MIDWEST AIR GROUP, INC.
2005 EQUITY INCENTIVE PLAN

    1.        Purposes, History and Effective Date.

        (a)       Purpose. The Midwest Air Group, Inc. 2005 Equity Incentive Plan has two complementary purposes: (i) to attract, retain, and reward individuals who serve as key employees and consultants and (ii) to increase shareholder value. The Plan will provide participants incentives to increase shareholder value by offering the opportunity to acquire shares of the Company’s common stock on the potentially favorable terms that this Plan provides.

        (b)       History. Prior to the effective date of this Plan, the Company had in effect the 1995 Plan, which was originally effective September 21, 1995. Upon shareholder approval of this Plan, the 1995 Plan will terminate and no new awards will be granted under the 1995 Plan, although awards granted under such plan and still outstanding will continue to be subject to all terms and conditions of such plan.

        (c)       Effective Date. This Plan will become effective, and Awards may be granted under this Plan, on and after the Effective Date. This Plan will terminate as provided in Section 11.

    2.        Definitions. Capitalized terms used in this Plan have the following meanings:

        (a)        “1995 Plan” means the Midwest Express Holdings, Inc. 1995 Stock Option Plan, as amended.

        (b)        “Affiliate” means any company in which the Company owns directly or indirectly 20% or more of the equity interest (collectively, the “Affiliates”).

        (c)         “Award” means a grant of Options, Stock Appreciation Rights or Restricted Stock.

        (d)         “Award Agreement” means a written instrument approved by the Committee that evidences the grant of an Award.

        (e)         “Board” means the Board of Directors of the Company.

        (f)         “Cause” means malfeasance (e.g., theft, harassment, violations of company code of ethics and values), as determined by the Committee.

        (g)         “Change of Control” means the first to occur of any one of the following:

 

(i)

“Person” (as such term is defined in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof), other than (A) the Company or any of its subsidiaries, (B) a trustee or other fiduciary holding securities under any employee benefit plan of the Company or any of its subsidiaries, (C) an underwriter temporarily holding securities pursuant to an offering of such securities or (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock in the Company (“Excluded Persons”), is or becomes the “Beneficial Owner” (as defined in rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after January 1, 2005, pursuant to express authorization by the Board that refers to this exception) representing 25% or more of either the then outstanding shares of Stock or the combined voting power of the Company’s then outstanding voting securities; or



 

(ii)

the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on January 1, 2005, constituted the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) whose appointment or 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 on January 1, 2005, or whose appointment, election or nomination for election was previously so approved; or



 

(iii)

consummation of a merger or consolidation of the Company with any other corporation or the issuance of voting securities of the Company in connection with a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) pursuant to applicable stock exchange requirements, other than (A) a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after January 1, 2005, pursuant to express authorization by the Board that refers to this exception) representing 25% or more of either the then outstanding shares of Common Stock or the combined voting power of the Company’s then outstanding voting securities;



 

(iv)

the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company; or



 

(v)

consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets (in one transaction or a series of related transactions within any period of 24 consecutive months), other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least 75% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.



        Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the record holders of the Common Stock immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

        (h)        “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes any successor provision and the regulations promulgated under such provision.

        (i)        “Committee” means the Compensation Committee of the Board which consists of at least two members each of whom shall qualify as a “non-employee director” within the meaning of Rule 16b-3 and as an “outside director” under Code Section 162(m)(4)(C), or such other committee of the Board appointed by the Board to administer the Plan consisting of at least two members each of whom shall qualify as a “non-employee director” within the meaning of Rule 16b-3 and as an “outside director” under Code Section 162(m)(4)(C).

        (j)        “Company” means Midwest Air Group, Inc., or any successor corporation thereto.

        (k)        “Effective Date” means the date the Company’s shareholders approve this Plan.

        (l)        “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a specific provision of the Exchange Act includes any successor provision and the regulations and rules promulgated under such provision.

        (m)        “Fair Market Value” means, per Share on a particular date, (i) the closing price of a Share, or, if no closing price is available on that date, then the closing price on the immediately preceding business day on which there is a closing price, if such security is listed or admitted for trading on any domestic national securities exchange, as officially reported on the principal securities exchange on which the Shares are listed; (ii) if not reported as described in clause (i), the closing sale price of a Share, or, if no closing sale price is available on that date, then the closing sale price on the immediately preceding business day on which there is a closing sale price, as reported by The Nasdaq Stock Market, or any similar system of automated dissemination of quotations of securities prices then in common use, if so quoted; or (iii) if not reported as described in clause (i) or quoted as described in clause (ii), then the Board shall determine in good faith and on a reasonable basis the applicable Fair Market Value, which determination shall be conclusive.

        (n)        “Option” means the right to purchase Shares at a stated price for a specified period of time.

        (o)        “Participant” means an individual selected by the Committee to receive an Award.

        (p)        “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.

        (q)        “Plan” means this Midwest Air Group, Inc. 2005 Equity Incentive Plan, as it may be amended from time to time.

        (r)        “Restricted Stock” means Shares that are subject to a risk of forfeiture and/or restrictions on transfer, which may lapse upon the completion of a period of service and/or satisfaction of such other criteria as the Committee specifies.

        (s)        “Retirement” means termination of employment on or after the date such Participant has attained age 55 and has ten vested years of service with the Company or any of its Affiliates as calculated in accordance with the Midwest Airlines Savings and Investment Plan (or any successor plan thereto) as of the date of such termination of employment.

        (t)        “Rule 16b-3” means Rule 16b-3 as promulgated by the United States Securities and Exchange Commission under the Exchange Act.

        (u)        “Share” means a share of Stock.

        (v)        “Stock” means the common stock, par value $0.01 per share, of the Company and shall include both treasury shares and authorized but unissued shares and shall also include any security of the Company issued in substitution, in exchange for, or in lieu of the Common Stock.

        (w)        “Stock Appreciation Right” or “SAR” means the right of a Participant to receive cash, and/or Shares with a Fair Market Value, equal to the excess of the Fair Market Value of a Share over the grant price.

        (x)        “Subsidiary” means any corporation (or other entity that elects to be taxed as a corporation) in an unbroken chain of entities beginning with the Company if each of the entities (other than the last entity in the chain) owns the stock or equity interest possessing more than fifty percent (50%) of the total combined voting power of all classes of stock or other equity interests in one of the other entities in the chain.

        (y)        “Total and Permanent Disability” has the meaning ascribed to such term in the Midwest Airlines, Inc. Employees Long-Term Disability Plan (or any successor plan thereto), provided the Committee shall make a determination of Total and Permanent Disability for any Participant hereunder.

    3.        Administration.

        (a)       Committee Administration. In addition to the authority specifically granted to the Committee in this Plan, the Committee has full discretionary authority to administer this Plan, including but not limited to the authority to (i) interpret the provisions of this Plan, (ii) prescribe, amend and rescind rules and regulations relating to this Plan, (iii) correct any defect, supply any omission, or reconcile any inconsistency in the Plan, any Award or any Award Agreement in the manner and to the extent it deems desirable to carry this Plan or such Award into effect and (iv) make all other determinations necessary or advisable for the administration of this Plan. The Committee may make any determination under this Plan without notice or meeting of the Committee by a writing that a majority of the Committee members have signed. All Committee determinations are final and binding.

        (b)       Delegation to Other Committees. To the extent applicable law permits, the Board may delegate to another committee of the Board consisting of at least two members each of whom shall qualify as a “non-employee director” within the meaning of Rule 16b-3 and as an “outside director” under Code Section 162(m)(4)(C) any or all of the authority and responsibility of the Committee. If the Board has made such a delegation, then all references to the Committee in this Plan include such other committee to the extent of such delegation.

        (c)       Report to Board. Within 60 days following the close of each calendar year that the Plan is in operation, the Committee shall make a report to the Board specifying the Participants who received Awards during the prior year, the type of Awards granted to each Participant and the number of Shares with respect to which such Award was made, and the status of prior Awards.

        (d)       Indemnification. The Company will indemnify and hold harmless each member of the Committee, and each member of any other committee to whom a delegation under Section 3(b) has been made, as to any act done, or determination made, with respect to this Plan or any Award to the maximum extent that the law and the Company’s by-laws permit.

    4.        Eligibility. The Committee may designate any of the following as a Participant from time to time: any officer or other key employee of the Company or its Affiliates, an individual that the Company or an Affiliate has engaged to become an officer or key employee, or a consultant who provides services to the Company or its Affiliates. The Committee’s designation of a Participant in any year will not require the Committee to designate such person to receive an Award in any other year.

    5.        Types of Awards. Subject to the terms of this Plan, the Committee may grant any type of Award to any Participant it selects, but only employees of the Company or a Subsidiary may receive grants of Incentive Stock Options. Awards may be granted alone or in addition to, in tandem with, or in substitution for any other Award (or any other award granted under another plan of the Company or any Affiliate).

    6.        Shares Reserved under this Plan.

        (a)       Plan Reserve. Subject to adjustment as provided in Section 13, an aggregate of one million (1,000,000) Shares are reserved for issuance under this Plan. The number of Shares reserved for issuance under this Plan shall be reduced only by the number of Shares delivered in payment or settlement of Awards. Notwithstanding the foregoing, the Company may issue only 750,000 Shares upon the exercise of Incentive Stock Options and may issue only 400,000 Shares as Restricted Stock.

        (b)        Replenishment of Shares Under this Plan. To the extent an Award lapses, expires, terminates or is cancelled without the issuance of Shares, or if Shares are forfeited under an Award, then such Shares may again be used for new Awards under this Plan under Section 6(a), including issuance as Incentive Stock Options.

        (c)        Participant Limitations. Subject to adjustment as provided in Section 13, no Participant may be granted Awards that could result in such Participant:

 

(i)

receiving Options for, and/or Stock Appreciation Rights with respect to, more than 200,000 Shares during any two calendar year period; and



 

(ii)

receiving Awards of Restricted Stock relating to more than 50,000 Shares during any calendar year.



        For purposes hereof, awards made under the 1995 Plan prior to the Effective Date will count toward the limit described herein. In all cases, determinations under this Section 6(c) should be made in a manner that is consistent with the exemption for performance based compensation that Code Section 162(m) provides.

    7.        Options. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each Option, including but not limited to:

        (a)        Whether the Option is an Incentive Stock Option intended to meet the requirements of Code Section 422, or a “nonqualified stock option” that does not meet the requirements of Code Section 422; provided that in the case of an Incentive Stock Option, if the aggregate Fair Market Value (determined at the time of grant) of the Shares with respect to which such option and all other Incentive Stock Options issued under this Plan (and under all other Incentive Stock Option plans of the Company or any Affiliate that is required to be included under Code Section 422) are first exercisable by the Participant during any calendar year exceeds $100,000, such Option automatically shall be treated as a nonqualified stock option to the extent this limit is exceeded.

        (b)         The number of Shares subject to the Option.

        (c)         The exercise price per Share, which may not be less than the Fair Market Value of a Share as determined on the date of grant; provided that (i) no Incentive Stock Option shall be granted to any employee who, at the time the Option is granted, owns (directly or indirectly, within the meaning of Code Section 424(d)) more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Subsidiary unless the exercise price is at least one hundred ten percent (110%) of the Fair Market Value of a Share on the date of grant; and (ii) the exercise price may vary during the term of the Option if the Committee determines that there should be adjustments to the exercise price relating to changes in an index or indices that the Committee determines is appropriate (but in no event may the exercise price per Share be less than the Fair Market Value of a Share as determined on the date of grant).

        (d)         The terms and conditions of exercise; provided that, unless the Committee determines otherwise:

 

(i)

The Option will become exercisable as to one third (1/3) of the Shares covered by the Option upon the first anniversary of the date of grant; an additional one third (1/3) upon the second anniversary of the date of grant; and the remaining one third (1/3) upon the third anniversary of the date of grant;



 

(ii)

The portion of the Option that is not exercisable as of the date of the Participant’s termination of employment (other than as a result of death, Total and Permanent Disability or Retirement) will be forfeited upon the date of such termination of employment;



 

(iii)

The Participant may purchase all of the Shares covered by the Option upon the Participant’s termination of employment as a result of death, Total and Permanent Disability or Retirement;



 

(iv)

The Participant’s exercise of the Option shall be effective only upon receipt by the Company (or its designated agent) of a properly completed and timely filed notice of exercise, accompanied by payment in full of the exercise price of the Shares being acquired and any applicable taxes due as a result of such exercise. Payment of the exercise price may be made (i) in cash, (ii) by a check payable to the Company, (iii) at the sole discretion of the Committee, by tender to the Company (including by attestation) of Shares of Stock that have been held by the Participant for at least six months or acquired in the open market and having a Fair Market Value on the transfer date equal to the amount payable to the Company, (iv) at the sole discretion of the Committee, through any combination of the foregoing, or (v) at the sole discretion of the Committee, by any other method or means as the Committee may prescribe. Payment of any taxes due shall be made as provided in Section 12. The date of exercise shall be deemed to be the date the Company receives the written notice and payment for the Shares being purchased and applicable taxes due thereon. A Participant shall have none of the rights of a shareholder with respect to Shares covered by such Option until the Participant becomes the record holder of such Shares. Notwithstanding the foregoing, the Company may cancel or delay the exercise of any Options if such exercise would result in the disallowance of a deduction to the Company under Section 162(m) of the Code.



 

(v)

The termination date, except that each Option must terminate no later than the tenth (10th) anniversary of the date of grant, and each Incentive Stock Option granted to any employee who, at the time the Option is granted, owns (directly or indirectly, within the meaning of Code Section 424(d)) more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Subsidiary must terminate no later than the third (3rd) anniversary of the date of grant; and provided that unless the Committee determines otherwise, the Option will terminate on the earliest of:



 

(A)       The tenth (10th) anniversary of the date of grant;



 

(B)        If the Participant’s employment is terminated for any reason other than death, Retirement, Total and Permanent Disability or Cause, the end of 90 days following such termination;



 

(C)        If the Participant’s employment is terminated as a result of death or Retirement or due to Total and Permanent Disability, the third anniversary of the date of such termination; or



 

(D)        Immediately upon the date of the Participant’s termination of employment for Cause.



        In all other respects, the terms of any Incentive Stock Option should comply with the provisions of Code Section 422 except to the extent the Committee determines otherwise. Upon a Participant’s death, the Option may be exercised by the person or persons to whom such Participant’s rights under the Option shall pass by will or by applicable law or, if no such person has such rights, by his executor or administrator.

    8.        Stock Appreciation Rights. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each SAR, including but not limited to:

        (a)        Whether the SAR is granted independently of an Option or relates to an Option; provided that if an SAR is granted in relation to an Option, then unless otherwise determined by the Committee, the SAR shall be exercisable or shall mature at the same time or times, on the same conditions and to the extent and in the proportion that the related Option is exercisable and may be exercised or mature for all or part of the Shares subject to the related Option. Upon exercise of any number of SARs, the number of Shares subject to the related Option shall be reduced accordingly, and such Option may not be exercised with respect to that number of Shares. The exercise of any number of Options that relate to an SAR shall likewise result in an equivalent reduction in the number of Shares covered by the related SAR.

        (b)         The number of Shares to which the SAR relates.

        (c)         The grant price, provided that the grant price shall not be less than the Fair Market Value of the Shares subject to the SAR as determined on the date of grant.

        (d)         The terms and conditions of exercise or maturity; provided that, unless the Committee determines otherwise:

 

(i)

The SAR will become exercisable or mature with respect to one third (1/3) of the Shares covered by the SAR upon the first anniversary of the date of grant of the SAR; an additional one third (1/3) upon the second anniversary of the grant date; and the remaining one third (1/3) upon the third anniversary of the grant date;



 

(ii)

The portion of the SAR that is not exercisable or has not matured as of the date of the Participant’s termination of employment (other than as a result of death, Total and Permanent Disability or Retirement) will be forfeited upon the date of such termination of employment;



 

(iii)

The SAR will become exercisable or mature in full upon the Participant’s termination of employment as a result of death, Total and Permanent Disability or Retirement;



 

(iv)

If the SAR is exercisable for Shares, the Participant’s exercise of the SAR shall be effective only upon receipt by the Company (or its designated agent) of a properly completed and timely filed notice of exercise, accompanied by payment in full of any applicable taxes due as a result of such exercise. Payment of any taxes due shall be made as provided in Section 12. The date of exercise shall be deemed to be the date the Company receives the written notice for the SAR(s) being exercised and applicable taxes due thereon. A Participant shall have none of the rights of a shareholder with respect to Shares covered by such SAR until the Participant becomes the record holder of such Shares. Notwithstanding the foregoing, the Company may cancel or delay the exercise of any SAR(s) if such exercise would result in the disallowance of a deduction to the Company under Section 162(m) of the Code; and



 

(v)

If the SAR is payable in cash, the excess of the Fair Market Value of the Share covered by the SAR that has matured over the grant price for such SAR shall be payable upon the date of maturity.



        (e)         The term, provided that an SAR must terminate no later than the tenth (10th) anniversary of the date of grant; and provided that unless the Committee determines otherwise, the SAR will terminate on the earliest of:

 

(i)

The tenth (10th) anniversary of the date of grant;



 

(ii)

If the Participant’s employment is terminated for any reason other than death, Retirement, Total and Permanent Disability or Cause, the end of 90 days following such termination;



 

(iii)

Immediately upon the date of the Participant’s termination of employment for Cause; or



 

(iv)

If the Participant’s employment is terminated as a result of death or Retirement or due to Total and Permanent Disability, the third anniversary of the date of such termination.



        (f)         Whether the SAR will be settled in cash, Shares or a combination thereof; provided that if an SAR is to be settled in cash, then the terms of such SAR shall comply with the requirements of Code Section 409A, and to the extent needed to comply with such law, the terms of Code Section 409A are incorporated herein by reference with respect to such SAR.

        Upon a Participant’s death, the SAR may be exercised by the person or persons to whom such Participant’s rights under the SAR shall pass by will or by applicable law or, if no such person has such rights, by his executor or administrator.

    9.        Restricted Stock. Subject to the terms of this Plan, the Committee will determine all terms and conditions of each award of Restricted Stock, including but not limited to:

        (a)        The number of Shares to which such Award relates.

        (b)         The period of time over which, and/or the conditions that must be satisfied so that, the risk of forfeiture and/or restrictions on transfer imposed on Restricted Stock will lapse; provided that, unless otherwise determined by the Committee:

 

(i)

the risk of forfeiture and/or restrictions on transfer imposed on the Restricted Stock will lapse upon the earliest of:



 

(A)        The third anniversary of the date of grant of the Restricted Stock, provided the Participant is an employee on such date; or



 

(B)        The date the Participant’s employment is terminated as a result of death or Total and Permanent Disability; and



 

(ii)

Restricted Stock for which the risk of forfeiture and/or restrictions on transfer have not lapsed as of the date of the Participant’s termination of employment will be forfeited as of such date.



        (c)        The manner of registration of certificates for such Shares, and whether to hold such Shares in escrow pending lapse of the risk of forfeiture and/or restrictions on transfer or to issue such Shares with an appropriate legend referring to such restrictions; provided that unless the Committee determines otherwise, shares of Restricted Stock will be held in escrow and will be issued to the Participant as soon as practicable after the risk of forfeiture and/or restrictions with respect to such Shares have lapsed.

        (d)        Whether dividends paid with respect to shares of Restricted Stock will be immediately paid or held in escrow or otherwise deferred and whether such dividends shall be subject to the same terms and conditions as the Award to which they relate; provided that, unless the Committee determines, dividends paid with respect to shares of Restricted Stock will be subject to the same risk of forfeiture and/or restrictions on transfer as the Shares to which they relate and will be paid (without liability for interest thereon) at the same time as the risk of forfeiture and/or restrictions on transfer imposed on the related Shares lapse.

    10.        Transferability. Awards are not transferable other than by will or the laws of descent and distribution, unless and to the extent the Committee allows. Notwithstanding the foregoing, an Incentive Stock Option shall not be transferable other than by will or the laws of descent and distribution and may be exercised during the Participant’s lifetime only by the Participant (or his legal representative).

    11.        Termination and Amendment of Plan; Amendment, Modification or Cancellation of Awards.

        (a)       Term of Plan. Unless the Board earlier terminates this Plan pursuant to Section 11(b), this Plan will terminate on the third (3rd ) anniversary of the Effective Date.

        (b)        Termination and Amendment. The Board or the Committee may amend, alter, suspend, discontinue or terminate this Plan at any time, subject to the following limitations:

 

(i)

the Board must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) action of the Board, (B) applicable corporate law or (C) any other applicable law;



 

(ii)

shareholders must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) Section 16 of the Exchange Act, (B) the Code, (C) the listing requirements of any principal securities exchange or market on which the Shares are then traded or (D) any other applicable law; and



 

(iii)

shareholders must approve any of the following Plan amendments: (A)an amendment to materially increase any number of Shares specified in Section 6(a) or 6(c) (except as permitted by Section 13); or (B) an amendment to the provisions of Section 11(e).



        (c)        Amendment, Modification or Cancellation of Awards. Except as provided in Section 11(e) and subject to the requirements of this Plan, the Committee may modify or amend any Award or waive any restrictions or conditions applicable to any Award or the exercise of the Award, and the terms and conditions applicable to any Awards may at any time be amended, modified or canceled by mutual agreement between the Committee and the Participant or any other person(s) as may then have an interest in the Award, so long as any amendment or modification does not increase the number of Shares issuable under this Plan (except as permitted by Section 13), but the Committee need not obtain Participant (or other interested party) consent for the cancellation of an Award pursuant to the provisions of Section 13(a) or the modification of an Award to the extent deemed necessary to comply with any applicable law (including as needed to preserve the tax-deferred nature of any Award subject to Code Section 409A) or the listing requirements of any principal securities exchange or market on which the Shares are then traded, or to preserve favorable accounting treatment of any Award for the Company.

        (d)        Survival of Authority and Awards. Notwithstanding the foregoing, the authority of the Board and the Committee under this Section 11 will extend beyond the date of this Plan’s termination. In addition, termination of this Plan will not affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards will continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.

        (e)        Repricing Prohibited. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Section 13, neither the Committee nor any other person may decrease the exercise price for any outstanding Option or the grant price of any SAR after the date of grant nor allow a Participant to surrender an outstanding Option or SAR to the Company as consideration for the grant of a new Option or SAR, as applicable, with a lower exercise or grant price, respectively.

        (f)        Foreign Participation. To assure the viability of Awards granted to Participants employed in foreign countries, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that the Committee approves for purposes of using this Plan in a foreign country will not affect the terms of this Plan for any other country. In addition, all such supplements, amendments, restatements or alternative versions must comply with the provisions of Section 11(b)(ii) and (iii).

 

    12.        Taxes. The Company is entitled to withhold the amount of any tax attributable to any amount payable or Shares deliverable under this Plan after giving the person entitled to receive such amount or Shares notice as far in advance as is reasonably practicable, and the Company may defer making payment or delivery if any such tax may be pending unless and until indemnified to its satisfaction. If Shares are deliverable upon exercise, payment or maturity of an Award, the Committee may permit a Participant to satisfy all or a portion of the federal, state and local withholding tax obligations arising in connection with such Award by electing to (a) have the Company withhold Shares otherwise issuable under the Award, (b) tender back Shares received in connection with such Award or (c) deliver other previously owned Shares, in each case having a Fair Market Value equal to the amount to be withheld. However, the amount to be withheld may not exceed the total minimum federal, state and local tax withholding obligations associated with the transaction, unless otherwise determined by the Committee. The election must be made on or before the date as of which the amount of tax to be withheld is determined and otherwise as the Committee requires.

    13.        Adjustment Provisions; Change of Control.

        (a)       Adjustment of Shares. If the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, 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 other similar corporate transaction or event affects the Shares such that the Committee determines an adjustment to be appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, then, subject to Participants’ rights under Section 13(c), the Committee may, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares subject to this Plan (including the number and type of Shares described in Sections 6(a) and 6(c)) and which may after the event be made the subject of Awards under this Plan, (ii) the number and type of Shares subject to outstanding Awards, and (iii) the grant, purchase, or exercise price with respect to any Award. In any such case, the Committee may also (or in lieu of the foregoing) make provision for a cash payment to the holder of an outstanding Award in exchange for the cancellation of all or a portion of the Award (without the consent of the holder of an Award) in an amount determined by the Committee effective at such time as the Committee specifies (which may be the time such transaction or event is effective), but if such transaction or event constitutes a Change of Control, then the Committee may make such a provision only if the Committee determines that doing so is necessary to substitute, for each Share then subject to an Award, the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction or event in accordance with the last sentence of this Section 13(a). However, in each case, with respect to Awards of Incentive Stock Options, no such adjustment may be authorized to the extent that such authority would cause this Plan to violate Code Section 422(b). Further, the number of Shares subject to any Award payable or denominated in Shares must always be a whole number. Without limitation, subject to Participants’ rights under Section 13(c), in the event of any reorganization, merger, consolidation, combination or other similar corporate transaction or event, whether or not constituting a Change of Control (other than any such transaction in which the Company is the continuing corporation and in which the outstanding Stock is not being converted into or exchanged for different securities, cash or other property, or any combination thereof), the Committee may substitute, on an equitable basis as the Committee determines, for each Share then subject to an Award, the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction.

        (b)        Issuance or Assumption. Notwithstanding any other provision of this Plan, and without affecting the number of Shares otherwise reserved or available under this Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, the Committee may authorize the issuance or assumption of awards upon such terms and conditions as it may deem appropriate.

        (c)        Change of Control. Except to the extent the Committee provides a result more favorable to holders of Awards (either in an Award Agreement or at the time of a Change of Control), in the event of a Change of Control:

 

(i)

each holder of an Option or SAR shall have the right at any time thereafter to exercise the Option or SAR in full whether or not the Option or SAR was theretofore exercisable;



 

(ii)

any SAR that has not yet matured shall automatically mature on the date of the Change of Control (provided the Change of Control also meets the requirements of a change of control as specified in Code Section 409A); and



 

(iii)

any risk of forfeiture and/or restrictions imposed on Restricted Stock shall lapse upon the date of the Change of Control.



    14.       Miscellaneous.

        (a)        Other Terms and Conditions. The grant of any Award may also be subject to other provisions (whether or not applicable to an Award granted to any other Participant) as the Committee determines appropriate, including, without limitation, provisions for:

 

(i)

provisions giving the Participant the right to receive dividend payments or dividend equivalent payments with respect to the Shares subject to the Award (both before and after the Shares subject to the Award are earned, vested or acquired);



 

(ii)

restrictions on resale or other disposition of Shares; and



 

(iii)

compliance with federal or state securities laws and stock exchange requirements.



        (b)        Employment and Service. The issuance of an Award shall not confer upon a Participant any right with respect to continued employment or service with the Company or any Affiliate. Unless determined otherwise by the Committee, for purposes of the Plan and all Awards, the following rules shall apply:

 

(i)

a Participant who transfers employment between the Company and its Affiliates, or between Affiliates, will not be considered to have terminated employment;



 

(ii)

a Participant who ceases to be employed by the Company or an Affiliate and immediately thereafter becomes a non-employee director of the Board, a non-employee director of the board of an Affiliate, or a consultant to the Company or any Affiliate shall not be considered to have terminated employment until such Participant’s service as a director of, or consultant to, the Company and its Affiliates has ceased;



 

(iii)

a Participant employed by an Affiliate will be considered to have terminated employment when such entity ceases to be an Affiliate; and



 

(iv)

a termination of employment with the Company or an Affiliate to accept immediate re-employment with the Company or an Affiliate shall not be deemed to be a termination of employment for purposes of the Plan.



        (c)        No Fractional Shares. No fractional Shares or other securities may be issued or delivered pursuant to this Plan, and the Committee may determine whether cash, other securities or other property will be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights to fractional Shares or other securities will be canceled, terminated or otherwise eliminated.

        (d)        Unfunded Plan. This Plan is unfunded and does not create, and should not be construed to create, a trust or separate fund with respect to this Plan’s benefits. This Plan does not establish any fiduciary relationship between the Company and any Participant or other person. To the extent any person holds any rights by virtue of an Award granted under this Plan, such rights are no greater than the rights of the Company’s general unsecured creditors.

        (e)        Requirements of Law and Securities Exchange. The granting of Awards and the issuance of Shares in connection with an Award are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or securities exchanges as may be required. Notwithstanding any other provision of this Plan or any Award Agreement, the Company has no liability to deliver any Shares under this Plan or make any payment unless such delivery or payment would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity, and unless and until the Participant has taken all actions required by the Company in connection therewith. The Company may impose such restrictions on any Shares issued under the Plan as the Company determines necessary or desirable to comply with all applicable laws, rules and regulations or the requirements of any securities exchanges.

        (f)        Governing Law. This Plan, and all agreements under this Plan, will be construed in accordance with and governed by the laws of the State of Wisconsin, without reference to any conflict of law principles. The parties agree that the exclusive venue for any legal action or proceeding with respect to this Plan, any Award or any Award Agreement shall be a court sitting in the County of Milwaukee, or the Federal District Court for the Eastern District of Wisconsin sitting in the County of Milwaukee, in the State of Wisconsin, and further agree that any such action or proceeding (including for recognition and enforcement of any judgment in respect of this Plan) may only be heard in a “bench” trial, and any party to such action or proceeding shall agree to waive its right to a jury trial.

        (g)        Limitations on Actions. Any legal action or proceeding with respect to this Plan, any Award or any Award Agreement must be brought within one year (365 days) after the day the complaining party first knew or should have known of the events giving rise to the complaint.

        (h)        Construction. Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used in the singular or plural, they shall be construed as though they were used in the plural or singular, as the case may be, in all cases where they would so apply. Title of sections are for general information only, and this Plan is not to be construed with reference to such titles.

        (i)        Severability. If any provision of this Plan or any Award Agreement or any Award (i) is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or (ii) would disqualify this Plan, any Award Agreement or any Award under any law the Committee deems applicable, then such provision should be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the intent of this Plan, Award Agreement or Award, then such provision should be stricken as to such jurisdiction, person or Award, and the remainder of this Plan, such Award Agreement and such Award will remain in full force and effect.