Document:

Exhibit 10.1

 

UAL CORPORATION

 

2006 MANAGEMENT EQUITY
INCENTIVE PLAN

 

1.             Purpose

 

The purposes of the UAL Corporation 2006 Management Equity Incentive
Plan (the “MEIP”) are to attract and retain outstanding individuals as officers
and key employees of UAL Corporation (the “Company”) and its subsidiaries in
connection with the Company’s emergence from bankruptcy, to further align their
interests with those of the Company’s shareholders through compensation that is
based on shares of the Company’s common stock, par
value $.01 per share (“Common Stock”), and to furnish incentives to such
persons by providing them opportunities to acquire shares of Common Stock on
advantageous terms as herein provided.

 

2.             Definitions

 

The following capitalized terms have the meanings set forth in this
Section:

 

(a)           Affiliate:  All persons with whom the Company would be
considered a single employer under Section 414(b) or 414(c) of
the Code.

 

(b)           Award:  An Incentive Stock Option, Nonqualified Stock
Option, Stock Appreciation Right, Restricted Share, or Other Share-Based Award
granted pursuant to the MEIP.

 

(c)           Board:  The Board of Directors of the Company.

 

(d)           Broker
Exercise Notice: A written notice pursuant to which a Participant, upon
exercise of an Option, irrevocably instructs a broker or dealer to sell a
sufficient number of shares or loan a sufficient amount of money to pay all or
a portion of the exercise price of the Option and/or any related withholding
tax obligations and remit such sums to the Company and directs the Company to
deliver stock certificates (by electronic means or otherwise) to be issued upon
such exercise directly to such broker or dealer or their nominee.

 

(e)           Cause:
One or more of:  (i) dishonesty,
fraud, misrepresentation, embezzlement or deliberate injury or attempted
injury, in each case related to the Company or any Subsidiary, (ii) any
unlawful or criminal activity of a serious nature, (iii) any intentional
and deliberate breach of a duty or duties that, individually or in the
aggregate, are material in relation to the Participant’s overall duties, or (iv) any
material breach of any confidentiality or noncompete agreement entered into
with the Company or any Subsidiary.

 

(f)            Change
in Control:  An event described in Section 13(a),
provided such event is a “change of control”, as such term is defined in Section 409A
of the Code.

 

(g)           Code:  The U.S. Internal Revenue Code of 1986, as
amended, or any successor law (including, when the context requires, all
regulations, interpretations and rulings issued thereunder).

 

(h)           Committee:  A committee of the Board, provided that, so
long as the Company has a class of its equity securities registered under Section 12
of the Exchange Act, such committee will consist solely of two or more members
of the Board who are “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act.  As of the
Effective Date, the Committee shall be the Human Resources Subcommittee of the
Board.

 

(i)            Common
Stock:  The Company’s common stock,
par value $.01 per share, issued on or after the Effective Date.

 

 

(j)            Company:   UAL Corporation, a Delaware corporation.

 

(k)           Continuity
Director:  An individual described in
Section 13(a).

 

(l)            Disability:
Disability of the Participant such as would entitle the Participant to receive
disability income benefits pursuant to the long-term disability plan of the
Company or Subsidiary then covering the Participant or, if no such plan exists
or is applicable to the Participant, the permanent and total disability of the
Participant within the meaning of Section 22(e)(3) of the Code;
provided, however, if distribution of an Award subject to Section 409A of
the Code is triggered by a Participant’s Disability, such term will mean that
the Participant is “disabled” as defined by Section 409A of the Code.

 

(m)          Effective
Date:  The date specified in Section 5.

 

(n)           Exchange
Act:  The U.S. Securities Exchange
Act of 1934, as amended, or any successor law.

 

(o)           Exercise
Price:  The purchase price per share
of Common Stock under the terms of an Incentive Stock Option, a Nonqualified
Stock Option, or a Stock Appreciation Right as determined pursuant to Section 6,
7 or 9, respectively.

 

(p)           Fair
Market Value:  Unless otherwise
determined by the Committee, the fair market value of the Company’s shares of
Common Stock as of any date shall be: (i) the mean between the lowest and
highest reported sale prices of the Common Stock on that date with respect to
the Common Stock, if the Common Stock is listed, admitted to unlisted trading
privileges, or reported on any national securities exchange or on the Nasdaq
Stock Market on such date (or, if no shares were traded on such day, as of the
next preceding day on which there was such a trade); or (ii) if the Common
Stock is not so listed, admitted to unlisted trading privileges, or reported on
any national exchange or on the Nasdaq National Market, the mean between the
lowest and highest reported sale prices as of such date, as reported by the
Nasdaq SmallCap Market, OTC Bulletin Board, the Bulletin Board Exchange (BBX)
or the National Quotation Bureaus, Inc., or other comparable service; or (iii) if
the Common Stock is not so listed or reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.

 

(q)           Incentive
Stock Option:  A stock option granted
pursuant to Section 6.  To the
extent that any Incentive Stock Option granted under the MEIP ceases for any
reason to qualify as an “incentive stock option” for purposes of Section 422
of the Code, such Incentive Stock Option will continue to be outstanding for
purposes of the MEIP but will thereafter be deemed to be a Nonqualified Stock
Option.

 

(r)            MEIP:  The UAL Corporation 2006 Management Equity
Incentive Plan, as may be amended from time to time.

 

(s)           Nonqualified
Stock Option:  A stock option granted
pursuant to Section 7.

 

(t)            Option:  An Incentive Stock Option or a Nonqualified
Stock Option.

 

(u)           Other
Share-Based Awards:  Awards granted
pursuant to Section 11.

 

(v)           Participant:  Officers and other employees of the Company
and its Subsidiaries as the Committee in its sole discretion may designate from
time to time to participate hereunder.

 

(w)          Previously
Acquired Shares:  Shares of Common
Stock that are already owned by the Participant or, with respect to any Award,
that are to be issued upon the grant, exercise or vesting of such Award.

 

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(x)            Restricted
Share: A restricted share of Common Stock granted pursuant to Section 10.

 

(y)           Retirement:  Termination of Employment at or after
attaining age 55 and completing ten (10) years of service with the Company
or an Affiliate, or Termination of Employment after attaining age 65.  With respect to a Participant who was in the
employ of a corporation or other organization whose business was acquired by
the Company or any Affiliate, if (and only to the extent) specifically provided
by the Committee, service will include the period of service such Participant
was in the employ of such corporation or other organization prior to such
acquisition).

 

(z)            Stock
Appreciation Right.  A stock
appreciation right granted pursuant to Section 9.

 

(aa)         Shareholder
Approval Date:  The date, if any, on
which the MEIP is approved by the Company’s stockholders, or is otherwise
treated as approved by the Company’s stockholders for purposes of Section 422
of the Code.

 

(bb)         Subsidiary:  United Air Lines, Inc., any other
corporation all of the outstanding voting stock of which is owned, directly or
indirectly, by the Company, and any other such entity, corporate or otherwise,
as the Company in its sole discretion from time to time determines to be a
Subsidiary.

 

(cc)         Termination
of Employment.  A complete severance
of an employee’s relationship with the Company and all Affiliates, for any
reason.  For any Award subject to Section 409A
of the Code, a Participant will be treated as having a Termination of
Employment only if such termination constitutes a “separation from service”
within the meaning of Section 409A of the Code.

 

3.             Shares Subject to the MEIP

 

(a)           Subject
to adjustment as provided in Section 19, the maximum number of shares of
Common Stock that will be available for issuance under the MEIP will be
9,825,000 shares of Common Stock.  The
shares available for issuance under the MEIP may, at the election of the
Committee, be either treasury shares or shares authorized but unissued, and, if
treasury shares are used, all references in the MEIP to the issuance of shares
will, for corporate law purposes, be deemed to mean the transfer of shares from
treasury.

 

(b)           Shares
of Common Stock that are issued under the MEIP or that are subject to
outstanding Awards will be applied to reduce the maximum number of shares of
Common Stock remaining available for issuance under the MEIP; provided,
however, that shares subject to an Award that lapses, expires, is forfeited
(including issued shares forfeited under a Restricted Stock Award) or for any
reason is terminated unexercised or unvested or is settled or paid in cash or
any form other than shares of Common Stock will automatically again become
available for issuance under the MEIP. 
To the extent that the exercise price of any Option and/or associated
tax withholding obligations are paid by tender or attestation as to ownership
of Previously Acquired Shares, or to the extent that such tax withholding
obligations are satisfied by withholding of shares otherwise issuable upon
exercise of the Option, only the number of shares of Common Stock issued net of
the number of shares tendered, attested to or withheld will be applied to
reduce the maximum number of shares of Common Stock remaining available for
issuance under the MEIP.

 

4.             Administration

 

(a)           All
Awards granted under the MEIP shall be granted by the Committee.  The MEIP shall be administered by the Committee,
including for all grants with respect to any “officer” as that term is defined
in Rule 16a-1(f) under the Exchange Act.  The Committee is authorized to interpret the
provisions of the MEIP and any Award agreement, to determine the terms and
conditions of Awards to be granted under the MEIP and to make all other
determinations necessary or advisable for the administration of the MEIP, but
only to the extent not contrary to or inconsistent with the 

 

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express provisions of the
MEIP.  Determinations, decisions and
actions of the Committee in connection with the construction, interpretation,
administration or application of the MEIP will be final, conclusive and binding
upon any Participant and any person claiming under or through the
Participant.  No member of the Committee
will be liable for any determination, decision or action made in good faith
with respect to the MEIP or any Awards granted under the MEIP.  To the extent consistent with Delaware corporate
law, the Committee may delegate to any officers of the Company the duties,
power and authority of the Committee under the MEIP pursuant to such conditions
or limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to
Participants who are subject to Section 16 of the Exchange Act.  The MEIP is not intended to modify or limit
the powers, duties or responsibilities of either the Board or the Committee as
set forth under the UAL Corporation Restated Certificate of Incorporation.

 

(b)           Notwithstanding
any other provision of the MEIP other than Section 19, the Committee may
not, without prior approval of the Company’s stockholders, seek to effect any
re-pricing of any previously granted, “underwater” Option by:  (i) amending or modifying the terms of
the Option to lower the exercise price; (ii) canceling the underwater
Option and granting either (A) replacement Options having a lower exercise
price or (B) Restricted Shares; or (iii) repurchasing the underwater
Options and granting new Awards under the MEIP. 
For purposes of this Section 4(b), an Option will be deemed to be “underwater”
at any time when the Fair Market Value of the Common Stock is less than the
exercise price of the Option.

 

(c)           In
addition to the authority of the Committee under Section 4(a) and
notwithstanding any other provision of the MEIP, the Committee may, in its sole
discretion, amend the terms of the MEIP or Awards with respect to Participants
resident outside of the United States or employed by a non-U.S. Subsidiary in
order to comply with local legal requirements, to otherwise protect the Company’s
or Subsidiary’s interests, or to meet objectives of the MEIP, and may, where
appropriate, establish one or more sub-plans (including the adoption of any
required rules and regulations) for the purposes of qualifying for
preferred tax treatment under foreign tax laws. 
The Committee shall have no authority, however, to take action pursuant
to this Section 4(c): (i) to reserve shares or grant Awards in excess
of the limitations provided in Section 3; (ii) to effect any
re-pricing in violation of Section 4(b); (iii) to grant Options
having an exercise price less than 100% of the Fair Market Value of one share of
Common Stock on the date of grant in violation of Sections 6(a) and 7(a);
or (iv) for which stockholder approval would then be required pursuant to Section 422
of the Code or the rules of any applicable national exchange or market on
which the Common Stock is listed or quoted.

 

(d)           Notwithstanding
anything in this Plan to the contrary, the Committee will determine whether an
Award is subject to the requirements of Section 409A of the Code and, if
determined to be subject to Section 409A of the Code, the Committee will
make such Award subject to such written terms and conditions determined
necessary or desirable to cause such Award to comply in form and operations
with the requirements of Section 409A of the Code.  It is intended that the Plan and all Awards
determined to be subject to the requirements of Section 409A of the Code
comply in form and operation with the requirements of Section 409A of the
Code.  In the event that any provision in
this MEIP shall be subject to more than one interpretation, such provision
shall be interpreted so as to comply with the requirements of Section 409A
of the Code.  In the event that it is not
possible to grant a particular Award that would comply with Section 409A,
it is intended that the Committee shall make an alternative Award that would
comply with Section 409A of the Code.

 

(e)           The
Company makes no warranties regarding the tax treatment to any person of any
Awards made pursuant to the Plan and each Participant will hold the Committee,
the Company, and its officers, directors, employees, agents, and advisors free
from any liability resulting from any tax position taken in good faith in
connection with the Plan.

 

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5.             Term of the MEIP

 

The MEIP shall be effective as of the effective date of the Company’s
confirmed plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code
(the “Effective Date”) and shall remain in effect as long as any Awards under
it remain outstanding.  No Award may be
granted under the MEIP after the tenth anniversary of the Effective Date, but
the term of any Award theretofore granted may extend beyond that date.

 

6.             Incentive Stock Options

 

Incentive Stock Options are intended to satisfy the requirements
applicable to “incentive stock options” described in Section 422(b) of
the Code or any successor provision. 
Incentive Stock Options may be granted under the MEIP only if the
Shareholder Approval Date is before the first anniversary of the Effective
Date.  Incentive Stock Options shall be
subject to the foregoing and the following terms and conditions and to such
other terms and conditions, not inconsistent therewith, as the Committee shall
determine:

 

(a)           The
Exercise Price shall not be less than the Fair Market Value of a share of
Common Stock on the date of grant of such Incentive Stock Option.  Options shall be exercisable at such time and
upon such terms and conditions, as may be determined by the Committee.

 

(b)           The
term of each Option shall be fixed by the Committee; in no event, however,
shall the period for exercising an Incentive Stock Option extend more than 10
years from the date of grant.

 

(c)           The
aggregate Fair Market Value (determined on the date of grant) of the shares of
Common Stock for which Incentive Stock Options are exercisable for the first
time in any calendar year (under all options plans of the Company and its
parent and Subsidiary corporations) for any Participant shall not exceed
$100,000.

 

(d)           Incentive
Stock Options shall not be transferable by a Participant other than by will or
the laws of descent and distribution and shall be exercisable, during the
Participant’s lifetime, only by the Participant.

 

(e)           Notwithstanding
clauses (a) and (b) above, the Exercise Price of Incentive Stock
Options granted to any individual who at the time of such grant owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its parent or Subsidiary corporations (within the
meaning of Section 422(b) of the Code) shall not be less than 110% of
the Fair Market Value of the Common Stock on the date of grant and the term of
any Incentive Stock Option granted to such individual shall not exceed five
years from the date of grant.

 

7.             Nonqualified Stock Options

 

Nonqualified Stock Options are not intended to satisfy the requirements
applicable to “incentive stock options” described in Section 422(b) of
the Code or any successor provision, and shall be subject to the foregoing and
the following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:

 

(a)           The
Exercise Price shall not be less than the Fair Market Value of a share of
Common Stock on the date of grant of such Nonqualified Stock Option.  Nonqualified Stock Options shall be
exercisable at such time and upon such terms and conditions, as may be
determined by the Committee.

 

(b)           The
term of each Nonqualified Stock Option shall be fixed by the Committee; in no
event, however, shall the period for exercising a Nonqualified Stock Option
extend more than 10 years from the date of grant.

 

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8.             Option Exercise and Payment Terms

 

(a)           The
total purchase price of the shares to be purchased upon exercise of an Option
will be paid entirely in cash (including check, bank draft, wire transfer or
money order); provided, however, that the Committee, in its sole discretion and
upon terms and conditions established by the Committee, may allow such payments
to be made, in whole or in part, by tender of a Broker Exercise Notice, by
tender, or attestation as to ownership, of Previously Acquired Shares that have
been held for the period of time necessary to avoid a charge to the Company’s
earnings for financial reporting purposes and that are otherwise acceptable to
the Committee, or by a combination of such methods. For purposes of such
payment, Previously Acquired Shares tendered or covered by an attestation will
be valued at their Fair Market Value on the exercise date.

 

(b)           An
Option may be exercised by a Participant in whole or in part from time to time,
subject to the conditions contained in the MEIP and in the agreement, notice or
schedule evidencing such Option, by delivery in person, by facsimile or
electronic transmission or through the mail of written notice of exercise to
the Company at its principal executive office and by paying in full the total
exercise price for the shares of Common Stock to be purchased in accordance
with clause (a) above.

 

9.             Stock Appreciation Rights

 

The Committee may, in its
discretion grant a Stock Appreciation Right to the holder of any Nonqualified
Stock Option granted hereunder.  In
addition, a Stock Appreciation Right may be granted independently of and
without relation to any Nonqualified Stock Option.  Stock Appreciation Rights shall be subject to
such terms and conditions consistent with the MEIP as the Committee shall
impose from time to time including the following:

 

(a)           A
Stock Appreciation Right may be granted with respect to a Nonqualified Stock
Option at the time of its grant or at any time thereafter.

 

(b)           Each
Stock Appreciation Right will entitle the Participant to elect to receive in
cash up to 100% of the appreciation in Fair Market Value of the shares of
Common Stock subject thereto up to the date the Stock Appreciation Right is
exercised.  In the case of a Stock
Appreciation Right issued in relation to a Nonqualified Stock Option, such
appreciation will be measured from the Nonqualified Stock Option’s Exercise
Price.  In the case of a Stock Appreciation
Right issued independently of any Nonqualified Stock Option, the appreciation
shall be measured from not less than the Fair Market Value of a share of Common
Stock on the date the Stock Appreciation Right is granted.

 

(c)           The
Committee shall have the discretion to satisfy a Participant’s right to receive
the amount of cash as determined in Section 9(b), in whole or in part, by
the delivery of shares of Common Stock valued as of the date of the Participant’s
exercise.

 

(d)           In
the event of the exercise of a Stock Appreciation Right, the number of shares
of Common Stock reserved for issuance hereunder (and the shares of Common Stock
subject to the related Nonqualified Stock Option, if any) shall be reduced by
the number of shares of Common Stock with respect to which the Stock
Appreciation Right is exercised.

 

10.           Restricted Shares

 

The Committee is hereby authorized to grant Awards of Restricted Shares
to Participants with the following terms and conditions:

 

(a)           During
the Restricted Period (as defined in Section 10(b)), Participant shall not
sell, assign, 

 

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exchange, transfer, pledge,
hypothecate or otherwise dispose of or encumber any of the Restricted
Shares.  Upon grant of the Award of
Restricted Shares, however, Participant shall thereupon be a stockholder with
respect to all shares of Common Stock subject to the Restricted Share Award and
shall have all the rights of a stockholder with respect to such shares of
Common Stock, including the right to vote such shares and to receive all
dividends and other distributions.

 

(b)           The
term “Restricted Period” shall mean any period as set by the Committee, not to
exceed ten years, ending upon such conditions as the Committee may deem
appropriate, including, without limitation, achievement of certain goals and/or
that the Participant has remained continuously employed by the Company or its
Subsidiaries for a certain period.

 

(c)           To
enforce the restrictions referred to in this Section 10, the Committee may
place a legend on the stock certificates referring to such restrictions and may
require the Participant, until the restrictions have lapsed, to keep the stock
certificates, together with duly endorsed stock powers, in the custody of the
Company or its transfer agent, or to maintain evidence of stock ownership,
together with duly endorsed stock powers, in a certificateless book-entry stock
account with the Company’s transfer agent.

 

11.           Other Share-Based Awards

 

The Committee, in its sole discretion, may grant to Participants such
other Awards including, without limitation, dividends and dividend equivalents
and other Awards that are valued in whole or in part by reference to, or are
otherwise based on the Fair Market Value of, shares of Common Stock.  Such Other Share-Based Awards shall be in
such form, and dependent on such conditions, as the Committee shall determine,
including, without limitation, the right to receive one or more shares of
Common Stock (or the equivalent cash value of such shares of Common Stock) upon
the completion of a specified period of service, the occurrence of an event
and/or the attainment of performance objectives. Other Share-Based Awards may
be granted alone or in addition to any other Awards granted under the MEIP.
Subject to the provisions of the MEIP, the Committee shall determine: (i) to
whom and when Other Share-Based Awards will be made; (ii) the number of
shares of Common Stock to be awarded under (or otherwise related to) such Other
Share-Based Awards; (iii) whether such Other Share-Based Awards shall be
settled in cash, shares of Common Stock or a combination of cash and shares of
Common Stock; and (iv) all other terms and conditions of such Other
Share-Based Awards (including, without limitation, the vesting provisions
thereof and provisions ensuring that all shares of Common Stock so awarded and
issued shall be fully paid and nonassessable).

 

12.           Effect of Termination of Employment 

 

(a)           Termination
of Employment Due to Death or Disability. 
In the event of a Participant’s Termination of Employment by reason of
death or Disability:

 

(i)            All
outstanding Options and Stock Appreciation Rights then held by the Participant
will become immediately exercisable in full and will remain exercisable for a
period of twelve (12) months after such termination (but in no event after the
expiration date of any such Option or Stock Appreciation Right);

 

(ii)           All
Restricted Shares then held by the Participant will become fully vested; and

 

(iii)          Any
conditions with respect to the issuance of shares of Common Stock pursuant to
Other Share-Based Awards which are based on a performance period will lapse
with respect to that portion of such shares equal to the ratio of the full
months of the Participant’s service within the performance period to the total
months of the performance period.  Unless
otherwise provided by the Committee, all other Other Share-Based Stock Awards
held by the Participant will terminate and be forfeited.

 

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(b)           Termination
of Employment Due to Retirement.  In
the event of a Participant’s Termination of Employment by reason of Retirement:

 

(i)            All
outstanding Options and Stock Appreciation Rights then held by the Participant
will become immediately exercisable in full and will remain exercisable in full
until the expiration date of any such Option or Stock Appreciation Right;

 

(ii)           All
Restricted Shares then held by the Participant that have not vested as of such
Termination of Employment will become fully vested; and

 

(iii)          Any
conditions with respect to the issuance of shares of Common Stock pursuant to
Other Share-Based Awards which are based on a performance period will lapse
with respect to that portion of such shares equal to the ratio of the full
months of the Participant’s service within the performance period to the total
months of the performance period.  Unless
otherwise provided by the Committee, all other Other Share-Based Stock Awards
held by the Participant will terminate and be forfeited.

 

(c)           Termination
of Employment for Reasons Other than Death, Disability or Retirement. In
the event of a Participant’s Termination of Employment for any reason other
than death, Disability or Retirement, or if a Participant is in the employ of
an Affiliate and the entity ceases to be an Affiliate of the Company (unless
the Participant continues in the employ of the Company or another Subsidiary
Affiliate):

 

(i)            All
outstanding Options and Stock Appreciation Rights then held by the Participant
will, to the extent exercisable as of such termination, remain exercisable in
full for a period of three (3) months after such termination (but in no
event after the expiration date of any such Option or Stock Appreciation
Right).  Options and Stock Appreciation
Rights not exercisable as of such termination will be forfeited and terminate;

 

(ii)           All
Restricted Shares then held by the Participant that have not vested as of such
Termination of Employment will be terminated and forfeited; and

 

(iii)          All
Other Share-Based Awards then held by the Participant will be terminated and
forfeited.

 

(d)           Modification
of Rights Upon Termination. 
Notwithstanding the other provisions of this Section 12, upon a
Participant’s Termination of Employment, the Committee may, in its sole
discretion (which may be exercised at any time on or after the date of grant,
including following such termination), cause Options and Stock Appreciation
Rights (or any part thereof) then held by such Participant to become or
continue to become exercisable and/or remain exercisable following such
Termination of Employment, and Restricted Shares and Other Share-Based Awards
then held by such Participant to vest and/or continue to vest or become free of
restrictions and conditions to issuance, as the case may be, following such
Termination of Employment, in each case in the manner determined by the
Committee; provided, however, that no Incentive Award may remain exercisable or
continue to vest for more than two years beyond the date such Incentive Award
would have terminated if not for the provisions of this Section 12(d) but
in no event beyond its expiration date. 
Modification of an Incentive Stock Option that is intended to qualify
under Section 422 of the Code will be limited to those modifications
permitted under Section 422 of the Code.

 

(e)           Effects
of Actions Constituting Cause. 
Notwithstanding anything in the MEIP to the contrary, in the event that
a Participant is determined by the Committee, acting in its sole discretion, to
have committed any action which would constitute Cause, irrespective of whether
such action or the Committee’s determination occurs before or after such
Participant’s Termination of Employment, all rights of the Participant under
the MEIP and any agreements evidencing an Incentive Award 

 

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then held by the Participant
shall terminate and be forfeited without notice of any kind.  The Company may defer the exercise of any
Option or Stock Appreciation Right, the vesting of any Restricted Shares or the
issuance of any shares of Common Stock pursuant to any Other Share-Based Award
for a period of up to forty-five (45) days in order for the Committee to make
any determination as to the existence of Cause.

 

(f)            Determination
of Termination of Employment.  Unless
the Committee otherwise determines in its sole discretion, a Participant’s
Termination of Employment will, for purposes of the MEIP, be deemed to have
occurred on the date recorded on the personnel or other records of the Company
or the Affiliate for which the
Participant provides employment, as determined by the Committee in its sole
discretion based upon such records.

 

13.           Change in Control

 

(a)           Change
in Control Defined.  A “Change in
Control” shall be deemed to have occurred if the event set forth in any one of
the following paragraphs shall have occurred:

 

(i)            any “person”
as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, any trustee or other fiduciary holding securities
under any employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes
during the 12-month period ending on the date of the most recent acquisition, including
pursuant to a tender or exchange offer for shares of Common Stock pursuant to
which purchases are made, the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting
power of the Company’s then outstanding securities, other than in a transaction
arranged or approved by the Continuity Directors prior to its occurrence;
provided, however, that if any such person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company’s then outstanding securities, a
Change in Control will be deemed to have occurred whether or not any or all of
such beneficial ownership is obtained in a transaction arranged or approved by
the Continuity Directors prior to its occurrence, and provided further that the
provisions of this subparagraph (i) shall not be applicable to a
transaction in which a corporation becomes the owner of all the Company’s
outstanding securities in a transaction which complies with the provisions of
subparagraph (iii) of this Section 13(a) (e.g., a reverse
triangular merger); or

 

(ii)           there is
consummated a merger or consolidation of the Company or any direct or indirect
Subsidiary of the Company with any other corporation that constitutes a “change
of control”  event under Section 409A
of the Code (other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger
or consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) more than 50% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding immediately
after such merger or consolidation, and in which no “person” (as defined under
subparagraph (a) above) acquires 50% or more of the combined voting power
of the securities of the Company or such surviving entity or parent thereof
outstanding immediately after such merger or consolidation); or

 

(iii)          the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an 

 

9

 

entity, more than 50% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to
such sale; or

 

(iv)          during any
12-month period the Continuity Directors cease
for any reason to constitute at least a majority of the Board.

 

For Purposes of this Section 13,
“Continuity Director” means any individual who was a member of the Board on the
Effective Date, while he or she is a member of the Board, and any individual
who subsequently becomes a member of the Board whose election or nomination for
election by the Company’s stockholders was approved by a vote of at least a
majority of the directors who are Continuity Directors (either by a specific
vote or by approval of the proxy statement of the Company in which such
individual is named as a nominee for director without objection to such
nomination).  For example, assuming that
twelve individuals comprise the entire Board as of the Effective Date, if a
majority of such individuals approved a proxy statement in which two different
individuals were nominated to replace two of the individuals who were members
of the Board as of the Effective Date, these two newly elected directors would
join the remaining ten directors who were members of the Board as of the
Effective Date as Continuity Directors. 
Similarly, if subsequently a majority of these directors approved a
proxy statement in which three different individuals were nominated to replace
three other directors who were members of the Board as of the Effective Date,
these three newly elected directors would also become, along with the other
nine directors, Continuity Directors. 
Individuals subsequently joining the Board could become Continuity
Directors under the principles reflected in this example.

 

(b)           Acceleration
of Vesting.  Without limiting the
authority of the Committee under Sections 4 and 19, if a Change in Control of
the Company occurs, then: (i) all Options and Stock Appreciation Rights
will become immediately exercisable in full and will remain exercisable in
accordance with their terms; (ii) all Restricted Shares will become
immediately fully vested and non-forfeitable; and (iii) any conditions to the
issuance of shares of Common Stock pursuant to Other Share-Based Awards will
lapse.

 

(c)           Cash
Payment.  If a Change in Control of
the Company occurs, then the Committee, if approved by the Committee in its
sole discretion either in an agreement evidencing an Award at the time of grant
or at any time after the grant of an Award, and without the consent of any
Participant affected thereby, may determine that: (i) some or all
Participants holding outstanding Options and/or Stock Appreciation Rights will
receive, with respect to some or all of the shares of Common Stock subject to
such Options or Stock Appreciation Rights, as of the effective date of any such
Change in Control of the Company, cash in an amount equal to the excess of the
Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options or Stock Appreciation Rights (or, in the event that there is no excess,
that such Options or Stock Appreciation Rights will be terminated); and (ii) some
or all Participants holding Other Share-Based Awards will receive, with respect
to some or all of the shares of Common Stock subject to such Other Share-Based
Awards, as of the effective date of any such Change in Control of the Company,
cash in an amount equal the Fair Market Value of such shares immediately prior
to the effective date of such Change in Control.

 

14.           Nontransferability of Awards

 

(a)           Except
as otherwise provided by the Committee, each Award granted under this MEIP
shall not be transferable other than by will or the laws of descent and
distribution, and shall be exercisable, during the Participant’s lifetime, only
by the Participant.

 

(b)           Upon
a Participant’s request, the Committee may, in its sole discretion, permit a
transfer of all or a portion of a Nonqualified Stock Option, other than for
value, to such Participant’s child, stepchild, 

 

10

 

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,
any person sharing such Participant’s household (other than a tenant or
employee), a trust in which any of the foregoing have more than fifty percent
of the beneficial interests, a foundation in which any of the foregoing (or the
Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than fifty percent of the voting interests.  Any permitted transferee will remain subject
to all the terms and conditions applicable to the Participant prior to the
transfer.  A permitted transfer may be
conditioned upon such requirements as the Committee may, in its sole
discretion, determine, including, but not limited to execution and/or delivery
of appropriate acknowledgements, opinion of counsel, or other documents by the
transferee.

 

15.           Other Provisions

 

The grant of any Award under the MEIP may also be subject to other
provisions (whether or not applicable to the grant of an Award to any other
Participant) as the Committee determines appropriate, including, without
limitation,

 

(a)           provisions
requiring that grants of Awards under the MEIP be evidenced by a written
agreement, notice or schedule (in form and substance as deemed appropriate
by the Committee);

 

(b)           provisions
concerning vesting;

 

(c)           restrictions
on resale or other disposition of shares of Common Stock delivered in
connection with such Awards;

 

(d)           such
provisions or, as determined by the Committee, modifications to outstanding
Awards as may be appropriate to comply with federal or state securities laws
and stock exchange requirements;

 

(e)           understandings
or conditions as to the Participant’s employment in addition to those specifically
provided for under the MEIP; and

 

(f)            other
provisions and terms not inconsistent with the MEIP.

 

16.           Tax Withholding

 

The Company is entitled to withhold the amount of taxes which the
Company in its discretion deems necessary to satisfy any applicable federal,
state and local tax withholding obligations arising from Awards granted under
the MEIP, or to make other appropriate arrangements with Participants to
satisfy such obligations.  The Committee
may, in its sole discretion and upon terms and conditions established by the
Committee, permit or require a Participant to satisfy, in whole or in part, any
withholding or employment-related tax obligation described in this Section by
electing to tender, or by attestation as to ownership of, Previously Acquired
Shares that have been held for the period of time necessary to avoid a charge
to the Company’s earnings for financial reporting purposes and that are
otherwise acceptable to the Committee, by delivery of a Broker Exercise Notice
or a combination of such methods.  For
purposes of satisfying a Participant’s withholding or employment-related tax
obligation, Previously Acquired Shares tendered or covered by an attestation
will be valued at their Fair Market Value.

 

17.           Limitation of Implied Rights

 

(a)           Neither
a Participant nor any other person shall, by reason of participation in the
MEIP or the grant of any Award hereunder, acquire any right in or title to any
assets, funds or property of the Company or any Subsidiary whatsoever,
including, without limitation, any specific funds, assets or other property
which the Company or any Subsidiary, in its sole discretion, may set aside in
anticipation of a liability under the MEIP. 
A Participant shall have only a contractual right to the 

 

11

 

shares of Common Stock or
amounts, if any, payable under the MEIP, unsecured by any assets of the Company
or any Subsidiary, and nothing contained in the MEIP shall constitute a
guarantee that the assets of the Company or any Subsidiary shall be sufficient
to pay any amounts to any person.

 

(b)           The
MEIP does not constitute a contract of employment, and selection as a
Participant will not give such Participant the right to be so retained in the
employ of the Company or any Subsidiary, nor any right or claim to any benefit
under the MEIP, unless such right or claim has specifically accrued under the
terms of the MEIP.  Except as otherwise
provided in the MEIP, no Award granted under the MEIP shall confer upon any
Participant any rights as shareholder of the Company prior to the date on which
the Participant fulfills all conditions for receipt of such rights.

 

18.           Successors and Assigns

 

The MEIP and any Award granted thereafter shall be binding on all
successors and assigns of the Company and a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy or
representative of the Participant’s creditors.

 

19.           Adjustment Provisions

 

In the event of a corporate transaction involving the Company
(including, without limitation, any Common Stock dividend, Common Stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
Committee may adjust Awards without enlargement or diminution to preserve the
benefits or potential benefits of the Awards intended to be made available
under the MEIP.  Action by the Committee
may include:  (i) adjustment of the
number and kind of shares which may be delivered under the MEIP; (ii) adjustment
of the number and kind of shares subject to outstanding Awards; (iii) adjustment
of the Exercise Price of outstanding Incentive Stock Options, Nonqualified
Stock Options and Stock Appreciation Rights; (iv) cancellation or
termination of outstanding Awards in exchange for a payment (in cash or
property) to the Participant of an amount determined by the Committee prior to
such provision to be equitable; (v) substitution of other awards or rights
in place of outstanding Awards on terms and conditions determined by the
Committee prior to such provision to be equitable; and (vi) any other
adjustments that the Committee determines prior to such provision to be equitable
or appropriate.

 

20.           Amendment or Termination

 

The Board may amend the MEIP from time to time or terminate the MEIP at
any time, but no such action, without the Participant’s consent, shall
adversely affect the rights of a Participant under any Award granted, and no
such amendments to the MEIP will be effective without approval of the Company’s
stockholders if: (i) stockholder approval of the amendment is then
required pursuant to Section 422 of the Code or the rules of any
national securities exchange or the Nasdaq Stock Market if the Common Stock is
listed or quoted thereon; or (ii) such amendment seeks to modify Section 4(b) or
13(b) hereof.

 

21.           Choice of Law

 

The validity, construction, interpretation, administration and effect
of the MEIP and any rules, regulations and actions relating to the MEIP will be
governed by and construed exclusively in accordance with the internal,
substantive laws of the State of Delaware, notwithstanding the conflicts of
laws principles of any jurisdictions.  
In the event of any conflict or inconsistency between the MEIP and any
agreement or notice evidencing an Award, the MEIP shall prevail.

 

12Exhibit 10.2

 

UAL CORPORATION

 

2006 DIRECTOR EQUITY INCENTIVE PLAN

 

1.             Description.

 

(a)           Purpose.  The purpose of the UAL Corporation 2006
Director Equity Incentive Plan (the “DEIP”) is to attract and retain the
services of experienced and knowledgeable non-employee directors by providing
such directors with greater flexibility in the form and timing of receipt of
compensation for their service on the Board of Directors and an opportunity to
obtain a greater proprietary interest in the Company’s long-term success and
progress through the receipt of equity-based awards, thereby aligning such
directors’ interests more closely with the interests of the Company’s
stockholders.  The DEIP is intended to be
unfunded for tax purposes.  For amounts
payable under the DEIP that constitute “deferred compensation” within the
meaning of Section 409A of the Code, the DEIP is intended to comply in
form and operation with the requirements of Section 409A of the Code.  The DEIP will be construed and administered
in a manner that is consistent with and gives effect to the foregoing.

 

(b)           Effective Date.  This DEIP shall be effective as of the
effective date of a confirmed Plan of reorganization under Chapter 11 of the
U.S. Bankruptcy Code (the “Effective Date”) and shall remain in effect as long
as any Periodic Awards or Accounts under it remain outstanding.

 

2.             Definitions.

 

The definitions
set forth in this Section 2 apply unless the context otherwise indicates.

 

(a)           Account.  “Account” means the bookkeeping account or
accounts maintained with respect to a Participant pursuant to Section 6.

 

(b)           Affiliate.  “Affiliate” means all persons with whom the
Company would be considered a single employer under Section 414(b) or
414(c) of the Code.

 

(c)           Annual Meeting Date.  “Annual Meeting Date” means the date on which
the annual meeting of the Company’s stockholders is held.

 

(d)           Beneficiary.  “Beneficiary” with respect to a Participant
is the person designated or otherwise determined under the provisions of Section 7(g) as
the distributee of benefits payable after the Participant’s death.  A person designated or otherwise determined
to be a Beneficiary under the terms of the DEIP has no interest in or right
under the DEIP until the Participant in question has died.  A person will cease to be a Beneficiary on
the day on which all benefits to which such person is entitled under the DEIP
have been distributed.

 

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

 

(f)            Broker Exercise
Notice.  “Broker Exercise Notice”
means a written notice pursuant to which a Participant, upon exercise of an
Option, irrevocably instructs a broker or dealer to sell a sufficient number of
shares or loan a sufficient amount of money to pay all or a portion of the
exercise price of the Option and/or any related withholding tax obligations and
remit such sums to the Company and directs the Company to deliver stock
certificates to be issued upon such exercise directly to such broker or dealer
or their nominee.

 

(g)           Cash Account.  “Cash Account” means an Account to which
deferred amounts are credited pursuant to Section 6(b) and earnings
thereon are credited pursuant to Section 6(d)(i) in U.S. dollars.

 

(h)           Cause.  “Cause” means dishonesty, fraud,
misrepresentation, embezzlement or deliberate injury or attempted injury, in
each case related to the Company or any subsidiary or any material breach of
any confidentiality agreement entered into with the Company or any subsidiary.

 

 

(i)            Change in Control.  A “Change in Control” means an event
described in Section 12, provided, such event is a “change of control” as
such term is defined in Section 409A of the Code.

 

(j)            Code.  “Code” means the Internal Revenue Code of
1986, as amended (including, when the context requires, all regulations,
interpretations and rulings issued thereunder). 
Any reference to a specific provision of the Code includes a reference
to that provision as it may be amended from time to time and to any successor
provision.

 

(k)           Committee.  A committee of the Board, provided that, so
long as the Company has a class of its equity securities registered under Section 12
of the Exchange Act, such committee will consist solely of two or more members
of the Board who are “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act.  As of the
Effective Date, the “Committee” is the Nominating / Governance Committee of the
Board or such other committee or person to whom administrative duties are
delegated pursuant to the provisions of Section 16(a), as the context
requires.

 

(l)            Company.  “Company” means UAL Corporation.

 

(m)          Continuity Director.  “Continuity Director” means any individual
who was a member of the Board on the Effective Date, while he or she is a
member of the Board, and any individual who subsequently becomes a member of
the Board whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors who
are Continuity Directors (either by a specific vote or by approval of the proxy
statement of the Company in which such individual is named as a nominee for
director without objection to such nomination). 
For example, assuming that twelve individuals comprise the entire Board
as of the Effective Date, if a majority of such individuals approved a proxy
statement in which two different individuals were nominated to replace two of
the individuals who were members of the Board as of the Effective Date, these
two newly elected directors would join the remaining ten directors who were
members of the Board as of the Effective Date. 
Similarly, if subsequently a majority of these directors approved a
proxy statement in which three different individuals were nominated to replace
three other directors who were members of the Board as of the Effective Date,
these three newly elected directors would also become, along with the other
nine directors, Continuity Directors. 
Individuals subsequently joining the Board could become Continuity
Directors under the principles reflected in this example.

 

(n)           DEIP.  “DEIP” means this UAL Corporation 2006
Director Equity Incentive Plan, as from time to time amended or restated.

 

(o)           Director Cash
Compensation.  “Director Cash
Compensation” means all cash amounts payable by the Company to a Qualified
Director for his or her services to the Company as a Qualified Director, (i) including,
without limitation, the retainers for service on the Board and fees
specifically paid for attending regular or special meetings of the Board and
Board committees or for acting as the chair of a committee, but (ii) excluding
expense allowances or reimbursements and insurance premiums.

 

(p)           Disability.  “Disability” means the Qualified Director, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, is unable to engage in any substantial
gainful activity; provided the Qualified Director is considered “disabled”
within the meaning of Section 409A of the Code.  Such Disability will be determined by the
Committee on the basis of medical evidence satisfactory to it.

 

(q)           Election Period.  “Election Period” means a period of one
calendar year, commencing on each January 1 and ending on each December 31.  In the case of a newly eligible Qualified
Director who commences participation in the DEIP following the Effective Date
and following the first day of the calendar year, the Election Period is such
partial calendar year described in Section 6(b)(ii).

 

(r)            Market Price.  “Market Price” means (i) the average of
the high and low sale prices of a Share during the regular trading session on a
specified date or, if Shares were not then traded, during the regular trading
session on the most recent prior date when Shares were traded, all as quoted in
The Wall Street Journal reports of 

 

2

 

New York Stock Exchange - Composite Transactions; or (ii) if the
Shares are not so listed, admitted to unlisted trading privileges, or reported
on any national exchange or on the Nasdaq National Market, the mean between the
lowest and highest reported sales prices as of such date, as reported by the
Nasdaq Small Cap Market, OTC Bulletin Board, the Bulletin Board Exchange (BBX)
or the National Quotation Bureaus, Inc., or other comparable service; or (iii) if
the Shares are not so listed or reported, such price as the committee
determines in good faith in the exercise of its reasonable discretion.

 

(s)           Option.  “Option” means an option to purchase Shares
granted to Qualified Directors from time to time pursuant to Section 8.

 

(t)            Participant.  “Participant” is a current or former
Qualified Director who has been granted an Option under the DEIP or to whose
Account amounts have been credited pursuant to Section 6 and who has not
ceased to be a Participant pursuant to Section 4(d).

 

(u)           Periodic Award.  “Periodic Award” means an award described in Section 5(c).

 

(v)           Plan Rules.  “Plan Rules” are rules, policies, practices
or procedures adopted by the Committee pursuant to Section 16(b), which
need not be reflected in a written instrument and may be changed at any time
without notice.

 

(w)          Previously Acquired
Shares.  “Previously Acquired Shares”
means Shares that are already owned by the Participant that have been held for
the period of time necessary to avoid a charge to the Company’s earnings for
financial reporting purposes and that are otherwise acceptable to the
Committee.

 

(x)            Prime Rate.  “Prime Rate” means the Bloomberg Prime Rate
Composite (“Prime Rate by Country US—BB Comp”).

 

(y)           Qualified Director.  “Qualified Director” means an individual who
is a member of the Board and who is not an employee of the Company or any
Affiliate.

 

(z)            Qualified
Retirement.  A Qualified Director has
a “Qualified Retirement” if he or she attained age 60 and has completed five (5) or
more continuous years of service as a member of the Board.

 

(aa)         Restricted Stock.  “Restricted Stock” has the meaning provided
in Section 10.

 

(bb)         Securities Act.  “Securities Act” means the Securities Act of
1933, as amended.  Any reference to a
specific provision of the Securities Act includes a reference to that provision
as it may be amended from time to time and to any successor provision.

 

(cc)         Separation from
Service.  “Separation from Service”
means a termination of a Participant’s service with the Company and all
Affiliates as a director and non-employee consultant/advisor, provided such
termination constitutes a “separation from service” within the meaning of Section 409A
of the Code, or such other change in the Participant’s relationship with the
Company and all Affiliates that constitutes a “separation from service” within
the meaning of Section 409A of the Code.

 

(dd)         Share Account.  “Share Account” means an Account to which
credits are made pursuant to Section 6(a), or deferred amounts are
credited pursuant to Section 6(b) and/or 6(c) and earnings are
credited pursuant to Section 6(d)(ii) in Share Units.

 

(ee)         Share Unit
Compensation.  “Share Unit
Compensation” means the compensation paid to a Qualified Director in the form
of credits to his or her Share Account pursuant to Section 6(a).

 

(ff)           Share Units.  “Share Units” means a unit credited to a
Participant’s Share Account at the discretion of the Board pursuant to Section 6
that represents the economic equivalent of one Share.  A Participant will not have 

 

3

 

any rights as a stockholder with respect to Share Units until the
Participant is distributed Shares pursuant to Section 7.

 

(gg)         Shares.  “Shares” means shares of common stock of the
Company $.01 par value per share issued on or after the Effective Date, or such
other class or kind of shares or other securities as may be applicable pursuant
to Section 3.

 

(hh)         Stock Appreciation
Rights.  “Stock Appreciation Rights”
has the meaning provided in Section 9.

 

(ii)           Unforeseeable
Emergency.  “Unforeseeable Emergency”
means a severe financial hardship to the Participant resulting from an illness
or accident of the Participant, or his or her spouse or dependent (within the
meaning of Section 152(a) of the Code), loss of the Participant’s
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Participant
but only if and to the extent it constitutes an “unforeseeable emergency”
within the meaning of Section 409A of the Code.  The existence of an unforeseeable emergency
will be determined by the Committee.

 

3.             Shares
Subject to Plan.

 

(a)           Maximum Number of
Shares Available.  Subject to
adjustment as provided in paragraph (c), the maximum number of Shares that will
be available for issuance or distribution under the DEIP will be 175,000
Shares.  The Shares available for
issuance or distribution under the DEIP may, at the election of the Committee,
be either treasury shares or shares authorized but unissued.  If treasury shares are used, all references
in the DEIP to the issuance or distribution of Shares will, for corporate law
purposes, be deemed to mean the transfer of shares from treasury.

 

(b)           Accounting.  Shares that are issued or distributed under
the DEIP or that are subject to outstanding Periodic Awards granted or Share
Units credited under the DEIP will be applied to reduce the maximum number of Shares
remaining available for issuance or distribution under the DEIP.  Any Shares that are subject to a Periodic
Award granted under the DEIP that lapses, expires, is forfeited or for any
reason is terminated unexercised and any Shares that are subject to Share Units
in a Share Account that are forfeited will automatically again become available
for issuance or distribution under the DEIP. 
To the extent that the exercise price of any Option or Stock
Appreciation Right granted under the DEIP is paid by attestation as to
ownership of Previously Acquired Shares, only the number of Shares issued net
of the number of Shares attested to will be applied to reduce the maximum
number of Shares remaining available for issuance under the DEIP.

 

(c)           Adjustment to Shares
and Share Units.  In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other similar change in the Company’s corporate structure or the Shares, the
Board (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation) will make
appropriate adjustment (which determination will be conclusive) as to the
number and kind of securities or other property (including cash) available for
issuance or distribution under the DEIP and as to the number and kind of Share
Units credited to Share Accounts and the number and kind of securities as to
which Periodic Awards are to be granted and, in order to prevent dilution or
enlargement of the rights of Participants holding Options or Stock Appreciation
Rights, the number, kind and exercise price of securities subject to
outstanding Options and Stock Appreciation Rights.

 

4.             Participation.

 

(a)           Eligibility.

 

(i)            Each
individual who is a Qualified Director who is entitled to Share Unit
Compensation at any time during a calendar year is eligible to have such credit
made to his or her Share Account pursuant to Section 6(a).

 

4

 

(ii)           Each
individual who is a Qualified Director on the first day of a calendar year is
eligible to make deferral elections pursuant to Section 6(b) and/or 6(c) with
respect to such calendar year.  An
individual who becomes a Qualified Director after the first day of a calendar
year is eligible to make a deferral election pursuant to Section 6(b) with
respect to the remainder of such calendar year. 
Each individual who has made a valid election pursuant to Section 6(b) or
6(c) and is a Qualified Director at any time during a calendar quarter
with respect to which a credit is made pursuant to Section 6(b) or 6(c) shall
have such credit made to his or her Account pursuant to such Section 6(b) or
6(c), as the case may be.

 

(iii)          Each
Qualified Director is eligible to receive Periodic Awards pursuant to Section 5(c).

 

(b)           Ceasing to be
Eligible.  An individual who ceases
to be a Qualified Director is not eligible to receive any subsequent Periodic
Awards pursuant to Section 5(c) or to make any subsequent elections
or receive further credits pursuant to Section 6, other than such credits
relating to the period prior to such cessation and, if applicable, earnings credits
under Section 6.

 

(c)           Condition of
Participation.  Each Participant, as
a condition of participation in the DEIP, is bound by all the terms and
conditions of the DEIP and the Plan Rules, including but not limited to the
reserved right of the Company to amend or terminate the DEIP, and must furnish
to the Committee such pertinent information, and execute such election forms
and other instruments, as the Committee or Plan Rules may require by such
dates as the Committee or Plan Rules may establish.

 

(d)           Termination of
Participation.  An individual will
cease to be a Participant as of the date on which he or she is no longer a
Qualified Director and his or her outstanding Periodic Awards have been
exercised, cancelled, vested or expired and his or her entire Account balances
have been distributed.

 

5.             Benefits.

 

(a)           Components of
Director Compensation.  Qualified
Directors who are eligible under Section 4(a) may receive Periodic
Awards, Share Unit Compensation and Director Cash Compensation as part of their
compensation for services rendered as directors of the Company, all as
determined by the Board from time to time. 
A Qualified Director may defer the receipt of some or all of his or her
Director Cash Compensation through credits to his or her Cash Account and/or
Share Account, and may defer the receipt of Shares that he or she would
otherwise be issued under a Periodic Award through credits to his or her Share
Account.

 

(b)           Share Unit
Compensation.  At the discretion of
the Board, each Qualified Director may receive Share Unit Compensation, which
is additional annual compensation in the form of credits to the Qualified
Director’s Share Account.

 

(c)           Periodic Awards.  At the discretion of the Board, a Qualified
Director may be granted from time to time one or more equity-based awards,
which may include (i) Options, (ii) Restricted Stock, (iii) 
Stock Appreciation Rights and/or (iv) Shares.  The terms of Options, Restricted Stock and
Stock Appreciation Rights are set forth in Sections 8, 9 and 10, respectively.

 

(d)           Deferral Accounts.  For each Participant, the Committee will
establish and maintain a Cash Account and a Share Account to evidence deferred
amounts credited with respect to the Participant pursuant to Section 6.  Each Participant will always have a
fully-vested, nonforfeitable right to that portion of his or her Account
credited under Sections 6(a), 6(b) and 6(c) and the earnings credits
thereon.  A Participant’s interest in
Share Units reflecting the deferral of receipt of Shares subject to vesting
will be nonforfeitable at the times and in the amounts provided under the
vesting requirements established in the Periodic Award.

 

(e)           Receipt of Shares in
Lieu of Director Cash Compensation. 
A Qualified Director may elect to forego receipt of all or any portion
of the Director Cash Compensation payable to him or her for any period and
instead receive whole Shares of equivalent value to the Director Cash
Compensation so foregone.  An election
under this Section 5(e) will be valid only if it is in writing,
signed by the Qualified Director, filed with the Committee before receipt of
the Director Cash Compensation and otherwise in accordance with Plan
Rules.  Once in effect, an 

 

5

 

election under this Section 5(e) shall remain in effect until
it is revised or revoked in accordance with Plan Rules.  The number of whole Shares to be
distributed to the Qualified Director by reason of an election under this Section 5(e) shall
be equal to the quotient of (i) the dollar amount of the Director Cash
Compensation the Qualified Director has elected to have paid to him or her in
Shares, divided by (ii) the Market Price as of the date on which the
Director Cash Compensation would otherwise have been payable to the Qualified
Director.  The Market Price of any
fractional Share shall be paid to the Qualified Director in cash.

 

6.             Participant
Deferral Accounts.

 

(a)           Share Unit
Compensation.  The amount of the
Qualified Director’s Share Unit Compensation to be credited to his or her Share
Account will be expressed in U.S. dollars and determined from time to time by
the Board.  A Qualified Director’s Share
Account will be credited pursuant to this section on the last day of each
calendar quarter with the number of whole and fractional Share Units equal to
the quotient of:  (i) the dollar
amount of the Share Unit Compensation allocated to such full calendar quarter,
divided by (ii) the Market Price on the last day of the calendar
quarter.  If a Qualified Director has not
served for the entire calendar quarter for which the Share Unit Compensation
relates, the amount credited to the Qualified Director’s Share Account will be
based on the dollar amount of the Share Unit Compensation earned by the
Qualified Director during the portion of the calendar quarter for which he or
she served.

 

(b)           Deferral of Director
Cash Compensation.  Elective
deferrals of Director Cash Compensation will be made in accordance with the
following rules:

 

(i)            Election
to Defer Director Cash Compensation. 
Each Qualified Director may elect, in accordance with this Section 6(b) and
Plan Rules, to defer the receipt of all or a portion of his or her Director
Cash Compensation relating to services performed and Director Cash Compensation
earned during an Election Period.  The
Committee will credit his or her Cash Account and/or Share Account with the
amount of compensation the Qualified Director elected to defer.  Any such deferral election will automatically
apply to the Participant’s Director Cash Compensation, as the amount of such
Director Cash Compensation is adjusted from time to time.

 

(ii)           Time
of Filing Election.  A deferral
election pursuant to this Section 6(b) will not be effective unless
it is made on a properly completed election form received by the Committee
before the first day of the Election Period to which the deferral election
relates or, in the case of an individual who first becomes a Qualified Director
on or after the first day of the calendar year, within 30 days after the date
such individual becomes a Qualified Director. 
Any election made under this clause (ii) will apply only to
Director Cash Compensation payable for services performed after the effective
date of the election, with a proportionate reduction (determined on the basis
of calendar days) in any payment due for a service period that includes
services performed before the effective date of the election.

 

(iii)          Allocation
of Deferral.  In conjunction with
each deferral election made pursuant to this Section 6(b), a Qualified
Director shall elect, in accordance with and subject to Plan Rules, how the
deferral is to be allocated (in increments of ten percent only) among his or
her Cash Account and Share Account.  The
sum of such percentages must not exceed 100 percent.  Any portion of the deferral for which no
election is made will be allocated to the Qualified Director’s Cash Account.

 

(iv)          Credits.  Director Cash Compensation deferred pursuant
to this Section 6(b) will be credited to a Qualified Director’s Cash
Account and/or Share Account, as elected, as of the last day of each calendar
quarter.  Such credits to the Qualified
Director’s Cash Account will be in United States dollars equal to the amount of
the deferral allocated to such Account. 
Credits to a Qualified Director’s Share Account will be the number of
whole and fractional Share Units determined by dividing the United States
dollar amount of the deferral allocated to the Share Account by the Market
Price of a Share on the last day of the calendar quarter.

 

(v)           Succeeding
Election Periods.  Unless the
election is revoked pursuant to clause (vii), a deferral election made pursuant
to this section will remain in effect until the last day of the calendar
year in which it is revoked or modified in accordance with Plan Rules.  The Qualified Director may change his or 

 

6

 

her deferral
by delivering a new deferral election not later than the day before the first
Election Period to which the new deferral election relates.

 

(vi)          Irrevocability.  Except as provided in clause (vii), a
deferral election made pursuant to this Section 6(b) for an Election
Period is irrevocable after the latest date by which the deferral election is
required to be given to the Committee for such Election Period.

 

(vii)         Revocation.  Any deferral election made under Section 6(b) by
a Participant who receives a distribution pursuant to Section 7(b) will
be revoked to the extent the Participant satisfies the requirements of Section 7(b) and
Plan Rules, and no further amounts will be deferred until the Qualified
Director makes a new, effective deferral election under Section 6(b).

 

(viii)        Code
Section 409A.  An election, or
revocation of an election, under this Section 6(b) shall be permitted
only if it complies with the requirements of Section 409A of the Code.

 

(c)           Deferral of
Restricted Stock or Shares Issuable Under Periodic Awards.  Each Qualified Director may elect, in
accordance with this Section 6(c) and Plan Rules, to defer receipt of
all or a portion of the Shares or Restricted Stock issuable pursuant to a
Periodic Award granted under the DEIP, other than on account of an Option or
Stock Appreciation Right.

 

(i)            Time
of Filing Election.  A deferral
election made pursuant to this Section 6(c) will not be effective
unless it is made on a properly completed election form received by the
Committee before the first day of the Election Period to which the deferral
election relates or, in the case of an individual who first becomes a Qualified
Director on or after the first day of the Election Period, within 30 days after
the date such individual becomes a Qualified Director.  Any election made under this clause applies
to the Qualified Director’s receipt of Restricted Stock or Shares relating to
services performed after the effective date of the election.

 

(ii)           Credits.  Deferral of the receipt of Shares pursuant to
this Section 6(c) will be credited to the Qualified Director’s Share
Account as of the day of the issuance of the Award
of Restricted Stock or Shares, as the case may be.   The number of Share Units credited to the
Qualified Director’s Share Account will equal the number of Shares otherwise
issuable following the grant of the Periodic Award of Restricted Stock or
Shares, as the case may be.

 

(iii)          Succeeding
Election Periods.  Unless the
election is revoked pursuant to clause (v), a deferral election made pursuant
to this section will remain in effect until the last day of the calendar
year in which it is revoked or modified in accordance with Plan Rules.  The Qualified Director may change his or her
deferral by delivering a new deferral election not later than the day before
the first Election Period to which the new deferral election relates.

 

(iv)          Irrevocability.  Except as provided in clause (v), a deferral
election made pursuant to this Section 6(c) that is in effect for an
Election Period is irrevocable after the latest date by which the deferral
election is required to be given to the Committee for such Election Period.

 

(v)           Revocation.  Any deferral election made under Section 6(c) by
a Participant who receives a distribution pursuant to Section 7(b) will
be revoked to the extent the Participant satisfies the requirements of Section 7(b) and
Plan Rules, and no further amounts will be deferred until the Qualified
Director makes a new, effective deferral election under Section 6(c).

 

(vi)          Code
Section 409A.  An election, or
revocation of an election, under this Section 6(c), shall be permitted
only if it complies with the requirements of Section 409A of the Code.

 

7

 

(d)           Earnings Credits.

 

(i)            Cash
Accounts.  As of the last day of each
calendar quarter, and before any credits have been made pursuant to Section 6
on such date, a Participant’s Cash Account will be credited with interest,
calculated on the balance in the Cash Account as of the last day of the
immediately preceding calendar quarter at the Prime Rate in effect on such
date.

 

(ii)           Share
Accounts.  A Participant’s Share
Account will be credited as of the date on which dividends are paid on Shares
with that number of whole and fractional Share Units determined by dividing the
dollar amount of the dividends that would have been payable to the Participant
if the number of Share Units credited to the Participant’s Share Account on the
record date for such dividend payment had then been Shares registered in the
name of such Participant by the Market Price of a Share on the date as of which
the credit is made.

 

7.             Distributions.

 

(a)           Distribution of
Accounts Following Separation from Service.

 

(i)            Distribution
Elections.

 

(A)          Initial
Election.  Subject to Sections 7(b),
7(c) and 7(h), a Participant may elect, in accordance with Plan Rules and
subject to Section 409A of the Code, the manner of distribution (as described
in clause (ii)) or the time of distribution (as defined in clause (iv)),
provided such election, as it relates to deferrals under Section 6(b) or
(c), is made no later than the date of the related deferral election and, as it
relates to Share Unit Compensation credited under Section 6(a), is made no
later than the close of the calendar year preceding the calendar year during
which the services giving rise to such compensation are performed, or, in the
case of an individual who first becomes a Qualified Director on or after the
first day of the calendar year, within 30 days after the date such individual
becomes a Qualified Director.

 

(B)           Redeferral
Election.  A Participant may elect to
change the time and manner of his or her distribution provided (X) the
Participant elects, in accordance with Plan Rules and subject to Section 409(A) of
the Code, at least twelve (12) months prior to the date that the Participant’s
first scheduled payment was to begin, (Y) the election may not take effect
until at least 12 months after the date on which the election is made, and (Z)
the election defers the first payment at least five (5) years beyond the
date payment otherwise would have been made.

 

(ii)           Form of
Distribution.  A Participant’s Cash
Account and Share Account will be distributed as provided in this Section 7(a) in
a lump sum payment unless the Participant has elected, as provided in Section 7(a)(i),
to receive his or her distribution in the form of annual installment payments
for a period of not more than 10 years.

 

(iii)          Medium
of Distribution.  Any distribution
from a Participant’s Cash Account will be made in cash only.  Subject to Section 14, any distribution
from a Participant’s Share Account will be made in whole Shares only, rounded
up to the next whole Share.

 

(iv)          Time
of Distribution.  Distribution to a
Participant will be made (if in a lump sum) or will commence (if in
installments) as soon as administratively practicable after the January 1 immediately following the date the Participant experiences a
Separation from Service unless the Participant has elected to defer
commencement of distribution until a future date as provided in Section 7(a)(i);
provided that if a lump sum distribution from a Participant’s Share Account
would otherwise be made after the record date for a dividend but before the
payment date for such dividend, the distribution of the dividend will be made
as soon as administratively practicable after the earnings credits has been
made to the Share Account pursuant to Section 6(d) on the payment
date of the dividend.

 

8

 

(v)           Amount
of Distribution for Cash Account.

 

(A)          Lump
Sum.  The amount of a lump sum
payment from a Participant’s Cash Account will be equal to the balance of the
Cash Account as of the time of the distribution.

 

(B)           Installments.  The amount of each installment payment from a
Participant’s Cash Account will be determined by dividing the balance of the
Cash Account as of the distribution date for such installment payment by the
total number of remaining payments (including the current payment).

 

(vi)          Amount
of Distribution for Share Account.

 

(A)          Lump
Sum.  A lump sum distribution from a
Participant’s Share Account will consist of the number of Shares equal to the
number of Share Units credited to the Share Account as of the time of
distribution, rounded up to the next whole Share.

 

(B)           Installments.  Each installment distribution from a
Participant’s Share Account will consist of the number of Shares determined by
dividing the number of whole Share Units credited to the Share Account as of
the distribution date for such installment distribution by the total number of
remaining payments (including the current payment) and rounding the quotient to
the next whole Share.

 

(b)           Distribution Due to
Unforeseeable Emergency. 
Notwithstanding any distribution election by a Participant to the
contrary, a distribution will be made to a Participant from his or her Account
if the Participant submits a written distribution request to the Committee and
the Committee determines that the Participant has experienced an Unforeseeable
Emergency.  The amount of the
distribution may not exceed the amount necessary to satisfy the Unforeseeable
Emergency plus the amount necessary to pay taxes, as determined by the
Committee.  Payments made on account of
an Unforeseeable Emergency will not be made to the extent that such
Unforeseeable Emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise, by liquidation of the Participant’s
assets (to the extent that such liquidation would not itself cause severe
financial hardship) or by cessation of deferrals under Section 6(b) and/or
6(c) for the balance of the calendar year, provided the determination of
such limitations is consistent with the requirements of Section 409A of
the Code.  Any distribution pursuant to
this Section 7(b) will be made as soon as administratively
practicable after the Committee’s determination that the Participant has
experienced an Unforeseeable Emergency and in the form of a lump sum payment
that is in cash from the Cash Account and in Shares from the Share Account
(rounded up to the next whole Share). 
Any distribution pursuant to this Section 7(b) will be made
first from the Participant’s Cash Account and then from the Participant’s Share
Account.

 

(c)           Small Benefits.

 

(i)            Cash
Account.  Each installment
distribution to a Participant who has experienced a Separation from Service
will be at least $2,500 or such smaller amount that equals the balance of the
Participant’s Cash Account.

 

(ii)           Share
Account.  If the balance of the Share
Account of a Participant who has experienced a Separation from Service is fewer
than 100 Share Units as of the day of any installment distribution pursuant to Section 7(a)(v)(B),
such remaining balance will be distributed to the Participant, as soon as
administratively practicable, in the form of a lump sum distribution, that will
consist of the number of Shares equal to the number of Share Units credited to
the Share Account as of that date, rounded up to the next whole Share.  Each installment distribution to a
Participant who has experienced a Separation from Service must be at least 100
Share Units or such smaller number of Share Units that remains in the
Participant’s Share Account.

 

(d)           Payment in Event of
Incapacity.  If any individual
entitled to receive any payment under the DEIP is, in the judgment of the
Committee, physically, mentally or legally incapable of receiving or
acknowledging 

 

9

 

receipt of the payment, and no legal representative has been appointed
for the individual, the Committee may (but is not required to) cause the
payment to be made to any one or more of the following as may be chosen by the
Committee: the Beneficiary (in the case of the incapacity of a Participant);
the institution maintaining the individual; a custodian for the individual
under the Uniform Transfers to Minors Act of any state; or the individual’s
spouse, child, parent, or other relative by blood or marriage.  The Committee is not required to see to the
proper application of any such payment, and the payment completely discharges
all claims under the DEIP against the Company, and the DEIP to the extent of
the payment.

 

(e)           Reduction of Account
Balance.  The balance of the Cash or
Share Account from which a distribution is made will be reduced, as of the date
of the distribution, by the cash amount or number of Shares distributed, as the
case may be.

 

(f)            Distribution to a
Beneficiary.  Following a Participant’s
death, the balances of the Participant’s Cash and Share Accounts will be
distributed to the Participant’s Beneficiary in a lump sum payment whether or
not payments had commenced to the Participant in the form of installments prior
to his or her death.  Any distribution
from a Participant’s Cash Account will be made in cash and any distribution
from a Participant’s Share Account will be made in whole Shares, rounded up to
the next whole Share.  Distributions will
be subject to the following:

 

(i)            Time.  Distribution to a Beneficiary will be made as
soon as administratively practicable after the end of the calendar quarter
during which the Committee receives notice of the Participant’s death; provided
that if a distribution from the Participant’s Share Account would otherwise be
made after the record date for a dividend but before the payment date for such
dividend, the distribution of the dividend will be made as soon as
administratively practicable after the earnings credit has been made to the
Share Account pursuant to Section 6(d) on the payment date of the
dividend.

 

(ii)           Amount.  The amount of the lump sum payment from a
Participant’s Cash Account will be equal to the sum of the balances of the Cash
Account on the date of distribution.  A
lump sum distribution from a Participant’s Share Account will consist of the
number of Shares equal to the number of Share Units credited to the Share
Account, rounded up to the next whole Share.

 

(g)           Beneficiary
Designation.

 

(i)            Each
Participant may designate, in accordance with Plan Rules, one or more primary
Beneficiaries or alternative Beneficiaries to receive all or a specified part
of the balance of his or her Cash or Share Accounts after his or her
death.  The Participant may change or
revoke any such designation from time to time without notice or consent from
any person.  No such designation, change
or revocation is effective unless completed and received by the Committee
during the Participant’s lifetime.

 

(ii)           Any
portion of a Participant’s Cash and Share Accounts for which the Participant
fails to designate a Beneficiary, revokes a Beneficiary designation without
naming another Beneficiary or designates one or more Beneficiaries, none of
whom survives the Participant or exists at the time in question, will be paid
to the Participant’s surviving spouse or, if the Participant is not survived by
a spouse, to the representative of the Participant’s estate.

 

(iii)          The
automatic Beneficiaries specified above and, unless the designation otherwise
specifies, the Beneficiaries designated by the Participant, become fixed as of
the Participant’s death so that, if a Beneficiary survives the Participant but
dies before the receipt of the payment due such Beneficiary, the payment will
be made to the representative of such Beneficiary’s estate.  Any designation of a Beneficiary by name that
is accompanied by a description of the relationship or only by a statement of
relationship to the Participant is effective only to designate the person or
persons standing in such relationship to the Participant at the Participant’s
death.

 

(h)           Modification of Time
and Manner of Payment. 
Notwithstanding the foregoing, the Committee in its sole and absolute
discretion, may distribute all balances in the Cash Account or Share Account to
the Participant in a lump sum as of any date but only if and to the extent
permitted under Section 409A of the Code. 
Nothing herein 

 

10

 

shall be construed to grant a Participant the right to elect a
modification of the time or manner for receiving payments hereunder, including
on account of termination of the Plan.

 

8.             Options.

 

All Options
granted by the Board under the DEIP
will be governed by the following terms and conditions:

 

(a)           Non-Statutory
Options.  All Options granted under
the DEIP will be non-statutory stock options not entitled to special tax
treatment under Section 422 of the Internal Revenue Code of 1986, as
amended to date and as may be amended from time to time (the “Code”).

 

(b)           Option Exercise
Price.  The exercise price per Share
purchasable under an Option granted under the DEIP will be not less than 100% of the Market Price on the date of grant of the
Option.

 

(c)           Exercisability of
Options.  Each Option granted under
the DEIP will be immediately exercisable, unless the Award notice provides
otherwise.

 

(d)           Duration of Options;
Effect of Cessation as Director. 
Except as provided in Section 11, each Option granted under the
DEIP will terminate ten years after its Date of Grant. If the Participant
ceases to serve as a director on the Board for any reason other than a
Qualified Retirement, then the Option will remain exercisable until the earlier
of the expiration of five years after the date the Participant ceased to serve
as a director of the Company or the remaining term of the Option.  If the Participant ceases to serve as a
director on the Board or account of a Qualified Retirement all Options will
become immediately exercisable in full and will remain exercisable in full
until the expiration of the Option.

 

(e)           Manner of Option
Exercise.  An Option granted under
the DEIP may be exercised by a Participant in whole or in part from time to
time, subject to the conditions contained in the DEIP, by delivering in person,
by facsimile or electronic transmission or through the mail notice of exercise
to the Company at its principal executive office, and by paying in full the
total exercise price for the Shares to be purchased in accordance with
paragraph (f).  Such notice will specify
the particular Option that is being exercised (by the date of grant and total
number of Shares subject to the Option) and the number of Shares with respect
to which the Option is being exercised.

 

(f)            Payment of Exercise
Price.  The total purchase price of
the shares to be purchased upon exercise of an Option granted under the DEIP
will be paid entirely in cash (including check, bank draft or money order);
provided, however, that the Committee, in its sole discretion and upon terms
and conditions established by the Committee, may allow such payments to be
made, in whole or in part, by tender of a Broker Exercise Notice, by tender, or
attestation as to ownership, of Previously Acquired Shares, or by a combination
of such methods.  For purposes of such payment,
Previously Acquired Shares tendered or covered by an attestation will be valued
at the Market Price on the exercise date.

 

(g)           Restrictions on
Transfer.

 

(i)            Except
pursuant to testamentary will or the laws of descent and distribution or as
otherwise expressly permitted by clauses (ii) or (iii) below, no
right or interest of any Participant in an Option granted under the DEIP prior
to the exercise of such Option will be assignable or transferable, or subjected
to any lien, during the lifetime of the Participant, either voluntarily or
involuntarily, directly or indirectly, by operation of law or otherwise.

 

(ii)           A
Participant will be entitled to designate a beneficiary to receive an Option
granted under the DEIP upon such Participant’s death, and in the event of a
Participant’s death, payment of any amounts due under the DEIP will be made to,
and exercise of any Options (to the extent permitted pursuant to Section 15)
may be made by, the Participant’s legal representatives, heirs and legatees.

 

(iii)          A
Participant who is a director of the Company will be entitled to transfer all
or a portion of an Option granted under the DEIP, other than for value, to such
Participant’s child, stepchild, grandchild, 

 

11

 

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, any person sharing such Participant’s household (other than a
tenant or employee), a trust in which any of the foregoing have more than fifty
percent of the beneficial interests, a foundation in which any of the foregoing
(or the Participant) control the management of assets, and any other entity in
which these persons (or the Participant) own more than fifty percent of the
voting interests.  Any permitted
transferee will remain subject to all the terms and conditions applicable to
the Participant prior to the transfer.  A
permitted transfer may be conditioned upon such requirements as the Committee
may, in its sole discretion, determine, including, but not limited to execution
and/or delivery of appropriate acknowledgements, opinion of counsel, or other
documents by the transferee.

 

(h)           Rights as a
Stockholder.  No Participant will
have any rights as a stockholder with respect to any Shares covered by an
Option granted under the DEIP until the Participant has exercised such Option,
paid the exercise price and become the holder of record of such Shares, and,
except as otherwise provided in Section 3(c), no adjustments will be made
for dividends or other distributions or other rights as to which there is a
record date preceding the date the Participant becomes the holder of record of
such Shares.

 

9.             Stock
Appreciation Rights.

 

A Stock Appreciation
Right may be granted by the Board to the holder of any Option granted
hereunder.  In addition, a Stock
Appreciation Right may be granted independently of and without relation to any
Option.  Stock Appreciation Rights shall
be subject to such terms and conditions consistent with the DEIP as the Board shall impose from time to time including the
following:

 

(a)           A Stock Appreciation
Right may be granted with respect to an Option at the time of its grant or at
any time thereafter.

 

(b)           Each Stock Appreciation
Right will entitle the Participant to elect to receive in cash up to 100% of
the appreciation in Market Price of the Shares subject thereto up to the date
the Stock Appreciation Right is exercised. 
In the case of a Stock Appreciation Right issued in relation to an
Option, such appreciation will be measured from the Option’s exercise
price.  In the case of a Stock
Appreciation Right issued independently of any Option, the appreciation shall
be measured from not less than the Market Price of a Share on the date the
Stock Appreciation Right is granted.

 

(c)           The Committee shall
have the discretion to satisfy a Participant’s right to receive the amount of
cash as determined in Section 9(b), in whole or in part, by the delivery
of Shares valued as of the date of the Participant’s election.

 

(d)           In the event a
Participant experiences a Separation from Service:

 

(i)            by
reason of death or Disability, all outstanding Stock Appreciation Rights then
held by the Participant will become immediately exercisable in full and will
remain exercisable for a period of twelve (12) months after such Separation
from Service (but in no event after the expiration date of any such Stock
Appreciation Right);

 

(ii)           by
reason of a Qualified Retirement, all outstanding Stock Appreciation Rights
then held by the Participant will become immediately exercisable in full and
will remain exercisable in full until the expiration date of any such Stock
Appreciation Rights; or

 

(iii)          for
reasons other than death, Disability or Qualified Retirement, all outstanding
Stock Appreciation Rights then held by the Participant will, to the extent
exercisable as of the date of Separation from Service, remain exercisable in
full for a period of three (3) months after such Separation from Service
(but in no event after the expiration date of any such Stock Appreciation
Right); and Stock Appreciation Rights not exercisable as of such Separation
from Service will terminate and be forfeited.

 

12

 

10.           Restricted
Stock.

 

The Board may
grant a Periodic Award of Restricted Stock to Participants with the following
terms and conditions.

 

(a)           During the Restricted
Period (as defined in paragraph (b)), a Participant shall not sell, assign,
exchange, transfer, pledge, hypothecate or otherwise dispose of or encumber any
of the Restricted Stock.  Upon grant of
the Award of Restricted Stock, however, Participant shall thereupon be a
stockholder with respect to all Shares subject to the Award and shall have all
the rights of a stockholder with respect to such Shares, including the right to
vote such Shares and to receive all dividends and other distributions.

 

(b)           The term “Restricted
Period” shall mean any period as set by the Board, not to exceed ten years,
ending upon such conditions as the Board may deem appropriate, including,
without limitation, achievement of certain goals and/or that the Participant
has remained in continuous service as a member of the Board of the Company for
a certain period.

 

(c)           To enforce the restrictions
referred to in this Section 10, the Board may place a legend on the stock
certificates for the Shares referring to such restrictions and may require the
Participant, until the restrictions have lapsed, to keep the stock
certificates, together with duly endorsed stock powers, in the custody of the
Company or its transfer agent, or to maintain evidence of stock ownership,
together with duly endorsed stock powers, in a certificateless book-entry stock
account with the Company’s transfer agent.

 

(d)           In the event a
Participant experiences a Separation from Service:

 

(i)            by
reason of death, Disability or Qualified Retirement, all Restricted Stock then
held by the Participant will become fully vested; or

 

(ii)           for
reasons other than death, Disability or Qualified Retirement, all Restricted
Stock then held by Participant that has not vested as of such Separation from
Service will be terminated and forfeited.

 

11.           Effects
of Actions Constituting Cause.

 

(a)           Notwithstanding
anything in the DEIP to the contrary, if a Participant is determined by the
Board, acting in its sole discretion, to have committed any action which would
constitute Cause as defined in Section 2(h), irrespective of whether such
action or the Board’s determination occurs before or after such Participant
ceases to serve as a director of the Company, all rights of the Participant
under the DEIP attributable to unexercised Options or Stock Appreciation Rights
or unvested Emergence Awards or Periodic Awards of Restricted Stock and any
agreements or notices evidencing any Emergence Awards or Periodic Awards then
held by the Participant will terminate and be forfeited without notice of any
kind.

 

(b)           Benefits attributable
to amounts credited to a Participant’s Account pursuant to Section 6 which
are vested and any earnings credited with respect to such vested amounts will
not be forfeited.

 

12.           Change
in Control.

 

(a)           A “Change in Control”
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:

 

(i)            any
“person” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company or other fiduciary holding securities
under any employee benefit plan of the Company, or any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company), is or becomes
during the 12-month period ending on the date of the most recent acquisition,
including pursuant to a tender or exchange offer for shares of Common Stock
pursuant to which purchases are made, the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 35% or more of the combined voting
power of the Company’s then outstanding securities, other than in a 

 

13

 

transaction
arranged or approved by the Continuity Directors prior to its occurrence;
provided, however, that if any such person will become the beneficial owner,
directly or indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company’s then outstanding securities, a
Change in Control will be deemed to occur whether or not any or all of such
beneficial ownership is obtained in a transaction arranged or approved by the
Continuity Directors prior to its occurrence, and provided further that the
provisions of this clause (i) shall not be applicable to a transaction in
which a corporation becomes the owner of all the Company’s outstanding
securities in a transaction which complies with the provisions of clause (iii) of
this Section 12(a) (e.g., a reverse triangular merger); or

 

(ii)           there
is consummated a merger or consolidation of the Company or any direct or indirect
Subsidiary of the Company with any other corporation that (constitutes a “change
of control” under Section 409A of the Code other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) more than 50% of the
combined voting power of the securities of the Company or such surviving entity
or any parent thereof outstanding immediately after such merger or
consolidation, and in which no “person” (as defined under clause (i) above)
acquires 50% or more of the combined voting power of the securities of the
Company or such surviving entity or parent thereof outstanding immediately
after such merger or consolidation provided such merger or consolidation); or

 

(iii)          the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, more than 50% of the combined voting power
of the voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale; or

 

(iv)          during
any 12-month period, the Continuity Directors cease for any reason to
constitute at least a majority of the Board.

 

(b)           Cash Payment.  If a Change in Control of the Company occurs,
then the Board, without the consent of any Participant affected thereby, may
determine to the extent permitted by Section 409A of the Code (for amounts
subject to Section 409A) that some or all Participants holding outstanding
Options and/or Stock Appreciation Rights granted under the DEIP will receive,
with respect to some or all of the Shares subject to such Options or Stock
Appreciation Rights, as of the effective date of any Change in Control of the
Company, cash in an amount equal to the excess of the Market Price of such
Shares immediately prior to the effective date of such Change in Control of the
Company over the exercise price per share of such Options or Stock Appreciation
Rights.

 

(c)           Acceleration of
Vesting.  If a Change in Control of
the Company occurs, then (i) all Options and Stock Appreciation Rights
will become immediately exercisable in full and will remain exercisable in
accordance with their terms; (ii) all Restricted Stock will become
immediately fully vested and nonforfeitable; and (iii) the Participant’s
deferral Accounts will become immediately fully vested and non-forfeitable.

 

(d)           Acceleration of
Payment.  If a Change in Control of
the Company occurs, then all deferred amounts credited to a Participant’s Cash
Account and Share Account will become immediately due and payable to the
Participant.

 

13.           Source
of Payments; Nature of Interest.

 

(a)           Source of Payments.  The Company is responsible for paying, from
its general assets, any benefits attributable to a Participant’s Account.

 

(b)           Status of DEIP.  Nothing contained in the DEIP is to be
construed as providing for assets to be held for the benefit of any Participant
or any other person or persons to whom benefits are to be paid pursuant to the 

 

14

 

terms of the DEIP, the Participant’s or other person’s only interest
under the DEIP being the right to receive the benefits set forth herein.  Until such time as Shares are distributed to
a Participant, Beneficiary of a deceased Participant or other person, he or she
has no rights as a shareholder with respect to any Share Units credited to a
Share Account pursuant to the DEIP.  To
the extent that the Participant or any other person acquires a right to receive
benefits under the DEIP, such right is no greater than the right of any
unsecured general creditor of the Company.

 

(c)           Non-Assignability of
Benefits.  The benefits payable under
the DEIP and the right to receive future benefits under the DEIP may not be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered, or
subjected to any charge or legal process.

 

14.           Securities
Law and Other Restrictions.

 

Notwithstanding
any other provision of the DEIP or any agreements entered into pursuant to the
DEIP to the contrary, the Company is not required to issue or distribute any
Shares under the DEIP, and a Participant or distributee may not sell, assign,
transfer or otherwise dispose of Shares issued or distributed pursuant to the
DEIP, unless (a) there is in effect with respect to such Shares a
registration statement under the Securities Act and any applicable securities
laws of a state or foreign jurisdiction or an exemption from such registration
under the Securities Act and applicable state or foreign securities laws, and (b) there
has been obtained any other consent, approval or permit from any other
regulatory body which the Company, in its sole discretion, deems necessary or
advisable.  The Company may condition
such issuance, distribution, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing Shares, as may be deemed necessary or
advisable by the Company in order to comply with such securities law or other
restrictions.

 

15.           Amendment
or Termination.

 

(a)           Amendment.

 

(i)            The
Company reserves the right to amend the DEIP at any time to any extent that it
may deem advisable.  To be effective, an
amendment must be stated in a written instrument approved in advance or
ratified by the Board and executed in the name of the Company by its Chief
Executive Officer or President and attested by the Secretary or an Assistant
Secretary.

 

(ii)           An
amendment adopted in accordance with Section 15(a) is binding on all
interested parties as of the effective date stated in the amendment; provided,
however, that no amendment will have any retroactive effect so as to deprive
any Participant, or the Beneficiary of a deceased Participant, of any benefit
to which he or she is entitled under the terms of the DEIP in effect
immediately prior to the effective date of the amendment, determined as if such
Participant had terminated service as a director immediately prior to the
effective date of the amendment.

 

(iii)          Without
limiting Section 15(a), the Company reserves the right to amend the DEIP
to change the method of determining the earnings credited to Participants’
Accounts pursuant to Section 6(d) and to apply such new method not
only with respect to the portion of the Accounts attributable to credits made
after the date on which such amendment is adopted but also with respect to the
portion of the Accounts attributable to credits made prior to the date on which
such amendment is adopted and regardless of whether such new method would
result in materially lower earnings credits than the old method.

 

(iv)          The
provisions of the DEIP in effect at the termination of a Participant’s service
as a director will, except as otherwise expressly provided by a subsequent
amendment, continue to apply to such Participant.

 

(b)           Termination.  The Company reserves the right to terminate
the DEIP at any time.  The DEIP will
terminate as of the date specified by the Company in a written instrument by
its authorized officers to the Committee, adopted in the manner of an
amendment.  Upon the termination of the
DEIP, any benefits to which 

 

15

 

Participants have become entitled prior to the effective date of the
termination will continue to be paid in accordance with the provisions of Section 7,
subject to acceleration as permitted by Section 7(h) and Section 409A
of the Code.  No termination, suspension
or amendment of the DEIP may adversely affect any outstanding Emergence Award
or Periodic Award without the consent of the affected Participant; provided,
however, that this sentence will not impair the right of the Board to take
whatever action it deems appropriate under Sections 3(c), 8, 9 and 10 of the
DEIP.  Options and Stock Appreciation
Rights outstanding upon termination of the DEIP may continue to be exercised in
accordance with their terms.

 

16.           Administration.

 

(a)           Committee.  The general administration of the DEIP and
the duty to carry out its provisions will be vested in the Committee or such
other Board committee as may be subsequently designated as the Committee by the
Board.  Such Committee may delegate such
duty or any portion thereof to a named person and may from time to time revoke
such authority and delegate it to another person.

 

(b)           Plan Rules and
Regulations.  The Committee has the
discretionary power and authority to make such Plan Rules as the Committee
determines to be consistent with the terms, and advisable in connection with
the administration, of the DEIP and to modify or rescind any such Plan
Rules.  In addition, the Committee has
the discretionary power and authority to limit or modify application of DEIP
provisions and Plan Rules as the Committee determines to be advisable to
facilitate tax deferral treatment (or accommodate the unavailability thereof)
for Options granted to, or amounts credited with respect to, non-U.S. resident
Participants.

 

(c)           Discretion.  The Committee has the sole discretionary
power and authority to make all determinations necessary for administration of
the DEIP, except those determinations that the DEIP requires others to make,
and to construe, interpret, apply and enforce the provisions of the DEIP and
Plan Rules whenever necessary to carry out its intent and purpose and to
facilitate its administration, including, without limitation, the discretionary
power and authority to remedy ambiguities, inconsistencies, omissions and
erroneous benefit calculations.  In the
exercise of its discretionary power and authority, the Committee will treat all
similarly situated persons uniformly.

 

(d)           Specialist’s
Assistance.  The Committee may retain
such actuarial, accounting, legal, clerical and other services as may
reasonably be required in the administration of the DEIP, and may pay
reasonable compensation for such services. 
All costs of administering the DEIP will be paid by the Company.

 

(e)           Indemnification.  The Company agrees to indemnify and hold harmless,
to the extent permitted by law, each director, officer and employee of the
Company and any subsidiary or affiliate of the Company against any and all
liabilities, losses, costs and expenses (including legal fees) of every kind
and nature that may be imposed on, incurred by, or asserted against such person
at any time by reason of such person’s services in connection with the DEIP,
but only if such person did not act dishonestly or in bad faith or in willful
violation of the law or regulations under which such liability, loss, cost or
expense arises.  The Company has the
right, but not the obligation, to select counsel and control the defense and
settlement of any action for which a person may be entitled to indemnification
under this provision.

 

17.           Miscellaneous.

 

(a)           Other Benefits.  Neither amounts deferred nor amounts paid
pursuant to the DEIP constitute salary or compensation for the purpose of
computing benefits under any other benefit DEIP, practice, policy or procedure
of the Company unless otherwise expressly provided thereunder.

 

(b)           No Warranties
Regarding Treatment.  The Company
makes no warranties regarding the tax treatment to any person of any deferrals
or payments made pursuant to the DEIP, and each Participant will hold the
Committee and the Company and their officers, directors, employees, agents and
advisors harmless from any liability resulting from any tax position taken in
good faith in connection with the DEIP.

 

(c)           No Rights to
Continued Service Created.  Neither
the establishment of or participation in the DEIP gives any individual the
right to continued service on the Board or limits the right of the Company or
its 

 

16

 

stockholders to terminate or modify the terms and conditions of service
of such individual on the Board or otherwise deal with any individual without
regard to the effect that such action might have on him or her with respect to
the DEIP.

 

(d)           Successors.  Except as otherwise expressly provided in the
DEIP, all obligations of the Company under the DEIP are binding on any
successor to the Company whether the successor is the result of a direct or
indirect purchase, merger, consolidation or otherwise of all of the business
and/or assets of the Company.

 

(e)           Governing Law.  Questions pertaining to the construction,
validity, effect and enforcement of the DEIP will be determined in accordance
with the internal, substantive laws of the State of Delaware without regard to
the conflict of laws rules of the State of Delaware or any other
jurisdiction.

 

(f)            Headings.  The headings of sections are included solely
for convenience of reference; if there exists any conflict between such
headings and the text of the DEIP, the text will control.

 

17

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