Document:

exv10w4

Exhibit 10.4

SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT (this “Agreement”) is entered into on May 16, 2011 between
LIGHTING SCIENCE GROUP CORPORATION, a Delaware corporation (the “Company”), LSGC Holdings LLC, a
Delaware limited liability company (“Holdings”), and LSGC Holdings II LLC, a Delaware limited
liability company (“Holdings II” and together with Holdings, the “Purchasers”).

     WHEREAS, Holdings II has agreed to purchase 1,635,800 shares (the “Holdings II Purchaser
Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), in exchange
for (and full satisfaction of) that certain Demand Note, dated May 6, 2011, by the Company, as
maker, in favor of Holdings II, as payee (the “Demand Note” and the outstanding principal of and
interest thereon as of the date hereof the “Holdings II Consideration”);

     WHEREAS, Holdings has agreed to purchase 3,750,000 shares (the “Holdings Purchaser Shares” and
together with the Holdings II Purchaser Shares, the “Purchaser Shares”) of Common Stock for
$15,000,000 in aggregate consideration (the “Holdings Consideration” and together with the Demand
Note, the “Consideration”), conditioned upon Holdings’ receipt of such funds from a third party
investor or investors as previously disclosed to the Company (the “Payment Condition”);

     NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto
agree as follows:

     1. Purchase and Sale of Common Stock. Each Purchaser shall purchase from
the Company and the Company shall sell to such Purchaser its respective Purchaser Shares in
accordance with the terms and conditions of this Agreement.

     2. Payment for Common Stock; Delivery of Certificate.

     (a) No later than one business day following satisfaction of the Payment
Condition (the “Commitment Date”), if any, Holdings shall: (i) pay, or cause to be paid, by
wire transfer of immediately available funds to the Company, an amount equal to the Holdings
Consideration and (ii) deliver a certificate to the Company signed on behalf of an
authorized officer of Holdings in which such officer, to the best of his or her knowledge
after reasonable investigation, shall state that: (A) the representations and warranties of
Holdings in this Agreement are true and correct as of the date thereof and (B) Holdings has
complied in all material respects with all agreements and satisfied all conditions on its
part to be performed or complied with by it hereunder at or prior to the Commitment Date;
provided that, notwithstanding anything to the contrary in this Agreement,
in the event the Payment Condition shall not have occurred on or prior to June 15, 2011 (the
“Termination Date”), Holdings shall have no obligation to pay the Holdings Consideration and
the Company shall have no obligation to deliver the Holdings Purchaser Shares.

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     (b) Upon the payment of the Holdings Consideration to the Company, if at all,
the Company shall pay, or cause to be paid, by wire transfer of immediately available funds
to Holdings or its designee, an amount equal to 4% of the Holdings Consideration.

     (c) On or prior to the date hereof and as consideration for the Holdings II
Purchaser Shares, Holdings II shall deliver to the Company the Demand Note.

     (d) On or promptly following the date hereof, the Company shall deliver to
Holdings II in accordance with this Agreement a certificate representing the Holdings II
Purchaser Shares. On or promptly following its acceptance of the Holdings Consideration,
the Company shall deliver to Holdings in accordance with this Agreement a certificate or
certificates (as directed by Holdings) representing the Holdings Purchaser Shares.

     3. Opinion of Counsel. On the date hereof, Haynes and Boone, LLP, counsel
for the Company, shall have delivered to Holdings II a usual and customary opinion with respect to
the issuance of the Holdings II Purchaser Shares. On the Commitment Date, if any, in connection
with the issuance of the Holdings Purchaser Shares to Holdings, Haynes and Boone, LLP, counsel for
the Company, shall have delivered to Holdings a usual and customary opinion with respect to the
issuance of the Holdings Purchaser Shares.

     4. Officer’s Certificate of the Company. On the Commitment Date, if any, in
connection with the issuance of the Holdings Purchaser Shares to Holdings, the Company shall have
delivered to Holdings a certificate signed on behalf of the Company by the Chairman of the Board,
Chief Executive Officer, Chief Financial Officer, President or any Executive Vice President, Senior
Vice President or Vice President of the Company in which such officer, to the best of his or her
knowledge after reasonable investigation, shall state that: (i) from the date of this Agreement
through the Commitment Date, the Company has not issued any Common Stock or Derivative Securities
(as defined below) other than Management Equity (as defined below); (ii) the representations and
warranties of the Company in this Agreement are true and correct as of the date thereof and (iii)
the Company has complied in all material respects with all agreements and satisfied all conditions
on its part to be performed or complied with by it hereunder at or prior to the Commitment Date.

     5. Company Representations and Warranties. The Company represents and
warrants to each Purchaser that as of the date hereof:

     (a) The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has the requisite corporate power
to own its properties and carry on its business as presently conducted.

     (b) The issuance, sale and delivery of such Purchaser’s Purchaser Shares in
accordance with this Agreement have been duly authorized by all necessary corporate action
on the part of the Company.

     (c) This Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement by the Company does not and will not conflict with,

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violate or cause a breach of any agreement, contract or instrument to which the Company
is a party or any judgment, order or decree to which the Company is subject.

     (d) As of the May 13, 2011, after taking into account the transactions
contemplated hereby and the transactions contemplated by that certain Subscription
Agreement, dated as of May 10, 2011, between the Company and Geveran Investments Ltd. and
that certain Subscription Agreement, dated as of May 16, 2011, between the Company and Al
Bawardi Enterprises LLC, Schedule 5(d) attached hereto sets forth a true, complete
and correct listing, as of May 13, 2011 of all of the Company’s outstanding: (i) shares of
Common Stock and (ii) securities convertible into or exchangeable for shares of Common Stock
(the “Derivative Securities”), including the applicable exercise price of such Derivative
Securities, other than any Derivative Securities issued pursuant to the Company’s Amended
and Restated Equity-Based Compensation Plan or the Company’s 2011 Employee Stock Purchase
Plan (the “Management Equity”). Except as set forth in Schedule 5(d) and except for
any Management Equity, the Company has no other outstanding equity securities.

     (e) SEC Reports; Financial Statements

	 	i.	 	As of its filing date, the Form 10-K filed by the
Company with the Securities and Exchange Commission (the “SEC”) on April
1, 2011 (such filing, the “Company SEC Document”) complied in all
material respects with the applicable requirements of the Securities Act
of 1933, as amended (the “1933 Act”), the Securities Exchange Act of
1934, as amended (the “1934 Act”), and the Sarbanes-Oxley Act of 2002, as
the case may be, including, in each case, the rules and regulations
promulgated thereunder.
	 
	 	ii.	 	Except to the extent that information contained in
the Company SEC Document has been revised or superseded by a document the
Company subsequently filed with the SEC, the Company SEC Document does
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they
were made, not misleading.
	 
	 	iii.	 	The financial statements (including the related
notes thereto) included in the Company SEC Document comply as to form in
all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
(“GAAP”) applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present in
all material respects the consolidated financial position of the Company
and its subsidiaries as of the dates thereof and their respective
consolidated results of operations and cash flows for the periods then
ended, all in accordance with GAAP and the applicable rules and
regulations promulgated by the SEC. Since

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	 	 	 	April 1, 2011, the Company has not made any change in the accounting
practices or policies applied in the preparation of its financial
statements, except as required by GAAP, the rules of the SEC or policy or
applicable law.
	 
	 	iv.	 	Subsequent to the filing of the Company SEC
Document with the SEC, there has been no material and adverse change or
development, or event involving such a prospective change, in the
condition, business, properties or results of operations of the Company
and its subsidiaries.

	 	(f)	 	The Company agrees and acknowledges that the Purchaser Shares to be
acquired by Holdings and Holdings II are subject to that certain Amended and
Restated Registration Rights Agreement, dated as of January 23, 2009, by and
between the Company and Pegasus Partners IV, L.P. (“Pegasus”), and any registration
rights agreement entered into pursuant to Section 5.03 of that certain Stock
Repurchase, Exchange and Recapitalization Agreement, dated as of September 30,
2010, by and among the Company, Pegasus and LED Holdings, LLC (collectively, the
“Registration Rights Agreements”), and that such Purchaser Shares shall constitute
Registrable Securities (as defined therein).
	 
	 	(g)	 	The offer and sale of the Purchaser Shares by the Company to the several
Purchasers in the manner contemplated by this Agreement will be exempt from the
registration requirements of the 1933 Act.

     6. Purchaser Representations and Warranties. Each Purchaser severally but
not jointly represents and warrants to the Company that as of the date hereof:

     (a) The Purchaser has the full power and authority to execute and deliver
this Agreement and to perform all of its obligations hereunder and thereunder, and to
purchase, acquire and accept delivery of its Purchaser Shares.

     (b) Its Purchaser Shares are being acquired for the Purchaser’s own account
and not with a view to, or intention of, distribution thereof in violation of the 1933 Act,
or any applicable state securities laws.

     (c) The Purchaser will not make any sale, transfer or other disposition of
the Purchaser Shares in violation of the 1933 Act, the 1934 Act, as amended, the rules and
regulations promulgated thereunder or any applicable state securities laws.

     (d) The Purchaser is sophisticated in financial matters and is able to
evaluate the risks and benefits of an investment in the Purchaser Shares. The Purchaser
understands and acknowledges that such investment is a speculative venture, involves a high
degree of risk and is subject to complete risk of loss. The Purchaser has carefully
considered and has, to the extent the Purchaser deems necessary, discussed with the
Purchaser’s professional legal, tax, accounting and financial advisers the suitability of
its investment in the Common Stock.

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     (e) The Purchaser is able to bear the economic risk of its investment in its
Purchaser Shares for an indefinite period of time because its Purchaser Shares have not been
registered under the 1933 Act and, therefore, cannot be sold unless subsequently registered
under the 1933 Act or an exemption from such registration is available. The Purchaser: (i)
understands and acknowledges that the Purchaser Shares being issued to the Purchaser have
not been registered under the 1933 Act, nor under the securities laws of any state, nor
under the laws of any other country and (ii) recognizes that no public agency has passed
upon the accuracy or adequacy of any information provided to the Purchaser or the fairness
of the terms of its investment in its Purchaser Shares.

     (f) The Purchaser has had an opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of the Common Stock and has had full
access to such other information concerning the Company as has been requested.

     (g) This Agreement constitutes the legal, valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, and the execution, delivery and
performance of this Agreement by the Purchaser does not and will not conflict with, violate
or cause a breach of any agreement, contract or instrument to which the Purchaser is a party
or any judgment, order or decree to which the Purchaser is subject.

     (h) The Purchaser became aware of the offering of the Purchaser Shares other
than by means of general advertising or general solicitation.

     (i) The Purchaser is an “accredited investor” as that term is defined under
the 1933 Act and Regulation D promulgated thereunder, as amended by Section 413 of the
Private Fund Investment Advisers Registration Act of 2010 and any applicable rules or
regulations or interpretations thereof promulgated by the SEC or its staff.

     (j) The Purchaser acknowledges that the certificates for its Purchaser Shares
will contain a legend substantially as follows:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS.

THE COMPANY MAY REQUEST A WRITTEN OPINION OF COUNSEL (WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY) TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH AN
OFFER, SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE.”

     Subject to any lock-up or other similar agreement that may apply to the Purchaser Shares, the
requirement that the Purchaser Shares contain the legend set forth in clause (j) above shall

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cease and terminate upon the earlier of (i) when such shares are transferred pursuant to Rule
144 under the 1933 Act or (ii) when such shares are transferred in any other transaction if the
transferor delivers to the Company a written opinion of counsel (which opinion and counsel shall be
reasonably satisfactory to the Company) to the effect that such legend is no longer necessary in
order to protect the Company against a violation by it of the 1933 Act upon any sale or other
disposition of such shares without registration thereunder. Upon the consummation of an event
described in (i) or (ii) above, the Company, upon surrender of certificates containing such legend,
shall, at its own expense, deliver to the holder of any such shares as to which the requirement for
such legend shall have terminated, one or more new certificates evidencing such shares not bearing
such legend.

7. Holdings II Representations and Warranties. In addition to the Purchaser
Representations and Warranties, Holdings II represents and warrants to the Company that as of the
date hereof Holdings II is the sole and exclusive owner of all rights, title and interests to the
Demand Note free and clear of any liens, encumbrances, or charges of any nature whatsoever, and
Holdings II has not transferred, hypothecated, pledged or otherwise disposed of its rights, title
or interests in the Demand Note.

8. Covenant of Holdings. Holdings hereby agrees to use commercially reasonable
efforts to cause the Payment Condition to be satisfied on or before the Termination Date.

9. Subsequent Registered Equity Sales. If the Company sells shares of Common
Stock in the currently pending firm commitment underwritten public offering (Registration No.
333-172165) (the “Re-IPO”) at a price per share of Common Stock (the “Offering Price”) that is less
than $4.00, then the Company shall promptly issue additional shares (the “Additional Shares”) of
Common Stock to each Purchaser that had been issued Purchaser Shares. The amount of such
Additional Shares to be issued to each such Purchaser shall be determined in accordance with the
following formulas:

Additional Shares payable to Holdings = (Holdings Consideration /
Offering Price) – Holdings Purchaser Shares

Additional Shares payable to Holdings II = (Holdings II Consideration /
Offering Price) – Holdings II Purchaser Shares

     Notwithstanding the foregoing, the Company’s obligation to issue Additional Shares, if any,
shall cease upon the first anniversary of the date of this Agreement and the Company shall have no
obligations to issue Additional Shares to any Purchaser that has not paid such Purchaser’s
Consideration to the Company in accordance with Section 2 of this Agreement.

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10. General Provisions.

     (a) Default. A default by any Purchaser of its obligations under
Section 2 of this Agreement shall not constitute a default by any other Purchaser
under this Agreement and, except with respect to such defaulting Purchaser, shall not
relieve the Company of any of its obligations to any other Purchaser under this Agreement.

     (b) Choice of Law. The laws of the State of New York without
reference to the conflict of laws provisions thereof, will govern all questions concerning
the construction, validity and interpretation of this Agreement.

     (c) Legal Expenses. Each party to this Agreement shall be solely
responsible for its own expenses incurred in connection with this Agreement and the
transactions contemplated hereby, except that the Company agrees that, on the date hereof,
it will pay up to $80,000 to Akin Gump Strauss Hauer & Feld LLP (“Akin Gump”), counsel to
Pegasus, for legal fees incurred by Pegasus in connection with this Agreement and the
transactions contemplated hereby. Such payment shall be transmitted by wire transfer of
immediately available funds to an account previously designated by Akin Gump.

     (d) Amendment and Waiver. The provisions of this Agreement may be
amended and waived only with the prior written consent of the Company and the Purchasers.

     (e) Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original and all of which shall constitute a single agreement.

     (f) Acceptance by the Company. It is understood that this
subscription is not binding on the Company until the Company accepts it, which acceptance is
at the sole discretion of the Company and shall be noted by execution of this Agreement by
the Company where indicated.

     (g) Stockholder. Each Purchaser hereby acknowledges that, once
accepted by the Company, this subscription or commitment, as applicable, is not revocable by
such Purchaser except to the extent provided for in Section 2(a) of this Agreement.
Each Purchaser agrees that, if this subscription is accepted, such Purchaser shall, and such
Purchaser hereby elects to: (i) become a stockholder of the Company; (ii) be bound by the
terms and provisions hereof; and (iii) execute any and all further documents when and as
reasonably requested by the Company in connection with the transactions contemplated by this
Agreement.

* * * * *

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the
date first written above.

	 	 	 	 	 
	 	COMPANY:

LIGHTING SCIENCE GROUP CORPORATION

 	 
	 	By:  	/s/ Gregory T. Kaiser	 
	 	Name:  	Gregory T. Kaiser	 
	 	Title:  	Chief Financial Officer	 
	 

 

 

	 	 	 	 	 	 	 

	 	 	PURCHASERS:	 	 
	 
	 	 	 	 	 	 
	 	 	LSGC Holdings LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	Pegasus Partners IV, L.P., its managing member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	Pegasus Investors IV, L.P., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	Pegasus Investors IV GP, L.L.C., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 	/s/ Jason Schaefer	 	 
	 

	 	Name:	Jason Schaefer	 	 
	 

	 	Title:
	General Counsel and Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	LSGC Holdings II LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	Pegasus Partners IV, L.P., its sole member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	Pegasus Investors IV, L.P., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	Pegasus Investors IV GP, L.L.C., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	/s/ Jason Schaefer	 	 
	 

	 	Name:
	Jason Schaefer
	 	 
	 

	 	Title:
	General Counsel and Secretaryexv10w1

Exhibit 10.1

PINNACLE ENTERTAINMENT, INC.

2005 EQUITY AND PERFORMANCE INCENTIVE PLAN, AS AMENDED

PINNACLE ENTERTAINMENT, INC., a corporation existing under the laws of the State of Delaware (the
“Company”), hereby establishes and adopts the following 2005 Equity and Performance Incentive Plan,
as amended and restated (the “Plan”). Certain capitalized terms used in the Plan are defined in
Article II.

RECITALS

WHEREAS, the Company desires to encourage high levels of performance by those individuals who are
key to the success of the Company, to attract new individuals who are highly motivated and who are
expected to contribute to the success of the Company and to encourage such individuals to remain as
directors, employees, consultants and/or advisors of the Company and its Affiliates by increasing
their proprietary interest in the Company’s growth and success; and

WHEREAS, to attain these ends, the Company has formulated the Plan embodied herein to authorize the
granting of Awards to Participants whose judgment, initiative and efforts are or have been or are
expected to be responsible for the success of the Company.

NOW, THEREFORE, the Company hereby constitutes, establishes and adopts the following Plan and
agrees to the following provisions:

ARTICLE I

PURPOSE OF THE PLAN

1.1 Purpose. The purpose of the Plan is to assist the Company and its Affiliates in attracting
and retaining selected individuals to serve as directors, employees, consultants and/or advisors of
the Company who are expected to contribute to the Company’s success and to achieve long-term
objectives which will inure to the benefit of all stockholders of the Company through the
additional incentives inherent in the Awards hereunder.

ARTICLE II

DEFINITIONS

2.1 “Affiliate” shall mean (i) any person or entity that directly, or through one or more
intermediaries, controls, or is controlled by, or is under common control with, the Company
(including any Parent or Subsidiary) or (ii) any entity in which the Company has a significant
equity interest, as determined by the Committee.

2.2 “Applicable Laws” means the legal requirements relating to the administration of and
issuance of securities under stock incentive plans, including, without limitation, the requirements
of state corporations law, federal and state securities law, federal and state tax law, and the
requirements of any stock exchange or quotation system upon which the Shares may then be listed or
quoted. For all purposes of this Plan, references to statutes and regulations shall be deemed to
include any successor statutes and regulations, to the extent reasonably appropriate as determined
by the Committee.

2.3 “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award,
Performance Award, Dividend Equivalent, Other Stock Unit Award or any other right, interest or
option relating to Shares or other property (including cash) granted pursuant to the provisions of
the Plan.

2.4 “Award Agreement” shall mean any written agreement, contract or other instrument or
document evidencing any Award granted by the Committee hereunder.

2.5 “Board” shall mean the board of directors of the Company.

 

 

 

2.6 “Cause” shall have the meaning set forth in a Participant’s employment or consulting
agreement
with the Company (if any), or if not defined therein, shall mean (a) acts or omissions by the
Participant which constitute intentional material misconduct or a knowing violation of a material
policy of the Company or any of its subsidiaries, (b) the Participant personally receiving a
benefit in money, property or services from the Company or any of its subsidiaries or from another
person dealing with the Company or any of its subsidiaries, in material violation of applicable law
or Company policy, (c) an act of fraud, conversion, misappropriation, or embezzlement by the
Participant or his conviction of, or entering a guilty plea or plea of no contest with respect to,
a felony, or the equivalent thereof (other than DUI), or (d) any deliberate and material misuse or
improper disclosure of confidential or proprietary information of the Company.

2.7 “Change of Control” shall mean the occurrence of any of the following events:

(i) The direct or indirect acquisition by an unrelated “Person” or “Group” of “Beneficial
Ownership” (as such terms are defined below) of more than 50% of the voting power of the Company’s
issued and outstanding voting securities in a single transaction or a series of related
transactions;

(ii) The direct or indirect sale or transfer by the Company of substantially all of its assets
to one or more unrelated Persons or Groups in a single transaction or a series of related
transactions;

(iii) The merger, consolidation or reorganization of the Company with or into another
corporation or other entity in which the Beneficial Owners (as such term is defined below) of more
than 50% of the voting power of the Company’s issued and outstanding voting securities immediately
before such merger or consolidation do not own more than 50% of the voting power of the issued and
outstanding voting securities of the surviving corporation or other entity immediately after such
merger, consolidation or reorganization; or

(iv) During any consecutive 12-month period, individuals who at the beginning of such period
constituted the Board of the Company (together with any new Directors whose election to such Board
or whose nomination for election by the stockholders of the Company was approved by a vote of a
majority of the Directors of the Company then still in office who were either Directors at the
beginning of such period or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of the Company then in office.

None of the foregoing events, however, shall constitute a Change of Control if such event is
not a “Change in Control Event” under Treasury Regulations Section 1.409A-3(i)(5) or successor IRS
guidance. For purposes of determining whether a Change of Control has occurred, the following
Persons and Groups shall not be deemed to be “unrelated”: (A) such Person or Group directly or
indirectly has Beneficial Ownership of more than 50% of the issued and outstanding voting power of
the Company’s voting securities immediately before the transaction in question, (B) the Company has
Beneficial Ownership of more than 50% of the voting power of the issued and outstanding voting
securities of such Person or Group, or (C) more than 50% of the voting power of the issued and
outstanding voting securities of such Person or Group are owned, directly or indirectly, by
Beneficial Owners of more than 50% of the issued and outstanding voting power of the Company’s
voting securities immediately before the transaction in question. The terms “Person,” “Group,”
“Beneficial Owner,” and “Beneficial Ownership” shall have the meanings used in the Exchange Act,
and the rules promulgated thereunder. Notwithstanding the foregoing, (I) Persons will not be
considered to be acting as a “Group” solely because they purchase or own stock of this Company at
the same time, or as a result of the same public offering, (II) however, Persons will be considered
to be acting as a “Group” if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction, with the Company,
and (III) if a Person, including an entity, owns stock both in the Company and in a corporation
that enters into a merger, consolidation, purchase or acquisition of stock, or similar transaction,
with the Company, such stockholders shall be considered to be acting as a Group with other
stockholders only with respect to the ownership in the corporation before the transaction.

2.8 “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto.

2.9 “Committee” shall mean the Committee constituted under Section 4.2 to administer this
Plan.

2.10 “Company” has the meaning set forth in introductory paragraph of the Plan.

 

 

 

2.11 “Consultant” means any person, including an advisor, who (i) is a natural person, (ii)
provides bona fide services to the Company or a Parent or Subsidiary, and (iii) provides services
that are not in connection with the offer or sale of securities in a capital-raising transaction,
and that do not directly or indirectly promote or maintain a market for the securities of the
Company; provided that the term ‘Consultant’ does not include (i) Employees or (ii) Directors who
are paid only a director’s fee by the Company or who are not compensated by the Company for their
services as Directors.

2.12 “Continuous Status as an Employee, Director or Consultant” means that the employment,
director or consulting relationship is not interrupted or terminated by the Company, any Parent or
Subsidiary, or by the Employee, Director or Consultant. Continuous Status as an Employee, Director
or Consultant will not be considered interrupted in the case of: (i) any leave of absence approved
by the Board, including sick leave, military leave, or any other personal leave, provided, that for
purposes of Incentive Stock Options, any such leave may not exceed 90 days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including certain Company policies) or
statute; (ii) transfers between locations of the Company or between the Company, its Parent, its
Subsidiaries or its successor; or (iii) in the case of an Award other than an Incentive Stock
Option, the ceasing of a person to be an Employee while such person remains a Director or
Consultant, the ceasing of a person to be a Director while such person remains an Employee or
Consultant or the ceasing of a person to be a Consultant while such person remains an Employee or
Director.

2.13 “Covered Employee” shall mean a “covered employee” within the meaning of Section
162(m)(3) of the Code, or any successor provision thereto.

2.14 “Director” shall mean a non-employee member of the Board or a non-employee member of the
board of directors of a Parent or Subsidiary.

2.15 “Disability” shall mean total and permanent disability as defined in Section 22(e)(3) of
the Code.

2.16 “Dividend Equivalents” shall have the meaning set forth in Section 12.5.

2.17 “Eligible Employees” shall have the meaning set forth in Section 14.3.

2.18 “Eligible Option” shall have the meaning set forth in Section 14.3.

2.19 “Employee” shall mean any employee of the Company or any Parent or Subsidiary.

2.20 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

2.21 “Exchange Grant” shall have the meaning set forth in Section 14.2.

2.22 “Fair Market Value” shall mean, with respect to any property other than Shares, the
market value of such property determined by such methods or procedures as shall be established from
time to time by the Committee. The Fair Market Value of Shares as of any date shall be determined
as follows:

(i) If the Shares are listed on any established stock exchange or a national market system,
including without limitation, the National Market System of NASDAQ, the Fair Market Value of a
Share will be (i) the closing sales price for such Shares (or the closing bid, if no sales are
reported) as quoted on that system or exchange (or the system or exchange with the greatest volume
of trading in Shares) on the last market trading day prior to the day of determination or (ii) any
sales price for such Shares (or the closing bid, if no sales are reported) as quoted on that system
or exchange (or the system or exchange with the greatest volume of trading in Shares) on the day of
determination, as the Committee may select, in each case as reported in the Wall Street Journal or
any other source the Committee considers reliable.

(ii) If the Shares are quoted on the NASDAQ System (but not on the NASDAQ National Market
System) or are regularly quoted by recognized securities dealers but selling prices are not
reported, the Fair
Market Value of a Share will be the mean between the high bid and low asked prices for the
Shares on (i) the last market trading day prior to the day of determination or (ii) the day of
determination, as the Committee may select, in each case as reported in the Wall Street Journal or
any other source the Committee considers reliable.

 

 

 

(iii) If the Shares are not traded as set forth above, the Fair Market Value will be
determined in good faith by the Committee with reference to the earnings history, book value and
prospects of the Company in light of market conditions generally, and any other factors the
Committee considers appropriate, such determination by the Committee to be final, conclusive and
binding.

2.23 “Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Participant’s household (other than a tenant or employee), a trust in which these
persons (or the Participant) control the management of assets, and any other entity in which these
persons (or the Participant) own more than 50 percent of the voting interests.

2.24 “Incentive Stock Option” means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

2.25 “Individual Arrangements” means the Nonqualified Stock Option Agreement dated as of
January 11, 2003 by and between the Company and Stephen H. Capp, the Nonqualified Stock Option
Agreements dated as of April 10, 2002 by and between the Company and Daniel R. Lee, the
Nonqualified Stock Option Agreement dated as of August 1, 2008 by and between the Company and
Carlos Ruisanchez, and the Nonqualified Stock Option Agreement dated as of March 14, 2010 by and
between the Company and Anthony M. Sanfilippo.

2.26 “Limitations” shall have the meaning set forth in Section 3.2.

2.27 “Option” shall mean any right granted to a Participant under the Plan allowing such
Participant to purchase Shares at such price or prices and during such period or periods as the
Committee shall determine.

2.28 “Option Exchange Program” shall have the meaning set forth in Section 14.2.

2.29 “Other Stock Unit Award” shall have the meaning set forth in Section 8.1.

2.30 “Parent” means a “parent corporation” with respect to the Company, whether now or later
existing, as defined in Section 424(e) of the Code.

2.31 “Participant” shall mean an Employee, Director or Consultant who is selected by the
Committee to receive an Award under the Plan.

2.32 “Payee” shall have the meaning set forth in Section 13.1.

2.33 “Performance Award” shall mean any Award of Performance Shares or Performance Units
granted pursuant to Article IX.

2.34 “Performance Period” shall mean that period established by the Committee at the time any
Performance Award is granted or at any time thereafter during which any performance goals specified
by the Committee with respect to such Award are to be measured.

2.35 “Performance Share” shall mean any grant pursuant to Article IX of a unit valued by
reference to a designated number of Shares, which value may be paid to the Participant by delivery
of such property as the Committee shall determine, including cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals during the Performance Period as
the Committee shall establish at the time of such grant or thereafter.

2.36 “Performance Unit” shall mean any grant pursuant to Article IX of a unit valued by
reference to a designated amount of property (including cash) other than Shares, which value may be
paid to the Participant by
delivery of such property as the Committee shall determine, including cash, Shares, other
property, or any combination thereof, upon achievement of such performance goals during the
Performance Period as the Committee shall establish at the time of such grant or thereafter.

 

 

 

2.37 “Prior Plans” shall mean, collectively, the Company’s 1993, 1996, 2001 and 2002 Option
Plans, as amended.

2.38 “Restricted Stock” shall mean any Share issued with the restriction that the holder may
not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee,
in its sole discretion, may impose (including any restriction on the right to vote such Share and
the right to receive any dividends), which restrictions may lapse separately or in combination at
such time or times, in installments or otherwise, as the Committee may deem appropriate.

2.39 “Restricted Period” shall have the meaning set forth in Section 7.1.

2.40 “Restricted Stock Award” shall have the meaning set forth in Section 7.1.

2.41 “Shares” shall mean the shares of common stock of the Company, par value $0.10 per share.

2.42 “Stock Appreciation Right” shall mean the right granted to a Participant pursuant to
Article VI.

2.43 “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the Award, each of the
corporations other than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the other corporations in
the chain.

2.44 “Substitute Awards” shall mean Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, by a company acquired by the Company or any Subsidiary or with
which the Company or any Subsidiary combines.

ARTICLE III

SHARES SUBJECT TO THE PLAN

3.1 Number of Shares.

(a) Subject to adjustment as provided in Section 12.2, a total of 5,850,000 Shares shall be
authorized for grant under the Plan, plus any Shares subject to awards granted under the Prior
Plans and Individual Arrangements, which such awards are forfeited, expire or otherwise terminate
without issuance of Shares, or are settled for cash or otherwise do not result in the issuance of
Shares, on or after the effective date of this Plan. Any Shares that are subject to Awards of
Options or Stock Appreciation Rights shall be counted against this limit as one Share for every one
Share granted. Any Shares that are subject to Awards other than Options or Stock Appreciation
Rights (including, but not limited to, Shares delivered in satisfaction of Dividend Equivalents)
shall be counted against this limit as 1.4 Shares for every one Share granted.

(b) If any Shares subject to an Award or to an award under the Prior Plans or Individual
Arrangements are forfeited, expire or otherwise terminate without issuance of such Shares, or any
Award or award under the Prior Plans or Individual Arrangements is settled for cash or otherwise
does not result in the issuance of all or a portion of the Shares subject to such Award, the Shares
shall, to the extent of such forfeiture, expiration, termination, cash settlement or non-issuance,
again be available for Awards under the Plan, subject to Section 3.1(e) below.

(c) In the event that (i) any Option or other Award granted under this Plan or any option or
award granted under the Prior Plans or Individual Arrangements is exercised through the tendering
of Shares (either actually, by attestation, or by the giving of instructions to a broker to remit
to the Company that portion of the sales price required to pay the exercise price) or by the
withholding of Shares by the Company, or (ii) withholding tax liabilities arising from such Options
or Awards under this Plan or options or awards under a Prior Plan or an
Individual Arrangement are satisfied by the tendering of Shares (either actually, by
attestation, or by the giving of instructions to a broker to remit to the Company that portion of
the sales price required to pay the exercise price) or by the withholding of Shares by the Company,
then the Shares so tendered or withheld shall not again be available for Awards under the Plan.

 

 

 

(d) Substitute Awards shall not reduce the Shares authorized for issuance under the Plan or
authorized for grant to a Participant in any calendar year. Additionally, in the event that a
company acquired by the Company or any Subsidiary, or with which the Company or any Subsidiary
combines, has shares available under a pre-existing plan approved by shareholders and not adopted
in contemplation of such acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio
or other adjustment or valuation ratio or formula used in such acquisition or combination to
determine the consideration payable to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares
authorized for issuance under the Plan; provided that Awards using such available shares shall not
be made after the date awards or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made to individuals who were
employees, directors or consultants of such acquired or combined company before such acquisition or
combination.

(e) Any Shares that again become available for grant pursuant to this Article III shall be
added back as one Share if such Shares were subject to Options or Stock Appreciation Rights granted
under the Plan or options or stock appreciation rights granted under the Prior Plans or Individual
Arrangements, and as 1.4 Shares if such Shares were subject to Awards other than Options or Stock
Appreciation Rights granted under the Plan.

3.2 Limitations on Grants to Individual Participant. Subject to adjustment as provided in
Section 12.2, no Participant may be granted (i) Options or Stock Appreciation Rights during any
12-month period with respect to more than 1,500,000 Shares, or (ii) Restricted Stock, Performance
Awards and/or Other Stock Unit Awards that are denominated in Shares in any 12-month period with
respect to more than 750,000 Shares (the “Limitations”). In addition to the foregoing, the maximum
dollar value payable to any Participant in any 12-month period with respect to Performance Awards
and/or Other Stock Unit Awards that are valued with reference to cash or property other than Shares
is $2,500,000. If an Award is cancelled, the cancelled Award shall continue to be counted toward
the applicable Limitations.

3.3 Character of Shares. Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares purchased in the open market or
otherwise.

ARTICLE IV

ELIGIBILITY AND ADMINISTRATION

4.1 Eligibility. Any Employee, Director or Consultant shall be eligible to be selected as a
Participant. Only Employees may receive awards of Incentive Stock Options.

4.2 Administration.

(a) The Plan shall be administered by the Committee, constituted as follows:

(i) The Committee will consist of the Board, or a committee designated by the Board, which
Committee will be constituted to satisfy Applicable Laws. Once appointed, a Committee will serve in
its designated capacity until otherwise directed by the Board. The Board may increase the size of
the Committee and appoint additional members, remove members (with or without cause) and substitute
new members, fill vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan. Notwithstanding the foregoing, unless the Board expressly
resolves to the contrary, while the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan will be administered only by the Compensation Committee of the Board (or such other
committee designated by the Compensation Committee of the Board), consisting of no fewer than two
Directors, each of whom is (A) a “non-employee director” within the meaning of Rule 16b-3 (or any
successor rule) of the Exchange Act, (B) an “outside director” within the meaning of Section
162(m)(4)(C)(i) of the
Code, and (C) an “independent director” for purpose of the rules and regulations of the New
York Stock Exchange or other exchange or quotation system on which the Shares are principally
traded; provided, however, the failure of the Committee to be composed solely of individuals who
are “non-employee directors,” “outside directors,” and “independent directors” shall not render
ineffective or void any awards or grants made by, or other actions taken by, such Committee.

 

 

 

(ii) The Plan may be administered by different bodies with respect to Directors, officers who
are not Directors, and Employees and Consultants who are neither Directors nor officers, and
Covered Employees.

(b) The Committee shall have full discretion, power and authority, subject to the provisions
of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the
Plan as may from time to time be adopted by the Board, to: (i) select the Employees, Consultants
and Directors to whom Awards may from time to time be granted hereunder; (ii) determine the type or
types of Awards, not inconsistent with the provisions of the Plan, to be granted to each
Participant hereunder; (iii) determine the number of Shares to be covered by each Award granted
hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the
Plan, of any Award granted hereunder and the form and content of any Award Agreement; (v) determine
whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other
property, subject to the provisions of the Plan; (vi) determine whether, to what extent and under
what circumstances any Award shall be modified, amended, canceled or suspended; (vii) interpret and
administer the Plan and any instrument or agreement entered into under or in connection with the
Plan, including any Award Agreement; (viii) correct any defect, supply any omission or reconcile
any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall
deem desirable to carry it into effect; (ix) establish such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan; (x) determine
whether any Award will have Dividend Equivalents; (xi) determine whether, to what extent, and under
what circumstances cash, Shares, or other property payable with respect to an Award shall be
deferred either automatically or at the election of the Participant; provided that the Committee
shall take no action that would subject the Participant to a penalty tax under Section 409A of the
Code; and (xii) make any other determination and take any other action that the Committee deems
necessary or desirable for administration of the Plan.

(c) Decisions of the Committee shall be final, conclusive and binding on all persons or
entities, including the Company, any Participant, any stockholder and any Employee or any
Affiliate. A majority of the members of the Committee may determine its actions and fix the time
and place of its meetings.

(d) The Committee may delegate to a committee of one or more Directors of the Company or, to
the extent permitted by Applicable Law, to one or more officers or a committee of officers, the
authority to grant Awards to Employees and officers of the Company who are not Directors, Covered
Employees, or “officers,” as such term is defined by Rule 16a-1(f) of the Exchange Act, and to
cancel or suspend Awards to Employees and officers of the Company who are not Directors, Covered
Employees, or “officers,” as such term is defined by Rule 16a-1(f) of the Exchange Act.

ARTICLE V

OPTIONS

5.1 Grant of Options. Options may be granted hereunder to Participants either alone or in
addition to other Awards granted under the Plan. Any Option shall be subject to the terms and
conditions of this Article V and to such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall deem desirable.

5.2 Award Agreements. All Options granted pursuant to this Article V shall be evidenced by a
written Award Agreement in such form and containing such terms and conditions as the Committee
shall determine which are not inconsistent with the provisions of the Plan. Granting of an Option
pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any
individual who is granted an Option pursuant to this Article V may hold more than one Option
granted pursuant to the Plan at the same time.

 

 

 

5.3 Option Price. Other than in connection with Substitute Awards, the option price per each
Share purchasable under any Option granted pursuant to this Article V shall not be less than 100%
of the Fair Market Value of such Share on the date of grant of such Option. Other than pursuant to
Section 12.2, the Committee shall not be permitted to (a) lower the option price per Share of an
Option after it is granted, (b) cancel an Option when the option price per Share exceeds the Fair
Market Value of the underlying Shares in exchange for another Award (other than in connection with
Substitute Awards), and (c) take any other action with respect to an Option that may be treated as
a repricing under the rules and regulations of the New York Stock Exchange or other exchange or
quotation system on which the Shares are principally traded.

5.4 Option Period. The term of each Option shall be fixed by the Committee in its sole
discretion; provided that no Option shall be exercisable after the expiration of ten years from the
date the Option is granted.

5.5 Exercise of Options. Vested Options granted under the Plan shall be exercised by the
Participant or by a Permitted Assignee thereof (or by the Participant’s executors, administrators,
guardian, beneficiary, or legal representative, or Family Members, as may be provided in an Award
Agreement) as to all or part of the Shares covered thereby, by the giving of written notice of
exercise to the Company or its designated agent, specifying the number of Shares to be purchased,
accompanied by payment of the full purchase price for the Shares being purchased. Unless otherwise
provided in an Award Agreement, full payment of such purchase price shall be made at the time of
exercise and shall be made (a) in cash or by certified check or bank check or wire transfer of
immediately available funds, (b) with the consent of the Committee, by tendering previously
acquired Shares (either actually or by attestation, valued at their then Fair Market Value) that
have been owned for a period of at least six months (or such other period to avoid accounting
charges against the Company’s earnings), (c) with the consent of the Committee, by delivery of
other consideration (including, where permitted by law and the Committee, other Awards) having a
Fair Market Value on the exercise date equal to the total purchase price, (d) with the consent of
the Committee, by withholding Shares otherwise issuable in connection with the exercise of the
Option, (e) with the consent of the Committee, by delivery of a properly executed exercise notice
together with any other documentation as the Committee and the Participant’s broker, if applicable,
require to effect an exercise of the Option and delivery to the Company of the sale or other
proceeds (as permitted by Applicable Law) required to pay the exercise price, (f) through any other
method specified in an Award Agreement, or (g) any combination of any of the foregoing. In
connection with a tender of previously acquired Shares pursuant to clause (b) above, the Committee,
in its sole discretion, may permit the Participant to constructively exchange Shares already owned
by the Participant in lieu of actually tendering such Shares to the Company, provided that adequate
documentation concerning the ownership of the Shares to be constructively tendered is furnished in
form satisfactory to the Committee. The notice of exercise, accompanied by such payment, shall be
delivered to the Company at its principal business office or such other office as the Committee may
from time to time direct, and shall be in such form, containing such further provisions consistent
with the provisions of the Plan, as the Committee may from time to time prescribe. In no event may
any Option granted hereunder be exercised for a fraction of a Share. No adjustment shall be made
for cash dividends or other rights for which the record date is prior to the date of such issuance.

5.6 Form of Settlement. In its sole discretion, the Committee may provide, at the time of
grant, that the Shares to be issued upon an Option’s exercise shall be in the form of Restricted
Stock or other similar securities, or may reserve the right so to provide after the time of grant.

5.7 Incentive Stock Options. With respect to the Options that may be granted by the Committee
under the Plan, the Committee may grant Options intended to qualify as Incentive Stock Options to
any Employee of the Company or any Parent or Subsidiary, subject to the requirements of Section 422
of the Code. The Award Agreement of an Option intended to qualify as an Incentive Stock Option
shall designate the Option as an Incentive Stock Option Notwithstanding anything in Section 3.1 to
the contrary and solely for the purposes of determining whether Shares are available for the grant
of Incentive Stock Options under the Plan, the maximum aggregate number of Shares with respect to
which Incentive Stock Options may be granted under the Plan shall be 5,850,000 Shares.
Notwithstanding the provisions of Section 5.3, in the case of an Incentive Stock Option granted to
an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more
than ten percent of the voting power of all classes of capital stock of the Company or any Parent
or Subsidiary, the per Share exercise price will be no less than 110% of the Fair Market Value per
Share on the date of grant. Notwithstanding the provisions of Section 5.4, in the case of an
Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent of the voting power of all classes
of capital stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option will be five years from the date of grant or any shorter term specified in the Award
Agreement. Notwithstanding the foregoing, if the Shares subject to an Employee’s Incentive Stock
Options (granted under all plans of the Company or any Parent or Subsidiary), which become
exercisable for the first time during any calendar year, have a Fair Market Value in excess of
$100,000, the Options accounting for this excess will be not be treated as Incentive Stock Options.
For purposes of the preceding sentence, Incentive Stock Options will be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares will be determined as of
the time of grant.

 

 

 

5.8 Termination of Employment or Consulting Relationship or Directorship. If a Participant
holds exercisable Options on the date his or her Continuous Status as an Employee, Director or
Consultant terminates (other than because of termination due to Cause, death or Disability), the
Participant may exercise the Options that were vested and exercisable as of the date of termination
until the end of the original term or for a period of 90 days following such termination, whichever
is earlier (or such other period as is set forth in the Award Agreement or determined by the
Committee). If the Participant is not entitled to exercise his or her entire Option at the date of
such termination, the Shares covered by the unexercisable portion of the Option will revert to the
Plan, unless otherwise set forth in the Award Agreement or determined by the Committee. The
Committee may determine in its sole discretion that such unexercisable portion of the Option will
become exercisable at such times and on such terms as the Committee may determine in its sole
discretion. If the Participant does not exercise an Option within the time specified above after
termination, that Option will expire, and the Shares covered by it will revert to the Plan, except
as otherwise determined by the Committee.

5.9 Disability of Participant. If a Participant holds exercisable Options on the date his or
her Continuous Status as an Employee, Director or Consultant terminates because of Disability, the
Participant may exercise the Options that were vested and exercisable as of the date of termination
until the end of the original term or for a period of 36 months following such termination,
whichever is earlier (or such other period as is set forth in the Award Agreement or determined by
the Committee). If the Participant is not entitled to exercise his or her entire Option at the
date of such termination, the Shares covered by the unexercisable portion of the Option will revert
to the Plan, unless otherwise set forth in the Award Agreement or determined by the Committee. The
Committee may determine in its sole discretion that such unexercisable portion of the Option will
become exercisable at such times and on such terms as the Committee may determine in its sole
discretion. If the Participant does not exercise an Option within the time specified above after
termination, that Option will expire, and the Shares covered by it will revert to the Plan, except
as otherwise determined by the Committee.

5.10 Death of Participant. If a Participant holds exercisable Options on the date his or her
death, the Participant’s estate or a person who acquired the right to exercise the Option by
bequest or inheritance or under Section 12.3 may exercise the Options that were vested and
exercisable as of the date of death until the end of the original term or for a period of 36 months
following the date of death, whichever is earlier (or such other period as is set forth in the
Award Agreement or determined by the Committee). If the Participant is not entitled to exercise
his or her entire Option at the date of death, the Shares covered by the unexercisable portion of
the Option will revert to the Plan, unless otherwise set forth in the Award Agreement or determined
by the Committee. The Committee may determine in its sole discretion that such unexercisable
portion of the Option will become exercisable at such times and on such terms as the Committee may
determine in its sole discretion. If the Participant’s estate or a person who acquired the right
to exercise the Option by bequest or inheritance or under Section 12.3 does not exercise the Option
within the time specified above after the date of death, the Option will expire, and the Shares
covered by it will revert to the Plan, except as otherwise determined by the Committee.

ARTICLE VI

STOCK APPRECIATION RIGHTS

6.1 Grant and Exercise. The Committee may provide Stock Appreciation Rights either alone or in
addition to other Awards upon such terms and conditions as the Committee may establish in its sole
discretion.

6.2 Terms and Conditions. Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to
time by the Committee, including the following:

(a) Upon the exercise of a Stock Appreciation Right, the holder shall have the right to
receive the excess of (i) the Fair Market Value of one Share on the date of exercise or such other
amount as the Committee shall so determine at any time during a specified period before the date of
exercise over (ii) the grant price of the right on the date of grant, which, except in the case of
Substitute Awards or in connection with an adjustment provided in Section 12.2, shall not be less
than the Fair Market Value of one Share on such date of grant of the right.

 

 

 

(b) Upon the exercise of a Stock Appreciation Right, payment shall be made in whole Shares, or
cash to the extent permissible without penalty to the Participant under Section 409A of the Code.

(c) The provisions of Stock Appreciation Rights need not be the same with respect to each
recipient.

(d) The Committee may impose such other conditions or restrictions on the terms of exercise
and the exercise price of any Stock Appreciation Right, as it shall deem appropriate. In connection
with the foregoing, the Committee shall consider the applicability and effect of Section 162(m) of
the Code. Notwithstanding the foregoing provisions of this Section 6.2, but subject to Section
12.2, a Stock Appreciation Right shall not have (i) an exercise price less than Fair Market Value
on the date of grant, or (ii) a term of greater than ten years. In addition to the foregoing, but
subject to Section 12.2, the base amount of any Stock Appreciation Right shall not be reduced after
the date of grant. The Committee shall take no action under this Article VI that would subject a
Participant to a penalty tax under Section 409A of the Code.

6.3 Termination of Employment or Consulting Relationship or Directorship. If a Participant
holds exercisable Stock Appreciation Rights on the date his or her Continuous Status as an
Employee, Director or Consultant terminates (other than because of termination due to Cause, death
or Disability), the Participant may exercise the Stock Appreciation Rights that were vested and
exercisable as of the date of termination until the end of the original term or for a period of 90
days following such termination, whichever is earlier (or such other period as is set forth in the
Award Agreement or determined by the Committee). If the Participant is not entitled to exercise his
or her entire Stock Appreciation Right at the date of such termination, the Shares covered by the
unexercisable portion of the Stock Appreciation Right will revert to the Plan, unless otherwise set
forth in the Award Agreement or determined by the Committee. The Committee may determine in its
sole discretion that such unexercisable portion of the Stock Appreciation Right will become
exercisable at such times and on such terms as the Committee may determine in its sole discretion.
If the Participant does not exercise a Stock Appreciation Right within the time specified above
after termination, that Stock Appreciation Right will expire, and the Shares covered by it will
revert to the Plan, except as otherwise determined by the Committee.

6.4 Disability of Participant. If a Participant holds exercisable Stock Appreciation Rights on
the date his or her Continuous Status as an Employee, Director or Consultant terminates because of
Disability, the Participant may exercise the Stock Appreciation Rights that were vested and
exercisable as of the date of termination until the end of the original term or for a period of 36
months following such termination, whichever is earlier (or such other period as is set forth in
the Award Agreement or determined by the Committee). If the Participant is not entitled to
exercise his or her entire Stock Appreciation Right at the date of such termination, the Shares
covered by the unexercisable portion of the Stock Appreciation Right will revert to the Plan,
unless otherwise set forth in the Award Agreement or determined by the Committee. The Committee
may determine in its sole discretion that such unexercisable portion of the Stock Appreciation
Right will become exercisable at such times and on such terms as the Committee may determine in its
sole discretion. If the Participant does not exercise a Stock Appreciation Right within the time
specified above after termination, that Stock Appreciation Right will expire, and the Shares
covered by it will revert to the Plan, except as otherwise determined by the Committee.

6.5 Death of Participant. If a Participant holds exercisable Stock Appreciation Rights on the
date his or her death, the Participant’s estate or a person who acquired the right to exercise the
Stock Appreciation Rights by bequest or inheritance or under Section 12.3 may exercise the Stock
Appreciation Rights that were vested and exercisable as of the date of death until the end of the
original term or for a period of 36 months following the date of death, whichever is earlier (or
such other period as is set forth in the Award Agreement or determined by the Committee). If the
Participant is not entitled to exercise his or her entire Stock Appreciation Right at the date of
death, the Shares covered by the unexercisable portion of the Stock Appreciation Right will revert
to the Plan, unless
otherwise set forth in the Award Agreement or determined by the Committee. The Committee may
determine in its sole discretion that such unexercisable portion of the Stock Appreciation Right
will become exercisable at such times and on such terms as the Committee may determine in its sole
discretion. If the Participant’s estate or a person who acquired the right to exercise the Stock
Appreciation Right by bequest or inheritance or under Section 12.3 does not exercise the Stock
Appreciation Right within the time specified above after the date of death, the Stock Appreciation
Right will expire, and the Shares covered by it will revert to the Plan, except as otherwise
determined by the Committee.

 

 

 

ARTICLE VII

RESTRICTED STOCK AWARDS

7.1 Grants. Awards of Restricted Stock may be issued hereunder to Participants either alone or
in addition to other Awards granted under the Plan (a “Restricted Stock Award”). A Restricted Stock
Award shall be subject to restrictions imposed by the Committee covering a period of time specified
by the Committee (the “Restriction Period”). The provisions of Restricted Stock Awards need not be
the same with respect to each recipient. The Committee has absolute discretion to determine whether
any consideration (other than services) is to be received by the Company or any Affiliate as a
condition precedent to the issuance of Restricted Stock.

7.2 Award Agreements. The terms of any Restricted Stock Award granted under the Plan shall be
set forth in a written Award Agreement which shall contain provisions determined by the Committee
and not inconsistent with the Plan.

7.3 Rights of Holders of Restricted Stock. Except as otherwise provided in the Award
Agreement, beginning on the date of grant of the Restricted Stock Award and subject to execution of
the Award Agreement, the Participant shall become a shareholder of the Company with respect to all
Shares subject to the Award Agreement and shall have all of the rights of a shareholder, including
the right to vote such Shares and the right to receive distributions made with respect to such
Shares; provided, however that any Shares or any other property (other than cash) distributed as a
dividend or otherwise with respect to any Restricted Shares as to which the restrictions have not
yet lapsed shall be subject to the same restrictions as such Restricted Shares.

ARTICLE VIII

OTHER STOCK UNIT AWARDS

8.1 Other Stock Unit Awards. Other Awards of Shares and other Awards that are valued in whole
or in part by reference to, or are otherwise based on, Shares or other property (“Other Stock Unit
Awards”) may be granted hereunder to Participants, either alone or in addition to other Awards
granted under the Plan, and such Other Stock Unit Awards shall also be available as a form of
payment in the settlement of other Awards granted under the Plan. Other Stock Unit Awards shall be
paid in Shares or cash. Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees, Consultants and Directors to whom and the time or
times at which such Other Stock Unit Awards shall be made, the number of Shares to be granted
pursuant to such Awards, and all other conditions of the Awards. The provisions of Other Stock Unit
Awards need not be the same with respect to each recipient.

8.2 Terms and Conditions. Shares (including securities convertible into Shares) subject to
Awards granted under this Article VIII may be issued for no consideration or for such minimum
consideration as may be required by Applicable Law. Shares (including securities convertible into
Shares) purchased pursuant to a purchase right awarded under this Article VIII shall be purchased
for such consideration as the Committee shall determine in its sole discretion.

ARTICLE IX

PERFORMANCE AWARDS

9.1 Terms of Performance Awards. Performance Awards may be issued hereunder to Participants,
for no consideration or for such minimum consideration as may be required by Applicable Law, either
alone or in addition to other Awards granted under the Plan. The performance criteria to be
achieved during any Performance
Period and the length of the Performance Period shall be determined by the Committee upon the
grant of each Performance Award; provided, however, that a Performance Period shall not be shorter
than six months nor longer than five years. Except as provided in Article XI or as may be provided
in an Award Agreement, Performance Awards will be distributed only after the end of the relevant
Performance Period. Performance Awards may be paid in cash, Shares, other property, or any
combination thereof, in the sole discretion of the Committee at the time of payment. The
performance goals to be achieved for each Performance Period shall be conclusively determined by
the Committee and may be based upon the criteria set forth in Section 10.2. The amount of the Award
to be distributed shall be conclusively determined by the Committee. Performance Awards may be paid
in a lump sum or in installments following the close of the Performance Period.

 

 

 

ARTICLE X

CODE SECTION 162(M) PROVISIONS

10.1 Covered Employees. Notwithstanding any other provision of the Plan, if the Committee
determines at the time Restricted Stock, a Performance Award or an Other Stock Unit Award is
granted to a Participant who is, or is likely to be, as of the end of the tax year in which the
Company would claim a tax deduction in connection with such Award, a Covered Employee, then the
Committee may provide that this Article X is applicable to such Award.

10.2 Performance Criteria. If Restricted Stock, a Performance Award or an Other Stock Unit
Award is subject to this Article X, then the lapsing of restrictions thereon and the distribution
of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the
achievement of one or more objective performance goals established by the Committee, which shall be
based on the attainment of specified levels of or growth of one or any combination of the following
factors, or an objective formula determined at the time of the Award that is based on modified or
unmodified calculations of one or any combination of the following factors: net sales; pretax
income before or after allocation of corporate overhead and bonus; earnings per share; net income;
division, group or corporate financial goals; return on stockholders’ equity; return on assets;
attainment of strategic and operational initiatives; appreciation in and/or maintenance of the
price of the Shares or any other publicly-traded securities of the Company; market share; gross
profits; earnings before taxes; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization (“EBITDA”); an adjusted formula of EBITDA determined by the
Committee; economic value-added models; comparisons with various stock market indices; reductions
in costs, and/or return on invested capital of the Company or any Affiliate, division or business
unit of the Company for or within which the Participant is primarily employed. Such performance
goals also may be based solely by reference to the Company’s performance or the performance of an
Affiliate, division or business unit of the Company, or based upon the relative performance of
other companies or upon comparisons of any of the indicators of performance relative to other
companies. Unless the Committee specifies otherwise when it sets performance goals for an Award,
objective adjustments shall be made to any of the foregoing measures for items that will not
properly reflect the Company’s financial performance for these purposes, such as the write-off of
debt issuance costs, pre-opening and development costs, gain or loss from asset dispositions, asset
or other impairment charges, litigation settlement costs, and other non-routine items that may
occur during the Performance Period. Also, unless the Committee determines otherwise in setting
the performance goals for an Award, such performance goals shall be applied by excluding the impact
of (a) restructurings, discontinued operations and charges for extraordinary items, (b) an event
either not directly related to the operations of the Company or not within the reasonable control
of the Company’s management, or (c) a change in accounting standards required by generally accepted
accounting principles. Such performance goals shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or
any successor provision thereto, and the regulations thereunder.

10.3 Adjustments. Notwithstanding any provision of the Plan (other than Article XI), with
respect to any Restricted Stock, Performance Award or Other Stock Unit Award that is subject to
this Article X, the Committee may adjust downward, but not upward, the amount payable pursuant to
such Award, and the Committee may not waive the achievement of the applicable performance goals,
except in the case of the death or Disability of the Participant or the occurrence of a Change of
Control.

10.4 Determination of Performance. Prior to the vesting, payment, settlement or lapsing of any
restrictions with respect to any Restricted Stock, Performance Award or Other Stock Unit Award that
is subject to
this Article X, the Committee shall certify in writing that the applicable performance goals
have been achieved to the extent necessary for such Award to qualify as “performance based
compensation” within the meaning of Section 162(m)(4)(C) of the Code.

 

 

 

10.5 Restrictions. The Committee shall have the power to impose such other restrictions on
Awards subject to this Article X as it may deem necessary or appropriate to ensure that such Awards
satisfy all requirements for “performance-based compensation” within the meaning of Section
162(m)(4)(C) of the Code, or which are not inconsistent with such requirements.

ARTICLE XI

CHANGE OF CONTROL PROVISIONS

11.1 Impact of Change of Control. The terms of any Award may provide in the Award Agreement
evidencing the Award, or the Committee may determine in its discretion, that, upon a Change of
Control of the Company, (a) Options and Stock Appreciation Rights outstanding as of the date of the
Change of Control immediately vest and become fully exercisable, (b) restrictions and deferral
limitations on Restricted Stock lapse and the Restricted Stock become free of all restrictions and
limitations and become fully vested, (c) all Performance Awards shall be considered to be earned
and payable (either in full or pro-rata based on the portion of Performance Period completed as of
the date of the Change of Control), and any deferral or other restriction shall lapse and such
Performance Awards shall be immediately settled or distributed, (d) the restrictions and deferral
limitations and other conditions applicable to any Other Stock Unit Awards or any other Awards
shall lapse, and such Other Stock Unit Awards or such other Awards shall become free of all
restrictions, limitations or conditions and become fully vested and transferable to the full extent
of the original grant, and (e) such other additional benefits, changes or adjustments as the
Committee deems appropriate and fair shall apply, subject in each case to any terms and conditions
contained in the Award Agreement evidencing such Award. Notwithstanding any other provision of the
Plan, the Committee, in its discretion, may determine that, upon the occurrence of a Change of
Control of the Company, (a) each Option and Stock Appreciation Right shall remain exercisable for
only a limited period of time determined by the Committee (provided that they remain exercisable
for at least 30 days after notice of such action is given to the Participants), or (b) each Option
and Stock Appreciation Right outstanding shall terminate within a specified number of days after
notice to the Participant, and such Participant shall receive, with respect to each Share subject
to such Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value
of such Share immediately prior to the occurrence of such Change of Control over the exercise price
per share of such Option and/or Stock Appreciation Right; such amount to be payable in cash, in one
or more kinds of stock or property (including the stock or property, if any, payable in the
transaction) or in a combination thereof, as the Committee, in its discretion, shall determine.
Notwithstanding the foregoing and the provisions of Section 11.2, the Committee will take no action
that would subject any Participant to a penalty tax under Section 409A of the Code.

11.2 Assumption Upon Change of Control. Notwithstanding the foregoing, the terms of any Award
Agreement may also provide that, if in the event of a Change of Control the successor company
assumes or substitutes for an Option, Stock Appreciation Right, Share of Restricted Stock or Other
Stock Unit Award, then each outstanding Option, Stock Appreciation Right, Share of Restricted Stock
or Other Stock Unit Award shall not be accelerated as described in Sections 11.1(a), (b) and (d).
For the purposes of this Section 11.2, an Option, Stock Appreciation Right, Share of Restricted
Stock or Other Stock Unit Award shall be considered assumed or substituted for if following the
Change of Control the award confers the right to purchase or receive, for each Share subject to the
Option, Stock Appreciation Right, Restricted Stock Award or Other Stock Unit Award immediately
prior to the Change of Control, the consideration (whether stock, cash or other securities or
property) received in the transaction constituting a Change of Control by holders of Shares for
each Share held on the effective date of such transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
shares); provided, however, that if such consideration received in the transaction constituting a
Change of Control is not solely common stock of the successor company, the Committee may, with the
consent of the successor company, provide that the consideration to be received upon the exercise
or vesting of an Option, Stock Appreciation Right, Restricted Stock Award or Other Stock Unit
Award, for each Share subject thereto, will be solely common stock of the successor company
substantially equal in fair market value to the per share consideration received by holders of
Shares in the transaction constituting a Change of Control. The determination of such substantial
equality of value of consideration shall be made by the Committee in its sole discretion and its
determination shall be conclusive and binding. Any assumption or substitution of an Incentive Stock
Option will be
made in a manner that will not be considered a “modification” under the provisions of Section
424(h)(3) of the Code. Notwithstanding the foregoing, on such terms and conditions as may be set
forth in an Award Agreement, in the event of a termination of a Participant’s employment in such
successor company within a specified time period following such Change of Control, each Award held
by such Participant at the time of the Change of Control shall be accelerated as described in
Sections 11.1(a), (b) and (d) above.

 

 

 

ARTICLE XII

GENERALLY APPLICABLE PROVISIONS

12.1 Amendment and Modification of the Plan. The Board may, from time to time, alter, amend,
suspend or terminate the Plan as it shall deem advisable, subject to any requirement for
stockholder approval imposed by Applicable Law; provided that the Board may not amend the Plan in
any manner that would result in noncompliance with Rule 16b-3 of the Exchange Act; and further
provided that the Board may not, without the approval of the Company’s stockholders, amend the Plan
to (a) increase the number of Shares that may be the subject of Awards under the Plan (except for
adjustments pursuant to Section 12.2), (b) expand the types of awards available under the Plan, (c)
materially expand the class of persons eligible to participate in the Plan, (d) amend any provision
of Section 5.3, (e) increase the maximum permissible term of any Option specified by Section 5.4,
or (f) amend any provision of Section 3.2. In addition, no amendments to, or termination of, the
Plan (other than by reason of the failure of stockholders to approve the Plan in the manner set
forth in Section 13.12) shall in any way impair the rights of a Participant under any Award
previously granted without such Participant’s consent.

12.2 Adjustments. In the event of any merger, reorganization, consolidation, recapitalization,
dividend or distribution (whether in cash, shares or other property), stock split, reverse stock
split, spin-off or similar transaction or other change in corporate structure affecting the Shares
or the value thereof, such adjustments and other substitutions shall be made to the Plan and to
Awards as the Committee, in its sole discretion, deems equitable or appropriate, including such
adjustments in the aggregate number, class and kind of securities that may be delivered under the
Plan and, in the aggregate or to any one Participant, in the number, class, kind and option or
exercise price of securities subject to outstanding Awards granted under the Plan (including, if
the Committee deems appropriate, the substitution of similar options to purchase the shares of, or
other awards denominated in the shares of, another company) as the Committee may determine to be
appropriate in its sole discretion; provided, however, that the number of Shares subject to any
Award shall always be a whole number. Where an adjustment under this Section 12.2 is made to an
Incentive Stock Option, the adjustment will be made in a manner which will not be considered a
“modification” under the provisions of subsection 424(h)(3) of the Code.

12.3 Transferability of Awards. Except as provided below, and except as otherwise authorized
by the Committee in an Award Agreement, no Award, and no Shares subject to Awards that have not
been issued or as to which any applicable restriction, performance or deferral period has not
lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or
the laws of descent and distribution, and such Award may be exercised during the life of the
Participant only by the Participant or the Participant’s guardian or legal representative.
Notwithstanding the foregoing, to the extent that the Committee so authorizes in the Award
Agreement or otherwise, an Award other than an Incentive Stock Option may be assigned, in whole or
in part, during the Participant’s lifetime to one or more Family Members of the Participant. Rights
under the assigned portion may be exercised by the Family Member(s) who acquire a proprietary
interest in such Award pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the Award immediately before such assignment and shall be
set forth in such documents issued to the assignee as the Committee deems appropriate.

(a) Designation of Beneficiary. A Participant may file a written designation of a beneficiary
who is to receive any Awards that remain unexercised in the event of the Participant’s death. If a
Participant is married and the designated beneficiary is not the spouse, spousal consent will be
required for the designation to be effective. The Participant may change such designation of
beneficiary at any time by written notice to the Committee, subject to the above spousal consent
requirement.

(b) Effect of No Designation. If a Participant dies and there is no beneficiary validly
designated and living at the time of the Participant’s death, the Company will deliver such
Participant’s Awards to the executor or administrator of his or her estate, or if no such executor
or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such Awards to the
spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent
or relative is known to the Company, then to such other person as the Company may designate.

 

 

 

(c) Death of Spouse or Dissolution of Marriage. If a Participant designates his or her spouse
as beneficiary, that designation will be deemed automatically revoked if the Participant’s marriage
is later dissolved. Similarly, any designation of a beneficiary will be deemed automatically
revoked upon the death of the beneficiary if the beneficiary predeceases the Participant. Without
limiting the generality of the preceding sentence, the interest in Awards of a spouse of a
Participant who has predeceased the Participant or whose marriage has been dissolved will
automatically pass to the Participant, and will not be transferable by such spouse in any manner,
including but not limited to such spouse’s will, nor will any such interest pass under the laws of
intestate succession.

12.4 Termination of Employment. The Committee shall determine and set forth in each Award
Agreement whether any Awards granted in such Award Agreement will continue to be exercisable, and
the terms of such exercise, on and after the date that a Participant ceases to be employed by or to
provide services to the Company or any Affiliate (including as a Director), whether by reason of
death, disability, voluntary or involuntary termination of employment or services, or otherwise.
The date of termination of a Participant’s employment or services will be determined by the
Committee, which determination will be final.

12.5 Dividend Equivalents. Subject to the provisions of the Plan and any Award Agreement, the
recipient of an Award (including any deferred Award) may, if so determined by the Committee, be
entitled to receive, currently or on a deferred basis, cash, stock or other property dividends, or
cash payments in amounts equivalent to stock or other property dividends on Shares (“Dividend
Equivalents”) with respect to the number of Shares covered by the Award, as determined by the
Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall
be deemed to have been reinvested in additional Shares or otherwise reinvested.

ARTICLE XIII

MISCELLANEOUS

13.1 Tax Withholding. The Company shall have the right to make all payments or distributions
pursuant to the Plan to a Participant (or to the Participant’s executors, administrators, guardian,
beneficiary, or legal representative, or Family Members) (any such person, a “Payee”) net of any
applicable Federal, State and local taxes required to be paid or withheld as a result of (a) the
grant of any Award, (b) the exercise of an Option or Stock Appreciation Rights, (c) the delivery of
Shares or cash, (d) the lapse of any restrictions in connection with any Award, or (e) any other
event occurring pursuant to the Plan. The Company or any Affiliate shall have the right to withhold
from wages or other amounts otherwise payable to such Payee such withholding taxes as may be
required by law, or to otherwise require the Payee to pay such withholding taxes. If the Payee
shall fail to make such tax payments as are required, the Company or its Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to such Payee or to take such other action as may be necessary to satisfy such
withholding obligations. The Committee shall be authorized to establish procedures for election by
Participants to satisfy such obligation for the payment of such taxes by tendering previously
acquired Shares (either actually or by attestation, valued at their then Fair Market Value) that
have been owned for a period of at least six months (or such other period to avoid accounting
charges against the Company’s earnings), or by directing the Company to retain Shares (up to the
employee’s minimum required tax withholding rate) otherwise deliverable in connection with the
Award. If Shares acquired upon exercise of any Incentive Stock Option are disposed of in a
disposition that, under Section 422 of the Code, disqualifies the holder from the application of
Section 421(a) of the Code, the holder of the Shares immediately before the disposition will comply
with any requirements imposed by the Company in order to enable the Company to secure the related
income tax deduction to which it is entitled in such event.

13.2 Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the grant of an
Award hereunder shall confer upon any Employee, Consultant or Director the right to continue in the
employment or service of the Company or any Affiliate or affect any right that the Company or any
Affiliate may have to terminate the employment or service of (or to demote or to exclude from
future Awards under the Plan) any such Employee, Consultant or Director at any time for any reason.
The Company shall not be liable for the loss of existing or
potential profit from an Award granted in the event of termination of an employment or other
relationship. No Employee or Participant shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the
Plan.

 

 

 

13.3 Prospective Recipient. The prospective recipient of any Award under the Plan shall not,
with respect to such Award, be deemed to have become a Participant, or to have any rights with
respect to such Award, until and unless such recipient shall have executed an agreement or other
instrument evidencing the Award and delivered a copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.

13.4 Cancellation of Award. Notwithstanding anything to the contrary contained herein, all
outstanding Awards granted to any Participant may be canceled in the discretion of the Committee if
the Participant’s Continuous Status as an Employee, Director or Consultant is terminated for Cause,
or if, after the termination of the Participant’s Continuous Status as an Employee, Director, or
Consultant, the Committee determines that Cause existed before such termination.

13.5 Stop Transfer Orders. All certificates for Shares delivered under the Plan pursuant to
any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the provisions of this Plan, the rules, regulations and other requirements of
the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed,
and any applicable federal or state securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such restrictions.

13.6 Nature of Payments. All Awards made pursuant to the Plan are in consideration of services
performed or to be performed for the Company or any Affiliate, division or business unit of the
Company. Any income or gain realized pursuant to Awards under the Plan and any Stock Appreciation
Rights constitute a special incentive payment to the Participant and shall not be taken into
account, to the extent permissible under Applicable Law, as compensation for purposes of any of the
employee benefit plans of the Company or any Affiliate except as may be determined by the Committee
or by the Board or board of directors of the applicable Affiliate.

13.7 Other Plans. Nothing contained in the Plan shall prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval if such approval is required;
and such arrangements may be either generally applicable or applicable only in specific cases.

13.8 Severability. If any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part by a court of competent jurisdiction, such provision shall (a) be
deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid
and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any
other provision of the Plan or part thereof, each of which shall remain in full force and effect.
If the making of any payment or the provision of any other benefit required under the Plan shall be
held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction, such
unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit from
being made or provided under the Plan, and if the making of any payment in full or the provision of
any other benefit required under the Plan in full would be unlawful or otherwise invalid or
unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such
payment or benefit from being made or provided in part, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under the Plan.

13.9 Construction. All references in the Plan to “Section,” “Sections,” or “Article” are
intended to refer to the Section, Sections or Article, as the case may be, of the Plan. As used in
the Plan, the words “include” and “including,” and variations thereof, shall not be deemed to be
terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”

13.10 Unfunded Status of the Plan. The Plan is intended to constitute an “unfunded” plan for
incentive and deferred compensation. With respect to any payments not yet made to a Participant by
the Company, nothing contained herein shall give any such Participant any rights that are greater
than those of a general creditor of the Company. In its sole discretion, the Committee may
authorize the creation of trusts or other arrangements to meet the obligations created under the
Plan to deliver the Shares or payments in lieu of or with respect to Awards
hereunder; provided, however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.

 

 

 

13.11 Governing Law. The Plan and all determinations made and actions taken thereunder, to the
extent not otherwise governed by the Code or the laws of the United States, shall be governed by
the laws of the State of Delaware and construed accordingly.

13.12 Effective Date of Plan; Termination of Plan. The Plan shall be effective on the date of
its adoption by the Board, subject to the approval of the Plan, within 12 months thereafter, by
affirmative votes representing a majority of the votes cast under Applicable Laws at a duly
constituted meeting of the stockholders of the Company. After the adoption of this Plan by the
Board, Awards may be made, but all such Awards shall be subject to stockholder approval of this
Plan in accordance with the first sentence of this Section 13.12, and no Options or Stock
Appreciation Rights may be exercised prior to such stockholder approval of the Plan. If the
stockholders do not approve this Plan in the manner set forth in the first sentence of this Section
13.12, this Plan, and all Awards granted hereunder, shall be null and void and of no effect. Awards
may be granted under the Plan at any time and from time to time on or prior to the tenth
anniversary of the effective date of the Plan (unless the Board sooner suspends or terminates the
Plan under Section 12.1), on which date the Plan will expire except as to Awards then outstanding
under the Plan. Notwithstanding the foregoing, unless affirmative votes representing a majority of
the votes cast under Applicable Laws approve the continuation of Article X at the first duly
constituted meeting of the stockholders of the Company that occurs in the fifth year following the
later of i) the effective date of this Plan or ii) the then most recent re-approval of the
continuation of Article X of the Plan, no Awards other than Options or Stock Appreciation Rights
shall be made to Covered Employees following the date of such meeting. Except as set forth in the
third sentence of this Section 13.12, outstanding Awards shall remain in effect until they have
been exercised or terminated, or have expired.

13.13 Foreign Employees. Awards may be granted to Participants who are foreign nationals or
employed outside the United States, or both, on such terms and conditions different from those
applicable to Awards to Employees employed in the United States as may, in the judgment of the
Committee, be necessary or desirable in order to recognize differences in local law or tax policy.
The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize
the Company’s obligation with respect to tax equalization for Employees on assignments outside
their home country.

13.14 Effect on Prior Plans. On the approval of this Plan by the stockholders of the Company
in the manner set forth in Section 13.12, the Prior Plans shall be cancelled and no further grants
or awards shall be made under the Prior Plans. Grants and awards made under the Prior Plans before
the date of such cancellation, however, shall continue in effect in accordance with their terms.
Grants and awards made under the Individual Arrangements shall likewise continue in effect in
accordance with their terms.

13.15 Other Company Compensation Plans. Shares available for Awards under the Plan may be used
by the Company as a form of payment of compensation under other Company compensation plans, whether
or not existing on the date hereof. To the extent any Shares are used as such by the Company, such
Shares will reduce the then number of Shares available under Article III of the Plan for future
Awards.

13.16 Captions. The captions in the Plan are for convenience of reference only, and are not
intended to narrow, limit or affect the substance or interpretation of the provisions contained
herein.

ARTICLE XIV

OPTION EXCHANGE PROGRAM

14.1 Establishment of Option Exchange Program. Notwithstanding any other provision of the Plan
to the contrary, the Company, by action of the Compensation Committee of the Board, may effect an
option exchange program (the “Option Exchange Program”), through one or more option exchange offers
to be commenced within 12 months of the approval by the stockholders; provided, however, that in no
event may more than one offer to exchange be made for any outstanding option.

 

 

 

14.2 Procedure for Exchanging Options. Under the Option Exchange Program, Eligible Employees
will be offered the opportunity to exchange Eligible Options for new grants of options (each
an “Exchange Grant”), as follows:

(a) the Compensation Committee shall determine the exchange ratio for an exchange of Eligible
Options for Exchange Grants; provided, however, that the ratio shall be such that the fair value as
of either the start of the exchange offer or the date of the exchange (for financial accounting
purposes) of an Exchange Grant shall be no more than the fair value (for financial accounting
purposes) of the Eligible Options for which the Exchange Grant is exchanged,

(b) the per share exercise price of each Exchange Grant that is a stock option shall not be
less than the fair market value of a Share on the date of issuance of the Exchange Grant,

(c) an Exchange Grant shall not be vested or exercisable within one year after the date of the
exchange, and

(d) the expiration of each Exchange Grant will be the same as its corresponding Eligible
Option.

All other terms of the Exchange Grants shall be governed by the provisions of the Plan. Any
Eligible Employee may receive Exchange Grants where the Shares underlying such Exchange Grants
exceed either one percent of the number of Shares or one percent of the voting power outstanding
before the issuance of such Exchange Grants.

14.3 Definitions. For purposes of this Article,

(a) “Eligible Employees” means employees of the Company other than the members of the
Company’s Board of Directors and executive officers (as defined in Rule 3b-7 under the Securities
Exchange Act of 1934, as amended).

(b) “Eligible Option” means any option granted under the Plan where, as of the date specified
by the terms of the Exchange Offer (which date shall be not more than ten business days prior to
any exchange offer), the per share exercise price of such option is greater than the higher of (i)
the then-current 52-week high trading price of the Shares and (ii) 150% of the then-current price
of the Shares.

14.4 Additional Terms. Subject to the foregoing, the Compensation Committee of the Board of
Directors shall be permitted to determine additional terms, restrictions or requirements relating
to the Option Exchange Program that they deem necessary or advisable, consistent with the terms of
the Plan.

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