Table of Contents

 

		Page
SECTION 1.	ESTABLISHMENT AND PURPOSE	1
SECTION 2.	DEFINITIONS	1
(a)	“Affiliate”	1
(b)	“Award”	1
(c)	“Board of Directors”	1
(d)	“Business Combination”	1
(e)	“Change of Control”	1
(f)	“Code”	3
(g)	“Committee”	3
(h)	“Corporate Transaction”	3
(i)	“Corporation”	3
(j)	“Consultant”	3
(k)	“Director”	3
(l)	“Effective Date”	3
(m)	“Employee”	4
(n)	“Exchange Act”	4
(o)	“Exercise Price”	4
(p)	“Fair Market Value”	4
(q)	“Incumbent Board”	4
(r)	“ISO”	4
(s)	“Nonstatutory Option” or “NSO”	4
(t)	“Offeree”	5
(u)	“Option”	5
(v)	“Optionee”	5
(w)	“Outstanding Common Stock”	5
(x)	“Outstanding Voting Securities”	5
(y)	“Parent”	5
(z)	“Participant”	5
(aa)	“Person”	5
(bb)	“Plan”	5
(cc)	“Purchase Price”	5
(dd)	“Restricted Share”	5
(ee)	“Restricted Share Agreement”	5

 

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(ff)	“Restricted Stock Unit”	5
(gg)	“Restricted Stock Unit Agreement”	5
(hh)	“SAR”	6
(ii)	“SAR Agreement”	6
(jj)	“Service”	6
(kk)	“Share”	6
(ll)	“Stock”	6
(mm)	“Stock Option Agreement”	6
(nn)	“Subsidiary”	6
SECTION 3.	ADMINISTRATION	6
(a)	Committee Composition	6
(b)	Committee for Non-Officer Grants	6
(c)	Committee Responsibilities	7
SECTION 4.	ELIGIBILITY	8
(a)	General Rule	8
(b)	Ten-Percent Stockholders	8
(c)	Attribution Rules	8
(d)	Outstanding Stock	9
SECTION 5.	STOCK SUBJECT TO PLAN	9
(a)	Basic Limitation	9
(b)	Award Limitation	9
(c)	Additional Shares	9
SECTION 6.	TERMS AND CONDITIONS OF OPTIONS	9
(a)	Stock Option Agreement	9
(b)	Number of Shares	10
(c)	Exercise Price	10
(d)	Withholding Taxes	10
(e)	Exercisability and Term	10
(f)	Exercise of Options	10
(g)	Effect of Change of Control	10
(h)	No Rights as a Stockholder	11
(i)	Restrictions on Transfer of Shares	11
(j)	Buyout Provisions	11
SECTION 7.	RESTRICTED SHARES	11
(a)	Restricted Share Agreement	11
(b)	Payment for Awards	11
(c)	Vesting	11

 

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(d)	Voting and Dividend Rights	11
(e)	Restrictions on Transfer of Shares	12
SECTION 8.	PAYMENT FOR SHARES	12
(a)	General Rule	12
(b)	Surrender of Stock	12
(c)	Services Rendered	12
(d)	Cashless Exercise	12
(e)	Exercise/Pledge	12
(f)	Promissory Note	12
(g)	Other Forms of Payment	12
(h)	Limitations under Applicable Law	13
SECTION 9.	STOCK APPRECIATION RIGHTS	13
(a)	SAR Agreement	13
(b)	Number of Shares	13
(c)	Exercise Price	13
(d)	Exercisability and Term	13
(e)	Effect of Change of Control	13
(f)	Exercise of SARs	13
(g)	Modification or Assumption of SARs	13
(h)	Buyout Provisions	14
SECTION 10.	RESTRICTED STOCK UNITS	14
(a)	Restricted Stock Unit Agreement	14
(b)	Payment for Awards	14
(c)	Vesting Conditions	14
(d)	Voting and Dividend Rights	14
(e)	Form and Time of Settlement of Restricted Stock Units	14
(f)	Death of Recipient	15
(g)	Creditors’ Rights	15
SECTION 11.	ADJUSTMENT OF SHARES; CORPORATE TRANSACTIONS	15
(a)	Adjustments	15
(b)	Dissolution or Liquidation	15
(c)	Corporate Transactions	16
(d)	Reservation of Rights	17
SECTION 12.	AWARDS UNDER OTHER PLANS	17
SECTION 13.	LEGAL AND REGULATORY REQUIREMENTS	17
SECTION 14.	WITHHOLDING TAXES	17
(a)	General	17

 

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(b)	Share Withholding	18
SECTION 15.	TRANSFERABILITY OF AWARDS	18
SECTION 16.	NO EMPLOYMENT RIGHTS	18
SECTION 17.	APPLICABLE LAW	18
SECTION 18.	DURATION AND AMENDMENTS	18
(a)	Term of the Plan	18
(b)	Right to Amend or Terminate the Plan	18
(c)	Effect of Termination	19
SECTION 19.	EXECUTION	20

 

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XPLORE TECHNOLOGIES CORP.

 

2009 STOCK INCENTIVE PLAN

 

SECTION 1.          ESTABLISHMENT AND PURPOSE.

 

The Plan was adopted by the Board of Directors on July 28, 2009, and shall be effective retroactively to June 10, 2009. The purpose of the Plan is to promote the long-term success of the Corporation and the creation of stockholder value by (a) encouraging Employees, Directors and Consultants to focus on strategic long-range objectives, (b) encouraging the attraction and retention of Employees, Directors and Consultants with exceptional qualifications and (c) aligning the interests of Employees, Directors and Consultants with those of stockholders through increased stock ownership and equity based compensation.  The Plan seeks to achieve this purpose by providing for Awards in the form of Options (which may constitute ISOs or NSOs), Restricted Shares, Restricted Stock Units, and SARs.

 

SECTION 2.          DEFINITIONS.

 

(a)           “Affiliate” shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with the Corporation.

 

(b)           “Award” shall mean any award of an Option, Restricted Shares, Restricted Stock Units, or a SAR under the Plan.

 

(c)            “Board of Directors” shall mean the Board of Directors of the Corporation, as constituted from time to time.

 

(d)           “Business Combination” shall mean a merger or consolidation involving the Corporation.

 

(e)            “Change of Control” shall mean the occurrence of any of the following events:

 

(i)             Upon consummation of a Business Combination unless, following such Business Combination,

 

(A)           all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock (or common equity) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including a corporation or other entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries),

 

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(B)            no Person (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by the Corporation or a Subsidiary or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock (or common equity) of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination, and

 

(C)            at least a majority of the members of the board of directors (or similar governing body) of the corporation or other entity resulting from such Business Combination were members of the Board of Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

 

(ii)            Upon the consummation of the sale, lease or exchange of all or substantially all of the assets of the Corporation; or

 

(iii)           On the date that individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Board of Directors; provided , however , that any individual who becomes a member of the Board of Directors on or subsequent to the day immediately following the Effective Date whose election, or nomination for election by the Corporation’s stockholders, was approved by a vote of at least a majority of the members of the Board of Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board of Directors occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board of Directors, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the Incumbent Board; or

 

(iv)           Upon the acquisition on or after the date of the Effective Date by any Person of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either:

 

(A)           the then Outstanding Common Stock, or

 

(B)            the combined voting power of the Outstanding Voting Securities;

 

provided , however , that the following acquisitions shall not be deemed to be covered by this subparagraph (iv):

 

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(x)             any acquisition of Outstanding Common Stock or Outstanding Voting Securities by or at the direction of the Corporation or any Subsidiary,

 

(y)            any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any Subsidiary, or

 

(z)             any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any Person pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 2(e)(i) of this Plan; or

 

(v)            Upon the approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

 

For avoidance of doubt, a Change of Control does not occur solely because a Person beneficially owns, directly or indirectly, 30% or more of Outstanding Common Stock or Outstanding Voting Securities as of the Effective Date.

 

(f)             “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(g)           “Committee” shall mean the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.

 

(h)           “Consultant” shall mean a consultant or advisor who provides bona fide services to the Corporation, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

 

(i)            “Corporate Transaction” shall mean an event that constitutes a “Change of Control” pursuant to subsection (i), subsection (ii) or subsection (iv) of Section 2(e); provided , however , that solely for purposes of this definition, the words “30% or more” in subsection (iv) of Section 2(e) shall be replaced with the words “more than 50%”.

 

(j)             “Corporation” shall mean Xplore Technologies Corp., a Delaware corporation.

 

(k)           “Director” shall mean a member of the Board of Directors.

 

(l)            “Effective Date” shall mean June 10, 2009, provided that the Plan is approved by the Corporation’s stockholders at any time within twelve months after such date.  Upon approval of the Plan by the stockholders of the Corporation, all Awards granted on or after the Effective Date shall be fully effective as if such stockholders had approved the Plan on the Effective Date.  If the stockholders of the Corporation do not approve the Plan within twelve months after the Effective Date, any Awards granted shall be null and void and of no effect.

 

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(m)           “Employee” shall mean any individual who is a common-law employee of the Corporation, a Parent, a Subsidiary or an Affiliate.

 

(n)           “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(o)           “Exercise Price” shall mean (a) in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement (or the addendum thereto), and (b) in the case of a SAR, an amount, as specified in the applicable SAR Agreement (or the addendum thereto), which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

 

(p)           “Fair Market Value” with respect to a Share, shall mean the market price of one Share, determined by the Committee or the Board of Directors as follows:

 

(i)             If the Stock is listed on the New York Stock Exchange, Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq Capital Market or another national securities exchange and sales prices are regularly reported for the Stock, then the Fair Market Value shall be equal to the closing selling price as quoted on such exchange (or the exchange with the greatest volume of trading in the Common Stock) on such date, or if such date is not a trading day, on the most recent trading day immediately prior to such date;

 

(ii)            If closing selling prices are not regularly reported for the Stock as described in clause (i), but bid and asked prices for the Common Stock are regularly reported on the OTC Bulletin Board or another regulated quotation service, then the Fair Market Value shall be the arithmetic mean between the closing or last bid and asked prices for the Common Stock on such date, or if such date is not a trading day or there are no bid and asked prices for such date, on the most recent trading day immediately prior to such date on which bid and asked prices are available; or

 

(iii)           If the foregoing provisions are not applicable, then the Fair Market Value shall be determined by the Committee or the Board of Directors in good faith on such basis as it deems appropriate.

 

In all cases, the determination of Fair Market Value by the Committee or the Board of Directors shall be conclusive and binding on all persons.

 

(q)           “Incumbent Board” shall mean the individuals who constitute the Board of Directors as of 11:59 p.m. (Central) on the Effective Date.

 

(r)            “ISO” shall mean an employee incentive stock option described in Section 422 of the Code.

 

(s)            “Nonstatutory Option” or “NSO” shall mean an employee stock option that is not an ISO.

 

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(t)            “Offeree” shall mean an individual to whom the Committee or the Board of Directors has offered the right to acquire Shares under the Plan (other than upon exercise of an Option).

 

(u)           “Option” shall mean an ISO or NSO granted under the Plan and entitling the holder to purchase Shares.

 

(v)            “Optionee” shall mean an individual or estate who holds an Option or SAR.

 

(w)           “Outstanding Common Stock” shall mean the outstanding shares of Stock.

 

(x)            “Outstanding Voting Securities” shall mean the outstanding voting securities of the Corporation entitled to vote generally in the election of members of the Board of Directors.

 

(y)            “Parent” shall mean any corporation or other entity (other than the Corporation) in an unbroken chain of corporations or other entities ending with the Corporation, if each of the corporations or other entities other than the Corporation owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation or other entity that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

 

(z)            “Participant” shall mean an individual or estate who holds an Award.

 

(aa)         “Person” shall mean any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act).

 

(bb)         “Plan” shall mean this Xplore Technologies Corp. 2009 Stock Incentive Plan, as amended from time to time.

 

(cc)          “Purchase Price” shall mean the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee or the Board of Directors.

 

(dd)         “Restricted Share” shall mean a Share awarded under the Plan and subject to the terms, conditions and restrictions set forth in a Restricted Share Agreement.

 

(ee)          “Restricted Share Agreement” shall mean the agreement between the Corporation and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Shares.

 

(ff)            “Restricted Stock Unit” shall mean a bookkeeping entry representing the Corporation’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Restricted Stock Unit Agreement.

 

(gg)         “Restricted Stock Unit Agreement” shall mean the agreement between the Corporation and the recipient of a Restricted Stock Unit that contains the terms, conditions and restrictions pertaining to such Restricted Stock Unit.

 

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Corporation under Section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and may determine all terms of such grants.  Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence.

 

To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Corporation to designate Employees, other than persons subject to Section 16 of the Exchange Act, to receive Awards and to determine the number of such Awards to be received by such Employees; provided , however , that the Board of Directors shall specify the aggregate limit (i.e., the number of Shares underlying all such Awards) and the individual limit (i.e., the number of Shares underlying any individual Award so granted) that such officer or officers may so award in any calendar year.

 

(c)            Committee Responsibilities .  Subject to the provisions of the Plan, the Committee or Board of Directors shall have full authority and discretion to take the following actions:

 

(i)             To interpret the Plan and to apply its provisions;

 

(ii)            To adopt, amend or rescind rules, procedures and forms relating to the Plan;

 

(iii)           To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws, including qualifying for preferred tax treatment under applicable foreign tax laws;

 

(iv)           To authorize any person to execute, on behalf of the Corporation, any instrument required to carry out the purposes of the Plan;

 

(v)            To determine when Awards are to be granted under the Plan;

 

(vi)           To select the Offerees and Optionees;

 

(vii)          To determine the number of Shares to be made subject to each Award;

 

(viii)         To prescribe the terms and conditions of each Award, including the Exercise Price, the Purchase Price, the performance criteria, the performance period, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a NSO, and to specify the provisions of the agreement relating to such Award;

 

(ix)            To amend any outstanding Award agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

 

(x)             To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

 

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(xi)            To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

 

(xii)           To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

 

(xiii)          To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award agreement;

 

(xiv)         To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

 

(xv)          To take any other actions deemed necessary or advisable for the administration of the Plan.

 

Notwithstanding the authority granted under this provision, to the extent an Award is intended to qualify for the exemption under Section 162(m)(4)(C) of the Code, as determined by the Committee or Board of Directors, only a Committee that satisfies the requirements of Treasury Regulations Section 1.162-27(e)(3) shall (i) make such Award, and (ii) if such Award requires the attainment of a performance goal as condition to the making, vesting or settlement of the Award, set the applicable performance goal and certify the extent to which it is attained.

 

Subject to the requirements of applicable law, the Committee or Board of Directors may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee or Board of Directors may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act.  All decisions, interpretations and other actions of the Committee or Board of Directors shall be final and binding on all Participants, and all persons deriving their rights from a Participant.  No member of the Committee or Board of Directors shall be liable for any action that he or she has taken or has failed to take in good faith with respect to the Plan or any Award.

 

SECTION 4.                             ELIGIBILITY.

 

(a)           General Rule . Only Employees shall be eligible for the grant of ISOs. Only Employees, Consultants and Directors shall be eligible for the grant of NSOs, Restricted Shares, Restricted Stock Units or SARs.

 

(b)           Ten-Percent Stockholders . An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Corporation, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

 

(c)            Attribution Rules . For purposes of Section 4(b) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or

 

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for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

 

(d)           Outstanding Stock . For purposes of Section 4(b) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant but shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

 

SECTION 5.                             STOCK SUBJECT TO PLAN.

 

(a)           Basic Limitation .  Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed 19,400,000 Shares.  The limitation of this Section 5(a) shall be subject to adjustment pursuant to Section 11.  The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan.  The Corporation, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.

 

(b)           Award Limitation .  Subject to the provisions of Section 11, no Participant may receive Awards under the Plan in any calendar year that relate to more than 8,000,000 Shares.

 

(c)            Additional Shares .  If an Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Shares or Restricted Stock Units, is forfeited to or repurchased by the Corporation due to failure to vest, the unpurchased Shares (or for Awards other than Options or SARs the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated).  With respect to SARs, only Shares actually issued pursuant to a SAR will cease to be available under the Plan; all remaining Shares under SARs will remain available for future grant or sale under the Plan (unless the Plan has terminated).  Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided , however , that if Shares issued pursuant to Awards of Restricted Shares or Restricted Stock Units are repurchased by the Corporation or are forfeited to the Corporation, such Shares will become available for future grant under the Plan.  Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan.  To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

 

SECTION 6.                             TERMS AND CONDITIONS OF OPTIONS.

 

(a)           Stock Option Agreement .  Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Corporation.  Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee or Board of Directors deems appropriate for inclusion in a Stock Option Agreement.  The Stock Option Agreement shall specify whether the Option is an ISO or an NSO.  The

 

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provisions of the various Stock Option Agreements entered into under the Plan need not be identical.  Options may be granted in consideration of a reduction in the Optionee’s other compensation.

 

(b)           Number of Shares .  Each Stock Option Agreement shall specify the number of Shares that are subject to the Option (subject to adjustment in accordance with Section 11).

 

(c)            Exercise Price .  Each Stock Option Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in Section 4(b).  Subject to the foregoing in this Section 6(c), the Exercise Price under any Option shall be determined by the Committee or Board of Directors at their discretion.  The Exercise Price shall be payable in one of the forms described in Section 8.

 

(d)           Withholding Taxes .  As a condition to the exercise of an Option, the Optionee shall make such arrangements as the Corporation may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise.  The Optionee shall also make such arrangements as the Corporation may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

 

(e)            Exercisability and Term .  Each Stock Option Agreement shall specify the date when all or any installment of the Option is to become exercisable.  The Stock Option Agreement shall also specify the term of the Option; provided , however , that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for Employees described in Section 4(b)).  A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee’s death, disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Optionee’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited.  Subject to the foregoing in this Section 6(e), the Committee or Board of Directors at their discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

 

(f)             Exercise of Options .  Each Stock Option Agreement shall set forth the extent to which the Optionee shall have the right to exercise the Option following termination of the Optionee’s Service with the Corporation and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Optionee’s estate or any person who has acquired such Option(s) directly from the Optionee by bequest or inheritance. Such provisions shall be determined in the discretion of the Committee or Board of Directors, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

 

(g)           Effect of Change of Control .  The Committee or Board of Directors may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option upon a Change of Control.

 

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(h)           No Rights as a Stockholder .  An Optionee, or a permitted transferee of an Optionee, shall have no rights as a stockholder of the Corporation with respect to any Shares covered by the Option until the date of the issuance of the Shares underlying the Option upon a valid exercise thereof.

 

(i)            Restrictions on Transfer of Shares .  Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee or Board of Directors may determine.  Such restrictions shall be set forth in the applicable Stock Option Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

(j)             Buyout Provisions .  The Committee or Board of Directors may at any time (a) offer to buy out for a payment in cash or cash equivalents an Option previously granted or (b) authorize an Optionee to elect to cash out an Option previously granted, in either case at such time and based upon such terms and conditions as the Committee or Board of Directors shall establish.

 

SECTION 7.                             RESTRICTED SHARES.

 

(a)           Restricted Share Agreement .  Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Agreement between the recipient and the Corporation.  Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Restricted Share Agreements entered into under the Plan need not be identical.  Restricted Shares may be granted in consideration of a reduction in the recipient’s other compensation.

 

(b)           Payment for Awards .  Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee or Board of Directors may determine, including cash, cash equivalents, full-recourse promissory notes, past services and future services.

 

(c)            Vesting .  Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Agreement.  A Restricted Share Agreement may provide for accelerated vesting in the event of the Participant’s death, disability or retirement or other events.  The Committee or Board of Directors may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested upon a Change of Control.  Except as may be set forth in a Restricted Share Agreement, vesting of the Restricted Shares shall cease on the termination of the Participant’s Service.

 

(d)           Voting and Dividend Rights .  The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Corporation’s other stockholders.  A Restricted Share Agreement, however, may require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares.  Such additional Restricted Shares shall be subject to the same conditions and restrictions as the Award with respect to which the dividends were paid.

 

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(e)            Restrictions on Transfer of Shares .  Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee or Board of Directors may determine. Such restrictions shall be set forth in the applicable Restricted Share Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

SECTION 8.                             PAYMENT FOR SHARES.

 

(a)           General Rule .  The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(g) below.

 

(b)           Surrender of Stock .  To the extent that a Stock Option Agreement so provides, payment may be made in entirety or in part by surrendering, or attesting to the ownership of, Shares which are then owned by the Optionee or his representative.  Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan.  The Optionee shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Corporation to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

 

(c)            Services Rendered .  At the discretion of the Committee or Board of Directors, Shares may be awarded under the Plan in consideration of services rendered to the Corporation or a Subsidiary prior to the award.  If Shares are awarded without the payment of a Purchase Price in cash, the Committee or Board of Directors shall make a determination (at the time of the award) of the value of the services rendered by the Offeree and the sufficiency of the consideration to meet the requirements of Section 7(b).

 

(d)           Cashless Exercise .  To the extent that a Stock Option Agreement so provides, payment may be made in its entirety or in part by delivery (on a form prescribed by the Corporation) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Corporation in payment of the aggregate Exercise Price.

 

(e)            Exercise/Pledge .  To the extent that a Stock Option Agreement so provides, payment may be made in its entirety or in part by delivery (on a form prescribed by the Corporation) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Corporation in payment of the aggregate Exercise Price.

 

(f)             Promissory Note .  To the extent that a Stock Option Agreement or Restricted Share Agreement so provides, payment may be made in its entirety or in part by delivering (on a form prescribed by the Corporation) a full-recourse promissory note.

 

(g)           Other Forms of Payment .  To the extent that a Stock Option Agreement or Restricted Share Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

 

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(h)           Limitations under Applicable Law .  Notwithstanding anything herein or in a Stock Option Agreement or Restricted Share Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee or Board of Directors in their discretion.

 

SECTION 9.                             STOCK APPRECIATION RIGHTS.

 

(a)           SAR Agreement .  Each grant of a SAR under the Plan shall be evidenced by a SAR Agreement between the Optionee and the Corporation.  Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various SAR Agreements entered into under the Plan need not be identical.  SARs may be granted in consideration of a reduction in the Optionee’s other compensation.

 

(b)           Number of Shares .  Each SAR Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 11.

 

(c)            Exercise Price .  Each SAR Agreement shall specify the Exercise Price, which shall not be less than 100% of the Fair Market Value of a Share on the date of grant.  A SAR Agreement ma