Exhibit 99.1
INTERDIGITAL, INC.
2009 STOCK INCENTIVE PLAN
1. Purpose
The purpose of the InterDigital, Inc. 2009 Stock Incentive Plan (the “Plan”) is to advance the
interests of InterDigital, Inc. (the “Company”) by stimulating the efforts of employees,
officers, non-employee directors and other service providers, in each case who are selected to be
participants, by heightening the desire of such persons to continue working toward and contributing
to the success and progress of the Company. Upon approval by the Company’s shareholders, the Plan
will supersede the Company’s Prior Plans with respect to future awards, and provides for the grant
of Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock and
Restricted Stock Units, any of which may be performance-based, and for Incentive Bonuses, which may
be paid in cash or stock or a combination thereof, as determined by the Administrator.
2. Definitions
As used in the Plan, the following terms shall have the meanings set forth below:
(a) “Administrator” means the Administrator of the Plan in accordance with Section 19.
(b) “Award” means an Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation
Right, Restricted Stock, Restricted Stock Unit or Incentive Bonus granted to a Participant pursuant
to the provisions of the Plan, any of which the Administrator may structure to qualify in whole or
in part as a Performance Award.
(c) “Award Agreement” means a written agreement or other instrument as may be approved from
time to time by the Administrator implementing the grant of each Award. An Agreement may be in the
form of an agreement to be executed by both the Participant and the Company (or an authorized
representative of the Company) or certificates, notices or similar instruments as approved by the
Administrator.
(d) “Board” means the board of directors of the Company.
(e) “Change in Control” means the occurrence of any of the following after the Effective Date:
(1) Any “person,” as such term is used in Section 13(d) and 14(d) of the Exchange Act
(other than the Company, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any company owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as their ownership of
stock of the Company), acquires voting securities of the Company and immediately thereafter
is a “50% Beneficial Owner.” For purposes of this provision, a “50% Beneficial Owner” shall
mean a person who is the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then-outstanding voting securities; or
(2) During any period of two consecutive years commencing on or after the Effective
Date, individuals who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person (as defined above) who has entered
into an agreement with the Company to effect a transaction described in subsections (1),
(3), (4) or (5) of this definition) whose election by the Board or nomination for election
by the Company’s shareholders 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 consummation of a merger, consolidation, recapitalization, or reorganization of
the Company, or a reverse stock split of any class of voting securities of the Company,
other than any such transaction which would result in at least 50% of the combined voting
power of the voting securities of the Company or the surviving entity outstanding
immediately after such transaction being beneficially owned by the persons who were
shareholders of the Company immediately prior to the transaction in substantially the same
proportion as their ownership of the voting power immediately prior to the transaction;
provided that, for purposes of this Section 2(f)(3), such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if the failure to
meet such 50% threshold (or to substantially preserve such relative ownership of the voting
securities) is due solely to the acquisition of voting securities by an employee benefit
plan of the Company, such surviving entity or a subsidiary thereof; or
(4) The shareholders of the Company accept shares in a share exchange in which the
shareholders of the Company immediately before such share exchange do not or will not own
directly or indirectly immediately following such share exchange more than 50% of the
combined voting power of the outstanding voting securities of the corporation resulting from
or surviving such share exchange in substantially the same proportion as the ownership of
the voting securities outstanding immediately before such share exchange; or
(5) The shareholders of the Company have approved a plan of complete liquidation of the
Company; or
(6) The consummation of a sale or disposition by the Company of all or substantially
all of the Company’s assets (or any transaction having a similar effect).
(f) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the
rulings and regulations issues thereunder.
(g) “Common Stock” means the Company’s common stock, par value $.01, subject to adjustment as
provided in Section 12.
(h) “Company” means InterDigital, Inc., a Pennsylvania corporation.
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(i) “Detrimental Activity” with respect to a Participant means that such Participant:
(1) Has engaged in any type of disloyalty to the Company, including without limitation,
insubordination, fraud, embezzlement, theft or dishonesty in the course of his or her
employment or engagement; or
(2) Has been convicted of a felony; or
(3) Has disclosed any confidential or proprietary information without the consent of
the Company; or
(4) Has breached the terms of any written confidentiality agreement or any
non-competition agreement with the Company in any material respect.
(j) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
(k) “Fair Market Value” means the fair market value of Common Stock, Awards or other property
as determined by the Administrator or under procedures established by the Administrator. The Fair
Market Value of Shares shall be the closing sale price reported on the composite tape of the
principal stock exchange on which the Shares are listed on the day as of which such value is being
determined or, if there is no sale on that day, then on the last previous day on which a sale was
reported.
(l) “Incentive Bonus” means a bonus opportunity awarded under Section 9 pursuant to which a
Participant may become entitled to receive an amount based on satisfaction of such performance
criteria as are specified in the Award Agreement.
(m) “Incentive Stock Option” means a stock option that is intended to qualify as an “incentive
stock option” within the meaning of Section 422 of the Code.
(n) “Nonemployee Director” means each person who is, or is elected to be, a member of the
Board and who is not an employee of the Company or any Subsidiary.
(o) “Nonqualified Stock Option” means a stock option that is not intended to qualify as an
“incentive stock option” within the meaning of Section 422 of the Code.
(p) “Option” means an Incentive Stock Option and/or a Nonqualified Stock Option granted
pursuant to Section 6 of the Plan.
(q) “Participant” means any individual described in Section 3 to whom Awards have been granted
from time to time by the Administrator and any authorized transferee of such individual.
(r) “Performance Award” means an Award, the grant, issuance, retention, vesting or settlement
of which is subject to satisfaction of one or more Qualifying Performance Criteria established
pursuant to Section 14.
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(s) “Plan” means the InterDigital, Inc. 2009 Stock Incentive Plan as set forth herein and as
amended from time to time.
(t) “Prior Plans” means the InterDigital Communications Corporation 1999 Restricted Stock
Plan, the InterDigital Communications Corporation 2000 Stock Award and Incentive Plan and the
InterDigital Communications Corporation 2002 Stock Award and Incentive Plan.
(u) “Qualifying Performance Criteria” has the meaning set forth in Section 14(b).
(v) “Restricted Stock” means Shares granted pursuant to Section 8 of the Plan.
(w) “Restricted Stock Unit” means an Award granted to a Participant pursuant to Section 8
pursuant to which Shares or cash in lieu thereof may be issued in the future.
(x) “Share” means a share of the Common Stock, subject to adjustment as provided in
Section 12.
(y) “Stock Appreciation Right” means a right granted pursuant to Section 7 of the Plan that
entitles the Participant to receive, in cash or Shares or a combination thereof, as determined by
the Administrator, value equal to or otherwise based on the excess of (i) the Fair Market Value of
a specified number of Shares at the time of exercise over (ii) the exercise price of the right, as
established by the Administrator on the date of grant.
(z) “Subsidiary” means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company where each of the corporations in the unbroken chain other
than the last corporation owns stock possessing at least 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in the chain, and if
specifically determined by the Administrator in the context other than with respect to Incentive
Stock Options, may include an entity in which the Company has a significant ownership interest or
that is directly or indirectly controlled by the Company.
(aa) “Termination of Employment” means ceasing to serve as a full-time employee of the Company
and its Subsidiaries or, with respect to a Nonemployee Director or other service provider, ceasing
to serve as such for the Company, except that with respect to all or any Awards held by a
Participant (i) the Administrator may determine, subject to Section 6(d), that an approved leave of
absence or approved employment on a less than full-time basis is not considered a Termination of
Employment, (ii) the Administrator may determine that a transition of employment to service with a
partnership, joint venture or corporation not meeting the requirements of a Subsidiary in which the
Company or a Subsidiary is a party is not considered a Termination of Employment, (iii) service as
a member of the Board or other service provider shall constitute continued employment with respect
to Awards granted to a Participant while he or she served as an employee and (iv) service as an
employee of the Company or a Subsidiary shall constitute continued employment with respect to
Awards granted to a Participant while he or she served as a member of the Board or other service
provider. The Administrator shall determine whether any corporate transaction, such as a sale or
spin-off of a division or subsidiary that employs a Participant, shall be deemed to result in a
Termination of Employment with the
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Company and its Subsidiaries for purposes of any affected Participant’s Options, and the
Administrator’s decision shall be final and binding.
3. Eligibility
Any person who is a current or prospective officer or employee of the Company or of any
Subsidiary shall be eligible for selection by the Administrator for the grant of Awards hereunder.
In addition, Nonemployee Directors and any other service providers who have been retained to
provide consulting, advisory or other services to the Company or to any Subsidiary shall be
eligible for the grant of Awards hereunder as determined by the Administrator. Options intending
to qualify as Incentive Stock Options may only be granted to employees of the Company or any
Subsidiary within the meaning of the Code, as selected by the Administrator.
4. Effective Date and Termination of Plan
This Plan was adopted by the Board as of April 27, 2009, and it will become effective (the
“Effective Date”) when it is approved by the Company’s shareholders at a meeting of the Company’s
shareholders or by written consent in accordance with the laws of the Commonwealth of Pennsylvania,
which approval must be obtained within twelve (12) months of the adoption of this Plan by the
Board. The Plan shall remain available for the grant of Awards until the tenth (10th) anniversary
of the Effective Date. Notwithstanding the foregoing, the Plan may be terminated at such earlier
time as the Board may determine. Termination of the Plan will not affect the rights and
obligations of the Participants and the Company arising under Awards theretofore granted and then
in effect.
5. Shares Subject to the Plan and to Awards
(a)
Aggregate Limits
. The aggregate number of Shares issuable pursuant to all Awards shall
not exceed 2,114,439, plus (i) any Shares that were authorized for issuance under the Prior Plans
that, as of the Effective Date, remain available for issuance under the Prior Plans (not including
any Shares that are subject to, as of the Effective Date, outstanding awards under the Prior Plans
or any Shares that prior to the Effective Date were issued pursuant to awards granted under the
Prior Plans) and (ii) any Shares subject to outstanding awards under the Prior Plans as of the
Effective Date (the “Prior Plan Awards”) that on or after such date cease for any reason to be
subject to such awards (other than by reason of exercise or settlement of the awards to the extent
they are exercised for or settled in vested and nonforfeitable shares). The aggregate number of
Shares available for grant under this Plan and the number of Shares subject to outstanding Awards
shall be subject to adjustment as provided in Section 12. The Shares issued pursuant to Awards
granted under this Plan may be shares that are authorized and unissued or shares that were
reacquired by the Company, including shares purchased in the open market.
(b)
Issuance of Shares
. For purposes of Section 5(a), the aggregate number of Shares issued
under this Plan at any time shall equal only the number of Shares actually issued upon exercise or
settlement of an Award. The aggregate number of Shares available for Awards under this Plan at any
time shall not be reduced by (i) Shares subject to Awards that have been terminated, expired
unexercised, forfeited or settled in cash, (ii) Shares subject to Awards (or Prior Plan Awards)
that have been retained or withheld by the Corporation in payment or
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satisfaction of the exercise price, purchase price or tax withholding obligation of an Award
(or Prior Plan Award), or (iii) Shares subject to Awards (or Prior Plan Awards) that otherwise do
not result in the issuance of Shares in connection with payment or settlement thereof. In
addition, Shares that have been delivered (either actually or by attestation) to the Company in
payment or satisfaction of the exercise price, purchase price or tax withholding obligation of an
Award (or Prior Plan Award) shall be available for Awards under this Plan.
(c)
Tax Code Limits
. In each calendar year a Participant may be granted Awards under this
Plan denominated in Shares relating up to his or her Annual Share Limit. A Participant’s Annual
Share Limit, in any calendar year, shall equal 300,000 Shares plus the amount of the Participant’s
unused Annual Share Limit as of the close of the previous year, which number shall be calculated
and adjusted pursuant to Section 12 only to the extent that such calculation or adjustment will not
affect the status of any Award intended to qualify as “performance-based compensation” under
Section 162(m) of the Code but which number shall not count any tandem SARs (as defined in
Section 7). In each calendar year a Participant may be granted Awards under this Plan denominated
in cash (and not Shares) relating up to his or her Annual Cash Limit. A Participant’s Annual Cash
Limit, in any calendar year, shall equal $1.5 million plus the amount of the Participant’s unused
Annual Cash Limit as of the close of the previous year. The aggregate number of Shares that may be
issued pursuant to the exercise of Incentive Stock Options granted under this Plan shall not exceed
3,000,000, which number shall be calculated and adjusted pursuant to Section 12 only to the extent
that such calculation or adjustment will not affect the status of any option intended to qualify as
an Incentive Stock Option under Section 422 of the Code.
6. Options
(a)
Option Awards
. Options may be granted at any time and from time to time prior to the
termination of the Plan to Participants as determined by the Administrator. No Participant shall
have any rights as a shareholder with respect to any Shares subject to Options hereunder until said
Shares have been issued. Each Option shall be evidenced by an Award Agreement. Options granted
pursuant to the Plan need not be identical but each Option must contain and be subject to the terms
and conditions set forth below.
(b)
Price
. The Administrator will establish the exercise price per Share under each Option,
which, in no event will be less than the Fair Market Value of the Shares on the date of grant;
provided, however, that the exercise price per Share with respect to an Option that is granted in
connection with a merger or other acquisition as a substitute or replacement award for options held
by optionees of the acquired entity may be less than 100% of the Fair Market Value of the Shares on
the date such Option is granted if such exercise price is based on a formula set forth in the terms
of the options held by such optionees or in the terms of the agreement providing for such merger or
other acquisition. The exercise price of any Option may be paid in Shares, cash or a combination
thereof, as determined by the Administrator, including an irrevocable commitment by a broker to pay
over such amount from a sale of the Shares issuable under an Option, the delivery of previously
owned Shares and withholding of Shares deliverable upon exercise.
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(c)
No Repricing without Shareholder Approval
. Other than in connection with a change in the
Company’s capitalization (as described in Section 12) the exercise price of an Option may not be
reduced without shareholder approval (including canceling previously awarded Options in exchange
for cash, other Awards or Options or Stock Appreciation Rights with an exercise price that is less
than the exercise price of the original Award).
(d)
Provisions Applicable to Options
. The date on which Options become exercisable shall be
determined at the sole discretion of the Administrator and set forth in an Award Agreement. Unless
provided otherwise in the applicable Award Agreement, to the extent that the Administrator
determines that an approved leave of absence is not a Termination of Employment, the vesting period
and/or exercisability of an Option shall be adjusted by the Administrator during or to reflect the
effects of any period during which the Participant is on an approved leave of absence or is
employed on a less than full-time basis. The Administrator shall establish the term of each
Option, which in no case shall exceed a period of 10 years from the date of grant.
(e)
Incentive Stock Options
. Notwithstanding anything to the contrary in this Section 6, in
the case of the grant of an Option intending to qualify as an Incentive Stock Option: (i) if the
Participant owns stock possessing more than 10 percent of the combined voting power of all classes
of stock of the Company (a “10% Shareholder”), the exercise price of such Option must be at least
110 percent of the Fair Market Value of the Shares on the date of grant and the Option must expire
within a period of not more than five (5) years from the date of grant, and (ii) Termination of
Employment will occur when the person to whom an Award was granted ceases to be an employee (as
determined in accordance with Section 3401(c) of the Code and the regulations promulgated
thereunder) of the Company and its Subsidiaries. Notwithstanding anything in this Section 6 to the
contrary, options designated as Incentive Stock Options shall not be eligible for treatment under
the Code as Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to the
extent that either (1) the aggregate Fair Market Value of Shares (determined as of the time of
grant) with respect to which such Options are exercisable for the first time by the Participant
during any calendar year (under all plans of the Company and any Subsidiary) exceeds $100,000,
taking Options into account in the order in which they were granted, or (2) such Options otherwise
remain exercisable but are not exercised within 3 months of Termination of Employment (or such
other period of time provided in Section 422 of the Code).
7. Stock Appreciation Rights
Stock Appreciation Rights may be granted to Participants from time to time either in tandem
with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in conjunction
with other Awards (“freestanding SARs”) and may, but need not, relate to a specific Option granted
under Section 6. The provisions of Stock Appreciation Rights need not be the same with respect to
each grant or each recipient. Any Stock Appreciation Right granted in tandem with an Award may be
granted at the same time such Award is granted or at any time thereafter before exercise or
expiration of such Award. All freestanding SARs shall be granted subject to the same terms and
conditions applicable to Options as set forth in Section 6 and all tandem SARs shall have the same
exercise price, vesting, exercisability, forfeiture and termination provisions as the Award to
which they relate. Subject to the provisions of Section 6
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and the immediately preceding sentence, the Administrator may impose such other conditions or
restrictions on any Stock Appreciation Right as it shall deem appropriate. Stock Appreciation
Rights may be settled in Shares, cash or a combination thereof, as determined by the Administrator
and set forth in the applicable Award Agreement.
8. Restricted Stock and Restricted Stock Units
(a)
Restricted Stock and Restricted Stock Unit Awards
. Restricted Stock and Restricted Stock
Units may be granted at any time and from time to time prior to the termination of the Plan to
Participants as determined by the Administrator. Restricted Stock is an award or issuance of
Shares the grant, issuance, retention, vesting and/or transferability of which is subject during
specified periods of time to such conditions (including continued employment or performance
conditions) and terms as the Administrator deems appropriate. Restricted Stock Units are Awards
denominated in units of Shares under which the issuance of Shares is subject to such conditions
(including continued employment or performance conditions) and terms as the Administrator deems
appropriate. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an
Award Agreement. Unless determined otherwise by the Administrator, each Restricted Stock Unit will
be equal to one Share and will entitle a Participant to either the issuance of Shares or payment
of an amount of cash determined with reference to the value of Shares. Restricted Stock and
Restricted Stock Units granted pursuant to the Plan need not be identical but each grant of
Restricted Stock and Restricted Stock Units must contain and be subject to the terms and conditions
set forth below.
(b)
Contents of Agreement
. Each Award Agreement shall contain provisions regarding (i) the
number of Shares or Restricted Stock Units subject to such Award or a formula for determining such
number, (ii) the purchase price of the Shares, if any, and the means of payment, (iii) the
performance criteria, if any, and level of achievement versus these criteria that shall determine
the number of Shares or Restricted Stock Units granted, issued, retainable and/or vested, (iv) such
terms and conditions on the grant, issuance, vesting and/or forfeiture of the Shares or Restricted
Stock Units as may be determined from time to time by the Administrator, (v) the term of the
performance period, if any, as to which performance will be measured for determining the number of
such Shares or Restricted Stock Units, and (vi) restrictions on the transferability of the Shares
or Restricted Stock Units. Shares issued under a Restricted Stock Award may be issued in the name
of the Participant and held by the Participant or held by the Company, in each case as the
Administrator may provide.
(c)
Vesting and Performance Criteria
. The grant, issuance, retention, vesting and/or
settlement of shares of Restricted Stock and Restricted Stock Units will occur when and in such
installments as the Administrator determines or under criteria the Administrator establishes, which
may include Qualifying Performance Criteria. Notwithstanding anything in this Plan to the
contrary, the performance criteria for any Restricted Stock or Restricted Stock Unit that is
intended to satisfy the requirements for “performance-based compensation” under Section 162(m) of
the Code will be a measure based on one or more Qualifying Performance Criteria selected by the
Administrator and specified when the Award is granted.
(d)
Discretionary Adjustments and Limits
. Subject to the limits imposed under Section 162(m)
of the Code for Awards that are intended to qualify as “performance-based
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compensation,” notwithstanding the satisfaction of any performance goals, the number of Shares
granted, issued, retainable and/or vested under an Award of Restricted Stock or Restricted Stock
Units on account of either financial performance or personal performance evaluations may, to the
extent specified in the Award Agreement, be reduced, but not increased, by the Administrator on the
basis of such further considerations as the Administrator shall determine.
(e)
Voting Rights
. Unless otherwise determined by the Administrator, Participants holding
shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those
shares during the period of restriction. Participants shall have no voting rights with respect to
Shares underlying Restricted Stock Units unless and until such Shares are reflected as issued and
outstanding shares on the Company’s stock ledger.
(f)
Dividends and Distributions
. Participants in whose name Restricted Stock is granted shall
be entitled to receive all dividends and other distributions paid with respect to those Shares,
unless determined otherwise by the Administrator. The Administrator will determine whether any
such dividends or distributions will be automatically reinvested in additional shares of Restricted
Stock and subject to the same restrictions on transferability as the Restricted Stock with respect
to which they were distributed or whether such dividends or distributions will be paid in cash.
Shares underlying Restricted Stock Units shall be entitled to dividends or dividend equivalents
only to the extent provided by the Administrator.
9. Incentive Bonuses
(a)
General
. Each Incentive Bonus Award will confer upon the Participant the opportunity to
earn a future payment tied to the level of achievement with respect to one or more performance
criteria established for a performance period specified by the Administrator.
(b)
Incentive Bonus Document
. The terms of any Incentive Bonus will be set forth in an Award
Agreement. Each Award Agreement evidencing an Incentive Bonus shall contain provisions regarding
(i) the target and maximum amount payable to the Participant as an Incentive Bonus, (ii) the
performance criteria and level of achievement versus these criteria that shall determine the amount
of such payment, (iii) the term of the performance period as to which performance shall be measured
for determining the amount of any payment, (iv) the timing of any payment earned by virtue of
performance, (v) restrictions on the alienation or transfer of the Incentive Bonus prior to actual
payment, (vi) forfeiture provisions and (vii) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the Administrator.
(c)
Performance Criteria
. The Administrator shall establish the performance criteria and
level of achievement versus these criteria that shall determine the target and maximum amount
payable under an Incentive Bonus, which criteria may be based on financial performance and/or
personal performance evaluations. The Administrator may specify the percentage of the target
Incentive Bonus that is intended to satisfy the requirements for “performance-based compensation”
under Section 162(m) of the Code. Notwithstanding anything to the contrary herein, the performance
criteria for any portion of an Incentive Bonus that is intended by the Administrator to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the Code shall be a
measure based on one or more Qualifying Performance
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Criteria (as defined in Section 14(b)) selected by the Administrator and specified at the time
the Incentive Bonus is granted. The Administrator shall certify the extent to which any Qualifying
Performance Criteria has been satisfied, and the amount payable as a result thereof, prior to
payment of any Incentive Bonus that is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code.
(d)
Timing and Form of Payment
. The Administrator shall determine the timing of payment of
any Incentive Bonus. Payment of the amount due under an Incentive Bonus may be made in cash or in
Shares, as determined by the Administrator. The Administrator may provide for or, subject to such
terms and conditions as the Administrator may specify, may permit a Participant to elect for the
payment of any Incentive Bonus to be deferred to a specified date or event.
(e)
Discretionary Adjustments
. Notwithstanding satisfaction of any performance goals, the
amount paid under an Incentive Bonus on account of either financial performance or personal
performance evaluations may, to the extent specified in the Award Agreement, be reduced, but not
increased, by the Administrator on the basis of such further considerations as the Administrator
shall determine.
10. Deferral of Gains
The Administrator may, in an Award Agreement or otherwise, provide for the deferred delivery
of Shares upon settlement, vesting or other events with respect to Restricted Stock or Restricted
Stock Units, or in payment or satisfaction of an Incentive Bonus. Notwithstanding anything herein
to the contrary, in no event will any deferral of the delivery of Shares or any other payment with
respect to any Award be allowed if the Administrator determines, in its sole discretion, that the
deferral would result in the imposition of the additional tax under Section 409A(a)(1)(B) of the
Code. No award shall provide for deferral of compensation that does not comply with Section 409A
of the Code, unless the Board, at the time of grant, specifically provides that the Award is not
intended to comply with Section 409A of the Code. The Company shall have no liability to a
Participant, or any other party, if an Award that is intended to be exempt from, or compliant with,
Section 409A of the Code is not so exempt or compliant or for any action taken by the Board.
11. Conditions and Restrictions Upon Securities Subject to Awards
The Administrator may provide that the Shares issued upon exercise of an Option or Stock
Appreciation Right or otherwise subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as the Administrator in its discretion
may specify prior to the exercise of such Option or Stock Appreciation Right or the grant, vesting
or settlement of such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for the Shares issued
upon exercise, vesting or settlement of such Award (including the actual or constructive surrender
of Shares already owned by the Participant) or payment of taxes arising in connection with an
Award. Without limiting the foregoing, such restrictions may address the timing and manner of any
resales by the Participant or other subsequent transfers by the Participant of any Shares issued
under an Award, including without limitation (i) restrictions under an insider
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trading policy or pursuant to applicable law, (ii) restrictions designed to delay and/or
coordinate the timing and manner of sales by Participant and holders of other Company equity
compensation arrangements, (iii) restrictions as to the use of a specified brokerage firm for such
resales or other transfers and (iv) provisions requiring Shares to be sold on the open market or to
the Company in order to satisfy tax withholding or other obligations.
12. Adjustment of and Changes in the Stock
In the event that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), stock split or a combination or consolidation of the
outstanding Shares into a lesser number of shares, is declared with respect to the Shares, the
authorization limits under Sections 5(a) and 5(c) shall be increased or decreased proportionately,
and the Shares then subject to each Award shall be increased or decreased proportionately without
any change in the aggregate purchase price therefore. In the event the Shares shall be changed
into or exchanged for a different number or class of shares of stock or securities of the Company
or of another corporation, whether through recapitalization, reorganization, reclassification,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or any other similar corporate transaction or event affects the Shares
such that an equitable adjustment would be required in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan, then the
authorization limits under Sections 5(a) and 5(c) shall be adjusted proportionately, and an
equitable adjustment shall be made to each Share subject to an Award such that no dilution or
enlargement of the benefits or potential benefits occurs. Each such Share then subject to each
Award shall be adjusted to the number and class of shares into which each outstanding Share shall
be so exchanged such that no dilution or enlargement of the benefits occurs, all without change in
the aggregate purchase price for the Shares then subject to each Award. Action by the
Administrator pursuant to this Section 12 may include adjustment to any or all of: (i) the number
and type of Shares (or other securities or other property) that thereafter may be made the subject
of Awards or be delivered under the Plan; (ii) the number and type of Shares (or other securities
or other property) subject to outstanding Awards; (iii) the purchase price or exercise price of a
Share under any outstanding Award or the measure to be used to determine the amount of the benefit
payable on an Award; and (iv) any other adjustments the Administrator determines to be equitable.
No right to purchase fractional shares shall result from any adjustment in Awards pursuant to
this Section 12. In case of any such adjustment, the Shares subject to the Award shall be rounded
down to the nearest whole share. The Company shall notify Participants holding Awards subject to
any adjustments pursuant to this Section 12 of such adjustment, but (whether or not notice is
given) such adjustment shall be effective and binding for all purposes of the Plan.
13. Effect of a Change in Control
Unless otherwise expressly provided in the Award Agreement or another contract, including an
employment agreement, or under the terms of a transaction constituting a Change in Control, the
Administrator may provide for the acceleration of the vesting and, if applicable,
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exercisability of any outstanding Award, or portion thereof, or the lapsing of any conditions
of restrictions on or the time for payment in respect of any outstanding Award, or portion thereof
upon termination of the Participant’s employment following a Change in Control. In addition,
unless otherwise expressly provided in the Award Agreement or another contract, including an
employment agreement, or under the terms of a transaction constituting a Change in Control, the
Administrator may provide that any or all of the following shall occur in connection with a Change
in Control: (i) the substitution for the Shares subject to any outstanding Award, or portion
thereof, stock or other securities of the surviving corporation or any successor corporation to the
Company, or a parent or subsidiary thereof, in which event the aggregate purchase or exercise
price, if any, of such Award, or portion thereof, shall remain the same, (ii) the conversion of any
outstanding Award, or portion thereof, into a right to receive cash or other property upon or
following the consummation of the Change in Control in an amount equal to the value of the
consideration to be received by holders of Common Shares in connection with such transaction for
one Share, less the per share purchase or exercise price of such Award, if any, multiplied by the
number of Shares subject to such Award, or a portion thereof, and/or (iii) the cancellation of any
outstanding and unexercised Awards upon or following the consummation of the Change in Control.
Any actions or determinations of the Administrator pursuant to this Section 13 may, but need not be
uniform as to all outstanding Awards, and the Administrator may, but need not treat all holders of
outstanding Awards identically.
14. Qualifying Performance-Based Compensation
(a)
General
. The Administrator may establish performance criteria and level of achievement
versus such criteria that shall determine the number of Shares to be granted, retained, vested,
issued or issuable under or in settlement of or the amount payable pursuant to an Award, which
criteria may be based on Qualifying Performance Criteria or other standards of financial
performance and/or personal performance evaluations. In addition, the Administrator may specify
that an Award or a portion of an Award is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code, provided that the performance
criteria for such Award or portion of an Award that is intended by the Administrator to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the Code shall be a
measure based on one or more Qualifying Performance Criteria selected by the Administrator and
specified at the time the Award is granted. The Administrator shall certify the extent to which
any Qualifying Performance Criteria has been satisfied, and the amount payable as a result thereof,
prior to payment, settlement or vesting of any Award that is intended to satisfy the requirements
for “performance-based compensation” under Section 162(m) of the Code. Notwithstanding
satisfaction of any performance goals, the number of Shares issued under or the amount paid under
an award may, to the extent specified in the Award Agreement, be reduced, but not increased, by the
Administrator on the basis of such further considerations as the Administrator in its sole
discretion shall determine.
(b)
Qualifying Performance Criteria
. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance criteria, or
derivations of such performance criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or Subsidiary, either individually,
alternatively or in any combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to previous years’ results or
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to a designated comparison group, in each case as specified by the Administrator: (i) net
sales; (ii) earnings from operations, earnings before or after taxes, earnings before or after
interest, depreciation, amortization, or extraordinary or special items; (iii) net income or net
income per common share (basic or diluted); (iv) return on assets (gross or net), return on
investment, return on capital, or return on equity; (v) cash flow, free cash flow, cash flow return
on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of
cost of capital; (vi) interest expense after taxes; (vii) economic value added or created; (viii)
operating margin or profit margin; (ix) stock price or total shareholder return; (x) average cash
balance or cash position; and (xi) strategic business criteria, consisting of one or more
objectives based on meeting specified product development, strategic partnering, licensing,
research and development, market penetration, geographic business expansion goals, cost targets,
customer satisfaction, employee satisfaction, management of employment practices and employee
benefits, supervision of litigation and information technology, and goals relating to acquisitions
or divestitures of subsidiaries, affiliates or joint ventures. To the extent consistent with
Section 162(m) of the Code, the Administrator (a) shall appropriately adjust any evaluation of
performance under a Qualifying Performance Criteria to eliminate the effects of charges for
restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense
determined to be extraordinary or unusual in nature or related to the disposal of a segment of a
business or related to a change in accounting principle all as determined in accordance with
standards established by opinion No. 30 of the Accounting Principles Board (APA Opinion No. 30) or
other applicable or successor accounting provisions, as well as the cumulative effect of accounting
changes, in each case as determined in accordance with generally accepted accounting principles or
identified in the Company’s financial statements or notes to the financial statements, and (b) may
appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to
exclude any of the following events that occurs during a performance period: (1) asset write-downs,
(2) litigation, claims, judgments or settlements, (3) the effect of changes in tax law or other
such laws or provisions affecting reported results, (4) accruals for reorganization and
restructuring programs and (5) accruals of any amounts for payment under this Plan or any other
compensation arrangement maintained by the Company.
15. Transferability
Each Award may not be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated by a Participant other than by will or the laws of descent and distribution, and each
Option or Stock Appreciation Right shall be exercisable only by the Participant during his or her
lifetime. Notwithstanding the foregoing, to the extent permitted by the Administrator, the person
to whom an Award is initially granted (the “Grantee”) may transfer an Award to any “family member”
of the Grantee (as such term is defined in Section 1(a)(5) of the General Instructions to Form S-8
under the Securities Act of 1933, as amended (“Form S-8”)), to trusts solely for the benefit of
such family members and to partnerships in which such family members and/or trusts are the only
partners; provided that, (i) as a condition thereof, the transferor and the transferee must execute
a written agreement containing such terms as specified by the Administrator, and (ii) the transfer
is pursuant to a gift or a domestic relations order to the extent permitted under the General
Instructions to Form S-8. Except to the extent specified otherwise in the agreement the
Administrator provides for the Grantee and transferee to execute, all vesting, exercisability and
forfeiture provisions that are conditioned on the Grantee’s continued employment or service shall
continue to be determined with reference to the Grantee’s employment or service (and not to the
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status of the transferee) after any transfer of an Award pursuant to this Section 15, and the
responsibility to pay any taxes in connection with an Award shall remain with the Grantee
notwithstanding any transfer other than by will or intestate succession.
16. Suspension or Termination of Awards
Except as otherwise provided by the Administrator, if at any time (including after a notice of
exercise has been delivered or an award has vested) the Chief Executive Officer or any other person
designated by the Administrator (each such person, an “Authorized Officer”) reasonably believes
that a Participant may have committed any act constituting Cause for termination of employment or
any Detrimental Activity, the Authorized Officer, Administrator or the Board may suspend the
Participant’s rights to exercise any Option, to vest in an Award, and/or to receive payment for or
receive Shares in settlement of an Award pending a determination of whether such an act has been
committed.
If the Administrator or an Authorized Officer determines a Participant has committed any act
constituting Cause for termination of employment or any Detrimental Activity, then except as
otherwise provided by the Administrator, (a) neither the Participant nor his or her estate nor
transferee shall be entitled to exercise any Option or Stock Appreciation Right whatsoever, vest in
or have the restrictions on an Award lapse, or otherwise receive payment of an Award, (b) the
Participant will forfeit all outstanding Awards and (c) the Participant may be required, at the
Administrator’s sole discretion, to return and/or repay to the Company any then unvested Shares
previously issued under the Plan. In making such determination, the Administrator or an Authorized
Officer shall give the Participant an opportunity to appear and present evidence on his or her
behalf at a hearing before the Administrator or its designee or an opportunity to submit written
comments, documents, information and arguments to be considered by the Administrator.
17. Compliance with Laws and Regulations
This Plan, the grant, issuance, vesting, exercise and settlement of Awards thereunder, and the
obligation of the Company to sell, issue or deliver Shares under such Awards, shall be subject to
all applicable foreign, federal, state and local laws, rules and regulations, stock exchange rules
and regulations, and to such approvals by any governmental or regulatory agency as may be required.
The Company shall not be required to register in a Participant’s name or deliver any Shares prior
to the completion of any registration or qualification of such shares under any foreign, federal,
state or local law or any ruling or regulation of any government body which the Administrator shall
determine to be necessary or advisable. To the extent the Company is unable to or the
Administrator deems it infeasible to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, the Company and its Subsidiaries shall be relieved of any liability with
respect to the failure to issue or sell such Shares as to which such requisite authority shall not
have been obtained. No Option shall be exercisable and no Shares shall be issued and/or
transferable under any other Award unless a registration statement with respect to the Shares
underlying such Award is effective and current or the Company has determined that such registration
is unnecessary.
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The Administrator may modify the provisions of the Plan or adopt rules or procedures relating
to the operation and administration of the Plan to accommodate the specific requirements of local
laws and procedures or to recognize differences in local law, currency or tax policy. The
Administrator may also impose conditions on the grant, issuance, exercise, vesting, settlement or
retention of Awards in order to comply with such foreign law and/or to minimize the Company’s
obligations with respect to tax equalization for Participants employed outside their home country.
Without limiting the generality of the foregoing, the Administrator is specifically authorized to
adopt rules and procedures regarding the conversion of local currency, data privacy security,
payroll tax, withholding procedures and handling of stock certificates which vary with local
requirements. The Administrator may also adopt sub-plans applicable to particular Subsidiaries or
locations. The rules of such sub-plans may take precedence over other provisions of this Plan,
with the exception of Sections 5 and 20, but unless otherwise superseded by the terms of such
sub-plan, the provisions of this Plan shall govern the operation of such sub-plan. The
Administrator shall not be required to obtain the approval of shareholders prior to the adoption,
amendment or termination of any sub-plan unless required by applicable law (including the law of
the foreign jurisdiction in which Participants participating in the sub-plan are located) or the
NASDAQ Global Select Market listing requirements.
18. Withholding
To the extent required by applicable federal, state, local or foreign law, a Participant shall
be required to satisfy, in a manner satisfactory to the Company, any withholding tax obligations
that arise by reason of an Option exercise, disposition of Shares issued under an Incentive Stock
Option, the vesting of or settlement of an Award, an election pursuant to Section 83(b) of the Code
or otherwise with respect to an Award. To the extent a Participant makes an election under
Section 83(b) of the Code, within ten days of filing such election with the Internal Revenue
Service, the Participant must notify the Company in writing of such election. The Company and its
Subsidiaries shall not be required to issue Shares, make any payment or to recognize the transfer
or disposition of Shares until all such obligations are satisfied. The Administrator may provide
for or permit these obligations to be satisfied through the mandatory or elective sale of Shares
and/or by having the Company withhold a portion of the Shares that otherwise would be issued to him
or her upon exercise of the Option or the vesting or settlement of an Award, or by tendering Shares
previously acquired. To the extent a Participant makes an election under Section 83(b) of the
Code, within ten days of filing such election with the Internal Revenue Service, the Participant
must notify the Company in writing of such election.
19. Administration of the Plan
(a)
Administrator of the Plan
. The Plan shall be administered by the Administrator who shall
be a committee of two or more directors designated by the Board, or in the absence of such a
committee, the Board itself. Initially, the Compensation Committee of the Board will be designated
as the Administrator. Any power of the Administrator may also be exercised by the Board, except to
the extent that the grant or exercise of such authority would cause any Award or transaction to
become subject to (or lose an exemption under) the short-swing profit recovery provisions of
Section 16 of the Securities Exchange Act of 1934 or cause an Award designated as a Performance
Award not to qualify for treatment as performance-based compensation under Section 162(m) of the
Code. To the extent that any permitted action taken by the Board conflicts
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with action taken by the Administrator, the Board action shall control. The Compensation
Committee hereby designates the Secretary of the Company and the head of the Company’s human
resource function to assist the Administrator in the administration of the Plan and execute Award
Agreements or other documents entered into under this Plan on behalf of the Administrator or the
Company. In addition, the Compensation Committee may delegate any or all aspects of the day-to-day
administration of the Plan to one or more officers or employees of the Company or any Subsidiary,
and/or to one or more agents.
(b)
Powers of Administrator
. Subject to the express provisions of this Plan, the
Administrator shall be authorized and empowered to do all things that it determines to be necessary
or appropriate in connection with the administration of this Plan, including, without limitation:
(i) to prescribe, amend and rescind rules and regulations relating to this Plan and to define terms
not otherwise defined herein; (ii) to determine which persons are Participants, to which of such
Participants, if any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to
grant Awards to Participants and determine the terms and conditions thereof, including the number
of Shares subject to Awards and the exercise or purchase price of such Shares and the circumstances
under which Awards become exercisable or vested or are forfeited or expire, which terms may but
need not be conditioned upon the passage of time, continued employment, the satisfaction of
performance criteria, the occurrence of certain events (including a Change in Control), or other
factors; (iv) to establish and 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; (v) to prescribe and amend the terms of the agreements or other documents evidencing Awards
made under this Plan (which need not be identical) and the terms of or form of any document or
notice required to be delivered to the Company by Participants under this Plan; (vi) to determine
the extent to which adjustments are required pursuant to Section 12; (vii) to interpret and
construe this Plan, any rules and regulations under this Plan and the terms and conditions of any
Award granted hereunder, and to make exceptions to any such provisions in if the Administrator, in
good faith, determines that it is necessary to do so in light of extraordinary circumstances and
for the benefit of the Company; (viii) to approve corrections in the documentation or
administration of any Award; (ix) to require or permit Participant elections and/or consents under
this Plan to be made by means of such electronic media as the Administrator may prescribe; and (x)
to make all other determinations deemed necessary or advisable for the administration of this Plan.
The Administrator may, in its sole and absolute discretion, without amendment to the Plan, waive
or amend the operation of Plan provisions respecting exercise after termination of employment or
service to the Company or an Affiliate and, except as otherwise provided herein, adjust any of the
terms of any Award. The Administrator may also (a) accelerate the date on which any Award granted
under the Plan becomes exercisable or (b) accelerate the vesting date or waive or adjust any
condition imposed hereunder with respect to the vesting or exercisability of an Award, provided
that the Administrator, in good faith, determines that such acceleration, waiver or other
adjustment is necessary or desirable in light of extraordinary circumstances. Notwithstanding
anything in the Plan to the contrary, no Award outstanding under the Plan may be repriced,
regranted through cancellation, including cancellation in exchange for other Awards or Options or
Stock Appreciation Rights with an exercise price that is less than the exercise price of the
original Award, or otherwise amended to reduce the exercise price applicable thereto (other than
with respect to adjustments made in connection with a transaction or other change in the Company’s
capitalization as described in Section 12) without the approval of the Company’s shareholders.
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(c)
Determinations by the Administrator
. All decisions, determinations and interpretations by
the Administrator regarding the Plan, any rules and regulations under the Plan and the terms and
conditions of or operation of any Award granted hereunder, shall be final and binding on all
Participants, beneficiaries, heirs, assigns or other persons holding or claiming rights under the
Plan or any Award. The Administrator shall consider such factors as it deems relevant, in its sole
and absolute discretion, to making such decisions, determinations and interpretations including,
without limitation, the recommendations or advice of any officer or other employee of the Company
and such attorneys, consultants and accountants as it may select.
(d)
Subsidiary Awards
. In the case of a grant of an Award to any Participant employed by a
Subsidiary, such grant may, if the Administrator so directs, be implemented by the Company issuing
any subject Shares to the Subsidiary, for such lawful consideration as the Administrator may
determine, upon the condition or understanding that the Subsidiary will transfer the Shares to the
Participant in accordance with the terms of the Award specified by the Administrator pursuant to
the provisions of the Plan. Notwithstanding any other provision hereof, such Award may be issued
by and in the name of the Subsidiary and shall be deemed granted on such date as the Administrator
shall determine.
20. Amendment of the Plan or Awards
The Board may amend, alter or discontinue this Plan and the Administrator may amend, or alter
any agreement or other document evidencing an Award made under this Plan but, except as provided
pursuant to the provisions of Section 12, no such amendment shall, without the approval of the
shareholders of the Company:
(a) increase the maximum number of Shares for which Awards may be granted under this Plan;
(b) reduce the price at which Options may be granted below the price provided for in
Section 6(a);
(c) reduce the exercise price of outstanding Options;
(d) extend the term of this Plan;
(e) change the class of persons eligible to be Participants;
(f) otherwise amend the Plan in any manner requiring shareholder approval by law or under the
NASDAQ Global Select Market listing requirements; or
(g) increase the individual maximum limits in Section 5(c).
No amendment or alteration to the Plan or an Award or Award Agreement shall be made which
would impair the rights of the holder of an Award, without such holder’s consent, provided that no
such consent shall be required if the Administrator determines in its sole discretion and prior to
the date of any Change in Control that such amendment or alteration either is required or advisable
in order for the Company, the Plan or the Award to satisfy any law
17
or regulation or to meet the requirements of or avoid adverse financial accounting
consequences under any accounting standard.
21. No Liability of Company
The Company and any Subsidiary or affiliate which is in existence or hereafter comes into
existence shall not be liable to a Participant or any other person as to: (i) the non-issuance or
sale of Shares as to which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance
and sale of any Shares hereunder; and (ii) any tax consequence expected, but not realized, by any
Participant or other person due to the receipt, exercise or settlement of any Award granted
hereunder.
22. Non-Exclusivity of Plan
Neither the adoption of this Plan by the Board nor the submission of this Plan to the
shareholders of the Company for approval shall be construed as creating any limitations on the
power of the Board or the Administrator to adopt such other incentive arrangements as either may
deem desirable, including without limitation, the granting of restricted stock or stock options
otherwise than under this Plan or an arrangement not intended to qualify under Code Section 162(m),
and such arrangements may be either generally applicable or applicable only in specific cases.
23. Governing Law
This Plan and any agreements or other documents hereunder shall be interpreted and construed
in accordance with the laws of the Commonwealth of Pennsylvania and applicable federal law. Any
reference in this Plan or in the agreement or other document evidencing any Awards to a provision
of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation
of similar effect or applicability.
24. Arbitration of Disputes
In the event a Participant or other holder of an Award or person claiming a right under an
Award or the Plan believes that a decision by the Administrator with respect to such person or
Award was arbitrary or capricious, the person may request arbitration with respect to such
decision. The review by the arbitrator shall be limited to determining whether the Participant or
other Award holder has proven that the Administrator’s decision was arbitrary or capricious. This
arbitration shall be the sole and exclusive review permitted of the Administrator’s decision.
Participants, Award holders and persons claiming rights under an Award or the Plan explicitly waive
any right to judicial review.
Notice of demand for arbitration shall be made in writing to the Administrator within thirty
(30) days after the applicable decision by the Administrator. The arbitrator shall be selected by
those members of the Board who are neither members of the Compensation Committee nor employees of
the Company or any Subsidiary. If there are no such members of the Board, the arbitrator shall be
selected by the Board. The arbitrator shall be an individual who is an attorney licensed to
practice law in the jurisdiction in which the Company’s headquarters
18
are then located. Such arbitrator shall be neutral within the meaning of the Commercial Rules
of Dispute Resolution of the American Arbitration Association; provided, however, that the
arbitration shall not be administered by the American Arbitration Association. Any challenge to
the neutrality of the arbitrator shall be resolved by the arbitrator whose decision shall be final
and conclusive. The arbitration shall be administered and conducted by the arbitrator pursuant to
the Commercial Rules of Dispute Resolution of the American Arbitration Association. Each side
shall bear its own fees and expenses, including its own attorney’s fees, and each side shall bear
one half of the arbitrator’s fees and expenses. The decision of the arbitrator on the issue(s)
presented for arbitration shall be final and conclusive and may be enforced in any court of
competent jurisdiction.
25. No Right to Employment, Reelection or Continued Service
Nothing in this Plan or an Award Agreement shall interfere with or limit in any way the right
of the Company, its Subsidiaries and/or its affiliates to terminate any Participant’s employment,
service on the Board or service for the Company at any time or for any reason not prohibited by
law, nor shall this Plan or an Award itself confer upon any Participant any right to continue his
or her employment or service for any specified period of time. Neither an Award nor any benefits
arising under this Plan shall constitute an employment contract with the Company, any Subsidiary
and/or its affiliates. Subject to Sections 4 and 20, this Plan and the benefits hereunder may be
terminated at any time in the sole and exclusive discretion of the Board without giving rise to any
liability on the part of the Company, its Subsidiaries and/or its affiliates.
26. Unfunded Plan
The Plan is intended to be an unfunded plan. Participants are and shall at all times be
general creditors of the Company with respect to their Awards. If the Administrator or the Company
chooses to set aside funds in a trust or otherwise for the payment of Awards under the Plan, such
funds shall at all times be subject to the claims of the creditors of the Company in the event of
its bankruptcy or insolvency.
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