Document:

ex101.htm

    Exhibit
10.1

    

    THIS
DEBTOR-IN-POSSESSION NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE SECURITIES LAWS, AND HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF.

    

    DEBTOR-IN-POSSESSION
NOTE

     

    
      	 U.S.$12,500,000    	
                 May 22,
      2009

            

    

    

    FOR VALUE
RECEIVED, the undersigned, TXCO RESOURCES INC., a corporation organized and
existing under the laws of the State of Delaware, TXCO ENERGY CORP., a
corporation organized and existing under the laws of the State of Texas, TEXAS
TAR SANDS INC., a corporation organized and existing under the laws of the State
of Texas, OUTPUT ACQUISITION CORP., a corporation organized and existing under
the laws of the State of Texas, OPEX ENERGY, LLC, a limited liability company
formed and existing under the laws of the State of Texas, CHARRO ENERGY INC., a
corporation organized and existing under the laws of the State of Texas, TXCO
DRILLING CORP., a corporation organized and existing under the laws of the State
of Texas, EAGLE PASS WELL SERVICES, L.L.C., a limited liability company formed
and existing under the laws of the State of Texas, PPL OPERATING INC., a
corporation organized and existing under the laws of the State of Texas,
MAVERICK GAS MARKETING, LTD., a limited partnership organized and existing under
the laws of the State of Texas and MAVERICK-DIMMIT PIPELINE, LTD., a limited
partnership organized and existing under the laws of the State of Texas
(together, the "Borrowers", and each
individually, a "Borrower"), hereby
jointly and severally promises to pay the principal sum of TWELVE MILLION FIVE
HUNDRED THOUSAND DOLLARS (U.S.$12,500,000) (or such lesser amount as may have
been advanced hereunder from time to time) on the Maturity Date (as defined
below) to the order of DOUBLE BLACK DIAMOND OFFSHORE, LTD., acting in the
capacity as agent (the "Agent") on behalf of
REGIMENT CAPITAL SPECIAL SITUATIONS FUND III, L.P., CIT BANK, BD FUNDING I, LLC
and LTD/DLT LONGHORN CORP. (together, the "Lenders", and each
individually, a "Lender").

     

    Amounts
payable under this Debtor-In-Possession Note ("this DIP Note") shall
bear interest from the date hereof until paid in full (computed on the basis of
a year of 360 days and the actual number of days elapsed) (a) with respect
to the amount of up to SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
(U.S.$7,500,000) advanced hereunder, at the rate of LIBOR (as defined below)
plus four percent (4.0%) per annum, and (b) with respect to any additional
amounts advanced hereunder in excess of SEVEN MILLION FIVE HUNDRED THOUSAND
DOLLARS (U.S.$7,500,000) up to TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS
(U.S.$12,500,000), at the rate of LIBOR plus ten percent (10.0%) per annum, in
each case which interest shall accrue daily and be payable in arrears in cash on
the following dates:

     

    
      
         

      

      
        1

      

       

    

    (i)           on
the last day of each calendar month occurring prior to the Maturity Date (as
adjusted in accordance with this DIP Note); and

     

    (ii)           on
the Maturity Date,

     

    unless
otherwise prepaid in connection with a prepayment of principal in accordance
with this DIP Note.  If any day when interest is scheduled to be paid
under this DIP Note is not a Business Day (as defined below), interest shall not
be payable on such day but on the next day which is a Business Day, unless such
next day would thereby fall into the next calendar month in which event such day
when interest is scheduled to be paid shall be brought forward to the
immediately preceding Business Day.  Notwithstanding the foregoing, if
an Event of Default (as defined in the Interim Order (as defined below)) shall
have occurred and be continuing, amounts evidenced by this DIP Note and all
other Obligations shall bear interest at the rate set forth in this paragraph,
as applicable, plus two percent (2.0%) per annum, which interest shall be
payable in cash on demand.

     

    Unless
otherwise defined in the text of this DIP Note, terms used in this DIP Note
shall have the meanings provided in Section 10 below.

     

    All
amounts payable under this DIP Note shall be payable in immediately available
United States funds to the Lenders at an account or accounts of the Lenders to
be designated to the Borrowers by the Lenders in writing.  All
payments on this DIP Note shall be applied first
to accrued and unpaid interest and second
to the outstanding principal balance hereof.  Any principal amounts
paid by the Borrowers may not be reborrowed.  Whenever any payment to
be made under this DIP Note shall be stated to be due on a day that is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day.

     

    This DIP
Note has been issued in connection with post-petition financing provided by the
Lenders pursuant to that certain "INTERIM ORDER UNDER 11 U.S.C. §§ 105(a), 361,
363 AND 364 AND FED. R. BANKR. P. 2002, 4001 AND 9014 (I) AUTHORIZING DEBTORS TO
INCUR POST-PETITION SECURED INDEBTEDNESS, (II) GRANTING SECURITY INTERESTS AND
SUPERPRIORITY CLAIMS, (III) APPROVING USE OF CASH COLLATERAL, AND (IV)
SCHEDULING FINAL HEARING" (together with the term sheet attached thereto, the
"Interim
Order"), entered by the United States Bankruptcy Court for the Western
District of Texas, San Antonio Division (the "Bankruptcy Court")
(Case No. 09-51807) (et al) in the pending chapter 11 case (the "Chapter 11 Case") of
the Borrowers.

     

    This DIP
Note may be prepaid by the Borrowers, in whole or in part, at any time without
premium or penalty; provided, that any
partial prepayment shall be applied pro rata in prepayment of (a) the
initial principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS
(U.S.$7,500,000) advanced hereunder and (b) any additional principal
amounts advanced hereunder in excess of SEVEN MILLION FIVE HUNDRED THOUSAND
DOLLARS (U.S.$7,500,000) up to TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS
(U.S.$12,500,000), in each case as are outstanding as of the date of such
prepayment.  Any principal amounts prepaid by the Borrowers may not be
reborrowed.  Accrued and unpaid interest with respect to the principal
amount prepaid shall be due and payable on the date of any such
prepayment.

     

    
      
         

      

      
        2

      

       

    

    It is the
intention of the parties hereto that the loans made hereunder shall conform
strictly to applicable usury laws.  Accordingly, none of the terms and
provisions contained in this DIP Note shall ever be construed to create a
contract to pay interest to the Lender for the use, forbearance or detention of
money at a rate in excess of the highest lawful rate applicable (the "Maximum Lawful
Rate").

     

    Section
1.                      Interim
Order.

     

    (a)           In
addition to the terms and provisions of this DIP Note, the terms and provisions
of the Interim Order also shall apply to the making of the advances evidenced by
this DIP Note and shall be deemed incorporated herein by reference as if fully
set forth herein.  In the event of a conflict between this DIP Note
and the Interim Order, the terms and provisions of the Interim Order shall
govern.

     

    (b)           As
described in the Interim Order, the loans evidenced by this DIP Note represent a
portion of the total loans that may be provided by the Lenders to the Borrowers
pursuant to definitive loan documentation (collectively, the "Definitive Credit
Agreement") to be negotiated and entered into between the Borrowers and
the Lenders subsequent to the date hereof.   At the time of
execution and delivery of the Definitive Credit Agreement, the loans evidenced
by this DIP Note shall be deemed to be continued under the Definitive Credit
Agreement and thereafter governed by, and entitled to the benefits of, the terms
and provisions of the Definitive Credit Agreement, and this DIP Note shall be
promptly returned to the Borrowers.  The Borrowers, and by accepting
this DIP Note, the Agent and the Lenders, each agrees to negotiate the terms of
the Definitive Credit Agreement in good faith and consistent with applicable
court orders.

     

    Section
2.                      Collateral
Security.

     

    (a)           Pursuant
to the Interim Order and in accordance with the terms thereof and hereof, as
security for the full and timely payment and performance of all of the
Obligations, each of the Borrowers hereby assigns, pledges and grants to the
Agent, on behalf of itself and the Lenders, a valid, binding, continuing
enforceable fully-perfected security interest in and to and lien on any and all
real and personal property and interests in real and personal property of the
Borrowers, whether now owned or existing or hereafter created, acquired or
arising, including all of the following properties and interests in properties,
whether now owned or hereafter created, acquired or arising (all being
collectively referred to herein as the "Collateral"):

    

     

    
      	
               
      

            	
              (1)

            	
              Accounts;

            

    

    
      	
               
      

            	
              (2)

            	
              Chattel
      Paper;

            

    

    
      	
               
      

            	
              (3)

            	
              Commercial
      Tort Claims;

            

    

    
      	
               
      

            	
              (4)

            	
              Deposit
      Accounts, all cash, and other property deposited therein or otherwise
      credited thereto from time to time;

            

    

    
      	
               
      

            	
              (5)

            	
              Documents;

            

    

    
      	
               
      

            	
              (6)

            	
              General
      Intangibles;

            

    

    
      	
               
      

            	
              (7)

            	
              Goods,
      including any and all Inventory, Equipment and
  Fixtures;

            

    

    
      	
               
      

            	
              (8)

            	
              Instruments;

            

    

    
      	
               
      

            	
              (9)

            	
              Investment
      Property;

            

    

    
      	
               
      

            	
              (10)

            	
              Letter-of-Credit
      Rights;

            

    

    
      
         

      

      
        3

      

       

    

    
      	
               
      

            	
              (11)

            	
              Supporting
      Obligations;

            

    

    
      	
               
      

            	
              (12)

            	
              Any
      and all other real or personal property and interests in real or personal
      property whether or not subject to the
UCC;

            

    

    
      	
               
      

            	
              (13)

            	
              Any
      and all books and records, in whatever form or medium, that at any time
      evidence or contain information relating to any of the
      foregoing;

            

    

    
      	
               
      

            	
              (14)

            	
              All
      Accessions and additions to, and substitutions and replacements of, any
      and all of the foregoing; and

            

    

    
      	
               
      

            	
              (15)

            	
              All
      Proceeds and products of the foregoing, and all insurance pertaining to
      the foregoing and proceeds thereof.

            

    

    

    (b)           The
liens and security interests in favor of the Agent, on behalf of itself and the
Lenders, referred to above shall remain in effect until all Obligations shall
have been repaid in full in cash.  The liens and security interests in
favor of the Agent, on behalf of itself and the Lenders, shall have all of the
benefits of the Interim Order in addition to the benefits provided by this DIP
Note.

    

    Section
3.                      Origination
Amount.  The Borrowers shall pay the Agent, on behalf of the
Lenders, an amount (the "Origination Amount")
equal to three percent (3.0%) of the face amount of this DIP Note, which shall
be payable as follows: (a) that portion of the Origination Amount equal to
one percent (1.0%) of the face amount of this DIP Note shall be due and payable
on the date of the first advance hereunder, and (b) that portion of the
Origination Amount equal to two percent (2.0%) of the face amount of this DIP
Note shall be due and payable on the Maturity Date (or, solely with respect to
the principal portion of this DIP Note prepaid, upon earlier prepayment of this
DIP Note); provided, however, that if this DIP Note shall be continued under the
Definitive Credit Agreement as contemplated pursuant to Section 1(b), then
such portion of the Origination Amount shall be due and payable in accordance
with the Definitive Credit Agreement.

     

    Section
4.                      Events of
Default.  Upon the occurrence of an Event of Default (as
defined in the Interim Order), the Lender shall have, and be entitled to
exercise, all of the rights and remedies described in the Interim
Order.

     

    Section
5.                      Amendment;
Assignment.  This DIP Note may not be amended or any of the
provisions waived without the prior written consent of the Agent, the Lenders,
and the Borrowers.  No Borrower may assign or transfer its respective
rights and obligations in this DIP Note without the prior written consent of the
Agent and the Lenders.  No Lender may assign this DIP Note in whole or
in part to any person or entity other than any person or entity that is,
directly or indirectly, controlled by, controlling, or under common control with
such Lender.  The Borrowers shall issue replacement DIP Note(s) in
connection with any such assignment or if any DIP Note is subsequently lost or
otherwise cannot be located.

    

    Section
6.                      Costs and
Expenses.  Subject to the terms and conditions of the Interim
Order, the Borrower shall pay (a) all reasonable out of pocket expenses incurred
by the Agent and each Lender and their respective affiliates (including the
reasonable fees, charges and disbursements of outside counsel for the Agent and
such Lender and of any appraisers, valuation experts, consultants, advisors and
agents employed or retained by the Agent and such Lender and their counsels), in
connection with the preparation, negotiation, execution, delivery and
administration of this DIP Note and the Related Documents or any amendments,
modifications

     

    
      
         

      

      
        4

      

       

    

    or
waivers of the provisions hereof or thereof and (b) all reasonable out of pocket
expenses incurred by the Agent and each Lender (including the fees, charges and
disbursements of any outside counsel for the Agent and such Lender and of any
appraisers, valuation experts, consultants, advisors and agents employed or
retain by the Agent and such Lender and their counsels) in connection with the
enforcement or protection of its rights (i) in connection with this DIP Note and
the Related Documents, including its rights under this Section, or (ii) in
connection with the advances evidenced hereby, including all such out of pocket
expenses incurred during any workout, restructuring or negotiations in respect
of such advances.

     

    Section
7.                      Governing Law,
Jurisdiction.

     

    (a)           This
DIP Note shall be governed by, and construed in accordance with, the law of the
State of New York applicable to contracts made and to be performed in the State
of New York, except to the extent New York law is superseded by the Bankruptcy
Code.

     

    (b)           Each
Borrower irrevocably and unconditionally submits, for itself and its property,
generally and unconditionally to the non-exclusive jurisdiction of the
Bankruptcy Court, in any action or proceeding arising out of or relating to this
DIP Note or any Related Document, or for recognition or enforcement of any
judgment, and each of the parties hereto irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in the Bankruptcy Court.  Each of the parties hereto agrees
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.  Each of the parties hereto further agrees
that the jurisdiction of the Bankruptcy Court contemplated herein shall be
exclusive so long as the automatic stay is in place in the Chapter 11 Case with
respect to the Collateral; provided that, upon the lifting of the automatic stay
under the Chapter 11 Case with respect to the Collateral, nothing in this
Section or any Related Document shall affect the Agent's or any Lender's right
to bring any action or proceeding relating to this DIP Note or any Related
Document against the Collateral, the Borrowers or their respective properties in
the courts of any jurisdiction.

     

    (c)           Each
Borrower irrevocably and unconditionally waives, to the fullest extent permitted
by applicable law, any objection that it may now or hereafter have to the laying
of venue of any action or proceeding arising out of or relating to this DIP Note
or any related document  in any court referred to in the immediately
preceding paragraph.  Each of the parties hereto irrevocably waives,
to the fullest extent permitted by applicable law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.

     

    (d)           Each
party hereto irrevocably consents to service of process out of the Bankruptcy
Court.  Nothing in this DIP Note will affect the right of any party
hereto to serve process in any other manner permitted by applicable
law.

     

    (e)           EACH
BORROWER (AND THE AGENT AND EACH LENDER BY ITS ACCEPTANCE OF THIS DIP NOTE)
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS DIP NOTE OR ANY OTHER RELATED
DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY).

     

    
      
         

      

      
        5

      

       

    

    Section
8.                      Notices
Generally.  All notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopier, as
follows:

     

    (a)           if
to any Borrower, to it at: 777 Sonterra Blvd., Suite 350, San Antonio, Texas
78258; Attention: Chief Executive Officer, Telecopier No.: (210) 496-3232;
Telephone No.: (210) 496-5300; and copied to: Fulbright & Jaworski L.L.P.,
2200 Ross Avenue, Suite 2800, Dallas, Texas 75201; Attn: Courtney S.
Marcus.

     

    (b)           if
to any Lender, to the Agent at an address to be identified by the Agent to the
Borrowers in writing after the date hereof, with a copy to Vinson & Elkins
LLP, 666 Fifth Avenue, New York, New York 10103; Attn: Steven
Abramowitz.

     

    Notices
sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent with notice of delivery
(except that, if not given during normal business hours for the recipient, shall
be deemed to have been given at the opening of business on the next business day
for the recipient).  Notices and other communications to the Agent
and/or any Lender hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by such party.  The Agent, any Lender or any
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it, provided that
approval of such procedures may be limited to particular notices or
communications.

     

    Section
9.                      Further
Assurances.  In case at any time after the execution of this
DIP Note any further action is necessary or desirable to carry out the purposes
of this DIP Note or any Related Document, each of the parties hereto shall take
such further action (including the execution and delivery of such further
instruments and documents) as the other party reasonably may
request.

     

    Section
10.                                Defined
Terms.

    

    (a)           Terms
used herein and not otherwise defined in this DIP Note shall have the meanings
assigned such terms in the Interim Order.

    

    (b)           In
addition, the following terms have the following meanings:

    

    "Business Day" means
any day that (a) is not a Saturday, Sunday or other day on which commercial
banks in Dallas, Texas or New York, New York are authorized or required by law
to close and (b) as applicable, is also a day on which dealings in dollar
deposits are carried out in the London interbank market.

    

    "LIBOR" means the
greater of (a) the rate appearing on Reuters BBA Libor Rates Page 3750 (or
on any successor or substitute page of such page providing rate quotations
comparable to those currently provided on such page, as determined from time to
time for purposes of providing quotations on interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London
time, two Business Days prior to the applicable date for payment of interest in
accordance with this DIP Note, as the rate for dollar

    
      
         

      

      
        6

      

       

    

    deposits
with a maturity comparable to one (1) month; provided, that in the event that
such rate is not available at such time for any reason, then "LIBOR" for such
period shall be the interest rate at which dollar deposits in the approximate
amount of the relevant outstanding principal balance under this DIP Note would
be offered to major banks in the London interbank market at approximately 11:00
a.m., London time, two Business Days prior to the applicable date for payment of
interest in accordance with this DIP Note and (b) three percent (3.0%) per
annum.

    

    "Maturity Date" means
the earliest of (a) 30 days after the entry of the Interim Order if the Final
Order (as defined in the Interim Order) has not been entered on or prior to such
date, and (b) the date of acceleration of the indebtedness evidenced by this DIP
Note after the occurrence of an Event of Default as provided in Section 4
above.

    

    "Obligations" means
all principal of and interest on this DIP Note, all fees, all expenses and
indemnities, and all other amounts from time to time owing to the Agent and the
Lenders by the Borrowers under this DIP Note and the Related Documents,
including all interest thereon and fees and reasonable out-of-pocket expenses
(including, without limitation, fees and expenses of outside legal counsel and
consultants) incurred in connection therein or otherwise related
thereto.

    

    "Related Documents"
means the Interim Order and any other agreement, instrument or court order
related to or contemplated by this DIP Note or the Interim Order, as the same
may be amended or otherwise modified from time to time.

    

    "UCC" means the
Uniform Commercial Code as in effect in any applicable
jurisdiction.

     

    (c)           All
capitalized terms defined in the UCC (including the items of Collateral
described in Section 2 hereof and not otherwise defined herein) shall have the
respective meanings provided for by the UCC.

     

    [REMAINDER
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        7

      

       

    

    IN
WITNESS WHEREOF, the parties hereto have caused this DIP Note to be duly
executed by their respective authorized officers as of the day and year first
above written.

     

    
      
        	 
      	
                BORROWERS:

              
	 
      	 
      
	 
      	
                TXCO
      RESOURCES INC.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	 
      
	 
      	
                TXCO
      ENERGY CORP.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                TEXAS
      TAR SANDS INC.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                OUTPUT
      ACQUISITION CORP.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                OPEX
      ENERGY, LLC

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                CHARRO
      ENERGY INC.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      

      

    

    [Signatures
continue on next page.]

    
      
         

      

      
        8

      

       

    

    

    
      
        	 
      	 
      
	 
      	
                TXCO
      DRILLING CORP.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                EAGLE
      PASS WELL SERVICES, L.L.C.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                PPL
      OPERATING INC.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                MAVERICK
      GAS MARKETING, LTD.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      
	 
      	
                MAVERICK-DIMMIT
      PIPELINE, LTD.

              
	 
      	 
      
	 
      	
                By:

              	
                /s/
      James E. Sigmon

              
	 
      	 
      	
                Name:

              	
                James
      E. Sigmon

              
	 
      	 
      	
                Title:

              	
                CEO

              
	 
      	 
      	 
      	 
      

      

    

    

     

    
      
         

      

      
        9exhibit.htm

    Exhibit 10.1

    
 

    [Missing Graphic Reference]

    

    INVACARE
CORPORATION

    AMENDED
AND RESTATED 2003 PERFORMANCE PLAN

    

    
      	
              1.  

            	
              Purpose

            

    

     

    The
Invacare Corporation 2003 Performance Plan (the “Plan”), is designed to foster
the long-term growth and performance of the Company by: (a) enhancing the
Company’s ability to attract and retain highly qualified employees, (b)
motivating employees to serve and promote the long-term interests of the Company
and its shareholders through stock ownership and performance-based incentives,
and (c) strengthening the Company’s ability to attract, retain and incentivize
highly qualified non-employee Directors and aligning the interests of such
Directors with the interests of shareholders through stock
ownership.  To achieve this purpose, the Plan provides authority for
the grant of Stock Options, Restricted Stock, Stock Equivalent Units, Stock
Appreciation Rights, and other stock and performance-based
incentives.

     

    
      	
              2.  

            	
              Definitions

            

    

     

    (a) “Affiliate” -- means
“Affiliate” within the meaning given such term in Rule 12b-2 under the Exchange
Act.

     

    (b) “Award” -- means the grant of
Stock Options, Restricted Stock, Stock Equivalent Units, Stock Appreciation
Rights, and other stock and performance-based incentives under this Plan, or any
combination thereof.

     

    (c) “Award Agreement” -- means any
agreement between the Company and a Participant that sets forth terms,
conditions, and restrictions applicable to an Award.

     

    (d) “Board of Directors” -- means
the Board of Directors of the Company.

     

    (e)  “Change of Control” -- a
“Change of Control” shall be deemed to have occurred at the first time on which,
after the effectiveness of approval of the amendments to the Plan by the
Company’s shareholders at the Company’s 2009 Annual Shareholder
Meeting:

    

    (i)           There
is a report filed on Schedule 13D or Schedule 14D-1 (or any successor schedule,
form, or report), each as adopted under the Securities Exchange Act of 1934, as
amended, disclosing the acquisition, in a transaction or series of transactions,
by any person (as the term “person” is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended), other than (1) A.
Malachi Mixon and/or any Affiliate of A. Malachi Mixon, (2) the Company or any
of its subsidiaries, (3) any employee benefit plan or employee stock ownership
plan or related trust of the Company or any of its subsidiaries, or (4) any
person or entity organized, appointed or established by the Company or any of
its subsidiaries for or pursuant to the terms of any such plan or trust, of such
number of shares of the Company as entitles that person to exercise 30% or more
of the voting power of the Company in the election of Directors; or

    

    (ii)           During
any period of 24 consecutive calendar months, individuals who at the beginning
of such period constitute the Directors of the Company cease for any reason
to constitute at
least a majority of
the Directors of the Company unless the election of each new Director of the
Company (over such period) was approved or recommended by the vote of at least two-thirds of
the Directors of the Company then still in office who
were Directors of the Company at the beginning of the period; or

    

    (iii)           There
is a merger, consolidation, combination (as defined in Section 1701.01(Q), Ohio
Revised Code), majority share acquisition (as defined in Section 1701.01(R),
Ohio Revised Code), or control share acquisition (as defined in Section
1701.01(Z)(1), Ohio Revised Code, or in the Company’s Second Amended and
Restated Articles of Incorporation, as the same may be hereafter amended)
involving the Company and, as a result of which, the holders of shares of the
Company prior to the transaction become, by reason of the transaction, the
holders of such number of shares of the surviving or acquiring corporation or
other entity as entitles them to exercise less than fifty percent (50%) of the
voting power of the surviving or acquiring corporation or other entity in the
election of Directors; or

    

    (iv)           There
is a sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company,
but only if the transferee of the assets in such transaction is not a subsidiary
of the Company; or

    

    (v)           The
shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of Invacare, but only if the transferee of the assets of the Company
in such liquidation or dissolution is not a subsidiary of the
Company.

     

    (f)  “Code” -- means the Internal
Revenue Code of 1986, or any law that supersedes or replaces it, as amended from
time to time.  A reference to any provision of the Code includes a
reference to any lawful regulation or pronouncement promulgated thereunder and
to any successor provision.

     

    (g) “Committee” -- means the
Compensation and Management Development Committee of the Board of Directors, or
any other committee of the Board of Directors that the Board of Directors or the
Compensation and Management Development Committee authorizes to administer all
or any aspect of this Plan.

     

    (h) “Common Shares” -- means
Common Shares, without par value, of Invacare Corporation, including authorized
and unissued Common Shares and treasury Common Shares.

     

    (i) “Company” -- means Invacare
Corporation, an Ohio corporation, and its direct and indirect subsidiaries, or
any successor entity.

     

    (j) “Continuing Director” -- means
a Director who was a Director prior to a Change in Control or was recommended or
elected to succeed a Continuing Director by a majority of the Continuing
Directors then in office (or by a committee comprised solely of Continuing
Directors).

     

    (k) “Director” -- means any
individual who is a member of the Board of Directors of the
Company.

     

    (l) “Exchange Act” -- means the
Securities Exchange Act of 1934, and any law that supersedes or replaces it, as
amended from time to time.

     

    (m) “Fair Market Value” of Common
Shares -- means the value of the Common Shares determined by the Committee, or
pursuant to rules established by the Committee.

     

    (n) “Incentive Stock Option” --
means a Stock Option that meets the requirements of Section 422 of the Code, or
any successor or replacement provision.

     

    (o) “Notice of Award” -- means any
notice by the Committee to a Participant that advises the Participant of the
grant of an Award or sets forth terms, conditions, and restrictions applicable
to an Award.

     

    (p) “Participant” -- means any
person to whom an Award has been granted under this Plan.

     

    (q) “Performance Objectives” --
means the achievement of performance objectives established pursuant to this
Plan.  Performance Objectives may be described in terms of
Company-wide objectives or objectives that are related to the performance of the
individual Participant or the subsidiary, division, department or function
within the Company in respect of which the Participant performs services during
a specified time period.  Any Performance Objectives applicable to
Awards intended to qualify as “performance-based compensation” under Section
162(m) of the Code (the “Performance-Based Exception”) shall be limited to
specified levels of or increases in the Company’s, or subsidiary’s, or
division’s, or department’s, or function’s return on equity, earnings per Common
Share, total earnings, earnings growth, return on capital, operating measures
(including, but not limited to, operating margin and/or operating costs), return
on assets, or increase in the Fair Market Value of the Common
Shares.  Except in the case of such an Award intended to qualify under
Section 162(m) of the Code, if the Committee determines that a change in the
business, operations, corporate structure or capital structure of the Company,
or the manner in which it conducts its business, or other events or
circumstances render the Performance Objectives unsuitable, the Committee may
modify such Performance Objectives or the related minimum acceptable level of
achievement, in whole or in part, as the Committee deems appropriate and
equitable.

     

    The
Committee shall have the discretion to adjust the determinations of the degree
of attainment of the pre-established Performance Objectives; provided, however,
that Awards which are designed to qualify for the Performance-Based Exception,
may not be adjusted upward (the Committee shall retain the discretion to adjust
such Awards downward).

     

    In the
event that applicable tax and/or securities laws change to permit Committee
discretion to alter the governing performance measures without obtaining
shareholder approval of such changes, the Committee shall have sole discretion
to make such changes without obtaining shareholder approval.  In
addition, in the event that the Committee determines that it is advisable to
grant Awards which shall not qualify for the Performance-Based Exception, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).

     

    (r) “Person” -- means an
individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture or other entity, or a
governmental authority.

     

    (s) “Plan” -- means this Invacare
Corporation 2003 Performance Plan, as set forth herein and as hereafter may be
amended from time to time in accordance with the terms hereof.

     

    (t) “Restricted Stock” -- means an
Award of Common Shares that are subject to restrictions or risk of forfeiture
based on time and/or performance.

     

    (u) “Rule 16b-3” -- means Rule
16b-3 under the Exchange Act, or any rule that supersedes or replaces it, as
amended from time to time.

     

    (v) “Stock Appreciation Right” --
means any rights granted pursuant to an Award described in Section
6(b)(i).

     

    (w) “Stock Award” -- means Awards
granted in Section 6(b)(ii).

     

    (x) “Stock Equivalent Unit” --
means an Award that is valued by reference to the value of Common
Shares.

     

    (y) “Stock Option” -- means an
option to purchase Common Shares as described in Section 6(b)(iii).

     

    
      	
              3.  

            	
              Eligibility

            

    

     

    All
Directors and employees of the Company and its Affiliates are eligible for the
grant of Awards.  The selection of any such persons to receive Awards
will be within the discretion of the Committee.  More than one Award
may be granted to the same person.

     

    Notwithstanding
the foregoing, any individual who renounces in writing any right that he or she
may have to receive Awards under the Plan shall not be eligible to receive any
Awards hereunder.

     

    
      	
              4.  

            	
              Common
      Shares Available for Awards;
Adjustment

            

    

     

    (a) Number of Common
Shares.  The aggregate number of Common Shares that may be
subject to Awards, including specifically Incentive Stock Options, granted under
this Plan during the term of this Plan will be equal to Six Million Eight
Hundred Thousand (6,800,000) Common Shares, subject to any adjustments made in
accordance with the terms of this Section 4.

     

    The
assumption of obligations in respect of awards granted by an organization
acquired by the Company, or the grant of Awards under this Plan in substitution
for any such awards, will not reduce the number of Common Shares available in
any fiscal year for the grant of Awards under this Plan.

     

    Common
Shares subject to an Award that is forfeited, terminated, or canceled without
having been exercised (other than Common Shares subject to a Stock Option that
is canceled upon the exercise of a related Stock Appreciation Right) will again
be available for grant under this Plan, without reducing the number of Common
Shares available in any fiscal year for grants of Awards under this Plan, except
to the extent that the availability of those Common Shares would cause this Plan
or any Awards granted under this Plan to fail to qualify for the exemption
provided by Rule 16b-3.  Common Shares that are used to pay all or any
part of the exercise price or taxes associated with an Award, whether by the
transfer of Common Shares or the surrender of all or part of an Award (including
the Award being exercised), may not be available for grant under this Plan
without reducing the number of Common Shares available for grants of Awards
hereunder.

     

    (b) No Fractional Common
Shares.  No fractional Common Shares will be issued, and the
Committee will determine the manner in which the value of fractional Common
Shares will be treated.

     

    (c) Adjustment.  In the
event of any change in the Common Shares by reason of a merger, consolidation,
reorganization, recapitalization, or similar transaction, including any
transaction described under Section 424(a) of the Code, or in the event of a
stock dividend, stock split, reverse stock split, or distribution to
shareholders (other than normal cash dividends), the Committee will have
authority to adjust, in any manner that it deems equitable, the number and class
of Common Shares that may be issued under this Plan, the number and class of
Common Shares subject to outstanding Awards, the per share exercise price
applicable to outstanding Awards, and the Fair Market Value of the Common Shares
and other value determinations applicable to outstanding Awards (i.e., Stock
Equivalent Units, for example), including as may be allowed or required under
Section 424(a) of the Code.

     

    
      	
              5.  

            	
              Administration

            

    

     

    (a) Committee.  This
Plan will be administered by the Committee; provided, however, that the Board of
Directors may, in its discretion, at any time and from time to time, administer
the Plan in which case the term “Committee” shall be deemed to be the Board of
Directors.  The Committee will, subject to the terms of this Plan,
have the authority to: (i) select the eligible employees who will receive
Awards, (ii) grant Awards, (iii) determine the number and types of Awards to be
granted to eligible employees, (iv) determine the terms, conditions, vesting
periods, and restrictions applicable to Awards, including timing, price, and, if
applicable, Performance Objectives, subject to, and consistent with, the
provisions of the Plan, (v) adopt, alter, and repeal administrative rules and
practices governing this Plan, (vi) interpret the terms and provisions of this
Plan and any Awards granted under this Plan, including, where applicable,
determining the method of valuing any Award and certifying as to the
satisfaction of such Awards, (vii) prescribe the forms of any Notices of Award,
Award Agreements, or other instruments relating to Awards, (viii) supervise the
administration of this Plan, and (ix) make all other determinations and take all
other actions as the Committee deems necessary for the administration and
operation of the Plan.  The Committee may employ attorneys,
consultants, accountants, or other professional advisors to assist it in the
administration of the Plan.

     

    (b) Delegation.  The
Committee may delegate any of its authority to any other person or persons that
it deems appropriate.

     

    (c) Decisions
Final.  All decisions by the Committee, and by any other Person
or Persons to whom the Committee has delegated authority, to the extent
permitted by law, will be final and binding on all Persons.

     

    (d) No
Liability.  Neither the Committee nor any of its members shall
be liable for any act taken by the Committee pursuant to the Plan.  No
member of the Committee shall be liable for the act of any other
member.

     

    
      	
              6.  

            	
              Awards

            

    

     

    (a) Grant of
Awards.  The Committee will determine the type or types of
Awards to be granted to each Participant and will set forth in the related
Notice of Award or Award Agreement the terms, conditions, vesting periods, and
restrictions applicable to each Award.  Awards may be granted singly
or in combination or tandem with other Awards.  Awards may also be
granted in replacement of, or in substitution for, other awards granted by the
Company, whether or not granted under this Plan; provided, however, that if a
Participant pays all or part of the exercise price or taxes associated with an
Award by the transfer of Common Shares or the surrender of all or part of an
Award (including the Award being exercised), the Committee may not grant a new
Award to replace the Common Shares that were transferred or the Award that was
surrendered.  The Company may assume obligations in respect of awards
granted by any Person acquired by the Company or may grant Awards in replacement
of, or in substitution for, any such awards.  In no event shall any
Stock Option or Stock Appreciation Right be granted to a Participant in exchange
for the Participant’s agreement to permit the cancellation of one or more Stock
Options or Stock Appreciation Rights previously granted to such Participant if
the exercise price of the new grant is lower than the exercise price of the
cancelled grant.  Moreover, in no event shall a previously granted
Stock Option or Stock Appreciation Right be amended to reduce the exercise
price, except in accordance with an adjustment pursuant to Section
4(c).

     

    (b) Types of
Awards.  Awards may include, but are not limited to, the
following:

    

    (i) Stock Appreciation Right --
means a right to receive a payment, in cash or Common Shares, equal to the
excess of (A) the Fair Market Value, or other specified valuation, of a
specified number of Common Shares on the date the right is exercised over (B)
the Fair Market Value, or other specified valuation, of such Common Shares on
the date the right is granted, all as determined by the
Committee.  The right may be conditioned upon the occurrence of
certain events, such as a Change in Control of the Company, or may be
unconditional, as determined by the Committee. The term of each Stock
Appreciation Right shall be fixed by the Committee, but in no event shall the
term exceed ten years after the date such Stock Appreciation Right is
granted.

     

    (ii) Stock Award -- means an Award
that is made in Common Shares, Restricted Stock, or Stock Equivalent Units or
that is otherwise based on, or valued in whole or in part by reference to, the
Common Shares, but does not include Stock Options.  All or part of any
Stock Award may be subject to conditions (including, but not limited to, the
passage of time or the achievement of Performance Objectives), restrictions,
and  risks of forfeiture, as and to the extent established by the
Committee.  Stock Awards may be based on the Fair Market Value of the
Common Shares, or on other specified values or methods of valuation, as
determined by the Committee.

     

    (iii) Stock Option -- means a right
to purchase a specified number of Common Shares, during a specified period, and
at a specified exercise price, all as determined by the Committee.  A
Stock Option may be an Incentive Stock Option or a Stock Option that does not
qualify as an Incentive Stock Option.  The term of each Stock Option
shall be fixed by the Committee, but in no event shall the term exceed ten years
after the date such Stock Option is granted.  In addition to the
terms, conditions, vesting periods, and restrictions established by the
Committee, Incentive Stock Options must comply with the requirements of Section
422 of the Code and regulations promulgated thereunder, including, but not
limited to, the requirements that Incentive Stock  Options (A) may not
be granted to non-employee Directors, and (B) the aggregate Fair Market Value of
the Common Shares that first becomes exercisable in any calendar year shall not
exceed $100,000 (measured as of the effective grant date of the
Award).  The exercise price of a Stock Option may not be less than
100% of the Fair Market Value on the date the Stock Option is granted; provided,
however, up to 200,000 Common Shares for which Stock Options that do not qualify
as Incentive Stock Options may be granted may have an exercise price of not less
than 75% of the Fair Market Value on the date such Stock Option is granted,
subject to adjustment in accordance with Section 4(c) hereof.

     

    (c) Limits on Awards under the
Plan.  The maximum aggregate number of Common Shares that may
be granted during the term of this Plan pursuant to all Awards, other than Stock
Options, is 1,300,000 Common Shares, subject to adjustment in accordance with
Section 4(c) hereof.

     

    (d) Limits on Individual
Awards.  The maximum aggregate number of Common Shares for
which Stock Options may be granted to any particular employee during any
calendar year during the term of this Plan is 400,000 Common Shares, subject to
adjustment in accordance with Section 4(c) hereof.  The maximum
aggregate number of Common Shares for each of (i) Stock Appreciation Rights and
(ii) other Stock Awards which may be granted to any particular employee during
any calendar year during the term of this Plan is 50,000 Common Shares (or
100,000 Common Shares in the aggregate), subject to adjustment in accordance
with Section 4(c) hereof.

     

    
      	
              7.  

            	
              Deferral
      of Payment

            

    

     

    With the
approval of the Committee, the delivery of the Common Shares, cash, or any
combination thereof subject to an Award, or the Award itself, may be deferred,
either in the form of installments or a single future delivery, so long as the
deferral is in compliance with Section 409A of the Internal Revenue Code
(“Section 409A”).  The Committee also may permit selected Participants
to defer the receipt of some or all of their Awards, as well as other
compensation, in accordance with procedures established by the Committee,
including to assure that the recognition of taxable income is deferred under the
Code, so long as the deferral is Section 409A compliant.  Deferred
amounts may, to the extent permitted by the Committee, be credited as cash or
Stock Equivalent Units.  The Committee also may establish rules and
procedures for the crediting of interest on deferred cash payments and dividend
equivalents on Stock Equivalent Units.

     

    
      	
              8.  

            	
              Payment
      of Exercise Price

            

    

     

    The
exercise price of a Stock Option (other than an Incentive Stock Option) and any
Stock Award for which the Committee has established an exercise price may be
paid in cash, by the transfer of Common Shares, by the surrender of all or part
of an Award (including the Award being exercised), or by a combination of these
methods, as and to the extent permitted by the Committee.  The
exercise price of an Incentive Stock Option may be paid in cash, by the transfer
of Common Shares, or by a combination of these methods, as and to the extent
permitted by the Committee but may not be paid by the surrender of all or part
of an Award.  The Committee may prescribe any other method of paying
the exercise price that it determines to be consistent with applicable law and
the purpose of this Plan.

     

    In the
event Common Shares that are Restricted Stock are used to pay the exercise price
of a Stock Award to the extent provided by the Committee, then that number of
the Common Shares issued upon the exercise of the Award equal to the number of
Common Shares that are Restricted Stock that have been used to pay the exercise
price will be subject to the same restrictions as the Restricted
Stock.

     

    
      	
              9.  

            	
              Taxes
      Associated with Award

            

    

     

    Prior to
the payment of an Award or upon the exercise or release thereof, the Company may
withhold, or require a Participant to remit to the Company, an amount sufficient
to pay any Federal, state, and local taxes associated with the
Award.  The Committee may, in its discretion and subject to such rules
as the Committee may adopt, permit a Participant to pay any or all taxes
associated with the Award (other than an Incentive Stock Option) in cash, by the
transfer of Common Shares, by the surrender of all or part of an Award
(including the Award being exercised), or by a combination of these
methods.  The Committee may permit a Participant to pay any or all
taxes associated with an Incentive Stock Option in cash, by the transfer of
Common Shares, or by a combination of these methods or by any other method which
does not disqualify the option as an Incentive Stock Option under applicable
provisions of the Code.  If Common Shares are used to satisfy
withholding tax obligations, such Common Shares shall be valued based on the
Fair Market Value thereof as of the date when the withholding for taxes is
required to be made.  Notwithstanding the foregoing, except as
otherwise provided by the Committee or in the terms of the Award, the Company
shall have the right to require a Participant to pay cash to satisfy withholding
taxes as a condition to the payment of any Award (whether in cash or Common
Shares) under the Plan.

     

    
      	
              10.  

            	
              Termination
      of Employment

            

    

     

    If the
employment of a Participant terminates for any reason, all unexercised,
deferred, and unpaid Awards may be exercisable or paid only in accordance with
rules established by the Committee or as specified in the particular Award
Agreement or Notice of Award.  Such rules may provide, as the
Committee deems appropriate, for the expiration, continuation, or acceleration
of the vesting of all or part of the Awards, provided that any such rules shall
comply with Section 422 of the Code to the extent such Award is intended to
qualify as an Incentive Stock Option.

     

    
      	
              11.  

            	
              Termination
      of Awards Under Certain Conditions

            

    

     

    The
Committee may cancel any unexpired, unpaid, or deferred Awards at any time if
the Participant is not in compliance with all applicable provisions of this Plan
or with any Notice of Award or Award Agreement.  Further, if the
Participant, without the prior written consent of the Company, engages in any of
the following activities:

     

    (i) Within
eighteen (18) months after the date a Participant terminates his or her
employment with the Company or its Affiliates for any reason, the Participant
then accepts employment with any competitor of the Company, or otherwise renders
services for an organization, or engages in a business, that is, in the judgment
of the Committee, in competition with the Company, or

     

    (ii) Discloses
to anyone outside of the Company, or uses for any purpose other than the
Company’s business any confidential information or material relating to the
Company, whether acquired by the Participant during or after employment with the
Company, in a fashion or with a result that the Committee, in its judgment,
deems is or may be injurious to the best interests of the Company;

     

    then the Committee
may, in its discretion, at any time thereafter, cancel any unexpired, unpaid or
deferred Awards or may require the Participant to return the economic value of
any Award that the Participant realized or obtained (as of the date of exercise,
vesting or payment) during the time period commencing six months prior to such
Participant’s termination date and ending after the date when all of the
Committee members discover that the Participant engaged in any activities
referred to in clauses (i) and (ii) above.

     

    The
Committee may, in its discretion and as a condition to the exercise of an Award,
require a Participant to acknowledge in writing that he or she is in compliance
with all applicable provisions of this Plan and of any Notice of Award or Award
Agreement and has not engaged in any activities referred to in clauses (i) and
(ii) above.

     

    
      	
              12.  

            	
              Change
      of Control

            

    

     

    In the
event of a Change of Control of the Company, unless and only then to the extent
otherwise determined by the Board of Directors or as otherwise prescribed in an
Award Agreement, (i) all Stock Appreciation Rights and Stock Options then
outstanding will become fully exercisable immediately prior to the date of the
Change of Control, and (ii) all restrictions and conditions applicable to
Restricted Stock and other Stock Awards will be deemed to have been satisfied
immediately prior to the date of the Change of Control.  Any such
determination by the Board of Directors that is made after the occurrence of a
Change of Control will not be effective unless a majority of the Directors then
in office are Continuing Directors and the determination is approved by a
majority of the Continuing Directors.

    
       

      
        	
                13.  

              	
                Amendment,
      Suspension, or Termination of this Plan; Amendment of Outstanding
      Awards

              

      

       

    

    (a) Amendment, Suspension, or
Termination of this Plan.  The Board of Directors may amend,
suspend, or terminate this Plan at any time and from time to time in such
respects as the Board of Directors may deem necessary or appropriate; provided,
however, that in no event, without the approval of the Company’s shareholders,
shall any action of the Committee or the Board of Directors result in
increasing, except as provided in Section 4(c) hereof, the maximum number of
Common Shares that may be subject to Awards granted under the Plan.

     

    (b) Amendment of Outstanding
Awards.  The Committee may, in its discretion, amend the terms
of any Award, prospectively or retroactively, but no such amendment may impair
the rights of any Participant without his or her consent, or reduce the exercise
price of any Stock Option or Stock Appreciation Right, except in accordance with
an adjustment pursuant to Section 4(c).  The Committee may, in whole
or in part, waive any restrictions or conditions applicable to, or accelerate
the vesting of, any Award.

     

    
      	
              14.  

            	
              Awards
      to Foreign Nationals and Employees Outside the United
    States

            

    

     

    To the
extent that the Committee deems appropriate to comply with foreign law or
practice and to further the purpose of this Plan, the Committee may, without
amending this Plan, (i) establish special rules applicable to Awards granted to
Participants who are foreign nationals, are employed outside the United States,
or both, including rules that differ from those established under this Plan, and
(ii) grant Awards to such Participants in accordance with those
rules.

     

    
      	
              15.  

            	
              Miscellaneous
      Terms

            

    

     

    (a) Nonassignability.  Unless
and except to the extent otherwise determined by the Committee (which may be
contained in the applicable Award Agreement or Notice of Award), (i) no Award
granted under the Plan may be transferred or assigned by the Participant to whom
it is granted other than by will or pursuant to the laws of descent and
distribution, and (ii) an Award granted under this Plan may be exercised, during
the Participant’s lifetime, only by the Participant or guardian or other legal
representative.

     

    (b) No Rights as
Employees/Shareholders.  Nothing in the Plan or in any Award
Agreement or Notice of Award shall confer upon any Participant any right to
continue in the employ of the Company or an  Affiliate, or to serve as
a member of the Board of Directors or to be entitled to receive any remuneration
or benefits not set forth in the Plan or such Award Agreement or Notice of
Award, or to interfere with or limit either the right of the Company or an
Affiliate to terminate the employment of such Participant at any time or the
right of the shareholders of the Company to remove him or her as a member of the
Board of Directors with or without cause.  Nothing contained in the
Plan or in any Award Agreement or Notice of Award shall be construed as
entitling any Participant to any rights of a shareholder as a result of the
grant of an Award until such time as Common  Shares are actually
issued to such Participant pursuant to the exercise of a Stock Option, Stock
Appreciation Right or other Stock Award.

     

    (c) Unfunded Plan.  The
Plan shall be unfunded and the Company shall not be required to segregate any
assets that may at any time be represented by Awards under the
Plan.  Any liability of the Company to any person with respect to any
Award under the Plan shall be based solely upon any contractual obligations that
may be effected pursuant to the Plan.  No such obligation of the
Company shall be deemed to be secured by any pledge of, or other encumbrance on,
any property of the Company.

     

    (d) Other Company Benefit and
Compensation Programs.  Payments and other benefits received by
a Participant under an Award made pursuant to the Plan shall not be deemed a
part of a Participant’s regular, recurring compensation for purposes of any
termination indemnity or severance pay law of any country and shall not be
included in, nor have any effect on, the determination of benefits under any
pension or other employee benefit plan or similar arrangement provided by the
Company or any Affiliate, unless (i) expressly so provided by such other plan or
arrangement or (ii) the Committee expressly determines that an Award or a
portion thereof should be included as recurring compensation.  Nothing
contained in the Plan shall prohibit the Company or any Affiliate from
establishing other special awards, incentive compensation plans, compensation
programs and other similar arrangements providing for the payment of
performance, incentive or other compensation to employees.  Payments
and benefits provided to any employee under any other plan shall be governed
solely by the terms of such other plan.

     

    (e) Securities Law
Restrictions.  In no event shall the Company be obligated to
issue or deliver any Common Shares or other Awards if such issuance or delivery
shall constitute a violation of any provisions of any law or regulation of any
governmental authority or securities exchange.  No Common Shares or
other Awards shall be issued under the Plan unless counsel for the Company shall
be satisfied that such issuance will be in compliance with all applicable
Federal and state securities laws and regulations and all requirements of any
securities exchange on which the Common Shares are listed.

     

    (f) Invalidity.  In the
event any provision of the Plan shall be held to be invalid or unenforceable for
any reason, such invalidity or unenforceability shall not affect the remaining
provisions of the Plan.

     

    (g) Successors.  All
obligations of the Company with respect to Awards granted under the Plan are
binding on any successor to the Company, whether as a result of a direct or
indirect purchase, merger, consolidation or otherwise of all or substantially
all of the business and/or assets of the Company.

     

    (h) Governing Law.  The
interpretation, validity, and enforcement of this Plan will, to the extent not
otherwise governed by the Code or the securities laws of the United States, be
governed by the laws of the State of Ohio.

     

    
      	
              16.  

            	
              Effective
      and Termination Dates

            

    

     

    (a) Effective
Date.  This Plan will be effective on May 21, 2003, upon
approval by the shareholders of the Company at the 2003 annual meeting of
shareholders.

     

    (b) Termination
Date.  This Plan will continue in effect until midnight on May
20, 2013; provided, however, that Awards granted on or before that date may
extend beyond that date and restrictions and other terms and conditions imposed
on Restricted Stock or any other Award granted on or before that date may extend
beyond such date.

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