1998 Stock Option Plan

2003 Stock Option Plan

2008 Stock Appreciation Rights Plan

 

 

 

 

MOOG INC.

                          1998 STOCK OPTION PLAN

 

                                I.  PURPOSE

 

     1.1  General.  Moog Inc., a New York corporation (the "Company"),

establishes this 1998 Stock Option Plan (the "Plan") to further the

Company's growth and development by providing to non-employee directors and

officers and other key employees who are in a position to contribute

materially to the prosperity of the Company, through ownership of stock of

the Company, an incentive to increase their interest in the Company's

welfare and continue their services and to afford a means through which the

Company can attract to its service other employees of outstanding ability.

 

     1.2  Form of Options.  Options granted under the Plan may be

"incentive stock options" within the meaning of Section 422 of the Internal

Revenue Code of 1986, as amended (the "Code") or non-qualified stock

options (i.e., stock options which are not incentive stock options), or a

combination of both, as determined by the Committee (as defined below) at

the time of grant.

 

 

                            II.  ADMINISTRATION

 

     2.1  Stock Option Committee.  The Plan shall generally be administered

by the Stock Option Committee ("Committee") of the Board of Directors of

the Company ("Board").  The Committee shall consist of not less than two

members of the Board, each of whom is a "Disinterested Board Member".  For

purposes of the Plan, the term "Disinterested Board Member" means a member

of the Board who (a) is not a current employee of the Company or any

subsidiary of the Company ("Subsidiary"), (b) is not a former employee of

the Company or a Subsidiary who receives compensation for prior services

(other than benefits under a tax-qualified retirement plan) during the

taxable year, (c) has not been an officer of the Company, (d) does not

receive remuneration from the Company or a Subsidiary, either directly or

indirectly, in any capacity other than as a director, and (e) does not

possess an interest in any other transaction, and is not engaged in a

business relationship, for which disclosure would be required pursuant to

Item 404(a) or (b) of Regulation S-K under the Securities Act of 1933, as

amended.  The term "Disinterested Board Member" shall be interpreted in

such manner as shall be necessary to conform to the requirements of

Section 162(m) of the Code and Rule 16b-3 promulgated under the Securities

Exchange Act of 1934 ("Exchange Act").  Except as otherwise provided

herein, the Committee, to be appointed by the Board, shall have full and

complete power and authority to do all things necessary and proper for the

administration of the Plan, including the power to interpret and construe

its terms and provisions and to determine the individuals selected to

receive options, the times when they shall receive them, the number and

class of shares to be subject to each option, whether any option is an

incentive stock option or a non-qualified stock option, and the option

price.  Notwithstanding any other provision of the Plan, non-employee

directors may only be granted non-qualified stock options under the Plan,

the Board must approve any grant of non-qualified stock options to a

non-employee director and such non-employee director must abstain from

voting on such grant.

 

 

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     2.2  Rules and Regulations.  The Committee, as it may deem advisable,

may issue rules and regulations for the administration of the Plan.  When

so directed by the Committee, appropriate officers of the Company shall

execute and deliver on behalf of the Company such options, agreements and

other instruments as the Committee may determine necessary to the

implementation of the Plan.  The Committee may adopt and/or construe an

appropriate form for any such options or agreements and instruments, which

forms shall contain such provisions or conditions as the Committee deems

necessary or advisable in carrying out the purposes of the Plan, provided,

however, that no such provision or condition shall be inconsistent with the

Plan.

 

     2.3  Defects or Omissions.  The Committee may correct any defect or

supply any omission or reconcile any inconsistency in the Plan or in any

option or agreement in the manner and to the extent it shall deem expedient

to carry it into effect, and shall be the sole and final judge of such

expediency.  The Committee's determination shall be conclusive.

 

 

                      III.  STOCK SUBJECT TO THE PLAN

 

     3.1  Number of Shares.  Shares of the Company's Class A Common Stock,

$1.00 par value ("Class A Common Stock") shall be subject to the Plan.  The

total number of shares of Class A Common Stock which may be sold pursuant

to options granted under the Plan shall not exceed 600,000 shares, as

adjusted as provided in Section 3.2.  The shares sold under the Plan may

either be authorized and unissued shares or issued shares reacquired by the

Company.  Unless and until the Board shall determine to purchase shares in

the market for the purpose of the Plan or to use treasury shares, the

shares sold under the Plan shall be authorized and unissued shares reserved

for such purpose.  In the event that any options granted under the Plan

shall terminate or expire for any reason without having been exercised in

full, the shares not purchased under those options shall be available again

for the purpose of the Plan.

 

     3.2  Adjustments.  Notwithstanding any provision of the Plan, in the

event of any change in any shares of the outstanding Class A Common Stock

or Class B Common Stock of the Company by reason of a stock dividend,

recapitalization, merger, consolidation, split-up, combination or exchange

of shares, or action of like nature, the aggregate number and class of

shares as to which options may be granted to any individual and the number

and class of shares subject to each outstanding option and the option

prices shall be appropriately adjusted by the Committee, whose

determination shall be conclusive.

 

 

                    IV.  ELIGIBILITY AND PARTICIPATION

 

     4.1  Participants.  Options may be granted only to non-employee

directors, full-time salaried officers and key employees of the Company or

any of its subsidiaries.

 

     4.2  Annual Limitations.  To the extent that the aggregate fair market

value (determined as of the time the option is granted) of the shares of

Class A Common Stock of the Company with respect to which options are

exercisable for the first time by any individual during any calendar year

under the Plan (and incentive stock options under all plans of the Company

 

 

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or of any "parent corporation" or "subsidiary corporation," as defined in

Sections 424(e) and (f) of the Code) exceeds $100,000, such options shall

be treated as non-qualified stock options.  The maximum number of shares of

Class A Common Stock with respect to which any optionee may be granted

options during any calendar year shall not exceed 15,000 shares.

 

     4.3  Voting Power Limitation Applicable to Incentive Stock Options.

If an incentive stock option is to be granted to an individual who at the

time the option is granted owns stock possessing more than 10 percent of

the total combined voting power of all classes of stock of the Company (as

determined under Section 424(d) of the Code), the option price set out in

the applicable portion of Section 5.1 hereof shall read "but shall not be

less than 110 percent of its 'Fair Market Value"' and the period of

exercise set out in the applicable portion of Section 6.1 hereof shall read

"and ending not more than 5 years after the date on which the option is

granted".

 

 

                                 V.  PRICE

 

     5.1  Determination.  The purchase price of a share of Class A Common

Stock under each option granted to an officer or key employee shall be

determined by the Committee, but shall not be less than 100% of its Fair

Market Value at the time of granting of the option, as determined in good

faith by the Committee.  The purchase price of a share of Class A Common

Stock under each option granted to a non-employee director shall be

determined by the Board, but shall not be less than 100% of its Fair Market

Value at the time of granting of the option, as determined in good faith by

the Board and the non-employee director shall abstain from voting on such

determination.

 

     5.2  Payment.  Upon exercise of the option the purchase price of the

shares being purchased shall be paid in full with cash or with stock of the

Company.

 

     5.3  Use of Proceeds.  The proceeds from the issuance of Class A

Common Stock upon the exercise of an option are to be added to the funds of

the Company available for its general corporate purposes.

 

 

                          VI.  EXERCISE OF OPTION

 

     6.1  Period of Exercise.  Each option granted under the Plan shall be

exercisable only during such period as the Committee (or the Board in the

case of an option granted to a non-employee director) may determine

beginning not less than one year and ending not more than ten years after

the date upon which the option is granted, except as such period may be

modified under the provisions of Sections 6.2 or Articles VIII or XIX

hereof.  Within such limits each option shall provide, as determined by the

Committee (or the Board in the case of an option granted to a non-employee

director), the time or times at which and the number of shares of Class A

Common Stock for which it may be exercised.  Unless otherwise provided in

the Committee's or the Board's action, each option shall be exercisable in

whole at any time, or in part from time to time (in blocks of 25 shares or

any multiple thereof) during the term of the option.  The holder of an

option shall have no rights as a shareholder with respect to shares subject

to the option until such shares shall have been issued to him upon exercise

of the option.

 

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     6.2  Change in Control.

 

     (a)  In the event of a "Change in Control" (as defined below) of the

Company, all outstanding, unexpired options shall become exercisable as of

the date of the Change in Control.

 

     (b)  A "Change in Control" shall be deemed to have occurred if:

 

          (i)  any "person," as such term is used in Section 13(d) and

     14(d) of the Exchange Act (other than (a) the Company or (b) any

     corporation owned, directly or indirectly, by the Company or the

     stockholders of the Company in substantially the same proportions as

     their ownership of stock of the Company), is or becomes the

     "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),

     directly or indirectly, of securities of the Company representing 25%

     or more of the combined voting power of the Company's then-outstanding

     securities;

 

          (ii) during any period of two consecutive years, there is elected

     25% or more of the members of the Board of the Company without the

     approval or the nomination of such members by a majority of that

     portion of the Board consisting of members who were serving at the

     beginning of the two-year period;

 

         (iii) the stockholders of the Company approve a merger or

     consolidation of the Company with any other corporation, other than

     (a) a merger or consolidation which would result in the voting

     securities of the Company outstanding immediately prior thereto

     continuing to represent more than 80% of the combined voting power of

     the voting securities of the Company, or such surviving entity,

     outstanding immediately after such consolidation; or (b) a merger or

     consolidation effected to implement a recapitalization of the Company

     (or similar transaction) in which no "person" (as defined above)

     acquires more than 25% of the then-outstanding securities; or

 

          (iv) the stockholders of the Company approve an agreement for the

     sale or disposition by the Company of all or substantially all of the

     Company's assets.

 

 

              VII.  LIMITATIONS ON TRANSFERABILITY OF OPTIONS

 

     7.1  General.  Except as otherwise provided herein and in the option

agreement, no option granted under the Plan shall be transferable otherwise

than by will or the laws of descent and distribution, and an option may be

exercised, during his lifetime, only by the optionee.

 

     7.2. Discretion to Permit Certain Transfers.  Notwithstanding

Section 7.1 of the Plan, the Committee (or the Board in the case of an

option granted to a non-employee director) may, in its sole discretion,

authorize all or a portion of the options granted to an optionee to be on

terms which permit the transfer by such optionee to (a) the spouse,

children, grandchildren, brothers or sisters of the optionee ("Immediate

Family Members"), (b) a trust or trusts for the benefit of one or more of

such Immediate Family Members, or (c) a partnership in which any of such

Immediate Family Members are the only partners; provided, however, that

(i) there may be no consideration for such transfer and the option

 

 

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agreement pursuant to which such options are granted must be approved by

the Committee (or the Board in the case of an option granted to a

non-employee director) and (ii) subsequent transfers of transferred options

shall be prohibited except transfers by will or the laws of descent and

distribution.  Following transfer, any transferred options shall continue

to be subject to the same terms and conditions as were applicable

immediately prior to transfer and the effects of termination of employment

or termination of directorship of non-employee directors described in

Article VIII or XIX, whichever is applicable, shall continue to apply to

such options with respect to the original optionee or holder of the option

and following any such termination, transferred options shall be

exercisable by the transferee only to the extent and for the periods

specified in Article VIII or XIX, whichever is applicable.  Optionees

transferring options in accordance with this Section 7.2 remain subject to

the withholding tax requirements of Section 13.3 with respect to the

transferred options.

 

 

                     VIII.  TERMINATION OF EMPLOYMENT

 

     8.1  General.  If employment by the Company of the holder of an option

is terminated for any reason, other than by death or disability, the

holder's option may be exercised only within three months from the date of

such termination of employment and only to the extent the option was

exercisable on the date of termination of employment, but in no event after

ten years from the granting of the option; provided, however, that if the

holder is dismissed for cause, as to which the Committee shall be sole and

exclusive judge, the option shall expire immediately.

 

     8.2  Death While Employed.  If the holder of an option dies while

employed by the Company the option may be exercised by the legal

representative of the option holder's estate, for a period of one year from

the date of death, but in no event after the expiration date of the option.

 

     8.3  Death After Termination.  If the holder of an option dies within

three months after termination of employment with the Company other than

for cause, the option may be exercised by the legal representative of the

option holder's estate for a period of one year from the date the option

holder's employment was terminated, but in no event after the expiration

date of the option.

 

     8.4  Disability.  If the holder of an option becomes disabled within

the meaning of Section 22(e)(3) of the Code, the option may be exercised by

the option holder within one year after becoming disabled, but in no event

after the expiration date of the option.

 

 

        IX.  TERMINATION OF DIRECTORSHIP OF NON-EMPLOYEE DIRECTORS

 

     9.1  General.  If a non-employee director's term as a director of the

Company terminates for any reason, other than by death or disability, the

non-employee director's option may be exercised only within three months

from the date of such termination and only to the extent the option was

exercisable on the date of termination, but in no event after ten years

from the granting of the option.

 

 

 

 

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     9.2  Death While a Director.  If a non-employee director dies while a

director of the Company the non-employee director's option may be exercised

by the legal representative of the non-employee director's estate, for a

period of one year from the date of death, but in no event after the

expiration date of the option.

 

     9.3  Death After Termination.  If a non-employee director dies within

three months after ceasing to be a director of the Company, the

non-employee director's option may be exercised by the legal representative

of the non-employee director's estate for a period of one year from the

date of such cessation, but in no event after the expiration date of the

option.

 

     9.4  Disability.  If a non-employee director becomes disabled within

the meaning of Section 22(e)(3) of the Code, the non-employee director's

option may be exercised by the non-employee director within one year after

becoming disabled, but in no event after the expiration date of the option.

 

 

                       X.  AMENDMENT AND TERMINATION

 

     10.1 Term.  Unless the Plan has been terminated as hereinafter

provided, the Plan shall terminate on November 13, 2007 and no option shall

be granted under it thereafter.  The Board may, at any time prior to that

date, terminate the Plan.

 

     10.2 Amendment.  The Board may also amend the Plan by making such

changes and additions to it as the Board shall deem advisable; provided,

however, that the Board may not, without further approval by the

shareholders of the Company, adopt any amendment which, if not approved by

shareholders, would cause the Plan or grants made hereunder not to be

exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3

promulgated thereunder, or any successor rule.  No termination or amendment

of the Plan may, without the consent of the holder of an option then

existing, terminate his option or materially and adversely affect his

rights under the option.

 

 

                            XI.  EFFECTIVE DATE

 

     11.1 Shareholder Approval.  The Plan shall become effective when it

shall have been approved by the vote of the holders of a majority of the

shares of Class A Common Stock and Class B Common Stock of the Company

outstanding and entitled to vote at a meeting of shareholders.

 

 

                     XII.  TIME OF GRANTING OF OPTIONS

 

     12.1 Formal Granting.  Nothing contained in the Plan or in any

resolution adopted or to be adopted by the Board or the shareholders of the

Company shall constitute the granting of an option hereunder.  The granting

of an option pursuant to the Plan and the acquisition of any rights as an

option holder shall take place only when the Committee (or the Board in the

case of an option granted to a non-employee director) authorizes the

issuance of an option, and a formal, written and executed option agreement

is delivered to the holder of the option.

 

 

 

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     12.2 Ten Year Limit.  Options may be granted under the Plan within ten

years from the date the Plan is adopted by the Board or the date the Plan

is approved by the shareholders of the Company, whichever is earlier.

 

 

                      XIII.  MISCELLANEOUS PROVISIONS

 

     13.1 Option Date.  An option shall have been deemed to have been

granted on the date fixed in the resolution of the Committee (or the Board

in the case of an option granted to a non-employee director) authorizing

the granting of such option, provided such date shall not be prior to the

date of the adoption of such resolution.  If no date is fixed by such

resolution, the option shall be deemed to have been granted on the date of

adoption of the resolution, provided that the agreement relating to the

option shall be executed and delivered within thirty days therefrom,

otherwise the option shall be deemed to have been granted on the date of

delivery of such agreement to the optionee.

 

     13.2 Indemnification of Board and Committee.  Without limiting any

other rights of indemnification, the members of the Board and the Committee

shall be indemnified by the Company against the reasonable expenses

(including attorneys' fees, judgments, fines, and amounts paid in

settlement) actually incurred as a result of any action, suit or

proceeding, or any appeal therein ("such claim"), to which they or any of

them may be a party by reason of any action taken or failure to act under

or in connection with the Plan, and against all amounts paid by them in

settlement of such claim, to the full extent permissible under Sections 721

through 726 of the Business Corporation Law of the State of New York;

provided that within sixty days after institution of any such claim, the

Board or Committee member involved offers the Company in writing the

opportunity, at its own expense, to handle and defend the same.

 

     13.3 Taxes.  The Company shall be entitled to deduct from any payment

under the Plan, regardless of the form of such payment, the amount of all

applicable income and employment taxes required by law to be withheld with

respect to such payment or may require the optionee to pay to it the amount

of such taxes prior to and as a condition of making such payment.  The

Committee (or the Board in the case of an option granted to a non-employee

director) may allow an optionee to pay the amount of such taxes by

withholding from the shares of Common Stock to be delivered upon exercise

of an option, a number of shares of Common Stock with a Fair Market Value,

as determined in good faith by the Committee (or the Board in the case of

an option granted to a non-employee director), equal to the amount of such

taxes, or by permitting the optionee to deliver to the Company shares of

Common Stock having a Fair Market Value, as determined in good faith by the

Committee (or the Board in the case of an option granted to a non-employee

director), equal to the amount of such taxes.

 

 

 

 

MOOG INC.

2003 STOCK OPTION PLAN

I. PURPOSE

      1.1 General. Moog Inc., a New York corporation (the “Company”), establishes this 2003 Stock Option Plan (the “Plan”) to further the Company’s growth and development by providing to non-employee directors and officers and other key employees who are in a position to contribute materially to the prosperity of the Company, through ownership of stock of the Company, an incentive to increase their interest in the Company’s welfare and continue their services and to afford a means through which the Company can attract to its service other employees of outstanding ability.

      1.2 Form of Options. Options granted under the Plan may be “incentive stock options” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or non-qualified stock options (i.e., stock options which are not incentive stock options), or a combination of both, as determined by the Committee (as defined below) at the time of grant.

II. ADMINISTRATION

      2.1 Stock Option Committee. The Plan shall generally be administered by the Stock Option Committee (“Committee”) of the Board of Directors of the Company (“Board”). The Committee shall consist of not less than two members of the Board, each of whom is a “Disinterested Board Member.” For purposes of the Plan, the term “Disinterested Board Member” means a member of the Board who (a) is not a current employee of the Company or any subsidiary of the Company (“Subsidiary”), (b) is not a former employee of the Company or a Subsidiary who receives compensation for prior services (other than benefits under a tax-qualified retirement plan) during the taxable year, (c) has not been an officer of the Company or a Subsidiary, (d) does not receive remuneration from the Company or a Subsidiary, either directly or indirectly, in any capacity other than as a director, and (e) does not possess an interest in any other transaction, and is not engaged in a business relationship, for which disclosure would be required pursuant to Item 404(a) or (b) of Regulation S-K under the Securities Act of 1933, as amended. The term “Disinterested Board Member” shall be interpreted in such manner as shall be necessary to conform to the requirements of Section 162(m) of the Code and Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (“Exchange Act”). Except as otherwise provided herein, the Committee, to be appointed by the Board, shall have full and complete power and authority to do all things necessary and proper for the administration of the Plan, including the power to interpret and construe its terms and provisions and to determine the individuals selected to receive options, the times when they shall receive them, the number and class of shares to be subject to each option, whether any option is an incentive stock option or a non-qualified stock option, and the option price. Notwithstanding any other provision of the Plan, non-employee directors may only be granted non-qualified stock options under the Plan, the Board must approve any grant of non-qualified stock options to a non-employee director and such non-employee director must abstain from voting on such grant.

      2.2 Rules and Regulations. The Committee, as it may deem advisable, may issue rules and regulations for the administration of the Plan. When so directed by the Committee, appropriate officers of the Company shall execute and deliver on behalf of the Company such options, agreements and other instruments as the Committee may determine necessary to the implementation of the Plan. The Committee may adopt and/or construe an appropriate form for any such options or agreements and instruments, which forms shall contain such provisions or conditions as the Committee deems necessary or advisable in carrying out the purposes of the Plan, provided, however, that no such provision or condition shall be inconsistent with the Plan.

      2.3 Defects or Omissions. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any option or agreement in the manner and to the extent it shall deem expedient to carry it into effect, and shall be the sole and final judge of such expediency. The Committee’s determination shall be conclusive.

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III. STOCK SUBJECT TO THE PLAN

      3.1 Number of Shares. Shares of the Company’s Class A Common Stock, $1.00 par value (“Class A Common Stock”) shall be subject to the Plan. The total number of shares of Class A Common Stock which may be sold pursuant to options granted under the Plan shall not exceed 600,000 shares, as adjusted as provided in Section 3.2. The shares sold under the Plan may either be authorized and unissued shares or issued shares reacquired by the Company. Unless and until the Board determines to purchase shares in the market for the purpose of the Plan or to use treasury shares, the shares sold under the Plan shall be authorized and unissued shares reserved for such purpose. In the event that any options granted under the Plan terminate or expire for any reason without having been exercised in full, the shares not purchased under those options shall be available again for the purpose of the Plan.

      3.2 Adjustments. Notwithstanding any provision of the Plan, in the event of any change in any shares of the outstanding Class A Common Stock or Class B Common Stock of the Company by reason of a stock dividend, recapitalization, merger, consolidation, split-up, combination or exchange of shares, or action of like nature, the aggregate number and class of shares as to which options may be granted to any individual and the number and class of shares subject to each outstanding option and the option prices shall be appropriately adjusted by the Committee, whose determination shall be conclusive.

IV. PARTICIPATION AND LIMITATIONS

      4.1 Participants. Options may be granted only to non-employee directors, full-time salaried officers and key employees of the Company or any Subsidiary.

      4.2 Annual Limitations. To the extent that the aggregate fair market value (determined as of the time the option is granted) of the shares of Class A Common Stock of the Company with respect to which options are exercisable for the first time by any individual during any calendar year under the Plan (and incentive stock options under all plans of the Company or of any “parent corporation” or “subsidiary corporation,” as defined in Sections 424(e) and (f)of the Code) exceeds $100,000, such options shall be treated as non-qualified stock options. The maximum number of shares of Class A Common Stock with respect to which any optionee may be granted options during any calendar year shall not exceed 30,000 shares.

      4.3 Voting Power Limitation Applicable to Incentive Stock Options. If an incentive stock option is to be granted to an individual who at the time the option is granted owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (as determined under Section 424(d) of the Code), the option price set out in the applicable portion of Section 5.1 hereof shall read “but shall not be less than 110% of its Fair Market Value” and the period of exercise set out in the applicable portion of Section 6.1 hereof shall read “and ending not more than five years after the date on which option is granted.”

V. PURCHASE PRICE AND PAYMENT

      5.1 Determination. The purchase price of a share of Class A Common Stock under each option granted to an officer or key employee shall be determined by the Committee, but shall not be less than 100% of its Fair Market Value at the time of granting of the option, as determined in good faith by the Committee. The purchase price of a share of Class A Common Stock under each option granted to a non-employee director shall be determined by the Board, but shall not be less than 100% of its Fair Market Value at the time of granting of the option, as determined in good faith by the Board, and the non-employee director shall abstain from voting on such determination.

      5.2 Payment. Upon exercise of the option the purchase price of the shares being purchased shall be paid in full with cash or with stock of the Company.

      5.3 Use of Proceeds. The proceeds from the issuance of Class A Common Stock upon the exercise of an option are to be added to the funds of the Company available for its general corporate purposes.

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VI. EXERCISE OF OPTION AND HOLDING PERIOD

      6.1 Period of Exercise Each option granted under the Plan shall be exercisable only during such period as the Committee (or the Board in the case of an option granted to a non-employee director) may determine, provided the period ends not more than ten years after the date upon which the option is granted, except as such period may be modified under the provisions of Articles VII or IX. Within such limits each option shall provide, as determined by the Committee (or the Board in the case of an option granted to a non-employee director), the time or times at which and the number of shares of Class A Common Stock for which it may be exercised. Unless otherwise provided in the Committee’s or the Board’s action, each option shall be exercisable in whole or in part (in blocks of 25 shares or any multiple thereof) at any time during the term of the option. The holder of an option shall have no rights as a shareholder with respect to shares subject to the option until such shares have been issued to him upon exercise of the option.

      6.2 Holding Period. As a condition to the grant of an option under the Plan, and subject to Section 6.3, except for options exercised on account of death, Disability (as defined in Section 6.3), termination of employment, termination of service as a director, or a Change in Control (as defined in Section 7.2), all shares of stock received on exercise of an option must be held by the individual exercising the option for not less than three years from the date of exercise. If an option holder pays the purchase price on exercise with shares of company stock, the holding period will not be imposed, and the individual will be permitted to sell or otherwise dispose of the shares acquired on exercise.

      6.3 Termination of Holding Period. Upon the occurrence of any of the following events or circumstances, the holding period imposed under Section 6.2 will terminate and the individual (or the legal representative of the individual’s estate) holding the shares acquired upon the exercise of an option under this Plan will be permitted to sell or otherwise dispose of the shares of stock:

 

      (a) death of the shareholder;

 

 

      (b) disability within the meaning of Section 22(e)(3) of the Code (“Disability”) of a shareholder;

 

 

      (c) a Change in Control (as defined in Section 7.2); or

 

 

      (d) the shareholder’s termination of employment with the Company or termination of service as a director of the Company.

VII. CHANGE IN CONTROL

      7.1 Acceleration of Exercisability. In the event of a Change in Control of the Company, all outstanding, unexpired options shall become exercisable as of the date of the Change in Control.

      7.2 Definition. A “Change in Control” shall be deemed to have occurred if:

      (a) any “person,” as such term is used in Section 13(d) and 14(d) of the Exchange Act (other than (i) the Company or (ii) any corporation owned, directly or indirectly, by the Company or the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then-outstanding securities;

      (b) during any period of two consecutive years, there is elected 25% or more of the members of the Board of the Company without the approval or the nomination of such members by a majority of that portion of the Board consisting of members who were serving at the beginning of the two-year period;

      (c) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent more than 80% of the combined voting power of the voting securities of the Company, or such surviving entity, outstanding immediately after

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such consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no “person” (as defined above) acquires more than 25% of the then-outstanding securities; or

      (d) the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

VIII. LIMITATIONS ON TRANSFERABILITY OF OPTIONS

      8.1 General. Except as otherwise provided herein and in the option agreement, no option granted under the Plan shall be transferable otherwise than by will or the laws of descent and distribution, and an option may be exercised, during his lifetime, only by the optionee.

      8.2 Discretion to Permit Certain Transfers. Notwithstanding Section 8.1 of the Plan, the Committee (or the Board in the case of an option granted to a non-employee director) may, in its sole discretion, for non-qualified stock options only, authorize all or a portion of the options granted to an optionee to be on terms which permit the transfer by such optionee to (a) the spouse, children, grandchildren, brothers or sisters of the optionee (“Immediate Family Members”), (b) a trust or trusts for the benefit of one or more of such Immediate Family Members, or (c) a partnership in which any of such Immediate Family Members are the only partners; provided, however, that (i) there may be no consideration for such transfer and the option agreement pursuant to which such options are granted must be approved by the Committee (or the Board in the case of an option granted to a non-employee director) and (ii) subsequent transfers of transferred options shall be prohibited except transfers by will or the laws of descent and distribution. Following transfer, any transferred options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and the effects of termination of employment or termination of directorship of non-employee directors, described in Article IX, shall continue to apply to such options with respect to the original optionee or holder of the option and following any such termination, transferred options shall be exercisable by the transferee only to the extent and for the periods specified in Article IX. Optionees transferring options in accordance with this Section 8.2 remain subject to the withholding tax requirements of Section 13.3 with respect to the transferred options. Transferees will be subject to the same three year holding period described in Section 6.2 as originally applied to the optionee who transferred the options.

IX. ACCELERATION OF VESTING

      9.1 Acceleration of Vesting. Upon the occurrence of any of the following events or circumstances (“Acceleration Event”), all options granted pursuant to this Plan will thereupon vest and become immediately exercisable:

 

      (a) death of an officer or key employee while in the employ of the Company;

 

 

      (b) death of a non-employee director while serving as a director of the Company;

 

 

      (c) Disability (as defined in Section 6.3) of an officer, a key employee, or a non-employee director;

 

 

      (d) except as hereinafter otherwise provided, retirement or termination of employment with the Company by an officer or key employee for any reason;

 

 

      (e) termination of a non-employee director’s service as a director of the Company for any reason; and

 

 

      (f) Change in Control within the meaning of Section 7.2.

      9.2 Exercise Following Acceleration Event. Upon the occurrence of an Acceleration Event, outstanding options may be exercised by the holder or by the legal representative of the option holder’s estate for a period of one year from the occurrence of the Acceleration Event, but in no event after the expiration date of the option.

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9.3 Termination for Cause. Notwithstanding the foregoing, if the employment with the Company of an officer or key employee holding options is terminated for cause, as to which the Committee will be the sole and exclusive judge, the options shall expire immediately.

X. AMENDMENT AND TERMINATION OF PLAN

      10.1 Term. Unless the Plan has been terminated as hereinafter provided, the Plan shall terminate on November 26, 2012 and no option shall be granted under it thereafter. The Board may, at any time prior to that date, terminate the Plan.

      10.2 Amendment. The Board may also amend the Plan by making such changes and additions to it as the Board deems advisable; provided, however, that the Board may not, without further approval by the shareholders of the Company, adopt any amendment which, if not approved by shareholders, would cause the Plan or grants made hereunder not to be exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder, or any successor rule. No termination or amendment of the Plan may, without the consent of the holder of an option then existing, terminate his option or materially and adversely affect his rights under the option.

XI. EFFECTIVE DATE

      11.1 Shareholder Approval. The Plan shall become effective when it has been approved by the vote of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock of the Company outstanding and entitled to vote at a meeting of shareholders.

XII. TIME OF GRANTING OF OPTIONS

      12.1 Formal Granting. Nothing contained in the Plan or in any resolution adopted or to be adopted by the Board or the shareholders of the Company shall constitute the granting of an option hereunder. The granting of an option pursuant to the Plan and the acquisition of any rights as an option holder shall take place only when the Committee (or the Board in the case of an option granted to a non-employee director) authorizes the issuance of an option, and a formal, written and executed option agreement is delivered to the holder of the option.

      12.2 Ten Year Limit. Options may be granted under the Plan within ten years from the date the Plan is adopted by the Board or the date the Plan is approved by the shareholders of the Company, whichever is earlier.

XIII. MISCELLANEOUS PROVISIONS

      13.1 Option Date. An option shall be deemed to have been granted on the date fixed in the resolution of the Committee (or the Board in the case of an option granted to a non-employee director) authorizing the granting of such option, provided such date is not prior to the date of the adoption of such resolution. If no date is fixed by such resolution, the option shall be deemed to have been granted on the date of adoption of the resolution, provided that the agreement relating to the option is executed and delivered within thirty days therefrom, otherwise the option shall be deemed to have been granted on the date of delivery of such agreement to the optionee.

      13.2 Indemnification of Board and Committee. Without limiting any other rights of indemnification, the members of the Board and the Committee shall be indemnified by the Company against the reasonable expenses (including attorneys’ fees, judgments, fines, and amounts paid in settlement) actually incurred as a result of any action, suit or proceeding, or any appeal therein (“such claim”), to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, and against all amounts paid by them in settlement of such claim, to the full extent permissible under Sections 721 through 726 of the Business Corporation Law of the State of New York; provided that within sixty days after

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institution of any such claim, the Board or Committee member involved offers the Company in writing the opportunity, at its own expense, to handle and defend the same.

      13.3 Taxes. The Company shall be entitled to deduct from any payment under the Plan, regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment or may require the optionee to pay to it the amount of such taxes prior to and as a condition of making such payment. The Committee (or the Board in the case of an option granted a non-employee director) may allow an optionee to pay the amount of such taxes by withholding from the shares of Common Stock to be delivered upon exercise of an option, a number of shares of Common Stock with a Fair Market Value, as determined in good faith by the Committee (or the Board in the case of an option granted to a non-employee director), equal to the amount of such taxes, or by permitting the optionee to deliver to the Company shares of Common Stock having a Fair Market Value, as determined in good faith by the Committee (or the Board in the case of an option granted to a non-employee director), equal to the amount of such taxes.

 

 

2008 STOCK APPRECIATION RIGHTS PLAN

 

Section 1. Purpose

 

Moog Inc., a New York corporation (the “Company”), establishes this Moog Inc. 2008 Stock Appreciation Rights Plan (the “Plan”) to further the Company’s growth and development by providing to non-employee directors and officers and other key employees who are in a position to contribute materially to the prosperity of the Company, through ownership of stock of the Company, an incentive to increase their interest in the Company’s welfare, to continue their services and to provide a means through which the Company can attract to its service other employees of outstanding ability. The opportunity to acquire Company stock will be provided through the grant of stock appreciation rights (“SARs”) under the Plan.

 

Section 2. Definitions

 

As used in the Plan, the following definitions apply to the terms indicated below:

 

a) Award means a grant of SARs under the Plan.

 

b) Award Agreement means the written agreement between the Company and a Participant, or other document (whether in a hard copy or in an electronic form approved by the Committee), evidencing an Award. The Committee need not require the execution of any such agreement by a Participant, in which case the acceptance of the Award by the Participant will constitute agreement to the terms of the Plan.

 

c) Board means the Board of Directors of the Company.

 

d) Cause means termination of employment of a Participant for cause, as determined under the Company’s generally applicable policies and procedures or, in the case of a Director, termination of Service as a Director under circumstances that would constitute cause if such policies and procedures were applicable.

 

e) Change in Control,” will be deemed to have occurred if:

 

1) any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than (i) the Company, (ii) a trust described in Code Section 401(a) if it is for the benefit of the employees of the Company, or (iii) any corporation owned, directly or indirectly, by the Company or the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule l3d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of the Company’s then-outstanding securities;

 

2) during any period of two consecutive years, individuals who at the beginning of the period constituted the Board (together with any new Board members whose election by the Board or whose nomination for election by the stockholders of the Company was approved by a vote of a majority of the Board members then still in office, who were either Board members at the beginning of the period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board then in office;

 

3) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than (i) a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent more than 75% of the combined voting power of the voting securities of the Company, or such surviving entity, outstanding immediately after such consolidation; or (ii) a merger or consolidation effected


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to implement a recapitalization of the Company (or similar transaction) in which no “person” (as defined above) acquires more than 25% of the then-outstanding securities; or

 

4) the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

 

f) Code means the Internal Revenue Code of 1986, as amended.

 

g) Committee means the Stock Option Committee of the Board or such other committee as the Board may appoint from time to time to administer the Plan; provided, that the Committee must at all times consist of two or more persons, each of whom is a member of the Board. To the extent required for transactions under the Plan to qualify for the exemptions available under Rule 16b-3 (as defined below), members of the Committee (or any subcommittee thereof) will be “non-employee directors” within the meaning of Rule 16b-3. To the extent required for compensation realized from Awards under the Plan to be deductible by the Company pursuant to Section 162(m) of the Code, members of the Committee (or any subcommittee thereof) will be “outside directors” within the meaning of such section.

 

h) Company Stock or Stock means the Class A Common Stock, par value $1.00 per share, of the Company.

 

iDirector means a non-employee member of the Board.

 

j) Disability means the permanent and total disability of a Participant, as defined under Code Section 22(e)(3).

 

k) Effective Date The Plan will be effective as of the date it is approved by the vote of the holders of a majority of the shares of Class A Common Stock and Class B Common Stock of the Company outstanding and entitled to vote at a meeting of stockholders.

 

l) Exchange Act means the Securities Exchange Act of 1934, as amended.

 

m) Fair Market Value means, for any particular date: (1) for any period during which the Company Stock is listed for trading on a national securities exchange or the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), the closing price per share of Company Stock on such exchange or the NASDAQ official close price as of such trading day, or (2) the market price per share of Company Stock as determined in good faith by the Board in the event (1) above is not applicable. If the Fair Market Value is to be determined as of a day when the securities markets are not open, the Fair Market Value on that day will be the Fair Market Value as of the immediately preceding day on which the markets were open.

 

n) Participant means an employee or a Director of the Company to whom an Award is granted under the Plan.

 

o) Retirement means a termination of employment at a time at which a Participant (1) is eligible for and could immediately commence receipt of either early or normal retirement benefits under the Company’s defined benefit plan, or (2) would have been eligible for and could have immediately commenced receipt of either early or normal retirement benefits under the Company’s defined benefit plan had the Participant been a participant in the Company’s defined benefit plan.

 

p) Rule 16b-3 means the rule thus designated under the Exchange Act.

 

q) Service means service as an employee or Director of the Company.

 

r) Stock Appreciation Right,” or “SAR” means the right to receive shares of Company Stock as determined in accordance with Section 5. One SAR will equal the right to the appreciation in value of one share of Company Stock.


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s) Subsidiary means any corporation or other entity in which, at the time of reference, the Company owns, directly or indirectly, stock or similar interests comprising more than 50% of the combined voting power of all outstanding securities of the entity.

 

Section 3. Administration of the Plan

 

a) Powers of the Committee.  The Plan will be administered by the Committee. Subject to the provisions of the Plan, the Committee has the power to: (l) determine the individuals selected to receive Awards, the times when they receive them, the number of SARs granted under each Award, and the exercise price of each SAR; (2) interpret and construe any provision of the Plan and the terms of any Award issued under it; (3) adopt such rules and regulations for administering the Plan as it may deem necessary or appropriate; and (4) determine whether an authorized leave of absence or absence due to military or government service will constitute termination of employment. Decisions of the Committee will be final and binding on all parties. Determinations made by the Committee under the Plan need not be uniform but may be made on an individual basis.

 

b) Powers of the Board.  Notwithstanding any other provision of the Plan, the Board must approve any grant of SARs to a Director and the Director must abstain from voting on the grant.

 

c) Delegation of Duties.  The Committee may direct appropriate officers of the Company to implement its rules, regulations and determinations and to execute and deliver on behalf of the Company such documents, forms, agreements and other instruments as are deemed by the Committee to be necessary for the administration and implementation of the Plan.

 

d) Adjustment of Terms.  The Committee may, in its absolute discretion, without amendment to the Plan, (1) accelerate the date on which any SAR granted under the Plan becomes exercisable, and (2) waive or amend the operation of Plan provisions respecting exercise after termination of service or otherwise adjust any of the terms of the SAR, provided the action does not violate Section 409A of the Code.

 

e) Indemnification.  No member of the Committee or the Board will be liable for any action, omission or determination relating to the Plan, and the Company will indemnify and hold harmless each member of the Committee and the Board and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission or determination relating to the Plan, unless, in either case, the action, omission or determination was taken or made by the member, director or employee in bad faith and without reasonable belief that it was in the best interests of the Company.

 

Section 4. Stock Subject to the Plan

 

a) Shares Available for SARs.  The total number of SARs that may be granted under the Plan may not exceed 2,000,000 SARs, as adjusted under Subsection (c) below. The shares with respect to which SARs may be granted may be authorized but unissued shares or authorized and issued shares held in the Company’s treasury or acquired by the Company for the purposes of the Plan.

 

b) Individual Limitation.  The total number of SARs awarded to any one employee during any fiscal year of the Company, may not exceed 50,000 SARs. Determinations under the preceding sentence will be made in a manner that is consistent with Section 162(m) of the Code and regulations promulgated thereunder. The provisions of this Section 4(b) do not apply in any circumstance with respect to which the Committee determines that compliance with Section 162(m) of the Code is not necessary.

 

c) Adjustment for Change in Capitalization.  In the event of any change in any shares of the outstanding Class A Common Stock or Class B Common Stock of the Company by reason of a stock dividend, recapitalization, merger, consolidation, split-up, combination or exchange of shares, or action of like nature, the aggregate number and class of shares as to which SARs may be granted to any individual, the number and class of shares subject to each outstanding SAR, and the exercise prices of SARs will be appropriately adjusted by the Committee, whose determination shall be conclusive.


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d) Other Adjustments.  In the event of any transaction or event described in Section 4(c) or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or of any affiliate (including without limitation any Change in Control), or of changes in applicable laws, regulations or accounting principles, and whenever the Committee determines that action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles, the Committee, in its sole discretion and on such terms and conditions as it deems appropriate, except to the extent necessary to ensure that the action does not violate Section 409A of the Code, either by amendment of the terms of any outstanding Awards or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Participant’s request, is hereby authorized to take any one or more of the following actions:

 

1) To provide for either (i) termination of any Award in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of the SARs or realization of the Participant’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 3(d) the Committee determines in good faith that no amount would have been attained upon the exercise of the Award or realization of the Participant’s rights, then the Award may be terminated by the Company without payment) or (ii) the replacement of the Award with other rights or property selected by the Committee in its sole discretion;

 

2) To provide that the Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or will be substituted for by similar SARs, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

 

3) To make adjustments in the number and type of shares of stock of the Company (or other securities or property) subject to outstanding Awards, and in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding SARs and rights and awards that may be granted in the future;

 

4) To provide that the Award will be exercisable or payable or fully vested with respect to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Award Agreement; and

 

5) To provide that the Award cannot vest, be exercised or become payable after such event.

 

e) Re-use of Shares.  To the extent that a SAR terminates, expires, is cancelled, is forfeited, or lapses for any reason, or if a SAR is settled by payment of cash, any shares of Company Stock subject to the SAR will again be available for the grant of an Award pursuant to the Plan. Shares that are withheld to satisfy tax withholding obligations on exercise of a SAR will not be available for further grants of Awards pursuant to the Plan To the extent permitted by applicable law or any exchange rule, shares of Company Stock issued in assumption of, or in substitution for, any outstanding awards of any entity acquired in any form of combination by the Company or any Subsidiary will not be counted against shares of Company Stock available for grant pursuant to this Plan.

 

f) No Repricing.  Absent stockholder approval, neither the Committee nor the Board will have any authority, with or without the consent of the affected holders of Awards, to “reprice” a SAR in the event of a decline in the price of Company Stock after the date of its initial grant either by reducing the exercise price from the original exercise price or through cancellation of outstanding Awards in connection with regranting of SARs at a lower price to the same individual. This paragraph may not be amended, altered or repealed by the Board or the Committee without approval of the stockholders of the Company.

 

g) No Reloading.  No SAR will provide for the automatic grant of replacement or reload SARs upon the Participant exercising the SAR and paying the withholding tax by tendering shares of Company Stock. This paragraph may not be amended, altered or repealed by the Board or the Committee without approval of the stockholders of the Company.


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Section 5. Grant and Exercise of SARs

 

a) SAR Grants.  The Committee, in its discretion, may make grants of SARs from time to time to selected Directors, full-time salaried officers and key employees of the Company or any Subsidiary. It is intended that individual grants will be based on both a Participant’s base salary and Company performance. Notwithstanding the preceding sentence, the Committee, in its discretion, may award SARs on different terms in connection with the recruitment of an individual or as the result of a business combination or acquisition by the Company.

 

b) Award Agreements.  Each Award granted under the Plan will be evidenced by an Award Agreement that contains such provisions as the Committee in its sole discretion deems necessary or desirable. By accepting an Award, a Participant agrees that the Award is subject to all of the terms and provisions of the Plan and the applicable Award Agreement.

 

c) Exercise Price.  The exercise price of a SAR will be the Fair Market Value of a share of Company Stock on the date of grant.

 

d) Benefit Upon Exercise.  The exercise of any number of vested SARs entitles the Participant to receive shares of Company Stock equal in value to the number of SARs exercised, multiplied by the difference between (i) the Fair Market Value of a share of Company Stock on the exercise date, over (ii) the exercise price of the SAR. This calculated value will be divided by the Fair Market value of a share of Company Stock on the exercise date to determine the number of shares of Company Stock that the Participant will receive on exercise, subject to any withholding of shares pursuant to Section 11(b). Fractional share amounts will be settled in cash. The Stock will be issued within one month of the date on which the SARs are exercised, subject to administrative feasibility.

 

e) Term and Exercise of SARS.

 

1) The applicable Award Agreement will specify the date or dates on which the SARs become exercisable and the expiration date of the SARs The term of a SAR may not exceed ten years from the date of the grant.

 

2) SARs will not become exercisable earlier than the first anniversary of the date of grant, except as provided in Section 6(b) or in connection with establishing the terms and conditions of employment of an individual necessary for the recruitment of the individual or as the result of a business combination or acquisition by the Company.

 

3) Unless otherwise provided in the Committee’s or the Board’s action, each vested SAR will be exercisable at any time during the term of the SAR, except that the SARs must be exercised in blocks of at least 100 SARs (unless the exercise is for the entire remaining vested portion of the Award). The partial exercise of an Award will not cause the expiration, termination or cancellation of the remaining SARs.

 

4) Unless the Committee determines otherwise, a SAR may be exercised by delivering notice to the Company’s principal office, to the attention of its Treasurer or Assistant Treasurer, no less than one nor more than ten business days in advance of the effective date of the proposed exercise. Such notice must specify the number of SARs that are being exercised, and the effective date of the proposed exercise, and must be signed by the Participant.

 

Section 6. Termination of Service; Acceleration of Vesting

 

a) Termination of Service.  If a Participant’s Service terminates for any reason other than death, Disability, Retirement, a Change in Control, or Cause the Participant’s vested SARs will expire on the earlier of:

 

1) the date 90 days after the Participant’s termination of Service; or

 

2) the expiration of the term of the SARs, as determined under Section 5(e)(1).


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To the extent the SARs granted to a Participant are not exercisable at the time of the Participant’s termination of Service under this subsection, the SARs will expire at the close of business on the date of the termination. If the Participant dies after the termination of Service, but before the expiration of the Participant’s SARs, all or part of the SARs may be exercised (prior to expiration) by the executors or administrators of the Participant’s estate or by any person who has acquired the SARs directly from the Participant by beneficiary designation, bequest or inheritance, or transfer under Section 7.

 

b) Acceleration of Vesting.  Upon the occurrence of any of the following events or circumstances (an “Acceleration Event”), all SARs granted to a Participant under this Plan will vest and become immediately exercisable:

 

1) Death while employed by, or serving as a Director of, the Company;

 

2) Disability;

 

3) Retirement; and

 

4) A Change in Control.

 

c) Exercise Following Acceleration Event.  Upon a Participant’s termination of Service due to an Acceleration Event, outstanding SARs may be exercised by the holder or by the legal representative of the SAR holder’s estate for a period of two years from the date of the termination, but in no event after the expiration date of the SARs. A Participant’s termination will be considered due to a Change in Control under this section if the Participant’s termination occurs within twelve months following the Change in Control.

 

d) Termination for Cause.  If a Participant’s Service as an employee or Director is terminated for Cause, as to which the Committee (or the Board in the case of a Director) will be the sole and exclusive judge, the SARs will immediately expire and become unexercisable as of the commencement of business on the date of the Participant’s termination.

 

Section 7. Limitations on Transferability

 

aGeneral.  Except as otherwise provided below and in the Award Agreement, no SAR granted under the Plan is transferable other than by will or the laws of descent and distribution, and a SAR may be exercised, during the Participant’s lifetime, only by the Participant.

 

b) Discretion to Permit Certain Transfers.  Notwithstanding Subsection (a), the Committee (or the Board in the case of a SAR granted to a Director) may, in its sole discretion, authorize all or a portion of a Participant’s SARs to be granted on terms that permit the transfer to (1) a Participant’s spouse, children, grandchildren, brothers or sisters (“Immediate Family Members”), (2) a trust or trusts for the benefit of one or more of the Immediate Family Members, or (3) a partnership in which any of the Immediate Family Members are the only partners; provided, however, that (i) there may be no consideration for such transfer and the Award Agreement pursuant to which the SARs are granted must be approved by the Committee (or the Board in the case of a SAR granted to a Director) and (ii) subsequent transfers of transferred SARs are prohibited except transfers by will or the laws of descent and distribution. Following transfer, any transferred SARs will continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, and the effects of termination of Service, described in Section 6, will continue to apply to the SARs with respect to the original Participant and following any such termination, transferred SARs will be exercisable by the transferee only to the extent and for the periods specified in Sections 6 and 7. Participants transferring SARs in accordance with this Section 7(b) remain subject to the withholding tax requirements of Section 11(b) with respect to the transferred SARs.

 

c) Transfers on Death.  Upon the death of a Participant, outstanding Awards granted to the Participant may be exercised only by the executor or administrator of the Participant’s estate or by a person who acquires the right to such exercise by will or by the laws of descent and distribution. No transfer of an Award by will or the laws of descent and distribution will be effective to bind the Company unless the Company has been furnished with (1) written notice thereof and with a copy of the will and/or such


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evidence as the Committee may deem necessary to establish the validity of the transfer and (2) an agreement by the transferee to comply with all the terms and conditions of the Award that are or would have been applicable to the Participant and to be bound by the acknowledgments made by the Participant in connection with the grant of the Award.

 

Section 8. Limitations on Rights and Obligations; Covenants

 

a) Rights as a Stockholder.  No person has any rights as a stockholder with respect to any shares of Company Stock covered by or relating to any Award until he or she becomes the holder of record of the Stock.

 

b) No Special Employment Rights.  Nothing contained in the Plan or any Award Agreement confers upon any Participant any right with respect to the continuation of employment by the Company or interferes in any way with the right of the Company, subject to the terms of any separate employment agreement to the contrary, at any time to terminate such employment or to increase or decrease the compensation of the Participant.

 

c) No Right to Award.  No person has any claim or right to receive an Award under the Plan. The Committee’s granting of an Award to a Participant at any time neither requires the Committee to grant any other Award to the Participant or other person at any time nor precludes the Committee from making subsequent grants to the Participant or any other person.

 

d) No Obligation to Exercise.  The grant of a SAR will impose no obligation upon the Participant to exercise the SAR.

 

e) Employee Covenants.  As partial consideration for the grant of an Award, a Participant must agree to any nondisclosure provisions specified in or referenced in his or her Award Agreement. A Participant’s violation of such nondisclosure provisions will be grounds for the cancellation and forfeiture of the Award, in whole or in part, as the Committee, in its sole discretion, may determine.

 

Section 9. Securities Matters

 

a) Registration.  The Company is under no obligation to effect the registration pursuant to the Securities Act of 1933 of any interests in the Plan or any shares of Company Stock to be issued under the Plan or to effect similar compliance under any state laws. Notwithstanding anything in the Plan to the contrary, the Company is not obligated to cause to be issued or delivered any certificates evidencing shares of Company Stock pursuant to the Plan unless and until the Company is advised by its counsel that the issuance and delivery of the certificates is in compliance with all applicable laws, regulations of governmental authority and the requirements of the securities exchange or automated quotation system on which shares of Company Stock are listed. Certificates evidencing shares of Company Stock issued under the Plan may bear such legends, as the Committee or the Company, in its sole discretion, deems necessary or desirable to insure compliance with applicable securities laws.

 

b) Compliance with Laws and Regulations.  The transfer of any shares of Company Stock under the Plan will be effective only at such time as counsel to the Company has determined that the issuance and delivery of the shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of the securities exchange or automated quotation system on which shares of Company Stock are listed. The Committee may, in its sole discretion, defer the effectiveness of any transfer of shares of Company stock in order to allow the issuance of the shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Company will inform the Participant in writing of the Committee’s decision to defer the effectiveness of a transfer. During the period of such a deferral in connection with the exercise of a SAR, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.

 

c) Compliance with Rule 16b-3.  It is intended that the Plan be applied and administered in compliance with Rule 16b-3. If any provision of the Plan would be in violation of Rule 16b-3 if applied as written,


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the provision will not have effect as written and will be given effect so as to comply with Rule 16b-3, as determined by the Committee. The Committee is authorized to amend the Plan and to make any such modifications to Award Agreements to comply with Rule 16b-3, as it may be amended from time to time, and to make any other such amendments or modifications deemed necessary or appropriate to better accomplish the purposes of the Plan in light of any amendments made to Rule 16b-3.

 

Section 10. Amendment and Termination of the Plan

 

a) Term.  Unless earlier terminated by the Board, the Plan will terminate on the date that is ten years from the Effective Date, and no SARs will be granted under it thereafter. The Board may, at any time prior to that date, terminate the Plan. Awards outstanding at Plan termination will remain in effect according to their terms and the provisions of the Plan.

 

b) Amendment.  Stockholder approval of any amendment to the Plan will be required if and to the extent required by Rule 16b-3 or by any comparable or successor exemption under which the Board believes it is appropriate for the Plan to qualify, or if and to the extent the Board determines that such approval is appropriate for purposes of satisfying Section 162(m), Section 422 or Section 409A of the Code, any applicable rule or listing standard of any stock exchange, automated quotation system or similar organization, or the New York Business Corporation Law. Except as otherwise provided in the Plan, the Board may, at any time, suspend or terminate the Plan or revise or amend it in any respect whatsoever. Nothing herein restricts the Committee’s ability to exercise its discretionary authority pursuant to Section 3, which discretion may be exercised without amendment to the Plan. No amendment or termination of the Plan may, without the consent of a Participant, reduce the Participant’s rights under any outstanding Award.

 

Section 11. Miscellaneous Provisions

 

a) SAR Date.  A SAR will be deemed to have been granted on the date fixed in the resolution of the Committee (or the Board in the case of a SAR granted to a Director) authorizing the granting of the SAR, provided such date is not prior to the date of the adoption of the resolution. If no date is fixed by the resolution, the SAR will be deemed to have been granted on the date of adoption of the resolution.

 

b) Withholding Taxes.  The Company will be entitled to deduct from any payment under the Plan, regardless of the form of the payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to the payment or may require the Participant to pay such amounts to the Company in cash prior to and as a condition of making the payment. The Committee (or the Board in the case of a SAR granted to a Director) may allow a Participant to satisfy the foregoing requirement by electing to have the Company withhold from delivery shares of Company Stock having a value equal to the minimum amount of tax required to be withheld or by permitting the Participant to deliver to the Company shares of Common Stock having a Fair Market Value equal to the amount required to be withheld. Fractional share amounts will be settled in cash. A withholding election may be made with respect to all or any portion of the shares to be delivered pursuant to an Award. Any tax withholding above the minimum amount of tax required to be withheld must be paid in cash by the Participant.

 

c) Expenses and Receipts.  The expenses of the Plan will be paid by the Company. Any proceeds received by the Company in connection with any Award will be used for general corporate purposes.

 

d) Failure to Comply.  In addition to the remedies of the Company elsewhere provided for in the Plan, failure by a Participant (or beneficiary) to comply with any of the terms and conditions of the Plan or the applicable Award Agreement, unless the failure is remedied by the Participant (or beneficiary) within ten days after notice of the failure by the Committee, will be grounds for the cancellation and forfeiture of the Award, in whole or in part, as the Committee, in its sole discretion, may determine.

 

e) Applicable Law.  Except to the extent preempted by any applicable federal law, the Plan will be construed and administered in accordance with the laws of the State of New York, without reference to the principles of conflicts of laws thereunder.