Exhibit No. 10(g)(*)

 

REGIS CORPORATION

 

2004 LONG TERM INCENTIVE PLAN

 

AS AMENDED AND RESTATED EFFECTIVE DECEMBER 31, 2008

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE I

ESTABLISHMENT AND PURPOSE

 

1

1.1

Establishment

 

1

1.2

Purpose

 

1

1.3

Compliance with 409A

 

1

 

 

 

 

ARTICLE II

DEFINITIONS

 

1

2.1

Affiliate

 

1

2.2

Agreement

 

1

2.3

Award

 

1

2.4

Beneficiary

 

2

2.5

Board of Directors or Board

 

2

2.6

Cause

 

2

2.7

Change in Control

 

2

2.8

Code

 

4

2.9

Commission

 

4

2.10

Committee

 

4

2.11

Common Stock

 

4

2.12

Company

 

4

2.13

Covered Employees

 

4

2.14

Disability

 

4

2.15

Effective Date

 

4

2.16

Exchange Act

 

4

2.17

Exercise Price

 

4

2.18

Fair Market Value

 

4

2.19

Grant Date

 

5

2.20

Incentive Stock Option

 

5

2.21

Non-Qualified Stock Option

 

5

2.22

Option Period

 

5

2.23

Participant

 

5

2.24

Performance Unit

 

5

2.25

Plan

 

5

2.26

Representative

 

6

2.27

Restricted Stock

 

6

2.28

Restricted Stock Unit

 

6

2.29

Rule 16b-3

 

6

2.30

Stock Appreciate Right

 

6

2.31

Stock Option or Option

 

6

2.32

Termination of Employment

 

6

 

 

 

 

ARTICLE III

ADMINISTRATION

 

7

3.1

Committee Structure and Actions

 

7

3.2

Committee Authority

 

7

 

 

 

 

ARTICLE IV

SHARES SUBJECT TO PLAN

 

8

4.1

Number of Shares

 

8

4.2

Release of Shares

 

8

4.3

Restrictions on Shares

 

9

 

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4.4

Shareholder Rights

 

9

4.5

Effect of Certain Changes

 

9

 

 

 

 

ARTICLE V

ELIGIBILITY

 

10

5.1

Eligibility

 

10

 

 

 

 

ARTICLE VI

STOCK OPTIONS

 

10

6.1

General

 

10

6.2

Grant

 

10

6.3

Terms and Conditions

 

10

6.4

Termination by Reason of Death

 

11

6.5

Termination by Reason of Disability

 

11

6.6

Other Termination

 

12

 

 

 

 

ARTICLE VII

STOCK APPRECIATION RIGHTS

 

12

7.1

General

 

12

7.2

Grant

 

12

7.3

Terms and Conditions

 

12

 

 

 

 

ARTICLE VIII

RESTRICTED STOCK

 

13

8.1

General

 

13

8.2

Grant, Awards and Certificates

 

13

8.3

Terms and Conditions

 

14

 

 

 

 

ARTICLE IX

PERFORMANCE AWARDS

 

15

9.1

General

 

15

9.2

Earning Performance Unit Awards

 

15

9.3

Termination of Employment Due to Death, Disability or Retirement or at the
Request of the Company without Cause

 

15

9.4

Nontransferability

 

15

9.5

Election to Defer

 

16

 

 

 

 

ARTICLE X

CHANGE IN CONTROL PROVISIONS

 

16

10.1

Impact of Event

 

16

10.2

Additional Discretion

 

16

 

 

 

 

ARTICLE XI

PROVISIONS APPLICABLE TO SHARES ACQUIRED UNDER THIS PLAN

 

16

11.1

No Company Obligation

 

16

 

 

 

 

ARTICLE XII

MISCELLANEOUS

 

17

12.1

Amendments and Termination

 

17

12.2

Unfunded Status of Plan

 

17

12.3

Provisions Relating to Internal Revenue Code Section 162(m)

 

17

12.4

No Additional Obligation

 

19

12.5

Withholding

 

19

12.6

Controlling Law

 

19

12.7

Offset

 

20

12.8

Nontransferability; Beneficiaries

 

20

12.9

Gross-Up for Excise Tax

 

20

12.10

No Rights with Respect to Continuance of Employment

 

20

 

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12.11

Awards in Substitution for Awards Granted by Other Corporations

 

21

12.12

Foreign Alternatives

 

21

12.13

Delivery of Stock Certificates

 

21

12.14

Headings

 

21

12.15

Severability

 

21

12.16

Successors and Assigns

 

22

12.17

Entire Agreement

 

22

 

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REGIS CORPORATION

 

2004 LONG TERM INCENTIVE PLAN

 

ARTICLE I

 

ESTABLISHMENT AND PURPOSE

 

1.1                                 Establishment. The Regis Corporation 2004
Long Term Incentive Plan (“Plan”) is hereby established by Regis Corporation
(“Company”), effective as of the Effective Date, and restated effective as of
December 31, 2008 to incorporate and supersede all prior amendments hereto and
to make certain changes to comply with Section 409A of the Internal Revenue Code
of 1986.

 

1.2                                 Purposes. The purpose of the Plan is to
foster and promote the long-term financial success of the Company and materially
increase shareholder value by motivating performance through incentive
compensation. The Plan also is intended to encourage Participant ownership in
the Company, attract and retain talent, and enable Participants to participate
in the long-term growth and financial success of the Company. The Plan and the
grant of Awards thereunder are expressly conditioned upon the Plan’s approval by
the shareholders of the Company.

 

1.3                                 Compliance with 409A. The Plan is intended
to meet the requirements of paragraph (2), (3) and (4) of Code
Section 409A(a) to the extent applicable, and the terms and provisions of the
Plan should be interpreted and applied in a manner consistent with such
requirements, including the regulations and other guidance issued under Code
Section 409A.

 

ARTICLE II

 

DEFINITIONS

 

For purposes of the Plan, the following terms are defined as set forth below:

 

2.1                                 “Affiliate” means any individual,
corporation, partnership, association, limited liability company, joint-stock
company, trust, unincorporated association or other entity (other than the
Company) that directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Company.

 

2.2                                 “Agreement” means any agreement entered into
pursuant to the Plan by which an Award is granted to a Participant, and any
amendments thereto.

 

2.3                                 “Award” means any Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit or Performance Unit
granted to a Participant under the Plan. Awards shall be subject to the terms
and conditions of the Plan and shall be evidenced by an Agreement containing
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall deem desirable.

 

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2.4                                 “Beneficiary” means any person or other
entity, which has been designated by a Participant in his or her most recent
written beneficiary designation filed with the Committee to receive the
compensation, specified under the Plan to the extent permitted. If there is no
designated beneficiary, then the term means any person or other entity entitled
by will or the laws of descent and distribution to receive such compensation.

 

2.5                                 “Board of Directors” or “Board” means the
Board of Directors of the Company.

 

2.6                                 “Cause” means, for purposes of determining
whether and when a Participant has incurred a Termination of Employment for
Cause, any act or omission which permits the Company to terminate the written
employment agreement or arrangement between the Participant and the Company or
an Affiliate for “cause” as defined in such agreement or arrangement, or in the
event there is no such agreement or arrangement or the agreement or arrangement
does not define the term “Cause,” then “Cause” means the Participant’s
intentional participation in illegal conduct which (i) is materially and
directly detrimental to the financial interests of the Company or an Affiliate
and (ii) results in the Participant’s conviction of a felony.

 

2.7                                 “Change in Control” means:

 

(1)                                  with respect to Awards granted before
January 1, 2009, the first to occur of any of the following events:

 

(a)                                 the acquisition by any “person,” as that
term is used in Sections 13(d) and 14(d) of the Exchange Act of “beneficial
ownership,” as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of 20% or more of the shares of the Company’s capital stock;

 

(b)                                the first day on which less than two-thirds
of the total membership of the Board of Directors shall be Continuing Directors
(as that term is defined in Article VII of the Company’s Articles of
Incorporation);

 

(c)                                 the approval by the shareholders of the
Company of a merger, share exchange, or consolidation of the Company (a
“Transaction”), other than a Transaction which would result in the Voting Stock
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the Voting Stock of the Company or such
surviving entity immediately after such Transaction; or

 

(d)                                the approval by the shareholders of the
Company of a complete liquidation of the Company or a sale or disposition of all
or substantially all the assets of the Company; and

 

(2)                                  with respect to Awards granted on or after
January 1, 2009, the first to occur of any of the following events:

 

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(a)                                 any “person” within the meaning of
Section 2(a)(2) of the Securities Act of 1933 and Section 14(d) of the Exchange
Act is or has become the “beneficial owner,” as defined in Rule 13d-3 under the
Exchange Act, of twenty percent (20%) or more of either (i) the then outstanding
shares of Common Stock of the Company (the “Outstanding Common Stock”) or
(ii) the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Voting Securities”), except for an acquisition by an entity
resulting from a Business Combination (as defined below) in which clauses
(x) and (y) of subparagraph (b) applies;

 

(b)                                consummation of (i) a merger or consolidation
of the Company with or into another entity, (ii) a statutory share exchange or
(iii) the acquisition by any person (as defined above) of all or substantially
all of the assets of the Company (each, a “Business Combination”), unless
immediately following such Business Combination, (x) all or substantially all of
the beneficial owners of the Outstanding Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than
fifty percent (50%) of the voting power of the then outstanding shares of voting
stock (or comparable voting equity interests) of the surviving or acquiring
entity resulting from such Business Combination (including such beneficial
ownership of an entity that, as a result of such transaction, owns the Company
or all or substantially all of the Company’s assets either directly or through
one or more subsidiaries), in substantially the same proportions (as compared to
the other beneficial owners of the Company’s voting stock immediately prior to
such Business Combination) as their beneficial ownership of the Company’s voting
stock immediately prior to such Business Combination and (y) no person (as
defined above) beneficially owns, directly or indirectly, twenty percent (20%)
or more of the voting power of the outstanding voting stock (or comparable
equity interests) of the surviving or acquiring entity (other than a direct or
indirect parent entity of the surviving or acquiring entity, that, after giving
effect to the Business Combination, beneficially owns, directly or indirectly,
100% of the outstanding voting stock (or comparable equity interests) of the
surviving or acquiring entity), or

 

(c)                                 individuals who constitute the Company’s
Board of Directors on the Effective Date (the “Incumbent Board”) have ceased for
any reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the Effective Date whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of
at least three-quarters (75%) of the directors comprising the Incumbent Board
shall be, for purposes of this Agreement, considered as though such person were
a member of the Incumbent Board;

 

provided, however, that for any payment with respect to any Award under the Plan
that is subject to Section 409A of the Code, the Change in Control must also be
a change in control event under Treas. Reg. Section 1.409A-3(i)(5).

 

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2.8                                 “Code” means the Internal Revenue Code of
1986, as amended from time to time, and any successor, along with related rules,
regulations and interpretations.

 

2.9                                 “Commission” means the Securities and
Exchange Commission or any successor thereto.

 

2.10                           “Committee” means the committee of the Board
responsible for granting Awards under the Plan, which shall be the Compensation
Committee of the Board, until such time as the Board may designate a different
committee. The Committee shall consist solely of two or more directors, each of
whom is a “Non-Employee Director” within the meaning of Rule 16b-3 and each of
whom is also an “outside director” under Section 162(m) of the Code. In
addition, each member of the Committee must be an “independent director” as
determined under the corporate governance rules of the New York Stock Exchange,
as amended from time to time.

 

2.11                           “Common Stock” means the shares of the Company’s
common stock, $0.05 par value, whether presently or hereafter issued, and any
other stock or security resulting from adjustment thereof as described
hereinafter, or the common stock of any successor to the Company which is
designated for the purpose of the Plan.

 

2.12                           “Company” means Regis Corporation, a Minnesota
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.

 

2.13                           “Covered Employee” means a Participant who is a
“covered employee” within the meaning of Section 162(m) of the Code.

 

2.14                           “Disability” means that the Participant is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months.

 

2.15                           “Effective Date” means May 26, 2004, subject to
shareholder approval at the Company’s annual meeting of shareholders on
October 28, 2004.

 

2.16                           “Exchange Act” means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated thereunder.

 

2.17                           “Exercise Price” means the price at which the
Common Stock may be purchased under an Option or may be obtained under a Stock
Appreciation Right. In no event may the Exercise Price per share of Common Stock
covered by an Option, or the Exercise Price of a Stock Appreciation Right, be
reduced through the technique commonly known as “repricing.”

 

2.18                           “Fair Market Value” means the value of one share
of Common Stock, determined pursuant to the applicable method described below,
without regard to whether the Common Stock is restricted or represents a
minority interest:

 

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(1)                                 if the Common Stock is listed on a
securities exchange or quoted on The Nasdaq Stock Market (“Nasdaq”), the closing
price of a share of Common Stock on the grant date (or, if such date is not a
business day or a day on which quotations are reported, then on the immediately
preceding date on which quotations were reported) or if a closing price was not
reported on the grant date, then the arithmetic mean of the high and low prices
on that date or on the first preceding trading date, as reported by the
principal national exchange on which such shares are traded (in the case of an
exchange) or by Nasdaq, as the case may be;

 

(2)                                 if the Common Stock is not listed on a
national securities exchange or quoted on Nasdaq, but is actively traded in the
over-the counter market, the average of the closing bid and asked prices for a
share of the Common Stock on the grant date (or, if such date is not a business
day or a day on which quotations are reported, then on the immediately preceding
date on which quotations were reported), or the most recent preceding date for
which such quotations are reported; and

 

(3)                                 if, on the relevant date, the Common Stock
is not publicly traded or reported as described in (1) or (2) above, the value
determined by the reasonable application of a reasonable valuation method which
is consistent with Treas. Reg. § 1.409A-1(b)(5)(iv), selected in good faith by
the Board.

 

2.19                           “Grant Date” means the date as of which an Award
is granted pursuant to the Plan.

 

2.20                           “Incentive Stock Option” means any Stock Option
intended to be and designated as an “incentive stock option” within the meaning
of Section 422 of the Code. Members of the Board who are not otherwise employees
of the Company do not qualify for Incentive Stock Options.

 

2.21                           “Non-Qualified Stock Option” means an Option to
purchase Common Stock in the Company granted under the Plan, the taxation of
which is pursuant to Section 83 of the Code.

 

2.22                           “Option Period” means the period during which the
Option shall be exercisable in accordance with an Agreement and Article VI.

 

2.23                           “Participant” means a person who satisfies the
eligibility conditions of Article V and to whom an Award has been granted by the
Committee under the Plan. In the event that a Representative is appointed for a
Participant, then the term “Participant” shall mean such appointed
Representative. Notwithstanding the appointment of a Representative, the term
“Termination of Employment” shall mean the Termination of Employment of the
Participant.

 

2.24                           “Performance Unit” shall have the meaning set
forth in Section 9.1 hereof.

 

2.25                           “Plan” means the Regis Corporation 2004 Long Term
Incentive Plan, as herein set forth and as may be amended from time to time.

 

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2.26                           “Representative” means (a) the person or entity
acting as the executor or administrator of a Participant’s estate pursuant to
the last will and testament of a Participant or pursuant to the laws of the
jurisdiction in which the Participant had the Participant’s primary residence at
the date of the Participant’s death; (b) the person or entity acting as the
guardian or temporary guardian of a Participant; (c) the person or entity which
is the beneficiary of the Participant upon or following the Participant’s death;
or (d) the person to whom an Award has been permissibly transferred; provided
that only one of the foregoing shall be the Representative at any point in time
as determined under applicable law and recognized by the Committee.

 

2.27                           “Restricted Stock” means Common Stock granted to
a Participant under Section 8.1 hereof and which is subject to certain
restrictions and to a risk of forfeiture or repurchase by the Company.

 

2.28                           “Restricted Stock Unit “ means an Award to a
Participant under Section 8.1 hereof under which no Common Stock actually is
awarded to the Participant on the date of grant. Each Award of a Restricted
Stock Unit entitles a Participant to receive a share of Common Stock as of a
future date, subject to certain restrictions and to a risk of forfeiture.

 

2.29                           “Rule 16b-3” means Rule 16b-3, as from time to
time in effect and applicable to the Plan and Participants, promulgated by the
Commission under Section 16 of the Exchange Act.

 

2.30                           “Stock Appreciation Right” means a right granted
under Article VII.

 

2.31                           “Stock Option” or “Option” means a right, granted
to a Participant under Section 6.1 hereof, to purchase Common Stock at a
specified price during specified time periods.

 

2.32                           “Termination of Employment” means the occurrence
of any act or event whether pursuant to an employment agreement or otherwise
that actually or effectively causes or results in the person’s ceasing, for
whatever reason, to be any and all of an officer or employee of the Company or
of any Affiliate, or to be any and all of an officer or employee of any entity
that provides services to the Company or an Affiliate, including, without
limitation, death, Disability, dismissal, severance at the election of the
Participant, retirement, or severance as a result of the discontinuance,
liquidation, sale or transfer by the Company or its Affiliates of a business
owned or operated by the Company or its Affiliates.

 

With respect to any person who is not an employee with respect to the Company or
an Affiliate (such as a non-employee member of the Board), the Agreement shall
establish what act or event shall constitute a Termination of Employment for
purposes of the Plan. A Termination of Employment shall occur with respect to an
employee who is employed by an Affiliate if the Affiliate shall cease to be an
Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate.  To the extent that an Award granted
under the Plan is subject to Internal Revenue Code Section 409A, a Termination
of Employment shall mean a “separation from service” under Code Section 409A and
the regulations and guidance issued with respect thereto (all references herein
to Code Section 409A shall include such regulations and guidance).

 

In addition, certain other terms used herein have definitions given to them in
the first place in which they are used.

 

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ARTICLE III

 

ADMINISTRATION

 

3.1                                 Committee Structure and Actions. The Plan
shall be administered by the Committee in accordance with the rules and
responsibilities of the Committee.

 

3.2                                Committee Authority. Subject to the terms of
the Plan, the Committee shall have the authority:

 

(1)                                 to select those persons to whom Awards may
be granted from time to time;

 

(2)                                 to determine whether and to what extent
Awards are to be granted hereunder;

 

(3)                                 to determine the number of shares of Common
Stock to be covered by each Award granted hereunder;

 

(4)                                 to determine the terms and conditions of any
Award granted hereunder, provided that the Exercise Price of any Option or Stock
Appreciation Right shall not be less than the Fair Market Value per share as of
the Grant Date;

 

(5)                                 to adjust the terms and conditions, at any
time or from time to time, of any Award, subject to the limitations of
Section 12.1;

 

(6)                                 to determine to what extent and under what
circumstances shares of Common Stock and other amounts payable with respect to
an Award shall be deferred;

 

(7)                                 to provide for the forms of Agreement to be
utilized in connection with this Plan;

 

(8)                                 to determine what legal requirements are
applicable to the Plan, Awards, and the issuance of Common Stock, and to require
of a Participant that appropriate action be taken with respect to such
requirements;

 

(9)                                 to cancel, with the consent of the
Participant or as otherwise provided in the Plan or an Agreement, outstanding
Awards;

 

(10)                           to require as a condition of the exercise of an
Award or the issuance or transfer of a certificate (or other representation of
title) of Common Stock, the withholding from a Participant of the amount of any
taxes as may be necessary in order for the Company or any other employer to
obtain a deduction or as may be otherwise required by law;

 

(11)                           to determine whether and with what effect an
individual has incurred a Termination of Employment (or, as applicable, a
“separation from service” pursuant to Code Section 409A);

 

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(12)                           to determine the restrictions or limitations on
the transfer of Common Stock;

 

(13)                           to determine whether an Award is to be adjusted,
modified or purchased, or is to become fully exercisable, under the Plan or the
terms of an Agreement;

 

(14)                           to determine the permissible methods of Award
exercise and payment within the terms and conditions of the Plan and the
particular Agreement;

 

(15)                           to adopt, amend and rescind such rules and
regulations as, in its opinion, may be advisable in the administration of this
Plan; and

 

(16)                           to appoint and compensate agents, counsel,
auditors or other specialists to aid it in the discharge of its duties.

 

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan. The Committee’s policies and
procedures may differ with respect to Awards granted at different times and may
differ with respect to a Participant from time to time, or with respect to
different Participants at the same or different times.

 

Any determination made by the Committee pursuant to the provisions of the Plan
shall be made in its sole discretion, and in the case of any determination
relating to an Award may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter. All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
Participants. Any determination shall not be subject to de novo review if
challenged in court.

 

ARTICLE IV

 

SHARES SUBJECT TO PLAN

 

4.1                                 Number of Shares. Subject to the adjustment
under Section 4.5, the total number of Common Stock reserved and available for
distribution pursuant to Awards under the Plan shall be 2,500,000 shares of
Common Stock which are hereby authorized for issuance on the Effective Date.
Such shares may consist, in whole or in part, of authorized and unissued shares
or shares acquired from a third party.

 

4.2                                 Release of Shares. Subject to Section 4.1,
the Committee shall have full authority to determine the number of shares of
Common Stock available for Awards, and in its discretion may include (without
limitation) as available for distribution any shares of Common Stock that have
ceased to be subject to an Award; any shares of Common Stock subject to any
Award that have been previously forfeited; any shares under an Award that
otherwise terminates without issuance of Common Stock being made to a
Participant; or any shares of Common Stock that are received by the Company in
connection with the exercise of an Award, including the satisfaction of any tax
liability or tax withholding obligation. Any shares that are available
immediately prior

 

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to the termination of the Plan, or any shares of Common Stock returned to the
Company for any reason subsequent to the termination of the Plan, may be
transferred to a successor plan.

 

4.3                                 Restrictions on Awards.  Common Stock issued
upon exercise of an Award shall be subject to the terms and conditions specified
herein and to such other terms, conditions and restrictions as the Committee in
its discretion may determine or provide in the Award Agreement. The Company
shall not be required to issue or deliver any certificates for Common Stock,
cash or other property prior to (i) the completion of any registration or
qualification of such shares under federal, state or other law, or any ruling or
regulation of any government body which the Committee determines to be necessary
or advisable; (ii) the satisfaction of any applicable withholding obligation in
order for the Company or an Affiliate to obtain a deduction or discharge its
legal obligation with respect to the exercise of an Award; or (iii) where
required by Code Section 409A for payments or transfers made upon a
Participant’s “separation from service” as defined in Code Section 409A to a
Participant who is a “specified employee” under Code Section 409A, the first
business day after the expiration of the six month period following such
separation from service or if earlier, the date of Participant’s death. The
Company may cause any certificate (or other representation of title) for any
shares of Common Stock to be delivered to be properly marked with a legend or
other notation reflecting the limitations on transfer of such Common Stock as
provided in this Plan or as the Committee may otherwise require. The Committee
may require any person exercising an Award to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of the Common Stock in compliance with applicable law or
otherwise. Fractional shares shall not be delivered, but shall be rounded to the
next lower whole number of shares.

 

4.4                                 Shareholder Rights. No person shall have any
rights of a shareholder as to Common Stock subject to an Award until, after
proper exercise of the Award or other action required, such shares shall have
been recorded on the Company’s official shareholder records as having been
issued and transferred. Upon exercise of the Award or any portion thereof, the
Company will have a reasonable period in which to issue and transfer the shares,
and the Participant will not be treated as a shareholder for any purpose
whatsoever prior to such issuance and transfer.  No adjustment shall be made for
cash dividends or other rights for which the record date is prior to the date
such shares are recorded as issued and transferred in the Company’s official
shareholder records, except as provided herein or in an Agreement.

 

4.5                                 Effect of Certain Changes.  In the event of
any Company share dividend, share split, combination or exchange of shares,
recapitalization or other change in the capital structure of the Company,
corporate separation or division of the Company (including, but not limited to,
a split-up, spin-off, split-off or distribution to Company shareholders other
than a normal cash dividend), reorganization, rights offering, a partial or
complete liquidation, or any similar transaction, Company share offering or
other event that causes the value of the Company’s Common Stock to change, then
the Committee shall proportionately adjust the number of Common Stock available
for Awards under the Plan, the number of shares of Common Stock covered by
outstanding Awards, the exercise price per share of outstanding Awards, and any
other characteristics or terms of the Awards as the Committee may deem necessary
or appropriate to result in an equitable adjustment; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated by rounding
to the next lower whole number of shares with proportionate payment for such
fractional share as shall reasonably be determined by the Committee.

 

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ARTICLE V

 

ELIGIBILITY

 

5.1                                 Eligibility. Except as herein provided, the
persons who shall be eligible to participate in the Plan and be granted Awards
shall be those persons who are common law employees of the Company or any
Affiliate, non-employee members of the Board, or other individuals selected by
the Committee. Of those persons described in the preceding sentence, the
Committee may, from time to time, select persons to be granted Awards and shall
determine the terms and conditions with respect thereto. In making any such
selection and in determining the form of the Award, the Committee shall give
consideration to such factors deemed appropriate by the Committee.

 

ARTICLE VI

 

STOCK OPTIONS

 

6.1                                 General. The Committee shall have authority
to grant Options under the Plan at any time or from time to time. An Option
shall entitle the Participant to receive Common Stock upon exercise of such
Option, subject to the Participant’s satisfaction in full of any conditions,
restrictions or limitations imposed in accordance with the Plan or an Agreement
(the terms and provisions of which may differ from other Agreements) including,
without limitation, payment of the Option Price.

 

6.2                                 Grant. The grant of an Option shall occur as
of the Grant Date determined by the Committee. Stock Options may be granted
alone or in connection with other Awards. An Award of Options shall be evidenced
by, and subject to the terms of, an Agreement. Only a person who is a common-law
employee of the Company, any parent corporation of the Company, or a subsidiary
(as such terms are defined in Section 424 of the Code) on the date of grant
shall be eligible to be granted an Incentive Stock Option. To the extent that
any Option is not designated as an Incentive Stock Option or even if so
designated does not qualify as an Incentive Stock Option, it shall constitute a
Non-Qualified Stock Option.

 

6.3                                 Terms and Conditions. Options shall be
subject to such terms and conditions as shall be determined by the Committee,
including the following:

 

(1)                                 Exercise Price. The Exercise Price per share
shall not be less than the Fair Market Value per share as of the Grant Date.  If
an Option intended to qualify as an Incentive Stock Option is granted to an
individual who owns or who is deemed to own shares possessing more than ten
percent (10%) of the combined voting power of all classes of shares of the
Company, a corporation which is a parent corporation of the Company, or any
subsidiary of the Company (each as defined in Section 424 of the Code) (a “10%
Owner”), the Exercise Price per share shall not be less than one hundred ten
percent (110%) of such Fair Market Value per share.

 

(2)                                 Option Period. The Option Period of each
Option shall be fixed by the Committee, provided that no Option shall be
exercisable more than ten (10) years

 

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after the date the Option is granted. In the case of an Incentive Stock Option
granted to a 10% Owner, the Option Period shall not exceed five (5) years. No
Option which is intended to be an Incentive Stock Option shall be granted more
than ten (10) years from the date the Plan is adopted by the Company or the date
the Plan is approved by the shareholders of the Company, whichever is earlier.

 

(3)                                 Exercisability. Subject to Section 10.1 and
the terms set by the Committee, Options shall be exercisable at the rate of
twenty percent (20%) of the total number of shares as of each anniversary of the
Grant Date. In addition, the Committee may at any time accelerate the
exercisability of all or part of any Option. If the Committee intends that an
Option be able to qualify as an Incentive Stock Option, the Committee may, in
its discretion, provide that the aggregate Fair Market Value (determined at the
date of grant of the Option) of the Common Stock as to which such Incentive
Stock Option held by a Participant which is exercisable for the first time
during any calendar year (including all other incentive stock options held by
the Participant issued under all plans of the Company and its Affiliates), shall
not exceed $100,000.

 

(4)                                 Method of Exercise.  Subject to the
provisions of this Article VI and the Agreement, a Participant may exercise
Options, in whole or in part, during the Option Period by giving written notice
of exercise on a form provided by the Committee to the Company specifying the
number of shares of Common Stock subject to the Option to be purchased or in
such other manner as is prescribed by the Committee or its delegates. Such
notice shall be accompanied by payment in full of the purchase price by cash or
certified check or such other form of payment as the Company may accept. If
permitted by the Committee, payment in full or in part may also be made by
(i) delivering Common Stock already owned by the Participant having a total Fair
Market Value on the date of such delivery equal to the Option Price; (ii) the
delivery of cash by a broker-dealer as a “cashless” exercise, provided such
method of payment may not be used by a director or executive officer of the
Company to the extent it would violate the Sarbanes-Oxley Act of 2002; or
(iii) any combination of the foregoing.

 

(5)                                 Non-transferability of Options. Except as
provided under the Plan or an Agreement, or as otherwise approved by the
Committee, no Option shall be sold, assigned, margined, transferred, encumbered,
conveyed, gifted, alienated, hypothecated, pledged, or otherwise disposed of,
other than by will or by the laws of descent and distribution, and all Options
shall be exercisable during the Participant’s lifetime only by the Participant.

 

6.4                                 Termination by Reason of Death. Unless
otherwise provided in an Agreement or determined by the Committee, if a
Participant incurs a Termination of Employment due to death or dies within three
(3) months after a termination described in Section 6.6, any unexpired and
unexercised Option held by such Participant shall thereafter be fully
exercisable for a period of one (1) year immediately following the date of such
death or until the expiration of the Option Period, whichever period is the
shorter.

 

6.5                                 Termination by Reason of Disability. Unless
otherwise provided in an Agreement or determined by the Committee, if a
Participant incurs a Termination of Employment

 

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due to a Disability, any unexpired and unexercised Option held by such
Participant shall thereafter be fully exercisable by the Participant for a
period of one (1) year immediately following the date of such Disability or
until the expiration of the Option Period, whichever period is the shorter, and
the Participant’s death at any time following such Termination of Employment due
to Disability shall not affect the foregoing.

 

6.6                                 Other Termination. Unless otherwise provided
in an Agreement or determined by the Committee, if a Participant incurs a
Termination of Employment that is involuntary on the part of the Participant
(but is not due to death, Disability or with Cause) or is voluntary on the part
of the Participant, any Option held by such Participant shall thereupon
terminate, except that such Option, to the extent then exercisable, may be
exercised for the lesser of the ninety (90) consecutive day period commencing
with the date of such Termination of Employment or until the expiration of the
Option Period whichever period is the shorter. If the Participant incurs a
Termination of Employment for Cause, the Option shall terminate immediately.
Unless otherwise provided in an Agreement, the death or Disability of a
Participant after a Termination of Employment otherwise provided herein shall
not extend the time permitted to exercise an Option.

 

ARTICLE VII

 

STOCK APPRECIATION RIGHTS

 

7.1                                 General. The Committee shall have authority
to grant Stock Appreciation Rights under the Plan at any time or from time to
time. Stock Appreciation Rights may be awarded either alone or in addition to
other Awards granted under the Plan. Subject to the Participant’s satisfaction
in full of any conditions, restrictions or limitations imposed in accordance
with the Plan or an Agreement, a Stock Appreciation Right shall entitle the
Participant to surrender to the Company the Stock Appreciation Right and to be
paid therefore in Common Stock the amount described in Section 7.3(2).

 

7.2                                 Grant. The grant of a Stock Appreciation
Right shall occur as of the Grant Date determined by the Committee. In no event
shall the Exercise Price per share be less than the Fair Market Value per share
as of the Grant Date. A Stock Appreciation Right entitles a Participant to
receive Common Stock as described in Section 7.3(2). An Award of Stock
Appreciation Rights shall be evidenced by, and subject to the terms of an
Agreement, which shall become effective upon execution by the Participant.

 

7.3                                 Terms and Conditions. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined by
the Committee, including the following:

 

(1)                                 Period and Exercise. The term of a Stock
Appreciation Right shall be established by the Committee. A Stock Appreciation
Right shall be for such period and shall be exercisable at such times and to the
extent provided in the Agreement. Subject to Section 10.1 and the terms set by
the Committee, Stock Appreciation Rights shall be exercisable at the rate of
twenty percent (20%) as of each anniversary of the Grant Date. In addition, the
Committee may at any time accelerate the exercisability of all or part of any
Stock Appreciation Right. Stock Appreciation Rights shall be exercised by the
Participant’s giving written notice of exercise on a form provided by the
Committee (if available) to the Company specifying the

 

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portion of the Stock Appreciation Right to be exercised or in such other manner
as is prescribed by the Committee or its delegates.

 

(2)                                 Amount. Upon the exercise of a Stock
Appreciation Right, a Participant shall be entitled to receive an amount in
Common Stock equal in value to the excess of the Fair Market Value per share of
Common Stock over the Exercise Price per share of Common Stock specified in the
related Agreement, multiplied by the number of shares in respect of which the
Stock Appreciation Right is exercised The aggregate Fair Market Value per share
of Common Stock shall be determined as of the date of exercise of such Stock
Appreciation Right.

 

(3)                                 Non-transferability of Stock Appreciation
Rights. Except as provided in the Plan or in an Agreement, no Stock Appreciation
Rights shall be sold, assigned, margined, transferred, encumbered, conveyed,
gifted, alienated, hypothecated, pledged or otherwise disposed of, other than by
will or the laws of descent and distribution, and all Stock Appreciation Rights
shall be exercisable during the Participant’s lifetime only by the Participant.

 

(4)                                 Termination. A Stock Appreciation Right
shall be forfeited or terminated at such time as an Option would be forfeited or
terminated under the Plan, unless otherwise provided in an Agreement.

 

ARTICLE VIII

 

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

8.1                                 General. The Committee shall have authority
to grant Restricted Stock and/or Restricted Stock Units under the Plan at any
time or from time to time. The Committee shall determine the number of shares of
Restricted Stock and/or the number of Restricted Stock Units to be awarded to
any Participant, the time or times within which such Awards may be subject to
forfeiture, and any other terms and conditions of the Awards. Each Award shall
be confirmed by, and be subject to the terms of, an Agreement which shall become
effective upon execution by the Participant.

 

8.2                                 Grant, Awards and Certificates.  An Award of
Restricted Stock or of Restricted Stock Units shall occur as of the Grant Date
determined by the Committee and as provided in an Agreement.  Restricted Stock
and Restricted Stock Units may be awarded either alone or in addition to other
Awards granted under the Plan. Notwithstanding the limitations on issuance of
Common Stock otherwise provided in the Plan, each Participant receiving an Award
of Restricted Stock shall be issued a certificate (or other representation of
title) in respect of such Restricted Stock. Such certificate shall be registered
in the name of such Participant and shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Award as
determined by the Committee. The Committee may require that the certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed and that, as a condition of any Award of Restricted
Stock, the Participant shall have delivered a share power, endorsed in blank,
relating to the Common Stock covered by such Award.

 

 

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8.3                                 Terms and Conditions. Restricted Stock and
Restricted Stock Units shall be subject to such terms and conditions as shall be
determined by the Committee, including the following:

 

(1)                                 Limitations on Transferability. The issue
prices for Restricted Stock and Restricted Stock Units shall be set by the
Committee and may be zero. Subject to the provisions of the Plan and the
Agreement, during a period set by the Committee (and, in the case of Restricted
Stock Units, until the date of delivery of Common Stock), commencing with the
date of such Award (the “Restriction Period “), the Participant shall not be
permitted to sell, assign, margin, transfer, encumber, convey, gift, alienate,
hypothecate, pledge or otherwise dispose of Restricted Stock or Restricted Stock
Units.

 

(2)                                 Rights. Except as provided in
Section 8.3(1), the Participant shall have, with respect to the Restricted
Stock, all of the rights of a shareholder of the Company holding the class of
Common Stock that is the subject of the Restricted Stock, including, if
applicable, the right to vote the shares and the right to receive any cash
dividends, except as limited by this Section 8.3(2). A Participant shall have no
voting rights with respect to any Restricted Stock Units granted hereunder but
shall, to the extent provided in an Agreement, have the right to receive (with
respect to such Restricted Stock Units) cash payments equivalent in value to,
and payable at the same time as, the cash dividends payable on a like number
shares of Common Stock. Unless otherwise determined by the Committee, cash
dividends on Restricted Stock shall not be distributed prior to vesting of the
Restricted Stock, but shall instead be accumulated and distributed as additional
shares of Common Stock after vesting of the Restricted Stock.

 

(3)                                 Criteria. Based on service, performance by
the Participant or by the Company or the Affiliate, including any division or
department for which the Participant is employed, or such other factors or
criteria as the Committee may determine, the Committee may provide for the lapse
of restrictions in installments and may accelerate the vesting of all or any
part of any Award of Restricted Stock and waive the restrictions for all or any
part of such Award of Restricted Stock.

 

(4)                                 Forfeiture. Unless otherwise provided in an
Agreement or determined by the Committee, if the Participant incurs a
Termination of Employment due to death or Disability during the Restriction
Period, the restrictions shall lapse and the Participant shall be fully vested
in the Restricted Stock or Restricted Stock Units. Except to the extent
otherwise provided in the applicable Agreement and the Plan, upon a
Participant’s Termination of Employment for any reason during the Restriction
Period other than a Termination of Employment due to death or Disability, all
shares of Restricted Stock and Restricted Stock Units still subject to
restriction shall be forfeited by the Participant, except the Committee shall
have the discretion to waive in whole or in part any or all remaining
restrictions with respect to any or all of such Participant’s Restricted Stock .

 

(5)                                 Delivery. If a share certificate is issued
in respect of Restricted Stock, the certificate shall be registered in the name
of the Participant but shall be held by the Company for the account of the
Participant until the end of the Restricted

 

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Period. If and when the Restriction Period expires without a prior forfeiture of
Restricted Stock or Restricted Stock Units subject to such Restriction Period,
unlegended certificates (or other representation of title) for Common Stock
shall be delivered to the Participant at the time and subject to the conditions
provided in the Agreement governing such Award.

 

(6)                                 Election. A Participant may elect to further
defer receipt of the Restricted Stock or payment of Common Stock with respect to
Restricted Stock Units for a specified period or until a specified event,
subject to the Committee’s approval and to such terms as are determined by the
Committee. Subject to any exceptions adopted by the Committee, such election
must be made one at least (1) year prior to completion of the Restriction Period
and in compliance with the terms and conditions of Section 409A of the Code.

 

ARTICLE IX

 

PERFORMANCE UNITS

 

9.1                                 General. The Committee shall have authority
to grant Performance Units under the Plan at any time or from time to time. A
Performance Unit (“Performance Unit”) consists of the right to receive cash upon
achievement of certain goals relating to performance (“Performance Goals”) and
may be awarded either alone or in addition to other Awards granted under the
Plan. The Committee shall have complete discretion to determine the number of
Performance Units granted to each Participant. Each Performance Unit Award shall
be evidenced by, and be subject to the terms of, an Agreement which will become
effective upon execution by the Participant. The time period during which a
Performance Unit Award shall be earned shall be the “Performance Period,” and
shall be at least one (1) fiscal year in length. Performance Units may be
subject to Performance Goals which shall be established by the Committee.

 

9.2                                 Earning Performance Unit Awards. After the
applicable Performance Period shall have ended, the Committee shall determine
the extent to which the established Performance Goals have been achieved.

 

9.3                                 Termination of Employment Due to Death or
Disability. In the event of a Termination of Employment due to death or
Disability during a Performance Period, the Participant shall receive a pro rata
share of the cash award earned with respect to the Participant’s Performance
Units relating to such Performance Period. Unless otherwise determined by the
Committee, in the event that a Participant’s employment terminates for any other
reason, all Performance Units shall be forfeited by the Participant to the
Company. Distribution of earned Performance Units on account of Termination of
Employment due to death or Disability may be made at the same time payments are
made to Participants who did not incur a Termination of Employment during the
applicable Performance Period

 

9.4                                 Nontransferability. Unless otherwise
provided in an Agreement, Performance Units may not be sold, assigned, margined,
transferred, encumbered, conveyed, gifted, alienated, hypothecated, pledged, or
otherwise disposed of, other than by will or by the laws of descent and
distribution.

 

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9.5                                 Election to Defer. A Participant may elect
to defer receipt of the cash award with respect to Performance Units for a
specified period or until a specified event, subject to the Committee’s approval
and to such terms are determined by the Committee. Subject to any exceptions
adopted by the Committee, such election must be made at least one (1) year prior
to completion of the Performance Period.

 

9.6                                 Payment.  Payment with respect to
Performance Units shall be made in accordance with the related Agreement.  In no
event, however, shall any payment with respect to a Performance Unit be made
after the fifteenth day of the third month after the last day of the applicable
Performance Period.

 

ARTICLE X

 

CHANGE IN CONTROL PROVISIONS

 

10.1                           Impact of Event. Notwithstanding any other
provision of the Plan to the contrary and unless otherwise provided in an
Agreement, in the event of a Change in Control:

 

(1)                                 Any Stock Options and Stock Appreciation
Rights outstanding as of the date of such Change in Control and not then
exercisable shall become fully exercisable to the full extent of the original
grant;

 

(2)                                 The restrictions applicable to any
Restricted Stock and Restricted Stock Unit Awards shall lapse. Such Restricted
Stock shall become free of all restrictions and become fully vested and
transferable to the full extent of the original grant, and such Restricted Stock
Units shall become free of all restrictions, fully vested, and payable in shares
of Common Stock; and

 

(3)                                 Any Performance Goal or other condition with
respect to any Performance Units shall be deemed to have been satisfied in full,
and such Award shall be fully distributable.

 

10.2                           Additional Discretion.  In the event of a Change
in Control, the Committee shall make a proportional adjustment of the terms of
Awards granted hereunder in whatever manner as the Committee deems appropriate
to equitably reflect the change (if any) in the value of the Common Stock due to
the Change in Control.  Notwithstanding anything herein or in an Agreement to
the contrary, upon a Change in Control, the Committee shall have full discretion
with respect to an outstanding Award to provide that the securities of another
entity be substituted hereunder for the Common Stock and to make equitable
adjustment with respect thereto.

 

ARTICLE XI

 

PROVISIONS APPLICABLE TO SHARES ACQUIRED UNDER THIS PLAN

 

11.1                           No Company Obligation. Except to the extent
required by applicable securities laws, none of the Company, an Affiliate or the
Committee shall have any duty or obligation to affirmatively disclose material
information to a record or beneficial holder of Common Stock or

 

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an Award, and such holder shall have no right to be advised of any material
information regarding the Company or any Affiliate at any time prior to, upon,
or in connection with receipt, exercise or distribution of an Award. The Company
makes no representation or warranty as to the future value of the Common Stock
issued or acquired in accordance with the provisions of the Plan.

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1                           Amendments and Termination. The Board may amend,
alter, or discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would impair the rights of a Participant
under an Award theretofore granted without the Participant’s consent, except
such an amendment (a) made to cause the Plan to comply with applicable law,
including without limitation an amendment to bring the Award into compliance
with, or obtain an exemption from, the requirements of Code Section 409A; or
(b) made to permit the Company or an Affiliate a tax deduction under applicable
law. The Committee may amend, alter or discontinue the terms of any Award
theretofore granted, prospectively or retroactively, on the same conditions and
limitations (and exceptions to limitations) as apply to the Board, and further
subject to any approval or limitations the Board may impose.  Notwithstanding
the foregoing, any material amendments (as determined under the rules of the New
York Stock Exchange, as amended from time to time) to the Plan shall require
shareholder approval.

 

12.2                           Unfunded Status of Plan. It is intended that the
Plan be an “unfunded” plan for incentive compensation. The Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the “unfunded” status of the
Plan.

 

12.3                           Provisions Relating to Internal Revenue Code
Section 162(m). It is the intent of the Company that Awards granted to persons
who are Covered Employees within the meaning of Section 162(m) of the Code shall
constitute “qualified performance-based compensation” satisfying the
requirements of Code Section 162(m). Accordingly, the Plan shall be administered
and the provisions of the Plan shall be interpreted in a manner consistent with
Code Section 162(m). If any provision of the Plan or any Agreement relating to
such an Award does not comply or is inconsistent with the requirements of Code
Section 162(m), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements. In addition, the following
provisions shall apply to the Plan or an Award to the extent necessary to obtain
a tax deduction for the Company or an Affiliate:

 

(1)                                 Not later than the date required or
permitted for “qualified performance-based compensation” under Code
Section 162(m), the Committee shall determine the Participants who are Covered
Employees who will receive Awards that are intended as qualified
performance-based compensation and the amount or method for determining the
amount of such compensation.

 

(2)                                 During any three-consecutive calendar year
period, the maximum number of shares of Common Stock for which Options and Stock
Appreciation Rights, in

 

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the aggregate, may be granted to any Participant shall not exceed 800,000
shares. For Performance Unit Awards that are intended to be “performance-based
compensation” (as that term is used in Code Section 162(m), no more than
$2,000,000 may be subject to such Awards granted to any Participant during any
three-consecutive calendar year period. If, after amounts have been earned with
respect to Performance Unit Awards, the payment of such amounts is deferred, any
additional amounts attributable to earnings during the deferral period shall be
disregarded for purposes of this limit.

 

(3)                                 Performance Goals. Awards may be subject to
Performance Goals (as defined in Section 9.1) which shall be measured in a
specific Performance Period (as defined in Section 9.1) established by the
Committee which shall be based on any of the following performance criteria,
either alone or in any combination, and on either a consolidated or business
unit level, as the Committee may determine: sales; cash flow; cash flow from
operations; operating profit or income; net income; operating margin; net income
margin; return on net assets; economic value added; return on total assets;
return on common equity; return on total capital; total shareholder return;
revenue; revenue growth; earnings before interest, taxes, depreciation and
amortization (“EBITDA”); EBITDA growth; funds from operations per share and per
share growth; cash available for distribution; cash available for distribution
per share and per share growth; share price performance on an absolute basis and
relative to an index of earnings per share or improvements in the Company’s
attainment of expense levels; and implementing or completion of critical
projects. The foregoing criteria shall have any reasonable definitions that the
Committee may specify, which may include or exclude any or all of the following
items as the Committee may specify: extraordinary, unusual or non-recurring
items; effects of accounting changes; effects of financing activities (e.g.,
effect on earnings per share of issuance of convertible debt securities);
expenses for restructuring or productivity initiatives; other non-operating
items; spending for acquisitions; effects of divestitures; and effects of
litigation activities and settlements. Any such performance criterion or
combination of such criteria may apply to the Participant’s Award opportunity in
its entirety or to any designated portion or portions of the Award opportunity,
as the Committee may specify. Unless the Committee determines otherwise for any
Performance Period, extraordinary items, such as capital gains and losses, which
affect any performance criterion applicable to the Award (including but not
limited to the criterion of net income) shall be excluded or included in
determining on the extent to which the corresponding performance goal has been
achieved, whichever will produce the higher Award. In the event applicable tax
or other laws change to permit the Committee discretion to alter the governing
performance measures without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
shareholder approval.

 

(4)                                 Earning Performance Awards. After the
applicable Performance Period shall have ended, the Committee shall certify the
extent to which the established Performance Goals have been achieved. Payment
with respect to Performance Units for Covered Employees shall be a direct
function of the extent to which the Company’s Performance Goals have been
achieved. A Performance Unit Award to a Participant who is a Covered Employee
shall (unless the Committee

 

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determines otherwise) provide that in the event of the Participant’s Termination
of Employment prior to the end of the Performance Period for any reason, such
Award will be payable only (a) if the applicable Performance Goals are achieved
and (b) to the extent, if any, as the Committee shall determine.

 

(5)                                 Other Section 162(m) Provisions. In the
manner required by Section 162(m) of the Code, the Committee shall, promptly
after the date on which the necessary financial and other information for a
particular Performance Period becomes available, certify the extent to which
Performance Goals have been achieved with respect to any Performance Unit Award
intended to qualify as “performance-based compensation” under Section 162(m) of
the Code. The Committee may not increase the amount of any Performance Unit
Award payable to any Participant above the amount established in accordance with
the relevant Performance Goals with respect to any Performance Unit Award
intended to qualify as “performance-based compensation” under Section 162(m) of
the Code

 

12.4                           No Additional Obligation. Nothing contained in
the Plan shall prevent the Company or an Affiliate from adopting other or
additional compensation or benefit arrangements for its employees.

 

12.5                           Withholding. No later than the date as of which
an amount first becomes includible in the gross income of the Participant for
federal income tax purposes with respect to any Award, the Participant shall pay
to the Company (or other entity identified by the Committee), or make
arrangements satisfactory to the Company or other entity identified by the
Committee regarding the payment of, any federal, state, or local taxes of any
kind required by law to be withheld with respect to such income. Unless
otherwise determined by the Committee, withholding obligations may be settled
with Common Stock, including shares of Common Stock that are part of the Award
that give rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements, and the
Company and its Affiliates shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment otherwise due to the Participant.
Subject to approval by the Committee, a Participant may elect to have such tax
withholding obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from shares of Common Stock to be issued pursuant to any
Award a number of shares with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the required statutory minimum (but
no more than such required minimum) with respect to the Company’s withholding
obligation, or (ii) transferring to the Company shares of Common Stock owned by
the Participant with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the required statutory minimum (but
no more than such required minimum) with respect to the Company’s withholding
obligation.

 

12.6                           Controlling Law. The Plan and all Awards made and
actions taken thereunder shall be governed by and construed in accordance with
the laws of Minnesota (other than its law respecting choice of law). The Plan
shall be construed to comply with all applicable law and to avoid liability to
the Company, an Affiliate or a Participant.  The Board and the Committee shall
administer the Plan, and shall exercise all authority and discretion under the
Plan to satisfy the requirements of Code Section 409A

 

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12.7                           Offset. Any amounts owed to the Company or an
Affiliate by the Participant of whatever nature may be offset by the Company
from the value of any Award to be transferred to the Participant.

 

12.8                           Nontransferability; Beneficiaries. No Award shall
be assignable or transferable by the Participant, otherwise than by will or the
laws of descent and distribution or pursuant to a beneficiary designation, and
Awards shall be exercisable during the Participant’s lifetime only by the
Participant (or by the Participant’s legal representatives in the event of the
Participant’s incapacity). Each Participant may designate a Beneficiary to
exercise any Option or Stock Appreciation Right or receive any Award held by the
Participant at the time of the Participant’s death or to be assigned any other
Award outstanding at the time of the Participant’s death. If a deceased
Participant has named no Beneficiary, any Award held by the Participant at the
time of death shall be transferred as provided in his or her will or by the laws
of descent and distribution. Except in the case of the holder’s incapacity, only
the holder may exercise an Option or Stock Appreciation Right. Notwithstanding
the foregoing, the Board or the Committee may, in its discretion and subject to
such limitations and conditions as the Board or the Committee deems appropriate,
permit the transfer of an Award by a Participant to a Participant’s children,
stepchildren, grandchildren, parents, stepparents, grandparents, spouse
(including an ex-spouse incident to divorce), siblings, in-laws, or persons
related by reason of legal adoption (collectively, the “Family Members”), or to
a trust for the exclusive benefit of the Grantee’s Family Members or a
partnership, corporation or limited liability the equity interests of which are
owned by the Grantee and/or the Grantee’s Family Members.

 

12.9                           Gross-Up for Excise Tax. If all or any portion of
the payments and benefits (including any acceleration of vesting) provided under
this Plan, either alone or together with other payments and benefits which a
Participant receives or is then entitled to receive from the Company or an
Affiliate, would constitute a “parachute payment” within the meaning of
Section 280G of the Code, the Company shall pay to the Participant, within ten
(10) business days of the determination that the payment would constitute a
parachute payment, a tax “gross-up” payment to the extent necessary so that the
net after-tax benefit to the Participant shall be equal to the net after-tax
benefit if the excise tax associated with the “parachute payment” were not
imposed. The “net after-tax benefit” for these purposes shall mean the sum of
(i) the total amount payable to the Participant under the Plan, plus (ii) all
other payments and benefits which the Participant receives or is then entitled
to receive from the Company or any Affiliate that would constitute a “parachute
payment” within the meaning of Section 280G of the Code, less (iii) the amount
of federal income taxes payable with respect to the foregoing calculated at the
maximum marginal income tax rate for each year in which the foregoing shall be
paid to the Participant (based upon the rate in effect for such year as set
forth in the Code at the time of the payment), less (iv) the amount of excise
taxes imposed with respect to the payments and benefits described in (i) and
(ii) above by Section 4999 of the Code. The determination on whether or not all
or any portion of the payments and benefits provided to the Participant would
constitute parachute payments shall be made by a national certified public
accounting firm selected by the Company, and such determination shall be
conclusive and binding on the Participant.

 

12.10                     No Rights with Respect to Continuance of Employment.
Nothing contained herein shall be deemed to alter the relationship between the
Company or an Affiliate and a Participant, or the contractual relationship
between a Participant and the Company or an Affiliate if there is a written
contract regarding such relationship. Nothing contained herein shall be
construed to constitute a contract of employment between the Company or an
Affiliate and a Participant. The Company or an Affiliate and each of the
Participants continue to have the right to

 

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terminate the employment or service relationship at any time for any reason,
except as provided in a written contract. The Company or an Affiliate shall have
no obligation to retain the Participant in its employ or service as a result of
this Plan. There shall be no inference as to the length of employment or service
hereby, and the Company or an Affiliate reserves the same rights to terminate
the Participant’s employment or service as existed prior to the individual
becoming a Participant in this Plan.

 

12.11                     Awards in Substitution for Awards Granted by Other
Corporations. Awards may be granted under the Plan from time to time in
substitution for awards held by employees, directors or service providers of
other corporations who are about to become officers, directors or employees of
the Company or an Affiliate as the result of a merger or consolidation of the
employing corporation with the Company or an Affiliate, or the acquisition by
the Company or an Affiliate of the assets of the employing corporation, or the
acquisition by the Company or Affiliate of the share of the employing
corporation, as the result of which it becomes a designated employer under the
Plan. The terms and conditions of the Awards so granted may vary from the terms
and conditions set forth in this Plan at the time of such grant as the majority
of the members of the Committee may deem appropriate to conform, in whole or in
part, to the provisions of the awards in substitution for which they are
granted.

 

12.12                     Foreign Alternatives. Notwithstanding the other
provisions of the Plan, in the case of any Award to any Participant who is an
employee of a foreign subsidiary or foreign branch of the Company or held by a
Participant who is in any other category specified by the Committee, the
Committee may specify that such Award shall not be represented by Common Stock
or other securities but shall be represented by rights approximately equivalent
(as determined by the Committee) to the rights that such Participant would have
received if shares of Common Stock or other securities had been issued in the
name of such Participant otherwise in accordance with the Plan (such rights
being hereinafter called “Share Equivalents”). The Share Equivalents
representing any such Award may subsequently, at the option of the Committee, be
converted into cash or an equivalent number of shares of Common Stock or other
securities under such circumstances and in such manner as the Committee may
determine.

 

12.13                     Delivery of Stock Certificates. To the extent the
Company uses certificates to represent shares of Common Stock, certificates to
be delivered to Participants under this Plan shall be deemed delivered for all
purposes when the Company or a stock transfer agent of the Company shall have
mailed such certificates in the United States mail, addressed to the
Participant, at the Participant’s last known address on file with the Company.
Any reference in this Section 12.13 or elsewhere in the Plan or an Agreement to
actual stock certificates and/or the delivery of actual stock certificates shall
be deemed satisfied by the electronic record-keeping and electronic delivery of
shares of Common Stock or other mechanism then utilized by the Company and its
agents for reflecting ownership of such shares.

 

12.14                     Headings. The headings contained in this Plan are for
reference purposes only and shall not affect the meaning or interpretation of
this Plan.

 

12.15                     Severability. If any provision of this Plan shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provision hereby, and this Plan
shall be construed as if such invalid or unenforceable provision were omitted.

 

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12.16                     Successors and Assigns. This Plan shall inure to the
benefit of and be binding upon each successor and assign of the Company. All
obligations imposed upon a Participant, and all rights granted to the Company
hereunder, shall be binding upon the Participant’s heirs, legal representatives
and successors.

 

12.17                     Entire Agreement. This Plan and each Agreement
constitute the entire agreement with respect to the subject matter hereof and
thereof, provided that in the event of any inconsistency between the Plan and
each Agreement, the terms and conditions of this Plan shall control.

 

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