Stock Award during the Period of
Restriction established for the Restricted Stock Award. Dividends paid with respect to Restricted Stock in cash or property other than shares of Stock or rights to acquire shares of Stock shall be
paid to the recipient of the Restricted Stock Award currently. Dividends paid in shares of Stock or rights to acquire shares of Stock shall be added to and become a part of the Restricted Stock.
During the Period of Restriction, certificates representing the Restricted Stock shall be registered in the Holder's name and bear a restrictive legend to the effect that ownership of such Restricted
Stock, and the enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions provided in the Plan and the applicable Award Agreement. Such certificates shall be
deposited by the recipient with the Secretary of the Company or such other officer of the Company as may be designated by the Committee, together with all stock powers or other instruments of
assignment, each endorsed in blank, which will permit transfer to the Company of all or any portion of the Restricted Stock which shall be forfeited in accordance with the Plan and the applicable
Award Agreement. 

 
 

  ARTICLE VIII
  
    RESTRICTED STOCK UNIT AWARDS    
    

        8.1    Authority to Grant RSU Awards.    Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant RSU Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The amount of, the vesting
and the transferability restrictions applicable to any RSU Award shall be determined by the Committee in its sole discretion. The Committee shall maintain a bookkeeping ledger account which reflects
the number of RSUs credited under the Plan for the benefit of a Holder. 

        8.2    RSU Award.    An RSU Award shall be similar in nature to a Restricted Stock Award
except that no shares of Stock are actually transferred to the Holder until a later date specified in the applicable Award Agreement. Each RSU shall have a value equal to the Fair Market Value of a
share of Stock. 

        8.3    RSU Award Agreement.    Each RSU Award shall be evidenced by an Award Agreement that
contains any Substantial Risk of Forfeiture, transferability restrictions, form and time of payment provisions and other provisions not inconsistent with the Plan as the Committee may specify. 

        8.4    Dividend Equivalents.    An Award Agreement for an RSU Award may specify that the
Holder shall be entitled to the payment of Dividend Equivalents under the Award. 

        8.5    Form of Payment Under RSU Award.    Payment under an RSU Award shall be made in either
cash or shares of Stock as specified in the applicable Award Agreement. 

        8.6    Time of Payment Under RSU Award.    A Holder's payment under an RSU Award shall be made
at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that the payment will be made (1) by a date that is no later than the date that is two and one-half
(21/2) months after the end of the Fiscal Year in which the RSU Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) at a time that is permissible under Section
409A. 

 
 

  ARTICLE IX
  
    PERFORMANCE STOCK AWARDS AND
  PERFORMANCE UNIT AWARDS    
    

        9.1    Authority to Grant Performance Stock Awards and Performance Unit Awards.    Subject to
the terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant 

A-15

 

Performance
Stock Awards and Performance Unit Awards under the Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The amount of, the vesting and the
transferability restrictions applicable to any Performance Stock Award and Performance Unit Award shall be based upon the attainment of such Performance Goals as the Committee may determine; provided,
however, that the performance period for any Performance Stock Award or Performance Unit Award shall not be less than one year. If the Committee imposes vesting or transferability restrictions on a
Holder's rights with respect to Performance Stock Awards or Performance Unit Awards, the Committee may issue such instructions to the Company's share transfer agent in connection therewith as it deems
appropriate. The Committee may also cause the certificate for shares
of Stock issued pursuant to a Performance Stock Award or Performance Unit Award to be imprinted with any legend which counsel for the Company considers advisable with respect to the restrictions or,
should the shares of Stock be represented by book or electronic entry rather than a certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law. 

        9.2    Performance Goals.    A Performance Goal must be objective such that a third party
having knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal may be based on one or more business criteria that apply to the Holder, one or more business
units of the Company, or the Company as a whole, with reference to one or more of the following: earnings per share, earnings per share growth, total shareholder return, economic value added, cash
return on capitalization, increased revenue, revenue ratios (per employee or per customer), net income, stock price, market share, return on equity, return on assets, return on capital, return on
capital compared to cost of capital, return on capital employed, return on invested capital, shareholder value, net cash flow, operating income, earnings before interest, taxes and depreciation, cash
flow, cash flow from operations, cost reductions, cost ratios (per employee or per customer), expense control, proceeds from dispositions, project completion time and budget goals, net cash flow
before financing activities, customer growth, total market value, dividend payout, dividend growth. Goals may also be based on performance relative to a peer group of companies. Unless otherwise
stated, such a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting
economic losses (measured, in each case, by reference to specific business criteria). Performance Goals may be determined by including or excluding, in the Committee's discretion, items that are
determined to be extraordinary, unusual in nature, infrequent in occurrence, related to the disposal or acquisition of a segment of a business, or related to a change in accounting principal, in each
case, based on Opinion No. 30 of the Accounting Principles Board (APB Opinion No. 30) or other applicable accounting rules, or consistent with Company accounting policies and practices in effect on
the date the Performance Goal is established. In interpreting Plan provisions applicable to Performance Goals and Performance Stock Awards or Performance Unit Awards, it is intended that the Plan will
conform with the standards of section 162(m) of the Code and Treasury Regulations §1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the Plan shall be
guided by such provisions. Prior to the payment of any compensation based on the achievement of Performance Goals, the Committee must certify in writing that applicable Performance Goals and any of
the material terms thereof were, in fact, satisfied. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Performance Stock or Performance Unit Awards made
pursuant to the Plan shall be determined by the Committee. 

        9.3    Time of Establishment of Performance Goals.    With respect to a Covered Employee, a
Performance Goal for a particular Performance Stock Award or Performance Unit Award must be established by the Committee prior to the earlier to occur of (a) 90 days after the commencement of the
period of service to which the Performance Goal relates or (b) the lapse of 25 percent of the period of service, and in any event while the outcome is substantially uncertain. 

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        9.4    Written Agreement.    Each Performance Stock Award and Performance Unit Award shall be
evidenced by an Award Agreement that contains any vesting, transferability restrictions and other provisions not inconsistent with the Plan as the Committee may specify. 

        9.5    Form of Payment Under Performance Unit Award.    Payment under a Performance Unit Award
shall be made in cash and/or shares of Stock as specified in the Holder's Award Agreement. 

        9.6    Time of Payment Under Performance Unit Award.    A Holder's payment under a Performance
Unit Award shall be made at such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that the payment will be made (a) by a date that is no later than the date
that is two and one-half (21/2) months after the end of the calendar year in which the Performance Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (b) at
a time that is permissible under Section 409A. 

        9.7    Holder's Rights as Stockholder With Respect to a Performance Stock
Award.    Subject to the terms and conditions of the Plan, each Holder of a Performance Stock Award shall have all the rights of a stockholder
with respect to the shares of Stock issued to the Holder pursuant to the Award during any period in which such issued shares of Stock are subject to forfeiture and restrictions on transfer, including
without limitation, the right to vote such shares of Stock. 

        9.8    Increases Prohibited.    None of the Committee or the Board may increase the amount of
compensation payable under a Performance Stock Award or Performance Unit Award. If the time at which a Performance Stock Award or Performance Unit Award will vest or be paid is accelerated for any
reason, the number of shares of Stock subject to, or the amount payable under, the Performance Stock Award or Performance Unit Award shall be reduced pursuant to Department of Treasury Regulation
§1.162-27(e)(2)(iii) to reasonably reflect the time value of money. 

        9.9    Stockholder Approval.    No payments of Stock or cash will be made to a Covered
Employee pursuant to this Article IX unless the stockholder approval requirements of Department of Treasury Regulation §1.162-27(e)(4) are satisfied. 

        9.10    Dividend Equivalents.    An Award Agreement for a Performance Unit Award may specify
that the Holder shall be entitled to the payment of Dividend Equivalents under the Award. 

 
 

  ARTICLE X
  
    OTHER STOCK-BASED AWARDS    
    

        10.1    Authority to Grant Other Stock-Based Awards.    Subject to the terms and provisions of
the Plan, the Committee, at any time, and from time to time, may grant other types of equity-based or equity-related Awards not otherwise described by the terms and provisions of the Plan (including
the grant or offer for sale of unrestricted shares of Stock) under the Plan to eligible persons in such number and upon such terms as the Committee shall determine. Such Awards may involve the
transfer of actual shares of Stock to Holders, or payment in cash or otherwise of amounts based on the value of shares of Stock and may include, without limitation, Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the United States. 

        10.2    Value of Other Stock-Based Award.    Each Other Stock-Based Award shall be expressed
in terms of shares of Stock or units based on shares of Stock, as determined by the Committee. 

        10.3    Payment of Other Stock-Based Award.    Payment, if any, with respect to an Other
Stock-Based Award shall be made in accordance with the terms of the Award, in cash or shares of Stock as the Committee determines. 

        10.4    Termination of Employment or Affiliation.    The Committee shall determine the extent
to which a Holder's rights with respect to Other Stock-Based Awards shall be affected by the Holder's 

A-17

 

Termination
of Employment or severance of affiliation relationship with the Company. Such provisions shall be determined in the sole discretion of the Committee and need not be uniform among all Other
Stock-Based Awards issued pursuant to the Plan 

 
 

  ARTICLE XI
  
    SUBSTITUTION AWARDS    
    

        Awards may be granted under the Plan from time to time in substitution for stock options and other awards held by employees and
directors of other entities who are about to become Employees or affiliated with the Company or any of its Affiliates, or whose employer or corporation with respect to which it provides services is
about to become an Affiliate as the result of a merger or consolidation of the Company with another corporation, or the acquisition by the Company of substantially all the assets of another
corporation, or the acquisition by the Company of at least fifty percent (50%) of the issued and outstanding stock of another corporation as the result of which such other corporation will become a
subsidiary of the Company. The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in the Plan to such extent as the Board at the time of grant
may deem appropriate to conform, in whole or in part, to the provisions of the award in substitution for which they are granted. 

 
 

  ARTICLE XII
  
    ADMINISTRATION    
    

        12.1    Awards.    The Plan shall be administered by the Committee or, in the absence of the
Committee or in the case of awards issued to Directors, the Plan shall be administered by the Board. The members of the Committee (that is not itself the Board) shall serve at the discretion of the
Board. The Committee shall have full and exclusive power and authority to administer the Plan and to take all actions that the Plan expressly contemplates or are necessary or appropriate in connection
with the administration of the Plan with respect to Awards granted under the Plan. 

        12.2    Authority of the Committee.    The Committee shall have full and exclusive power to
interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem
necessary or proper, all of which powers shall be exercised in the best interests of the Company and in keeping with the objectives of the Plan. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting. Any decision or
determination reduced to writing and signed by a majority of the members shall be as effective as if it had been made by a majority vote at a meeting properly called and held. All questions of
interpretation and application of the Plan, or as to Awards granted under the Plan, shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee. No
member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including but not limited to the exercise of any power
or discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct. In carrying out its authority under the Plan, the Committee shall have full and
final authority and discretion, including but not limited to the following rights, powers and authorities to (a) determine the persons to whom and the time or times at which Awards will be made; (b)
determine the number and exercise price of shares of Stock covered in each Award subject to the terms and provisions of the Plan (including, but not limited to, the provisions of Section 4.11
which prohibit repricing); (c) determine the terms, provisions and conditions of each Award, which need not be identical and need not match the default terms set forth in the Plan; (d) accelerate the
time at which any outstanding Award will vest; (e) prescribe, amend and rescind rules and regulations relating to administration of the Plan; and (f) make all other 

A-18

 

determinations
and take all other actions deemed necessary, appropriate or advisable for the proper administration of the Plan. 

        The
Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award to a Holder in the manner and to the extent the Committee deems
necessary or desirable to further the Plan's objectives. Further, the Committee shall make all other determinations that may be necessary or advisable for the administration of the Plan. As permitted
by law and the terms and provisions of the Plan, the Committee may delegate its authority as identified in this Section 12.2. The Committee may employ attorneys, consultants, accountants,
agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such
persons. 

        12.3    Decisions Binding.    All determinations and decisions made by the Committee or the
Board, as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions of the Committee or the Board, as the case may be, shall be final, conclusive and binding on
all persons, including the Company, its stockholders, Holders and the estates and beneficiaries of Holders. 

        12.4    No Liability.    Under no circumstances shall the Company, the Board or the Committee
incur liability for any indirect, incidental, consequential or special damages (including lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the form of the
act in which such
a claim may be brought, with respect to the Plan or the Company's, the Committee's or the Board's roles in connection with the Plan. 

 
 

  ARTICLE XIII
  
    AMENDMENT OR TERMINATION OF PLAN    
    

        13.1    Amendment, Modification, Suspension, and Termination.    Subject to
Section 13.2, the Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and the Committee may, at any time and from time to time, alter, amend,
modify, suspend, or terminate any Award Agreement in whole or in part; provided, however, that, without the prior approval of the Company's stockholders and except as provided in Section 4.6,
the Committee shall not directly or indirectly lower the Option Price of a previously granted Option or the grant price of a previously granted SAR, and no amendment of the Plan shall be made without
stockholder approval if stockholder approval is required by applicable law or stock exchange rules. 

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

 
 

  ARTICLE XIV
  
    ACCELERATION OF VESTING FOR CERTAIN AWARDS
  ON CHANGE IN CONTROL OF THE COMPANY    
    

        Notwithstanding any provision of the Plan to the contrary, in the event of an occurrence of a Change in Control of the Company all then
outstanding Options, SARs, Restricted Stock Awards and Performance Stock Awards granted under the Plan shall become fully vested, and exercisable and all substantial risk of forfeiture restrictions
applicable thereto shall lapse. The effect, if any, of a Change in Control of the Company upon any other Award granted under the Plan shall be determined in accordance with the terms of the applicable
Award Agreement issued by the Committee that are applicable to the Award. 

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  ARTICLE XV
  
    MISCELLANEOUS    
    

        15.1    Unfunded Plan/No Establishment of a Trust Fund.    Holders shall have no right, title,
or interest whatsoever in or to any investments that the Company or any of its Affiliates may make to aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or any other
person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the
Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure
payment of such amounts, except as expressly set forth in the Plan. No property shall be set aside nor shall a trust fund of any kind be established to secure the rights of any Holder under the Plan.
The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended. 

        15.2    No Employment Obligation.    The granting of any Award shall not constitute an
employment contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ or continue to employ, or utilize the services of, any Holder. The right of the Company
or any Affiliate to terminate the employment of, or provision of services by, any person shall not be diminished or affected by reason of the fact that an Award has been granted to him, and nothing in
the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or its Affiliates to terminate any Holder's employment or provision of services to the Company at any
time or for any reason not prohibited by law. 

        15.3    Tax Withholding.    The Company or any Affiliate shall be entitled to deduct from
other compensation payable to each Holder any sums required by federal, state or local tax law to be withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award.
In the alternative, the Company may require the Holder (or other person validly exercising the Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check within one
day after the date of vesting, exercise or lapse of restrictions. In the discretion of the Committee, and with the consent of the Holder, the Company may reduce the number of shares of Stock issued to
the Holder upon such Holder's exercise of an Option to satisfy the tax withholding obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of Stock held back
shall not exceed the Company's or the Affiliate's Minimum Statutory Tax Withholding Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory Tax Withholding
Obligation arising upon the vesting of an Award by delivering to the Holder a reduced number of shares of Stock in the manner specified herein. If permitted by the Committee and acceptable to the
Holder, at the time of vesting of shares under the Award, the Company shall (a) calculate the amount of the Company's or an Affiliate's Minimum Statutory Tax Withholding Obligation on the assumption
that all such shares of Stock vested under the Award are made available for delivery, (b) reduce the number of such shares of Stock made available for delivery so that the Fair Market Value of the
shares of Stock withheld on the vesting date approximates the Company's or an Affiliate's Minimum Statutory Tax Withholding Obligation and (c) in lieu of the withheld shares of Stock, remit cash to
the United States Treasury and/or other applicable governmental authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax Withholding Obligation. The Company shall withhold only
whole shares of Stock to satisfy its Minimum Statutory Tax Withholding Obligation. Where the Fair Market Value of the withheld shares of Stock does not equal the amount of the Minimum Statutory Tax
Withholding Obligation, the Company shall withhold shares of Stock with a Fair Market Value slightly less than the amount of the Minimum Statutory Tax Withholding Obligation and the Holder must
satisfy the remaining minimum withholding obligation in some other manner permitted under this Section 15.3. The withheld shares of Stock not made available for delivery by the Company shall be 

A-20

 

retained
as treasury shares or will be cancelled and the Holder's right, title and interest in such shares of Stock shall terminate. The Company shall have no obligation upon vesting or exercise of
any Award or lapse of restrictions on an Award until the Company or an Affiliate has received payment sufficient to cover the Minimum Statutory Tax Withholding Obligation with respect to that vesting,
exercise or lapse of restrictions. Neither the Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the amount which it will be required to withhold. 

        15.4    Indemnification of the Committee.    The Company shall indemnify each present and
future member of the Committee against, and each member of the Committee shall be entitled without further action on his or her part to indemnity from the Company for, all expenses (including
attorney's fees, the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably
incurred by such member in connection with or arising out of any action, suit or proceeding in which such member may be involved by reason of such member being or having been a member of the
Committee, whether or not he or she continues to be a member of the Committee at the time of incurring the expenses, including, without limitation, matters as to which such member shall be finally
adjudged in any action, suit or proceeding to have been negligent in the performance of such member's duty as a member of the Committee. However, this indemnity shall not include any expenses incurred
by any member of the Committee in respect of matters as to which such member shall be finally adjudged in any action, suit or proceeding to have been guilty of gross negligence or willful misconduct
in the performance of his
duty as a member of the Committee. In addition, no right of indemnification under the Plan shall be available to or enforceable by any member of the Committee unless, within 60 days after institution
of any action, suit or proceeding, such member shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. This right of indemnification shall inure to
the benefit of the heirs, executors or administrators of each member of the Committee and shall be in addition to all other rights to which a member of the Committee may be entitled as a matter of
law, contract or otherwise. 

        15.5    Gender and Number.    If the context requires, words of one gender when used in the
Plan shall include the other and words used in the singular or plural shall include the other. 

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

        15.7    Headings.    Headings of Articles and Sections are included for convenience of
reference only and do not constitute part of the Plan and shall not be used in construing the terms and provisions of the Plan. 

        15.8    Other Compensation Plans.    The adoption of the Plan shall not affect any other
option, incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing any other forms of incentive compensation
arrangements for Employees or Directors. 

        15.9    Retirement and Welfare Plans.    Neither Awards made under the Plan nor shares of
Stock or cash paid pursuant to such Awards, may be included as "compensation" for purposes of computing the benefits payable to any person under the Company's or any Affiliate's retirement plans (both
qualified and non-qualified) or welfare benefit plans unless such other plan expressly provides that such compensation shall be taken into account in computing a participant's benefit. 

        15.10    Other Awards.    The grant of an Award shall not confer upon the Holder the right to
receive any future or other Awards under the Plan, whether or not Awards may be granted to similarly situated Holders, or the right to receive future Awards upon the same terms or conditions as
previously granted. 

A-21

 

        15.11    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 of all or substantially all of the business
and/or assets of the Company, or a merger, consolidation, or other transaction. 

        15.12    Law Limitations/Governmental Approvals.    The granting of Awards and the issuance of
shares of Stock 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. 

        15.13    Delivery of Title.    The Company shall have no obligation to issue or deliver
evidence of title for shares of Stock issued under the Plan prior to (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and (b) completion
of any registration or other qualification of the Stock under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable. 

        15.14    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 of Stock hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such shares of Stock as to which such requisite authority shall not have been obtained. 

        15.15    Investment Representations.    The Committee may require any person receiving Stock
pursuant to an Award under the Plan to represent and warrant in writing that the person is acquiring the shares of Stock for investment and without any present intention to sell or distribute such
Stock. 

        15.16    Persons Residing Outside of the United States.    Notwithstanding any provision of
the Plan to the contrary, in order to comply with the laws in other countries in which the Company or any of its Affiliates operates or has Employees, the Committee, in its sole discretion, shall have
the power and authority to (a) determine which Affiliates shall be covered by the Plan; (b) determine which persons employed outside the United States are eligible to participate in the Plan; (c)
amend or vary the terms and provisions of the Plan and the terms and conditions of any Award granted to persons who reside outside the United States; (d) establish subplans and modify exercise
procedures and other terms and procedures to the extent such actions may be necessary or advisable—any subplans and modifications to Plan terms and procedures established under this
Section 15.16 by the Committee shall be attached to the Plan document as Appendices; and (e) take any action, before or after an Award is made, that it deems advisable to obtain or comply with any
necessary local government regulatory exemptions or approvals. Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the
Exchange Act, the Code, any securities law or governing statute or any other applicable law. 

        15.17    Arbitration of Disputes.    Subject to the provisions of Article XIV, any controversy
arising out of or relating to the Plan or an Award Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of the American Arbitration Association. The arbitration shall
be final and binding on the parties. 

        15.18    No Fractional Shares.    No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash, additional Awards, or other property shall be issued or paid in lieu of fractional shares of Stock or whether such
fractional shares or any rights thereto shall be forfeited or otherwise eliminated. 

        15.19    Governing Law.    The provisions of the Plan and the rights of all persons claiming
thereunder shall be construed, administered and governed under the laws of the State of Delaware, 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 of Texas, to resolve any and all issues that may arise out of or relate to the Plan or any related Award Agreement. 

A-22

QuickLinks

Exhibit 10.1

Annex A

ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION

ARTICLE II DEFINITIONS

ARTICLE III ELIGIBILITY AND PARTICIPATION

ARTICLE IV GENERAL PROVISIONS RELATING TO AWARDS

ARTICLE V OPTIONS

ARTICLE VI STOCK APPRECIATION RIGHTS

ARTICLE VII RESTRICTED STOCK AWARDS

ARTICLE VIII RESTRICTED STOCK UNIT AWARDS

ARTICLE IX PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS

ARTICLE X OTHER STOCK-BASED AWARDS

ARTICLE XI SUBSTITUTION AWARDS

ARTICLE XII ADMINISTRATION

ARTICLE XIII AMENDMENT OR TERMINATION OF PLAN

ARTICLE XIV ACCELERATION OF VESTING FOR CERTAIN AWARDS ON CHANGE IN CONTROL OF THE COMPANY

ARTICLE XV MISCELLANEOUSExhibit
10.18

 

Tyco
International Ltd.

 

Director Compensation

 

FY09 DSU Award Agreement

 

Effective Date: September 29, 2008

 

 

Tyco International Ltd.

FY09 DSU Award Agreement

 

Recipient
Information

 

Name:

Address:

 

FY09
DSU Award Description

 

In recognition of your service as a member of the Board of Directors of
Tyco International Ltd. (the “Company”), on September 29, 2008, you have
been awarded 3,521 deferred stock units (the “Units”) under the terms of the
Tyco International Ltd. 2004 Stock and Incentive Plan (the “Plan”), a copy of
which is enclosed herewith.  The
effective date of the grant is September 29, 2008, and the number of Units you were granted represents the value of
$120,000 divided by the closing stock price on the date of grant.  Based on Tyco’s closing stock price per share
of $34.09, the grant date value of your FY09 DSU award was $120,031.

 

Vesting

 

All Units are immediately
vested on the date of grant.  All
dividend equivalents are immediately vested on the date the dividend equivalents
are credited to your account.

 

Dividend Treatment

 

If on any date the Company
pays a cash dividend on common shares of the Company (the “Shares”), you will
receive dividend equivalents on your Units credited in the form of additional
Units.  Tyco will calculate the number of
Units credited to you using the formula provided in Appendix A.

 

Settlement
of your DSU Award

 

Upon
the first to occur of (i) 30 days following termination of your service as
a member of the Board of Directors of the Company (except in the event of
Cause), or (ii) a Change in Control, the Company shall issue to you a
number of Shares equal to the aggregate number of Units credited to you on such
date in full satisfaction of such Units; provided, however, that in the event
that the Company is involved in a transaction in which the Shares will be
exchanged for cash, the Company shall issue to you immediately prior to the
consummation of such transaction a number of Shares equal to the aggregate
number of vested Units credited to you on such date.  Immediately after such issuance of Shares,
all Units standing to your credit shall terminate
immediately and be of no further force or effect.  Any fractional Unit shall be rounded up to
the next whole Share as no fractional Shares shall be issued.

 

Consequences of Termination for “Cause”

 

Termination for “Cause” occurs when an individual ceases to be a Director by
reason of his or her removal by the Board for misconduct, actions considered
willfully or wantonly harmful to the Company. 
In such event, all Units will be immediately forfeited.

 

2

 

Tyco International Ltd.

FY09 DSU Award Agreement

 

Authority

 

The
terms and conditions of the Plan are incorporated herein by reference and all capitalized terms in this Award Agreement
shall have the meanings granted to such terms in the Plan, unless a different
definition for a term is provided in this Award Agreement, in which case the
definition provided in this Award Agreement shall control.  Any conflict between the terms and conditions of this Award Agreement and the Plan
shall be governed by the terms and conditions of such Plan, including any Plan
provision that may be subsequently adopted to comply with Section 409A of
the U.S. Internal Revenue Code.

 

Tax
Implications of Your DSU Award

 

Since
this is a deferred stock unit award, generally, under current U.S. tax rules,
federal income tax (including self-employment tax for non-employee directors)
will be due when the Shares are distributed. 
If you are subject to taxes in a jurisdiction other than the U.S.,
please contact your tax advisor on the tax reporting requirements.

 

Assignability

 

You
cannot sell, assign, exchange, pledge or otherwise transfer the Units.  If you remain an affiliate of the Company
after the Shares are issued, or were an affiliate of the Company within the
three month period prior to sale of the Shares, there may be various
restrictions on the disposition of the Shares. 
If this is the case, the Company should be notified if you desire to
dispose of the Shares in order to determine whether the disposition may be made
without violating applicable law.

 

Award
Acknowledgement – Action Required

 

Please
acknowledge your acceptance of the FY09 DSU award by returning a signed copy of
the FY09 DSU Acceptance Form in the enclosed Federal Express envelope.

 

For
Additional Information

 

If
you have any questions about the Plan, please call either Bill Gentry
(609-720-4337) or Tricia Hiller (609-806-2190) in our Executive Compensation
group.

 

3

 

Tyco International Ltd.

FY09 DSU Award Agreement

 

Appendix A

 

Crediting of Dividends

 

If
on any date the Company pays a cash dividend on common shares of the Company
(the “Shares”), you will receive dividend equivalents on your Units credited in
the form of additional Units.  The number
of Units credited to you shall be determined by the following formula:

 

	
   

  	
  (# of Units in your
  account1 x Cash Dividend Amount)

  	
   

  
	
   

  	
  Fair Market Value per
  Share on Dividend Payment Date2

  	
   

  

 

Note 1 = Aggregate number
of Units credited to you as of the dividend record date.

 

Note 2 = Fair Market
Value is the closing sales price on the dividend payment date.

 

In
the case of a dividend paid on Shares in the form of Shares, the number of
additional Units credited to you shall equal to the product of (i) the
aggregate number of Units that have been credited to you through the related
dividend record date, and (ii) the number of Shares (including any
fraction thereof) payable as a dividend on a Share.  The number and terms of the Units shall be
adjusted in accordance with the provisions of the Plan.

 

In the case of a dividend payable in property other than Shares or
cash, the per Share value of such dividend shall be the same as applied to all
other shareholders of the Company as is determined in good faith by the Board.

 

4

 

Tyco International Ltd.

FY09 DSU Award Agreement

 

Tyco Board of Directors

 

FY09 Deferred Stock Unit Award

 

(Please
sign below and return a copy of the FY09 Award Agreement in the enclosed
envelope)

 

I
hereby accept the deferred stock unit award described in this Award
Agreement.  I agree to be bound by the
provisions of the Tyco International Ltd. 2004 Stock and Incentive Plan and the
Award Agreement.  I have been advised
that if I am an affiliate of the Company, resales of any Shares received by me
will be subject to the Securities Act of 1933, as amended (the “Act”) and I
agree that I will comply with restrictions on resales by affiliates as provided
by the Act.  In addition, by signing and
returning a copy of this agreement, I acknowledge receipt of the documents
constituting the Plan.

 

 

	
  Signature:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

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