Gabriel Communications, Inc. 1998 Stock Incentive Plan (as amended December 21, 1999)

Summary

Gabriel Communications, Inc. established this Stock Incentive Plan to attract and retain employees, directors, consultants, and advisers by offering stock-based compensation. The plan outlines eligibility, types of awards (such as stock options and restricted stock), and key definitions, including what constitutes a change in control or termination. The plan is administered by the company's Compensation Committee and is designed to align participants' interests with those of shareholders, promoting long-term company growth and value. The plan was amended as of December 21, 1999.

EX-10.4 13 ex10-4.txt 1998 STOCK INCENTIVE PLAN, AS AMENDED 1 EXHIBIT 10.4 GABRIEL COMMUNICATIONS, INC. 1998 STOCK INCENTIVE PLAN (as amended as of December 21, 1999) SECTION 1 Statement of Purpose 1.1. The Gabriel Communications, Inc. 1998 Stock Incentive Plan (the "Plan") has been established by Gabriel Communications, Inc., a Delaware corporation (the "Company"), to: (a) attract and retain executive, managerial and other salaried employees, and outside directors, consultants and advisers; (b) motivate Participants, by means of appropriate incentives, to achieve long-range goals; (c) provide incentive compensation opportunities that are competitive with those of other telecommunications businesses; and (d) further identify a Participant's interests with those of the Company's stockholders through compensation that is based on the Company's Stock; and thereby promote the long-term financial interests of the Company, including the growth in value of the Company's equity and enhancement of long-term stockholder returns. SECTION 2 Definitions 2.1. Unless the context indicates otherwise, the following terms shall have the meaning set forth below: (a) Award. The term "Award" shall mean any award or benefit granted to any Participant under the Plan, including, without limitation, the grant of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Stock, Performance Units, Stock acquired through a Stock purchase program, Merit Awards and Phantom Stock Awards. (b) Board. The term "Board" shall mean the Board of Directors of the Company. (c) Cause. The term "Cause" shall mean (i) the willful and continued failure by a Participant to substantially perform his or her duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), or (ii) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes 2 of this definition, no act, or failure to act, shall be deemed "willful" unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his or her action or omission was in the best interest of the Company. (d) Change in Control. A "Change in Control" shall be deemed to have occurred if: (1) any "person" as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than a Significant Stockholder, the Company, any subsidiary of the Company, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company's then outstanding securities in any transaction or series of transactions not approved in advance by a vote of at least two-thirds (2/3) of the Board; or (2) during any period of three consecutive years (not including any period prior to the effective date of this Plan), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (1), (3), (4) or (5) of this definition) whose election by the Board or nomination for election by the Comapny's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; or (3) the stockholders of the Company approve a merger or consolidation of the Company with any other company other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) 2 3 acquires more than 25% of the combined voting power of the Company's then outstanding securities; or (4) the stockholders of the Company adopt a plan of complete liquidation of the Company or approve an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or (5) any other event determined by a vote of at least two-thirds (2/3) of the Board to constitute a "Change of Control". (e) Code. The term "Code" means the Internal Revenue Code of 1986, as amended. A reference to any provision of the Code shall include reference to any successor provision of the Code. (f) Committee. The term "Committee" means the Compensation Committee of the Board selected in accordance with the provisions of Subsection 4.2. (g) Date of Termination. A Participant's "Date of Termination" shall be the date on which his or her employment or other affiliation with all Employers terminates for any reason; provided that a Date of Termination shall not be deemed to occur by reason of a transfer of the Participant between the Company and a Related Company or between two Related Companies; and provided further that an Employee Participant's employment shall not be considered terminated while the Employee Participant is on a leave of absence which is approved by the Participant's Employer. (h) Disability. Except as otherwise provided by the Committee, a Participant shall be considered to have a "Disability" during the period in which he or she is unable, by reason of a medically determinable physical or mental impairment, to carry out his or her duties with an Employer, which condition, in the discretion of the Committee, is expected to have a duration of not less than 120 days. (i) Effective Date. The term "Effective Date" shall have the meaning ascribed to it in Section 4.1 of the Plan. (j) Employee. The term "Employee" shall mean a person with an employment relationship with an Employer. (k) Employer. The term "Employer" shall mean the Company and each Related Company. (l) Fair Market Value. Until the initial public offering of the Stock pursuant to a registration statement filed pursuant to the Securities Act of 1933, as amended ("IPO"), the term "Fair Market Value" of the Stock on any given date shall be the 3 4 mean the fair market value per share of Stock as reasonably determined in good faith by the Committee. On any given date following the IPO, the term "Fair Market Value" of the Stock shall mean the last sale price per share of Stock, regular way, on such date or, in case no such sale takes place on such date, the mean between the closing bid and asked prices per share of Stock on such date, as reported in the principal quotation system applicable to the Stock or, if on any such date the Stock is not so quoted, the price per share of Stock reasonably determined in good faith by the Committee. (m) Grant Date. The term "Grant Date" means the date any Award is granted by the Committee or such earlier day on which the Participant is hired, promoted or such other singular event occurs, provided the date on which the Award is granted by the Committee shall not be more than 90 days following such date. (n) Immediate Family. With respect to a particular Participant, the term "Immediate Family" shall mean, whether through consanguinity or adoptive relationships, the Participant's spouse, children, stepchildren, siblings and grandchildren. (o) Incentive Stock Option. The term "Incentive Stock Option" shall have the meaning ascribed to it in Subsection 6.1 of the Plan. (p) Individual Limit. The term "Individual Limit" shall have the meaning ascribed to it in Subsection 4.3 of the Plan. (q) Merit Award. The term "Merit Award" shall mean any Merit Award granted pursuant to Section 13 of the Plan. (r) Non-Qualified Stock Option. The term "Non-qualified Stock Option" shall have the meaning ascribed to it in Subsection 6.1 of the Plan. (s) Option. The term "Option" shall mean any Incentive Stock Option or Non-Qualified Stock Option granted under the Plan. (t) Participant. The term "Participant" means any Employee, any non-Employee director of the Company or any outside adviser or consultant retained by any Employer who has been granted an Award under the Plan. (u) Performance-Based Compensation. The term "Performance-Based Compensation" shall have the meaning ascribed to it in Section 162(m)(4)(C) of the Code. (v) Performance Goals. The term "Performance Goals" means the goals established by the Committee as part of the terms of any Award which, if met, 4 5 will entitle the Participant to payment in accordance with the terms of such Award and will qualify such payment as Performance-Based Compensation. (w) Performance Period. The term "Performance Period" shall mean the period over which applicable performance is to be measured. (x) Performance Stock. The term "Performance Stock" shall mean Stock awarded pursuant to Section 10 of the Plan. (y) Performance Units. The term "Performance Units" shall mean units awarded pursuant to Section 11 of the Plan. (z) Phantom Stock Award. The term "Phantom Stock Award" shall mean any Phantom Stock Award granted pursuant to Section 14 of the Plan. (aa) Qualified Retirement Plan. The term "Qualified Retirement Plan" means any plan of an Employer that is intended to be qualified under Section 401(a) of the Code. (bb) Related Company. The term "Related Company" means any company during any period in which it is a "subsidiary corporation" of the Company (as that term is defined in Code Section 424(f)). (cc) Restricted Period. The term "Restricted Period" shall mean the period of time for which Restricted Stock is subject to forfeiture pursuant to the Plan or during which Options and Stock Appreciation Rights are not exercisable. (dd) Restricted Stock. The term "Restricted Stock" shall mean Stock awarded pursuant to Section 8 of the Plan. (ee) Restricted Stock Units. The term "Restricted Stock Units" shall mean units awarded pursuant to Section 9 of the Plan. (ff) Retirement. "Retirement" of an Employee Participant shall mean the occurrence of a Participant's Date of Termination under circumstances that constitute such participant's retirement at normal retirement age under the terms of the Qualified Retirement Plan of the Company that is extended to the Participant immediately prior to the Participant's Date of Termination or, if no such plan is extended to the Participant on his or her Date of Termination, under the terms of any applicable retirement policy of the Participant's Employer. (gg) Significant Stockholder. The term "Significant Stockholder" shall mean any stockholder of the Company who, immediately prior to the Effective Date, owned 25% or more of the outstanding shares of Stock. 5 6 (hh) Stock. The term "Stock" shall mean shares of common stock, $0.10 par value per share, of the Company. (ii) Stock Appreciation Right. The term "Stock Appreciation Right" shall mean a Stock Appreciation Right awarded pursuant to Section 7 of the Plan. SECTION 3 Eligibility 3.1. Subject to the discretion of the Committee and the terms and conditions of the Plan, the Committee shall determine and designate from time to time, from among the Employees, the non-Employee directors of the Company and the outside advisers and consultants of any Employer, Participants who will be granted one or more Awards under the Plan, provided that only Employees may be granted Incentive Stock Options. SECTION 4 Operation and Administration 4.1. The Plan was originally adopted by the Board and approved by a majority vote of the holders of the Stock as of November 16, 1998 (the "Effective Date"). As of February 16, 1999, November 23, 1999, and December 21, 1999, the Board adopted amendments of the Plan that increased the number of shares available for grant of Awards from 1,000,000 to 1,300,000, from 1,300,000 to 3,550,000, and from 3,550,000 to 5,000,000, respectively, which amendments are subject to approval of the stockholders of the Company. To the extent required pursuant to Section 162(m) of the Code, the Plan shall be resubmitted to stockholders of the Company for reapproval at the first meeting of stockholders of the Company that occurs in 2003 and at five year intervals thereafter, in each case, as may be required to qualify any Award under the Plan as Performance - Based Compensation. The Plan shall remain in effect until terminated by the Board, provided however, that no Incentive Stock Options may be granted under the Plan after November 15, 2007. 4.2. The Plan shall be administered by the Committee which shall consist of not less than two non-Employee members of the Board. Plenary authority to manage and control the operation and administration of the Plan shall be vested in the Committee, which authority shall include, without limitation, the following: (a) Subject to the provisions of the Plan, the Committee will have the authority and discretion to select Employees, non-Employee directors of the Company and outside advisers or consultants retained by an Employer to receive Awards, to determine the time or times of receipt, to determine the types of Awards and the number of shares covered by Awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of Awards, and to cancel or suspend Awards. In making such Award determinations, the Committee may take into account the nature of services rendered by 6 7 the respective Employee or outside adviser or consultant, his or her present and potential contribution to the Company's success and such other factors as the Committee deems relevant. (b) Subject to the provisions of the Plan, the Committee will have the authority and discretion to determine the extent to which Awards under the Plan will be structured to conform to the requirements applicable to Performance-Based Compensation as described in Code Section 162(m), and to take such action, establish such procedures, and impose such restrictions at the time such Awards are granted as the Committee determines to be necessary or appropriate to conform to such requirements. (c) The Committee will have the authority and discretion to interpret the Plan, to establish, amend and rescind any rules and regulations relating to the Plan, to determine the terms and provisions of any agreements made pursuant to the Plan, and to make all other determinations that may be necessary or advisable for the administration of the Plan and to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award in the manner and to the extent the Committee deems necessary or advisable to carry it into effect. (d) Any interpretation of the Plan by the Committee and any decision made by it under the Plan is final and binding on all persons. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee; provided, however, that except as otherwise permitted under Treasury Regulation 1.162-27(e)(2)(iii)(C), the Committee may not increase any Award once made if payment under such Award is intended to constitute Performance-Based Compensation. (e) The Committee may only act by a majority of its members. Any determination of the Committee may be made without a meeting by the unanimous written consent of its members. In addition, the Committee may authorize one or more of its members or any officer of an Employer to execute and deliver documents and perform other administrative acts pursuant to the Plan. (f) No member or authorized delegate of the Committee shall be liable to any person for any action taken or omitted in connection with the administration of the Plan unless attributable to his or her own fraud or gross misconduct. The Committee, the individual members thereof, and persons acting as the authorized delegates of the Committee under the Plan, shall be indemnified by the Company against any and all liabilities, loses, costs and expenses (including legal fees and expenses) of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Committee or its members or authorized delegates by reason of the performance of a Committee function if the Committee or its members or authorized delegates, as the case may be, did not act dishonestly or in willful violation of the law or regulation under which such liability, loss, cost or expense arises. This indemnification shall not duplicate but may supplement any coverage available under any applicable insurance policy, contract or by-law of any Employer. 7 8 4.3 Notwithstanding any other provision of the Plan to the contrary, no Participant shall receive any Award of an Option or a Stock Appreciation Right under the Plan to the extent that the sum of (a) the number of shares of Stock subject to such Award and (b) the number of shares of Stock subject to all other prior Awards of Options and Stock Appreciation Rights under the Plan during the one-year period ending on the date of the Award would exceed the Participant's Individual Limit under the Plan. The determination made under this Subsection 4.3 shall be based on the shares of Stock subject to Awards at the time of grant, regardless of when the Awards become exercisable. Subject to the provisions of Section 16, a Participant's "Individual Limit" shall be 2,000,000 shares of Stock per calendar year. The maximum amount of cash that may be paid out with respect to Awards to any individual during any one-year period is $1,000,000. 4.4. To the extent that the Committee determines that it is necessary or desirable to conform any Awards under the Plan with the requirements applicable to "Performance-Based Compensation", as that term is used in Code Section 162(m)(4)(C), it may, at or prior to the time an Award is granted, take such steps and impose such restrictions with respect to such Award as it determines to be necessary to satisfy such requirements. To the extent that it is necessary to establish Performance Goals for a Particular Performance Period, those goals will be based on one or more of the following business criteria: revenues, EBITDA, cash flow, net income, earnings per share, debt reduction, return on investment, return on assets, costs of communications services, sales, general and administration costs, customer service and satisfaction, compliance with Employer policies and achievement of objectives set forth in the Company's Business Plan and annual budgets. If the Committee establishes Performance Goals for a Performance Period relating to one or more of these business criteria, the Committee may determine to approve a payment from that particular Performance Period upon attainment of the Performance Goal relating to any one or more of such criteria. SECTION 5 Shares Available Under the Plan 5.1. The shares of Stock with respect to which Awards may be made under the Plan shall be shares currently authorized but unissued or treasury shares acquired by the Company, including shares purchased in open market or in private transactions. Subject to the provisions of Section 16, the total number of shares of Stock available for grant of Awards shall not exceed five million (5,000,000) shares of Stock, of which shares one million (1,000,000) shall be available for issuance pursuant to any Stock purchase program established pursuant to Section 12 of the Plan. Except as otherwise provided herein, any shares subject to an Award which for any reason expires or is terminated without issuance of shares (whether or not cash or other consideration is paid to a Participant in respect to such Award) as well as shares used as full or partial payment to the Company upon exercise of an Award, shall again be available for any purpose under the Plan. 8 9 SECTION 6 Options 6.1. The grant of an "Option" under this Section 6 entitles the Participant to purchase shares of Stock at a price fixed at the time the Option is granted, or at a price determined under a method established at the time the Option is granted, subject to the terms of this Section 6. Options granted under this Section 6 may be either Incentive Stock Options or Non-Qualified Stock Options, and, subject to Sections 15 and 20, shall not be exercisable for at least six months from Grant Date, as determined in the discretion of the Committee. An "Incentive Stock Option" is an Option that is intended to satisfy the requirements applicable to an "incentive stock option" described in Section 422(b) of the Code. A "Non-Qualified Option" is an Option that is not intended to be an "incentive stock option" as that term is described in Section 422(b) of the Code. 6.2. The Committee shall designate the Participants to whom Options are to be granted under this Section 6 and shall determine the number of shares of Stock to be subject to each such Option. To the extent that the aggregate Fair Market Value of Stock with respect to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year (under all plans of the Employers) exceeds $100,000, such options shall be treated as Non-Qualified Stock Options, to the extent required by Section 422 of the Code. 6.3. The determination and payment of the purchase price of a share of Stock under each Option granted under this Section shall be subject to the following: (a) The purchase price shall be established by the Committee or shall be determined by a method established by the Committee at the time the Option is granted, subject to the following limitations: (i) the purchase price established for each Incentive Stock Option shall not be less than 100% of the Fair Market Value of the Stock on the Grant Date (110% in the case of an Incentive Stock Option granted to a Participant who directly or indirectly owns more than 10% of the total combined voting power of all classes of stock of the Company); and (ii) the purchase price established for each Non-Qualified Stock Option shall be not less than 80% of the Fair Market Value of the Stock on the Grant Date; (b) Subject to the following provisions of this subsection 6.3, the full purchase price of each share of Stock purchased upon the exercise of any Option shall be paid at the time of such exercise and, as soon as practicable thereafter, a certificate representing the shares so purchased shall be delivered to the person entitled thereto; and (c) The purchase price shall be payable either in cash or shares of Stock (valued at Fair Market Value as of the day of exercise), through a combination of cash or shares of Stock or through such cashless exercise arrangement as may be approved by the Committee and established by the Company, provided that any share of Stock used for payment shall have been owed by the Participant for at least six (6) months. 9 10 6.4. Except as otherwise expressly provided in the Plan, an Option granted under this Section 6 shall be exercisable in accordance with the following terms of this Subsection 6.4: (a) The terms and conditions relating to exercise of an Option shall be established by the Committee, and may include, without limitation, conditions relating to completion of a specified period of service and achievement of Performance Goals by the Participant prior to exercise of the Option; (b) No Option may be exercised by a Participant after the expiration date applicable to that Option; and (c) The exercise of an Option will result in the surrender of the corresponding rights under a tandem Stock Appreciation Right, if any. 6.5. The vesting and exercise periods of any Option shall be determined by the Committee but the term of any Option shall not extend more than ten years after the Date of Grant. 6.6. In the event the Participant exercises an Option under this Plan and pays all or a portion of the purchase price in Stock, in the manner permitted by Subsection 6.3, such Participant, pursuant to the exercise of Committee discretion at the time the Option is exercised or to the extent previously authorized by the Committee, may be issued a new Option to purchase additional shares of Stock equal to the number of shares of Stock surrendered to the Company in such payment. Such new Option shall have an exercise price equal to the Fair Market Value per share of Stock on the date such new Option is granted and may have vesting and expiration dates that are the same as the Option so exercised. SECTION 7 Stock Appreciation Rights 7.1. Subject to the terms of this Section 7, a Stock Appreciation Right granted under the Plan entitles the Participant to receive, in cash or Stock (as determined in accordance with Subsection 7.4), value equal to all or a portion of the excess of: (a) the Fair Market Value of a specified number of shares of Stock at the time of exercise; over (b) a specified price which shall not be less than (i) 100% of the Fair Market Value of the Stock on the Grant Date, or (ii) if granted in tandem with an Option, the exercise price with respect to shares of Stock under the tandem Option. 7.2. Subject to the provisions of the Plan, the Committee shall designate the Participants to whom Stock Appreciation Rights are to be granted under the Plan, shall determine the exercise price or a method by which the price shall be established with respect to each such Stock Appreciation Right, and shall determine the number of shares of Stock on which each Stock Appreciation Right is based. A Stock Appreciation Right may be granted in connection with all or any portion of a previously or contemporaneously granted Option or not in connection with an Option. If a Stock Appreciation Right is granted in connection with an Option then, in the 10 11 discretion of the Committee, the Stock Appreciation Right may, but need not, be granted in tandem with the Option. 7.3. The exercise of Stock Appreciation Rights shall be subject to the following: (a) If a Stock Appreciation Right is not in tandem with an Option, then the Stock Appreciation Right shall be exercisable in accordance with the terms established by the Committee in connection with such rights but, subject to Sections 15 and 20 shall not be exercisable for six months from the Grant Date and the term of any Stock Appreciation Right shall not extend more than ten years from the Grant Date; and may include, without limitation, conditions relating to completion of a specified period of service and achievement of Performance Goals prior to exercise by the Participant; and (b) If a Stock Appreciation Right is in tandem with an Option, then the Stock Appreciation Right shall be exercisable only at the time the tandem Option is exercisable and the exercise of the Stock Appreciation Right will result in the surrender of the corresponding rights under the tandem Option. 7.4. Upon the exercise of a Stock Appreciation Right, the value to be distributed to the Participant, in accordance with Subsection 7.1, shall be distributed in shares of Stock (valued at their Fair Market Value at the time of exercise), in cash, or in a combination of Stock and cash, in the discretion of the Committee. 7.5. The Committee may grant Limited Stock Appreciation Rights which entitle the Participant to receive a cash payment in connection with a Change in Control. Notwithstanding the foregoing provisions of this Section 7, a Limited Stock Appreciation Right shall be subject to the following: (a) A Limited Stock Appreciation Right may (but need not) be granted in connection with all or any portion of a previously or contemporaneously granted Option and may be granted in tandem with an Option regardless of whether the Option is in tandem with a Stock Appreciation Right; (b) In the case of a Limited Stock Appreciation Right that is in tandem with an Option, the payment amount shall be equal to the difference between the exercise price per share of the Stock covered by the tandem Option and the Fair Market Value of a share of Stock on the date of exercise; (c) To the extent provided by the Committee, a Limited Stock Appreciation Right may be automatically exercisable at a time determined by the Committee, or it may be exercised by the Participant during the period beginning not earlier than the date of a Change in Control, and ending not later than ninety (90) days following the date of the Change in Control, and may be exercisable regardless of whether the Participant is then employed by an Employer; and 11 12 (d) If the Limited Stock Appreciation Right is in tandem with an Option, the exercise of the Limited Stock Appreciation Right shall result in the cancellation of the tandem Option (and any Stock Appreciation Right in tandem with such Option). SECTION 8 Restricted Stock 8.1. Subject to the terms of this Section 8, Restricted Stock Awards under the Plan are grants of Stock to Participants, the vesting of which is subject to certain conditions established by the Committee, with some or all of those conditions relating to events (such as performance of continued employment) occurring after the Grant Date, provided however that to the extent that vesting of a Restricted Stock Award is contingent on continued employment, the required employment period generally shall not be less than three years following the Grant Date unless such grant is in substitution for an Award under this Plan. To the extent, if any, required by the General Corporation Law of the State of Delaware, a Participant's receipt of an Award of newly issued shares of Restricted Stock shall be made subject to payment by the Participant of an amount equal to the aggregate par value of such newly issued shares of Restricted Stock. 8.2. The Committee shall designate the Participants to whom Restricted Stock is to be granted, and the number of shares of Stock that are subject to each such Award. The Award of shares under this Section 8 may, but need not, be made in conjunction with a cash-based incentive compensation program maintained by the Company, and may, but need not, be in lieu of cash otherwise awardable under such program. 8.3. Shares of Restricted Stock granted to Participants under the Plan shall be subject to the following terms and conditions: (a) Except as otherwise hereinafter provided, Restricted Stock granted to Participants may not be sold, assigned, transferred, pledged or otherwise encumbered during the Restricted Period; (b) The Participant as owner of such shares of Restricted Stock shall have all the rights of a stockholder (except as approved in clause (a)), including but not limited to the right to vote such shares and, except as otherwise provided by the Committee or as otherwise provided by the Plan, the right to receive all dividends paid on such shares; (c) Each certificate issued in respect of shares of Restricted Stock granted under the Plan shall be registered in the name of the Participant but, at the discretion of the Committee, each such certificate may be deposited with the Company with a stock power endorsed in blank or in a bank designated by the Committee; (c) The Committee may award Performance-Based Restricted Stock, which shall be Restricted Stock that becomes vested (or for which vesting is accelerated) upon the 12 13 achievement of Performance Goals established by the Committee and the Committee may specify the number of shares that will vest upon achievement of different levels of performance; except as otherwise provided by the Committee, achievement of maximum targets during the Performance Period shall result in the Participant's earning the full amount of the Restricted Stock comprising such Performance-Based Restricted Stock Award and the Committee may establish a portion of the Award which the Participant is entitled to receive upon achievement of a minimum target but less than the maximum target; and (d) Except as otherwise determined by the Committee, any Restricted Stock which is not earned by the end of a Restricted Period or Performance Period, as the case may be, shall be forfeited. If a Participant's Date of Termination occurs prior to the end of a Restricted Period or a Performance Period, as the case may be, the Committee may determine that the Participant will be entitled to settlement of all or any portion of the Restricted Stock as to which he or she would otherwise be eligible, and may accelerate the determination of the value and settlement of such Restricted Stock or make such other adjustments as the Committee, in its sole discretion, deems desirable. Subject to the limitations of the Plan and the Award of Restricted Stock, upon the vesting of Restricted Stock, such Restricted Stock will be transferred free of all restrictions to a Participant (or his or her legal representative, beneficiary or heir). SECTION 9 Restricted Stock Units 9.1. Subject to the terms of this Section 9, a Restricted Stock Unit entitles a Participant to receive shares of Stock or cash for the units at the end of a Restricted Period to the extent provided by the Award with the vesting of such units to be contingent upon such conditions as may be established by the Committee (such as continued employment or satisfaction of Performance Goals) occurring after the Grant Date; provided, however, that to the extent that the vesting of a Restricted Stock Unit is contingent on continued employment, the required employment period generally shall not be less than three years following the Grant Date unless the grant of the Restricted Stock Unit is in substitution for another Award under this Plan. The Award of Restricted Stock Units under this Section 9 may, but need not, be made in conjunction with a cash-based incentive compensation program maintained by the Company, and may, but need not, be in lieu of cash otherwise awardable under such program. 9.2. The Committee shall designate the Participants to whom Restricted Stock Units shall be granted and the number of units that are subject to each such Award. During any period in which units are outstanding and have not been settled in Stock, the Participant shall not have the rights of a stockholder, but shall have the right to receive a payment from the Company, in lieu of any dividend, in an amount equal to the amount of such dividend and at such times as such dividend would otherwise have been paid during the Restricted Period. 13 14 9.3 Except as otherwise determined by the Committee, any Restricted Stock Unit which is not earned by the end of the Restricted Period shall be forfeited. If a Participant's Date of Termination occurs prior to the end of a Restricted Period, the Committee, in its sole discretion, may determine that the Participant will be entitled to settlement of all or any portion or none of the Restricted Stock Units as to which he or she would otherwise be eligible, and may accelerate the determination of the value and settlement of such Restricted Stock Units or make such other adjustments as the Committee, in its sole discretion, deems desirable. SECTION 10 Performance Stock 10.1. Subject to the terms of this Section 10, a Performance Stock Award provides for the distribution of Stock to a Participant upon the achievement of Performance Goals established by the Committee. 10.2. The Committee shall designate the Participants to whom Performance Stock Awards are to be granted, and the number of shares of Stock that are subject to each such Award. The Award of shares under this Section 10 may, but need not, be made in conjunction with a cash-based incentive compensation program maintained by the Company, and may, but need not, be in lieu of cash otherwise awardable under such program. 10.3. Except as otherwise determined by the Committee, any Performance Stock Award which is not earned by the end of the Performance Period shall be forfeited. If a Participant's Date of Termination occurs prior to the end of a Performance Period, the Committee, in its sole discretion, may determine that the Participant will be entitled to settlement of all or any portion or none of the Performance Stock as to which he or she would otherwise be eligible, and may accelerate the determination of the value and settlement of such Performance Stock Award or make such other adjustments as the Committee, in its sole discretion, deems desirable. SECTION 11 Performance Units 11.1. Subject to the terms of this Section 11, the Award of Performance Units under the Plan entitles the Participant to receive value for the units at the end of a Performance Period to the extent provided under the Award. The number of Performance Units earned, and value received from them, will be contingent on the degree to which the Performance Goals established at the time of grant of the Award are met. 11.2. The Committee shall designate the Participants to whom Performance Units are to be granted, and the number of Performance Units to be the subject to each such Award. 11.3. For each such Participant, the Committee will determine (a) the value of Performance Units, which may be stated either in cash or in units representing shares of Stock, (b) the 14 15 Performance Goals to be used for determining whether the Performance Units are earned, (c) the Performance Period during which the Performance Goals will apply, (d) the relationship between the level of achievement of the Performance Goals and the degree to which Performance Units are earned, (e) whether, during or after the Performance Period, any revision to the Performance Goals or Performance Period should be made to reflect significant events or changes that occur during the Performance Period, and (f) the number of earned Performance Units that will be settled in cash and/or shares of Stock. 11.4. Settlement of Performance Units shall be subject to the following: (a) The Committee will compare the actual performance to the Performance Goals established for the Performance Period and determine the number of Performance Units as to which settlement is to be made, and the value of such Performance Units; (b) Settlement of Performance Units earned shall be wholly in cash, wholly in Stock or in a combination of cash and Stock, to be distributed in a lump sum or installments, as determined by the Committee, in its sole discretion; and (c) Shares of Stock distributed in settlement of Performance Units shall be subject to such vesting requirements and other conditions, if any, as the Committee shall determine, including, without limitation, restrictions of the type that may be imposed with respect to Restricted Stock under Section 8. 11.5. Except as otherwise determined by the Committee, any Award of Performance Units which is not earned by the end of the Performance Period shall be forfeited. If a Participant's Date of Termination occurs during a Performance Period, the Committee may determine that the Participant will be entitled to settlement of all or any portion or none of the Performance Units as to which he or she would otherwise be eligible, and may accelerate the determination of the value and settlement of such Performance Units or make such other adjustments as the Committee, in its sole discretion, deems desirable. SECTION 12 Stock Purchase Program 12.1. The Committee may, from time to time, establish one or more programs under which Participants will be permitted to purchase shares of Stock under the Plan, and shall designate the Participants eligible to participate under such Stock purchase programs. The purchase price for shares of Stock available under such programs, and other terms and conditions of such programs, shall be established by the Committee. The purchase price may not be less than 75% of the Fair Market Value of the Stock at the time of purchase (or, in the Committee's discretion, the average Stock value over a period determined by the Committee), and further provided that to the extent, if any, required by the General Corporation Law of the State of Delaware, the purchase price shall not be less than the aggregate par value of any newly issued shares of Stock. 15 16 12.2. The Committee may impose such restrictions with respect to shares purchased under this Section 12.1, as the Committee determines in its sole discretion, to be appropriate. Such restrictions may include, without limitations, restrictions of the type that may be imposed with respect to Restricted Stock under Section 8. SECTION 13 Merit Awards 13.1. The Committee may from time to time make an Award of Stock under the Plan to selected Participants for such reasons and in such amounts as the Committee, in its sole discretion, may determine. The consideration to be paid by an Employee for any such Merit Award shall be fixed by the Committee from time to time, but, if required by the General Corporation Law of the State of Delaware, shall not be less than the aggregate par value of the shares of Stock awarded to him or her pursuant to such Merit Award. SECTION 14 Phantom Stock Awards 14.1. The Committee may make Phantom Stock Awards to selected Participants which may be based solely on the value of the underlying shares of Stock, solely on any earnings or appreciation thereon, or both. Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine the number of hypothetical or target shares as to which each such Phantom Stock Award is subject and to determine the terms and conditions of each such Phantom Stock Award. There may be more than one Phantom Stock Award in existence at any one time with respect to a selected Participant, and the terms and conditions of each such Phantom Stock Award may differ from each other. 14.2. The Committee shall establish vesting or performance measures for each Phantom Stock Award on the basis of such criteria and to accomplish such objectives as the Committee from time to time, in its sole discretion, may determine. Such measures may be based on years of service or periods of affiliation, or the achievement of individual or corporate Performance Goals. The vesting and performance measures determined by the Committee shall be established at the time a Phantom Stock Award is made. Phantom Stock Awards may not be sold, assigned, transferred, pledged, or otherwise encumbered, except as provided in Section 17, during the Performance Period. 14.3. The Committee shall determine, in its sole discretion, the manner of payment, which may include cash, shares of Stock or a combination of cash and shares of Stock, in such proportions as the Committee shall determine. 14.4. Except as otherwise provided by the Committee, any Award of Phantom Stock which is not earned by the end of the Performance Period shall be forfeited. If a Participant's Date of Termination occurs prior to the end of a Performance Period, the Committee, in its sole 16 17 discretion, may determine that the Participant will be entitled to settlement of all or a portion or none of the Phantom Stock for which he or she would otherwise be eligible, and may accelerate the determination of the value and settlement of Phantom Stock or make such other adjustment as the Committee, in its sole discretion, deems desirable. SECTION 15 Termination of Employment or Affiliation 15.1. If a Participant's Date of Termination occurs for any reason other than death, Disability, or Retirement, or by reason of the Participant's employment or affiliation being terminated by the Participant's Employer for Cause, all Awards shall be forfeited. 15.2. If a Participant's Date of Termination occurs by reason of death, all Options and Stock Appreciation Rights outstanding immediately prior to the Participant's Date of Termination shall immediately become exercisable and all restrictions on Awards outstanding immediately prior to the Participant's Date of Termination shall lapse. 15.3. If a Participant's Date of Termination occurs by reason of Disability or Retirement or by reason of the Participant's employment or affiliation being terminated by the Participant's Employer for any reason other than Cause, all Options and Stock Appreciation Rights outstanding immediately prior to the Participant's Date of Termination shall be exercisable to the extent the Participant was entitled to exercise such Options and Stock Appreciation Rights, as the case may be, on the Participant's Date of Termination, and the restrictions shall lapse on the portion of any Awards outstanding immediately prior to the Participant's Date of Termination determined in accordance with the following sentence (except that, to the extent that such portion of any such Award is subject to a Performance Period, such portion of the Award shall be determined at the end of the Performance Period). The portion of the Award upon which the restrictions shall lapse shall be a fraction, the denominator of which shall be the total number of months of the Restricted Period applicable to the Award and the numerator of which is the number of months of such Restricted Period which elapsed prior to the Date of Termination. 15.4. Stock Appreciation Rights and Non-Qualified Stock Options which are or become exercisable pursuant to Subsections 15.2 and 15.3 shall expire on the expiration date set forth in the Award or, if earlier: (a) three years after the Date of Termination, if the Participant's termination occurs because of death, Disability, or Retirement; and (b) three months after the Date of Termination, if the Participant's employment or affiliation is terminated by the Participant's Employer for any reason other than Cause. Incentive Stock Options which are or become exercisable by reason of death, Disability or Retirement shall expire on the expiration date set forth in the Award or, if earlier, three months after the Date of Termination. Options and Stock Appreciation Rights which are or become 17 18 exercisable at the time of a Participant's death may be exercised by the Participant's designated beneficiary or, in the absence of such designation, by the person to whom the Participant's rights will pass by will or the laws of descent and distribution. 15.5. Except to the extent that the Committee shall otherwise determine, if, as a result of a sale or other transaction (other than a Change in Control), a Participant's Employer ceases to be a Related Company (and the Participant's Employer is or becomes an entity that is separate from the Company), the occurrence of such transaction shall be treated as the Participant's Date of Termination caused by the Participant's employment or affiliation being terminated by the Participant's Employer for a reason other than Cause. 15.6. Notwithstanding the foregoing provisions of this Section 15, the Committee may, with respect to any Awards of a Participant (or portion thereof) that are outstanding immediately prior to the Participant's Date of Termination, determine that a Participant's Date of Termination will not result in forfeiture or other termination of the Award. SECTION 16 Adjustments to Awards 16.1. If the Company shall effect a reorganization, merger, consolidation or similar event, or effect any subdivision or consolidation of shares of Stock or other capital readjustment, payment of stock dividend, stock split, spin-off, combination of shares or recapitalization or other increase or reduction of the number of shares of Stock outstanding without receiving compensation therefor in money, services or property, then the Committee shall adjust (i) the number of shares of Stock available under the Plan, (ii) the number of shares of Stock available under any individual or other limitations under the Plan, (iii) the number of shares of Stock subject to outstanding Awards and (iv) the per-share price under any outstanding Award to the extent that the Participant is required to pay a purchase price per share with respect to the Award. All share adjustments shall be made to the nearest full share. 16.2. If the Committee determines that an adjustment in accordance with the foregoing provisions of Subsection 16.1 would not be fully consistent with the purposes of the Plan or the purposes of the outstanding Awards under the Plan, the Committee may make such other adjustment to the Awards, if any, that the Committee determines is equitable and consistent with the purposes of the Plan and/or the affected Awards. SECTION 17 Transferability and Deferral of Awards 17.1. Awards under the Plan are not transferable except by will or by the laws of descent and distribution. To the extent that the Participant who receives an Award under the Plan has the right to exercise such Award, the Award may be exercised during the lifetime to the Participant only by the Participant. Notwithstanding the foregoing provisions of this Section 17, the 18 19 Committee may permit Awards under the Plan (other than an Incentive Stock Option) to be transferred by a Participant for no consderation to or for the benefit of members of the Participant's Immediate Family (including, without limitation, to a trust for the benefit of members of a Participant's Immediate Family or to a Family partnership for the benefit of members of the Participant's Immediate Family), subject to such limits as the Committee may establish, provided that the transferee shall remain subject to all of the terms and conditions applicable to such Award prior to such transfer. 17.2 The Committee may permit a Participant to elect to defer the receipt of any payment under a Performance Unit or Phantom Stock Award under such terms and conditions as the Committee, in its sole discretion, may determine; provided that any such deferral election must be made prior to the time the Participant has become entitled to payment under the Performance Unit or Phantom Stock Award. SECTION 18 Award Agreement 18.1. Each Participant granted an Award pursuant to the Plan shall sign an Award agreement which signifies the offer of the Award by the Company and the acceptance of the Award by the Participant in accordance with the terms of the Award and the provisions of the Plan. Each Award agreement shall reflect the terms and conditions of the Award. Participation in the Plan shall confer no rights to continued employment or affiliation with the Company nor shall it restrict the right of the Company to terminate a Participant's employment or affiliation at any time. SECTION 19 Tax Withholding 19.1 All Awards and other payments under the Plan are subject to withholding of all applicable taxes, which withholding obligations shall be satisfied (without regard to whether the Participant has transferred an Award under the Plan) by a cash remittance, or with the consent of the Committee, through the surrender of shares of Stock which the Participant owns or to which the Participant is otherwise entitled under the Plan pursuant to an irrevocable election submitted by the Participant to the Company. The number of shares of Stock needed to be submitted in payment of the taxes shall be determined using the Fair Market Value as of the applicable tax date rounding down to the nearest whole share; provided that no election to have shares of Stock withheld from an Award or submission of shares of stock shall be effective with respect to an Award which was transferred by a Participant in accordance with the Plan. 19 20 SECTION 20 Change in Control 20.1. Subject to the provisions of Section 16 (relating to the adjustments to Awards), and except as otherwise provided in the Plan or the agreement reflecting the applicable Award, upon the occurrence of a Change in Control: (a) All outstanding Options (regardless of whether in tandem with Stock Appreciation Rights) shall become fully exercisable, except to the extent that the right to exercise the Option is subject to any restrictions established in connection with a Limited Stock Appreciation Right that is in tandem with the Option; (b) All outstanding Stock Appreciation Rights (regardless of whether in tandem with Options) shall become fully exercisable, except that if Stock Appreciation Rights are in tandem with an Option, and the Option is in tandem with a Limited Stock Appreciation Right, the right to exercise the Stock Appreciation Right shall be subject to any restrictions established in connection with the Limited Stock Appreciation Right; (c) All shares of Stock subject to Awards shall become fully vested; and (d) Performance Units may be paid out in such manner and amounts as determined by the Committee in its sole discretion. SECTION 21 Termination and Amendment 21.1. The Board may suspend, terminate, modify or amend the Plan, provided that any amendment that would (a) increase the aggregate number of shares of Stock which may be issued under the Plan, (b) materially increase the benefits accruing to Participants under the Plan, or (c) materially modify the requirements as to eligibility for participation in the Plan, shall be subject to the approval of the Company's stockholders, except that any such increase or modification that may result from adjustments authorized by Section 16 shall not require such approval. No suspension, termination, modification or amendment of the Plan may terminate a Participant's existing Award or materially and adversely affect a Participant's rights under such Award without the Participant's consent. 20