Exhibit 10.51

 

QUANEX CORPORATION
2006 OMNIBUS INCENTIVE PLAN

 

 

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ARTICLE I

ESTABLISHMENT, PURPOSE AND DURATION

 

1.1

Establishment

1

1.2

Purpose of the Plan

1

1.3

Duration of Plan

1

 

 

 

ARTICLE II

DEFINITIONS

 

2.1

Affiliate

1

2.2

Annual Incentive Award

1

2.3

Award

1

2.4

Award Agreement

1

2.5

Board

1

2.6

Cash-Based Award

1

2.7

Code

2

2.8

Committee

2

2.9

Company

2

2.10

Corporate Change

2

2.11

Director

2

2.12

Disability

2

2.13

Dividend Equivalent

2

2.14

Employee

2

2.15

Fair Market Value

2

2.16

Fiscal Year

2

2.17

Holder

2

2.18

Minimum Statutory Tax Withholding Obligation

2

2.19

Option

2

2.20

Option Price

2

2.21

Other Stock-Based Award

3

2.22

Performance Goals

3

2.23

Performance Stock Award

3

2.24

Performance Unit Award

3

2.25

Period of Restriction

3

2.26

Plan

3

2.27

Restricted Stock

3

2.28

Restricted Stock Award

3

2.29

RSU

3

2.30

RSU Award

3

2.31

SAR

3

2.32

Section 409A

3

2.33

Stock

3

2.34

Substantial Risk of Forfeiture

3

2.35

Termination of Employment

3

 

 

 

ARTICLE III

ELIGIBILITY AND PARTICIPATION

 

3.1

Eligibility

4

3.2

Participation

4

 

 

 

ARTICLE IV

GENERAL PROVISIONS RELATING TO AWARDS

 

4.1

Authority to Grant Awards

4

4.2

Dedicated Shares; Maximum Awards

4

 

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4.3

Non-Transferability

5

4.4

Requirements of Law

5

4.5

Changes in the Company’s Capital Structure

5

4.6

Election Under Section 83(b) of the Code

8

4.7

Forfeiture for Cause

8

4.8

Forfeiture Events

8

4.9

Award Agreements

8

4.10

Amendments of Award Agreements

8

4.11

Rights as Stockholder

8

4.12

Issuance of Shares of Stock

8

4.13

Restrictions on Stock Received

9

4.14

Compliance With Section 409A

9

 

 

 

ARTICLE V

OPTIONS

 

5.1

Authority to Grant Options

9

5.2

Option Agreement

9

5.3

Option Price

9

5.4

Duration of Option

9

5.5

Amount Exercisable

9

5.6

Exercise of Option

9

 

 

 

ARTICLE VI

STOCK APPRECIATION RIGHTS

 

6.1

Authority to Grant SAR Awards

10

6.2

General Terms

10

6.3

SAR Agreement

10

6.4

Term of SAR

10

6.5

Exercise of SAR

10

6.6

Payment of SAR Amount

10

6.7

Termination of Employment

10

 

 

 

ARTICLE VII

RESTRICTED STOCK AWARDS

 

7.1

Restricted Stock Awards

11

7.2

Restricted Stock Award Agreement

11

7.3

Holder’s Rights as Stockholder

11

 

 

 

ARTICLE VIII

RESTRICTED STOCK UNIT AWARDS

 

8.1

Authority to Grant RSU Awards

11

8.2

RSU Award

11

8.3

RSU Award Agreement

12

8.4

Dividend Equivalents

12

8.5

Form of Payment Under RSU Award

12

8.6

Time of Payment Under RSU Award

12

 

 

 

ARTICLE IX

PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS

 

9.1

Authority to Grant Performance Stock Awards and Performance Unit Awards

12

9.2

Performance Goals

12

9.3

Time of Establishment of Performance Goals

13

9.4

Written Agreement

13

9.5

Form of Payment Under Performance Unit Award

13

9.6

Time of Payment Under Performance Unit Award

13

 

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9.7

Holder’s Rights as Stockholder With Respect to a Performance Stock Award

13

9.8

Increases Prohibited

13

9.9

Stockholder Approval

13

 

 

 

ARTICLE X

ANNUAL INCENTIVE AWARDS

 

10.1

Authority to Grant Annual Incentive Awards

13

10.2

Performance Goals

14

10.3

Time of Establishment of Performance Goals

14

10.4

Written Agreement

14

10.5

Form of Payment Under Annual Incentive Award

14

10.6

Time of Payment Under Annual Incentive Award

14

10.7

Increases Prohibited

14

10.8

Stockholder Approval

14

 

 

 

ARTICLE XI

OTHER STOCK-BASED AWARDS

 

11.1

Authority to Grant Other Stock-Based Awards

15

11.2

Value of Other Stock-Based Award

15

11.3

Payment of Other Stock-Based Award

15

11.4

Termination of Employment

15

 

 

 

ARTICLE XII

CASH-BASED AWARDS

 

12.1

Authority to Grant Cash-Based Awards

15

12.2

Value of Cash-Based Award

15

12.3

Payment of Cash-Based Award

15

12.4

Termination of Employment

15

 

 

 

ARTICLE XIII

SUBSTITUTION AWARDS

 

 

 

 

ARTICLE XIV

ADMINISTRATION

 

14.1

Awards

16

14.2

Authority of the Committee

16

14.3

Decisions Binding

16

14.4

No Liability

17

 

 

 

ARTICLE XV

AMENDMENT OR TERMINATION OF PLAN

 

15.1

Amendment, Modification, Suspension, and Termination

17

15.2

Awards Previously Granted

17

 

 

 

ARTICLE XVI

MISCELLANEOUS

 

16.1

Unfunded Plan/No Establishment of a Trust Fund

17

16.2

No Employment Obligation

17

16.3

Tax Withholding

18

16.4

Gender and Number

18

16.5

Severability

18

16.6

Headings

18

16.7

Other Compensation Plans

18

16.8

Other Awards

18

16.9

Successors

19

16.10

Law Limitations/Governmental Approvals

19

16.11

Delivery of Title

19

 

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16.12

Inability to Obtain Authority

19

16.13

Investment Representations

19

16.14

Persons Residing Outside of the United States

19

16.15

Arbitration of Disputes

19

16.16

Governing Law

19

 

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ARTICLE I

ESTABLISHMENT, PURPOSE AND DURATION

 

1.1           Establishment.  The Company hereby establishes an incentive
compensation plan, to be known as the “Quanex Corporation 2006 Omnibus Incentive
Plan,” as set forth in this document.  The Plan permits the grant of Options,
SARs, Restricted Stock, RSUs, Performance Stock Awards, Performance Unit Awards,
Annual Incentive Awards, Cash-Based Awards and Other Stock-Based Awards.  The
Plan shall become effective on the later of (a) the date the Plan is approved by
the Board and (b) the date the Plan is approved by the stockholders of the
Company.

 

1.2           Purpose of the Plan.  The Plan is intended to advance the best
interests of the Company, its Affiliates and its stockholders by providing those
persons who have substantial responsibility for the management and growth of the
Company and its Affiliates with additional performance incentives and an
opportunity to obtain or increase their proprietary interest in the Company,
thereby encouraging them to continue in their employment or affiliation with the
Company or its Affiliates.

 

1.3           Duration of Plan.  The Plan shall continue indefinitely until it
is terminated pursuant to Section 15.1.  The applicable provisions of the Plan
will continue in effect with respect to an Award granted under the Plan for as
long as such Award remains outstanding.

 

ARTICLE II

DEFINITIONS

 

The words and phrases defined in this Article shall have the meaning set out
below throughout the Plan, unless the context in which any such word or phrase
appears reasonably requires a broader, narrower or different meaning.

 

2.1           “Affiliate“ means any corporation, partnership, limited liability
company or association, trust or other entity or organization which, directly or
indirectly, controls, is controlled by, or is under common control with, the
Company.  For purposes of the preceding sentence, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control
with”), as used with respect to any entity or organization, shall mean the
possession, directly or indirectly, of the power (a) to vote more than fifty
percent (50%) of the securities having ordinary voting power for the election of
directors of the controlled entity or organization, or (ii) to direct or cause
the direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract
or otherwise.

 

2.2           “Annual Incentive Award“ means an Award granted to a Holder
pursuant to Article X.

 

2.3           “Award“ means, individually or collectively, a grant under the
Plan of Options, SARs, Restricted Stock, RSUs, Performance Stock Awards,
Performance Unit Awards, Annual Incentive Awards, Other Stock-Based Awards and
Cash-Based Awards, in each case subject to the terms and provisions of the Plan.

 

2.4           “Award Agreement“ means an agreement that sets forth the terms and
conditions applicable to an Award granted under the Plan.

 

2.5           “Board“ means the board of directors of the Company.

 

2.6           “Cash-Based Award“ means an Award granted pursuant to Article XII.

 

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2.7           “Code“ means the United States Internal Revenue Code of 1986, as
amended from time to time.

 

2.8           “Committee“ means the Compensation Committee of the Board.

 

2.9           “Company“ means Quanex Corporation, a Delaware corporation, or any
successor (by reincorporation, merger or otherwise).

 

2.10         “Corporate Change“ shall have the meaning ascribed to that term in
Section 4.5(c).

 

2.11         “Director“ means a director of the Company who is not an Employee.

 

2.12         “Disability“ means as determined by the Committee in its discretion
exercised in good faith, a physical or mental condition of the Holder that would
entitle him to payment of disability income payments under the Company’s
long-term disability insurance policy or plan for Employees as then in effect;
or in the event that the Holder is not covered, for whatever reason, under the
Company’s long-term disability insurance policy or plan for Employees or in the
event the Company does not maintain such a long-term disability insurance
policy, “Disability” means a permanent and total disability as defined in
section 22(e)(3) of the Code.  A determination of Disability may be made by a
physician selected or approved by the Committee and, in this respect, the Holder
shall submit to an examination by such physician upon request by the Committee.

 

2.13         “Dividend Equivalent“  means a payment equivalent in amount to
dividends paid to the Company’s stockholders.

 

2.14         “Employee“ means a person employed by the Company or any Affiliate
as a common law employee.

 

2.15         “Fair Market Value“ of the Stock as of any particular date means
(1) if the Stock is traded on a stock exchange, the closing sale price of the
Stock on that date as reported on the principal securities exchange on which the
Stock is traded, or (2) if the Stock is traded in the over-the-counter market,
the average between the high bid and low asked price on that date as reported in
such over-the-counter market; provided that (a) if the Stock is not so traded,
(b) if no closing price or bid and asked prices for the stock was so reported on
that date or (c) if, in the discretion of the Committee, another means of
determining the fair market value of a share of Stock at such date shall be
necessary or advisable, the Committee may provide for another means for
determining such fair market value.

 

2.16         “Fiscal Year“ means the Company’s fiscal year.

 

2.17         “Holder“ means a person who has been granted an Award or any person
who is entitled to receive shares of Stock or cash under an Award.

 

2.18         “Minimum Statutory Tax Withholding Obligation“  means, with respect
to an Award, the amount the Company or an Affiliate is required to withhold for
federal, state and local taxes based upon the applicable minimum statutory
withholding rates required by the relevant tax authorities.

 

2.19         “Option“ means a “nonqualified stock option” to purchase Stock
granted pursuant to Article V that does not satisfy the requirements of section
422 of the Code.

 

2.20         “Option Price“ shall have the meaning ascribed to that term in
Section 5.3.

 

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2.21         “Other Stock-Based Award“ means an equity-based or equity-related
Award not otherwise described by the terms and provisions of the Plan that is
granted pursuant to Article XI.

 

2.22         “Performance Goals“ means one or more of the criteria described in
Section 9.2 on which the performance goals applicable to an Award are based.

 

2.23         “Performance Stock Award“ means an Award designated as a
performance stock award granted to a Holder pursuant to Article IX.

 

2.24         “Performance Unit Award“ means an Award designated as a performance
unit award granted to a Holder pursuant to Article IX.

 

2.25         “Period of Restriction“ means the period during which Restricted
Stock is subject to a substantial risk of forfeiture (based on the passage of
time, the achievement of performance goals, or upon the occurrence of other
events as determined by the Committee, in its discretion), as provided in
Article VII.

 

2.26         “Plan“ means the Quanex Corporation 2006 Omnibus Incentive Plan, as
set forth in this document as it may be amended from time to time.

 

2.27         “Restricted Stock“ means shares of restricted Stock issued or
granted under the Plan pursuant to Article VII.

 

2.28         “Restricted Stock Award“ means an authorization by the Committee to
issue or transfer Restricted Stock to a Holder.

 

2.29         “RSU“ means a restricted stock unit credited to a Holder’s ledger
account maintained by the Company pursuant to Article VIII.

 

2.30         “RSU Award“ means an Award granted pursuant to Article VIII.

 

2.31         “SAR“ means a stock appreciation right granted under the Plan
pursuant to Article VI.

 

2.32         “Section 409A“  means section 409A of the Code and Department of
Treasury rules and regulations issued thereunder.

 

2.33         “Stock“ means the common stock of the Company, $0.50 par value per
share (or such other par value as may be designated by act of the Company’s
stockholders).  In addition, for purposes of the Plan and the Awards, the term
Stock shall also be deemed to include any rights to purchase (“Rights”) the
Series A Junior Participating Preferred Stock of the Company that may then be
trading together with the Stock as provided in the Rights Agreement between the
Company and Wells Fargo Bank, N.A. relating to the Rights.

 

2.34         “Substantial Risk of Forfeiture“ shall have the meaning ascribed to
that term in section 409A of the Code and Department of Treasury guidance issued
thereunder.

 

2.35         “Termination of Employment“ means the termination of the Award
recipient’s employment relationship with the Company and all Affiliates.

 

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ARTICLE III

ELIGIBILITY AND PARTICIPATION

 

3.1           Eligibility.  The persons who are eligible to receive Awards under
the Plan other than Annual Incentive Awards are key Employees and Directors. 
The persons who are eligible to receive Annual Incentive Awards under the Plan
are key executive Employees who, by the nature and scope of their positions,
regularly directly make or influence policy decisions which significantly impact
the overall results or success of the Company.

 

3.2           Participation.  Subject to the terms and provisions of the Plan,
the Committee may, from time to time, select the Employees and Directors to whom
Awards shall be granted and shall determine the nature and amount of each Award.

 

ARTICLE IV

GENERAL PROVISIONS RELATING TO AWARDS

 

4.1           Authority to Grant Awards.  The Committee may grant Awards to
those key Employees and Directors as the Committee shall from time to time
determine, under the terms and conditions of the Plan.  Subject only to any
applicable limitations set out in the Plan, the number of shares of Stock or
other value to be covered by any Award to be granted under the Plan shall be as
determined by the Committee in its sole discretion.

 

4.2           Dedicated Shares; Maximum Awards.  The aggregate number of shares
of Stock with respect to which Awards may be granted under the Plan is
1,750,000.  The aggregate number of shares of Stock with respect to which full
value awards (such as Restricted Stock Awards and Performance Stock Awards) may
be granted under the Plan is 875,000.  The maximum number of shares of Stock
with respect to which Options may be granted to an Employee during a Fiscal Year
is 200,000.  The maximum number of shares of Stock with respect to which
Performance Stock Awards may be granted to an Employee during a Fiscal Year is
100,000.  The maximum number of shares of Stock with respect to which
Performance Unit Awards payable in Stock may be granted to an Employee during a
Fiscal Year is 100,000.  The maximum value of cash with respect to which
Performance Unit Awards payable in cash may be granted to an Employee during a
Fiscal Year, determined as of the dates of Grants of the Performance Unit
Awards, is $2,000,000.  The maximum amount that may be paid to an Employee under
Annual Incentive Award(s) granted to an Employee during a Fiscal Year is
$2,000,000.  The maximum number of shares with respect to which SARs may be
granted to an Employee during a Fiscal Year is 200,000.  Each of the foregoing
numerical limits stated in this Section 4.2 shall be subject to adjustment in
accordance with the provisions of Section 4.5.  The number of shares of Stock
stated in this Section 4.2 shall also be increased by such number of shares of
Stock as become subject to substitute Awards granted pursuant to Article XIII;
provided, however, that such increase shall be conditioned upon the approval of
the stockholders of the Company to the extent stockholder approval is required
by law or applicable stock exchange rules.  If shares of Stock are withheld from
payment of an Award to satisfy tax obligations with respect to the Award, such
shares of Stock will count against the aggregate number of shares of Stock with
respect to which Awards may be granted under the Plan.  If shares of Stock are
tendered in payment of an Option Price of an Option, such shares of Stock will
not be added to the aggregate number of shares of Stock with respect to which
Awards may be granted under the Plan.  To the extent that any outstanding Award
is forfeited or cancelled for any reason or is settled in cash in lieu of shares
of Stock, the shares of Stock allocable to such portion of the Award may again
be subject to an Award granted under the Plan.  When a SAR is settled in shares
of Stock, the number of shares of Stock subject to the SAR under the SAR Award
Agreement will be counted against the aggregate number of

 

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shares of Stock with respect to which Awards may be granted under the Plan as
one share for every share subject to the SAR, regardless of the number of shares
used to settle the SAR upon exercise.

 

4.3           Non-Transferability.  Except as specified in the applicable Award
Agreements or in domestic relations court orders, an Award shall not be
transferable by the Holder other than by will or under the laws of descent and
distribution, and shall be exercisable, during the Holder’s lifetime, only by
him or her.  Any attempted assignment of an Award in violation of this Section
4.3 shall be null and void.  In the discretion of the Committee, any attempt to
transfer an Award other than under the terms of the Plan and the applicable
Award Agreement may terminate the Award.

 

4.4           Requirements of Law.  The Company shall not be required to sell or
issue any shares of Stock under any Award if issuing those shares of Stock would
constitute or result in a violation by the Holder or the Company of any
provision of any law, statute or regulation of any governmental authority. 
Specifically, in connection with any applicable statute or regulation relating
to the registration of securities, upon exercise of any Option or pursuant to
any other Award, the Company shall not be required to issue any shares of Stock
unless the Committee has received evidence satisfactory to it to the effect that
the Holder will not transfer the shares of Stock except in accordance with
applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law. 
The determination by the Committee on this matter shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
shares of Stock covered by the Plan pursuant to applicable securities laws of
any country or any political subdivision.  In the event the shares of Stock
issuable on exercise of an Option or pursuant to any other Award are not
registered, the Company may imprint on the certificate evidencing the shares of
Stock any legend that counsel for the Company considers necessary or advisable
to comply with applicable law, or, should the shares of Stock be represented by
book or electronic entry rather than a certificate, the Company may take such
steps to restrict transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law.  The Company
shall not be obligated to take any other affirmative action in order to cause or
enable the exercise of an Option or any other Award, or the issuance of shares
of Stock pursuant thereto, to comply with any law or regulation of any
governmental authority.

 

4.5           Changes in the Company’s Capital Structure.

 

(a)           The existence of outstanding Awards shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business, any merger or consolidation of the
Company, any issue of bonds, debentures, preferred or prior preference shares
ahead of or affecting the Stock or Stock rights, the dissolution or liquidation
of the Company, any sale or transfer of all or any part of its assets or
business or any other corporate act or proceeding, whether of a similar
character or otherwise.

 

(b)           If the Company shall effect a subdivision or consolidation of
Stock or other capital readjustment, the payment of a Stock dividend, or other
increase or reduction of the number of shares of Stock outstanding, without
receiving compensation therefor in money, services or property, then (1) the
number, class or series and per share price of Stock subject to outstanding
Options or other Awards under the Plan shall be appropriately adjusted in such a
manner as to entitle a Holder to receive upon exercise of an Option or other
Award, for the same aggregate cash consideration, the equivalent total number
and class or series of Stock the Holder would have received had the Holder
exercised his or her Option or other Award in full immediately prior to the
event requiring the adjustment, and (2) the number and class or series of Stock
then reserved to be issued under the Plan shall be adjusted by substituting for
the total number and class or series of Stock then reserved, that number and
class or series of Stock that would

 

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have been received by the owner of an equal number of outstanding shares of
Stock of each class or series of Stock as the result of the event requiring the
adjustment.

 

(c)           If while unexercised Options or other Awards remain outstanding
under the Plan (1) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than an entity that was wholly-owned by the Company immediately
prior to such merger, consolidation or other reorganization), (2) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity (other than an
entity wholly-owned by the Company), (3) the Company is to be dissolved or
(4) the Company is a party to any other corporate transaction (as defined under
section 424(a) of the Code and applicable Department of Treasury regulations)
that is not described in clauses (1), (2) or (3) of this sentence (each such
event is referred to herein as a “Corporate Change”), then, except as otherwise
provided in an Award Agreement or another agreement between the Holder and the
Company (provided that such exceptions shall not apply in the case of a
reincorporation merger), or as a result of the Committee’s effectuation of one
or more of the alternatives described below, there shall be no acceleration of
the time at which any Award then outstanding may be exercised, and no later than
ten days after the approval by the stockholders of the Company of such Corporate
Change, the Committee, acting in its sole and absolute discretion without the
consent or approval of any Holder, shall act to effect one or more of the
following alternatives, which may vary among individual Holders and which may
vary among Awards held by any individual Holder (provided that, with respect to
a reincorporation merger in which Holders of the Company’s ordinary shares will
receive one ordinary share of the successor corporation for each ordinary share
of the Company, none of such alternatives shall apply and, without Committee
action, each Award shall automatically convert into a similar award of the
successor corporation exercisable for the same number of ordinary shares of the
successor as the Award was exercisable for ordinary shares of Stock of the
Company):

 

(1)           accelerate the time at which some or all of the Awards then
outstanding may be exercised so that such Awards may be exercised in full for a
limited period of time on or before a specified date (before or after such
Corporate Change) fixed by the Committee, after which specified date all such
Awards that remain unexercised and all rights of Holders thereunder shall
terminate;

 

(2)           require the mandatory surrender to the Company by all or selected
Holders of some or all of the then outstanding Awards held by such Holders
(irrespective of whether such Awards are then exercisable under the provisions
of the Plan or the applicable Award Agreement evidencing such Award) as of a
date, before or after such Corporate Change, specified by the Committee, in
which event the Committee shall thereupon cancel such Award and the Company
shall pay to each such Holder an amount of cash per share equal to the excess,
if any, of the per share price offered to stockholders of the Company in
connection with such Corporate Change over the exercise prices under such Award
for such shares;

 

(3)           with respect to all or selected Holders, have some or all of their
then outstanding Awards (whether vested or unvested) assumed or have a new award
of a similar nature substituted for some or all of their then outstanding Awards
under the Plan (whether vested or unvested) by an entity which is a party to the
transaction resulting in such Corporate Change and which is then employing such
Holder or which is affiliated or associated with such Holder in the same or a
substantially similar manner as the Company prior to the Corporate Change, or a
parent or subsidiary of such entity, provided that (A) such assumption or
substitution is on a basis where the excess of the aggregate fair market value
of the Stock subject to the Award immediately after the

 

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assumption or substitution over the aggregate exercise price of such Stock is
equal to the excess of the aggregate fair market value of all Stock subject to
the Award immediately before such assumption or substitution over the aggregate
exercise price of such Stock, and (B) the assumed rights under such existing
Award or the substituted rights under such new Award, as the case may be, will
have the same terms and conditions as the rights under the existing Award
assumed or substituted for, as the case may be;

 

(4)           provide that the number and class or series of Stock covered by an
Award (whether vested or unvested) theretofore granted shall be adjusted so that
such Award when exercised shall thereafter cover the number and class or series
of Stock or other securities or property (including, without limitation, cash)
to which the Holder would have been entitled pursuant to the terms of the
agreement or plan relating to such Corporate Change if, immediately prior to
such Corporate Change, the Holder had been the holder of record of the number of
shares of Stock then covered by such Award; or

 

(5)           make such adjustments to Awards then outstanding as the Committee
deems appropriate to reflect such Corporate Change (provided, however, that the
Committee may determine in its sole and absolute discretion that no such
adjustment is necessary).

 

In effecting one or more of the alternatives set out in paragraphs (3), (4) or
(5) immediately above, and except as otherwise may be provided in an Award
Agreement, the Committee, in its sole and absolute discretion and without the
consent or approval of any Holder, may accelerate the time at which some or all
Awards then outstanding may be exercised.

 

(d)           In the event of changes in the outstanding Stock by reason of 
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Section 4.5,
any outstanding Award and any Award Agreement evidencing such Award shall be
subject to adjustment by the Committee in its sole and absolute discretion as to
the number and price of Stock or other consideration subject to such Award.  In
the event of any such change in the outstanding Stock, the aggregate number of
shares of Stock available under the Plan may be appropriately adjusted by the
Committee, whose determination shall be conclusive.

 

(e)           After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each Holder shall be entitled to
have his Restricted Stock appropriately adjusted based on the manner in which
the shares of Stock were adjusted under the terms of the agreement of merger or
consolidation.

 

(f)            The issuance by the Company of stock of any class or series, or
securities convertible into, or exchangeable for, stock of any class or series,
for cash or property, or for labor or services either upon direct sale or upon
the exercise of rights or warrants to subscribe for them, or upon conversion or
exchange of stock or obligations of the Company convertible into, or
exchangeable for, stock or other securities, shall not affect, and no adjustment
by reason of such issuance shall be made with respect to, the number, class or
series, or price of shares of Stock then subject to outstanding Options or other
Awards.

 

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4.6           Election Under Section 83(b) of the Code.  No Holder shall
exercise the election permitted under section 83(b) of the Code with respect to
any Award without the written approval of the Chief Financial Officer or General
Counsel of the Company.  Any Holder who makes an election under section 83(b) of
the Code with respect to any Award without the written approval of the Chief
Financial Officer or General Counsel of the Company may, in the discretion of
the Committee, forfeit any or all Awards granted to him or her under the Plan.

 

4.7           Forfeiture for Cause.  Notwithstanding any other provision of the
Plan or an Award Agreement, if the Committee finds by a majority vote that a
Holder, before or after his Termination of Employment (a) committed fraud,
embezzlement, theft, felony or an act of dishonesty in the course of his
employment by the Company or an Affiliate which conduct damaged the Company or
an Affiliate or (b) disclosed trade secrets of the Company or an Affiliate, then
as of the date the Committee makes its finding, any Awards awarded to the Holder
that have not been exercised by the Holder (including all Awards that have not
yet vested) will be forfeited to the Company.  The findings and decision of the
Committee with respect to such matter, including those regarding the acts of the
Holder and the damage done to the Company, will be final for all purposes.  No
decision of the Committee, however, will affect the finality of the discharge of
the individual by the Company or an Affiliate.

 

4.8           Forfeiture Events.  The Committee may specify in an Award
Agreement that the Holder’s rights, payments, and benefits with respect to an
Award shall be subject to reduction, cancellation, forfeiture, or recoupment
upon the occurrence of certain specified events, in addition to any otherwise
applicable vesting or performance conditions of an Award.  Such events may
include, but shall not be limited to, Termination of Employment for cause,
termination of the Holder’s provision of services to the Company or its
Affiliates, violation of material policies of the Company and its Affiliates,
breach of noncompetition, confidentiality, or other restrictive covenants that
may apply to the Holder, or other conduct by the Holder that is detrimental to
the business or reputation of the Company and its Affiliates.

 

4.9           Award Agreements.  Each Award shall be embodied in a written
agreement that shall be subject to the terms and conditions of the Plan.  The
Award Agreement shall be signed by  an executive officer of the Company, other
than the Holder, on behalf of the Company, and may be signed by the Holder to
the extent required by the Committee.  The Award Agreement may specify the
effect of a change in control on the Award.  The Award Agreement may contain any
other provisions that the Committee in its discretion shall deem advisable which
are not inconsistent with the terms and provisions of the Plan.

 

4.10         Amendments of Award Agreements.  The terms of any outstanding Award
under the Plan may be amended from time to time by the Committee in its
discretion in any manner that it deems appropriate and that is consistent with
the terms of the Plan.  However, no such amendment shall adversely affect in a
material manner any right of a Holder without his or her written consent. 
Except as specified in Section 4.5(b), the Committee may not directly or
indirectly lower the exercise price of a previously granted Option or the grant
price of a previously granted SAR.

 

4.11         Rights as Stockholder.  A Holder shall not have any rights as a
stockholder with respect to Stock covered by an Option, a SAR, an RSU, a
Performance Stock Unit, or an Other Stock-Based Award until the date, if any,
such Stock is issued by the Company; and, except as otherwise provided in
Section 4.5, no adjustment for dividends, or otherwise, shall be made if the
record date therefor is prior to the date of issuance of such Stock.

 

4.12         Issuance of Shares of Stock.  Shares of Stock, when issued, may be
represented by a certificate or by book or electronic entry.

 

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4.13         Restrictions on Stock Received.  The Committee may impose such
conditions and/or restrictions on any shares of Stock issued pursuant to an
Award as it may deem advisable or desirable.  These restrictions may include,
but shall not be limited to, a requirement that the Holder hold the shares of
Stock for a specified period of time.

 

4.14         Compliance With Section 409A.  Awards shall be designed and
operated in such a manner that they are either exempt from the application of,
or comply with, the requirements of Section 409A.

 

ARTICLE V

OPTIONS

 

5.1           Authority to Grant Options.  Subject to the terms and provisions
of the Plan, the Committee, at any time, and from time to time, may grant
Options under the Plan to eligible persons in such number and upon such terms as
the Committee shall determine.

 

5.2           Option Agreement.  Each Option grant under the Plan shall be
evidenced by an Award Agreement that shall specify (a) the Option Price, (b) the
duration of the Option, (c) the number of shares of Stock to which the Option
pertains, (d) the exercise restrictions, if any, applicable to the Option and
(e) such other provisions as the Committee shall determine that are not
inconsistent with the terms and provisions of the Plan.

 

5.3           Option Price.  The price at which shares of Stock may be purchased
under an Option (the “Option Price”) shall not be less than one hundred percent
(100%) of the Fair Market Value of the shares of Stock on the date the Option is
granted.  Subject to the limitations set forth in the preceding sentences of
this Section 5.3, the Committee shall determine the Option Price for each grant
of an Option under the Plan.

 

5.4           Duration of Option.  An Option shall not be exercisable after the
earlier of (i) the general term of the Option specified in the applicable Award
Agreement (which shall not exceed ten years) or (ii) the period of time
specified in the applicable Award Agreement that follows the Holder’s
Termination of Employment or severance of affiliation relationship with the
Company.

 

5.5           Amount Exercisable.  Each Option may be exercised at the time, in
the manner and subject to the conditions the Committee specifies in the Award
Agreement in its sole discretion.

 

5.6           Exercise of Option.

 

(a)           General Method of Exercise. Subject to the terms and provisions of
the Plan and the applicable Award Agreement, Options may be exercised in whole
or in part from time to time by the delivery of written notice in the manner
designated by the Committee stating (1) that the Holder wishes to exercise such
Option on the date such notice is so delivered, (2) the number of shares of
Stock with respect to which the Option is to be exercised and (3) the address to
which any certificate representing such shares of Stock should be mailed. 
Except in the case of exercise by a third party broker as provided below, in
order for the notice to be effective the notice must be accompanied by payment
of the Option Price by any combination of the following: (a) cash, certified
check, bank draft or postal or express money order for an amount equal to the
Option Price under the Option, (b) an election to make a cashless exercise
through a registered broker-dealer (if approved in advance by the Committee or
an executive officer of the Company) or (c) any other form of payment which is
acceptable to the Committee.

 

(b)           Exercise Through Third-Party Broker.  The Committee may permit a
Holder to elect to pay the Option Price and any applicable tax withholding
resulting from such exercise by authorizing a

 

9

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third-party broker to sell all or a portion of the shares of Stock acquired upon
exercise of the Option and remit to the Company a sufficient portion of the sale
proceeds to pay the Option Price and any applicable tax withholding resulting
from such exercise.

 

ARTICLE VI

STOCK APPRECIATION RIGHTS

 

6.1           Authority to Grant SAR Awards.  Subject to the terms and
provisions of the Plan, the Committee, at any time, and from time to time, may
grant SARs under the Plan to eligible persons in such number and upon such terms
as the Committee shall determine.  Subject to the terms and conditions of the
Plan, the Committee shall have complete discretion in determining the number of
SARs granted to each Holder and, consistent with the provisions of the Plan, in
determining the terms and conditions pertaining to such SARs.

 

6.2           General Terms.  Subject to the terms and conditions of the Plan, a
SAR granted under the Plan shall confer on the recipient a right to receive,
upon exercise thereof, an amount equal to the excess of (a) the Fair Market
Value of one share of the Stock on the date of exercise over (b) the grant price
of the SAR, which shall not be less than one hundred percent (100%) of the Fair
Market Value of one share of the Stock on the date of grant of the SAR.

 

6.3           SAR Agreement.  Each Award of SARs granted under the Plan shall be
evidenced by an Award Agreement that shall specify (a) the grant price of the
SAR, (b) the term of the SAR, (c) the vesting and termination provisions of the
SAR and (d) such other provisions as the Committee shall determine that are not
inconsistent with the terms and provisions of the Plan.  The Committee may
impose such additional conditions or restrictions on the exercise of any SAR as
it may deem appropriate.

 

6.4           Term of SAR.  The term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided that no SAR shall
be exercisable on or after the tenth anniversary date of its grant.

 

6.5           Exercise of SAR.  A SAR may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes.

 

6.6           Payment of SAR Amount.  Upon the exercise of a SAR, a Holder shall
be entitled to receive payment from the Company in an amount determined by
multiplying the excess of the Fair Market Value of a share of Stock on the date
of exercise over the grant price of the SAR by the number of shares of Stock
with respect to which the SAR is exercised.  At the discretion of the Committee,
the payment upon SAR exercise may be in cash, in Stock of equivalent value, in
some combination thereof or in any other manner approved by the Committee in its
sole discretion.  The Committee’s determination regarding the form of SAR payout
shall be set forth in the Award Agreement pertaining to the grant of the SAR.

 

6.7           Termination of Employment.  Each Award Agreement shall set forth
the extent to which the Holder of a SAR shall have the right to exercise the SAR
following the Holder’s Termination of Employment.  Such provisions shall be
determined in the sole discretion of the Committee, may be included in the Award
Agreement entered into with the Holder, need not be uniform among all SARs
issued pursuant to the Plan, and may reflect distinctions based on the reasons
for termination.

 

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ARTICLE VII

RESTRICTED STOCK AWARDS

 

7.1           Restricted Stock Awards.  The Committee may make Awards of
Restricted Stock to eligible persons selected by it.  The amount of, the vesting
and the transferability restrictions applicable to any Restricted Stock Award
shall be determined by the Committee in its sole discretion.  If the Committee
imposes vesting or transferability restrictions on a Holder’s rights with
respect to Restricted Stock, the Committee may issue such instructions to the
Company’s share transfer agent in connection therewith as it deems appropriate. 
The Committee may also cause the certificate for shares of Stock issued pursuant
to a Restricted Stock Award to be imprinted with any legend which counsel for
the Company considers advisable with respect to the restrictions or, should the
shares of Stock be represented by book or electronic entry rather than a
certificate, the Company may take such steps to restrict transfer of the shares
of Stock as counsel for the Company considers necessary or advisable to comply
with applicable law.

 

7.2           Restricted Stock Award Agreement.  Each Restricted Stock Award
shall be evidenced by an Award Agreement that contains any vesting,
transferability restrictions and other provisions not inconsistent with the Plan
as the Committee may specify.

 

7.3           Holder’s Rights as Stockholder.  Subject to the terms and
conditions of the Plan, each recipient of a Restricted Stock Award shall have
all the rights of a stockholder with respect to the shares of Restricted Stock
included in the Restricted Stock Award during the Period of Restriction
established for the Restricted Stock Award.  Dividends paid with respect to
Restricted Stock in cash or property other than shares of Stock or rights to
acquire shares of Stock shall be paid to the recipient of the Restricted Stock
Award currently.  Dividends paid in shares of Stock or rights to acquire shares
of Stock shall be added to and become a part of the Restricted Stock.  During
the Period of Restriction, certificates representing the Restricted Stock shall
be registered in the Holder’s name and bear a restrictive legend to the effect
that ownership of such Restricted Stock, and the enjoyment of all rights
appurtenant thereto, are subject to the restrictions, terms, and conditions
provided in the Plan and the applicable Award Agreement.  Such certificates
shall be deposited by the recipient with the Secretary of the Company or such
other officer of the Company as may be designated by the Committee, together
with all stock powers or other instruments of assignment, each endorsed in
blank, which will permit transfer to the Company of all or any portion of the
Restricted Stock which shall be forfeited in accordance with the Plan and the
applicable Award Agreement.

 

ARTICLE VIII

RESTRICTED STOCK UNIT AWARDS

 

8.1           Authority to Grant RSU Awards.  Subject to the terms and
provisions of the Plan, the Committee, at any time, and from time to time, may
grant RSU Awards under the Plan to eligible persons in such amounts and upon
such terms as the Committee shall determine.  The amount of, the vesting and the
transferability restrictions applicable to any RSU Award shall be determined by
the Committee in its sole discretion.  The Committee shall maintain a
bookkeeping ledger account which reflects the number of RSUs credited under the
Plan for the benefit of a Holder.

 

8.2           RSU Award.  An RSU Award shall be similar in nature to a
Restricted Stock Award except that no shares of Stock are actually transferred
to the Holder until a later date specified in the applicable Award Agreement. 
Each RSU shall have a value equal to the Fair Market Value of a share of Stock.

 

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8.3           RSU Award Agreement.  Each RSU Award shall be evidenced by an
Award Agreement that contains any Substantial Risk of Forfeiture,
transferability restrictions, form and time of payment provisions and other
provisions not inconsistent with the Plan as the Committee may specify.

 

8.4           Dividend Equivalents.  An Award Agreement for an RSU Award may
specify that the Holder shall be entitled to the payment of Dividend Equivalents
under the Award.

 

8.5           Form of Payment Under RSU Award.  Payment under an RSU Award shall
be made in either cash or shares of Stock as specified in the applicable Award
Agreement.

 

8.6           Time of Payment Under RSU Award.  A Holder’s payment under an RSU
Award shall be made at such time as is specified in the applicable Award
Agreement.  The Award Agreement shall specify that the payment will be made (1)
by a date that is no later than the date that is two and one-half (2 1/2) months
after the end of the Fiscal Year in which the RSU Award payment is no longer
subject to a Substantial Risk of Forfeiture or (2) at a time that is permissible
under Section 409A.

 

ARTICLE IX

PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS

 

9.1           Authority to Grant Performance Stock Awards and Performance Unit
Awards.  Subject to the terms and provisions of the Plan, the Committee, at any
time, and from time to time, may grant Performance Stock Awards and Performance
Unit Awards under the Plan to eligible persons in such amounts and upon such
terms as the Committee shall determine.  The amount of, the vesting and the
transferability restrictions applicable to any Performance Stock Award or
Performance Unit Award shall be based upon the attainment of such Performance
Goals as the Committee may determine.  If the Committee imposes vesting or
transferability restrictions on a Holder’s rights with respect to Performance
Stock or Performance Unit Awards, the Committee may issue such instructions to
the Company’s share transfer agent in connection therewith as it deems
appropriate.  The Committee may also cause the certificate for shares of Stock
issued pursuant to a Performance Stock or Performance Unit Award to be imprinted
with any legend which counsel for the Company considers advisable with respect
to the restrictions or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to
restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law.

 

9.2           Performance Goals.  A Performance Goal must be objective such that
a third party having knowledge of the relevant facts could determine whether the
goal is met.  Such a Performance Goal may be based on one or more business
criteria that apply to the Holder, one or more business units of the Company, or
the Company as a whole, with reference to one or more of the following: 
earnings per share, total shareholder return, cash return on capitalization,
increased revenue, revenue ratios (per employee or per customer), net income,
stock price, market share, return on equity, return on assets, return on
capital, return on capital compared to cost of capital, return on capital
employed, return on invested capital, shareholder value, net cash flow,
operating income, earnings before interest and taxes, cash flow, cash flow from
operations, cost reductions and cost ratios (per employee or per customer). 
Goals may also be based on performance relative to a peer group of companies. 
Unless otherwise stated, such a Performance Goal need not be based upon an
increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting economic losses
(measured, in each case, by reference to specific business criteria).  In
interpreting Plan provisions applicable to Performance Goals and Performance
Stock or Performance Unit Awards, it is intended that the Plan will conform with
the standards of section 162(m) of the Code and Treasury Regulations
§ 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions.  Prior to the payment
of any compensation based on the achievement of Performance Goals, the Committee
must certify in

 

12

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writing that applicable Performance Goals and any of the material terms thereof
were, in fact, satisfied.  Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Performance Stock or Performance
Unit Awards made pursuant to the Plan shall be determined by the Committee.

 

9.3           Time of Establishment of Performance Goals.  A Performance Goal
for a particular Performance Stock Award or Performance Unit Award must be
established by the Committee prior to the earlier to occur of (a) 90 days after
the commencement of the period of service to which the Performance Goal relates
or (b) the lapse of 25 percent of the period of service, and in any event while
the outcome is substantially uncertain.

 

9.4           Written Agreement.  Each Performance Stock Award or Performance
Unit Award shall be evidenced by an Award Agreement that contains any vesting,
transferability restrictions and other provisions not inconsistent with the Plan
as the Committee may specify.

 

9.5           Form of Payment Under Performance Unit Award.  Payment under a
Performance Unit Award shall be made in cash and/or shares of Stock as specified
in the Holder’s Award Agreement.

 

9.6           Time of Payment Under Performance Unit Award.  A Holder’s payment
under a Performance Unit Award shall be made at such time as is specified in the
applicable Award Agreement.  The Award Agreement shall specify that the payment
will be made (1) by a date that is no later than the date that is two and
one-half (2 1/2) months after the end of the calendar year in which the
Performance Unit Award payment is no longer subject to a Substantial Risk of
Forfeiture or (2) at a time that is permissible under Section 409A.

 

9.7           Holder’s Rights as Stockholder With Respect to a Performance Stock
Award.  Subject to the terms and conditions of the Plan, each Holder of a
Performance Stock Award shall have all the rights of a stockholder with respect
to the shares of Stock issued to the Holder pursuant to the Award during any
period in which such issued shares of Stock are subject to forfeiture and
restrictions on transfer, including without limitation, the right to vote such
shares of Stock.

 

9.8           Increases Prohibited.  None of the Committee or the Board may
increase the amount of compensation payable under a Performance Stock or
Performance Unit Award.  If the time at which a Performance Stock or Performance
Unit Award will vest or be paid is accelerated for any reason, the number of
shares of Stock subject to, or the amount payable under, the Performance Stock
or Performance Unit Award shall be reduced pursuant to Department of Treasury
Regulation section 1.162-27(e)(2)(iii) to reasonably reflect the time value of
money.

 

9.9           Stockholder Approval.  No payments of Stock or cash will be made
pursuant to this Article IX unless the stockholder approval requirements of
Department of Treasury Regulation section 1.162-27(e)(4) are satisfied.

 

ARTICLE X

ANNUAL INCENTIVE AWARDS

 

10.1         Authority to Grant Annual Incentive Awards.  Subject to the terms
and provisions of the Plan, the Committee, at any time, and from time to time,
may grant Annual Incentive Awards under the Plan to key executive Employees who,
by the nature and scope of their positions, regularly directly make or influence
policy decisions which significantly impact the overall results or success of
the Company in such amounts and upon such terms as the Committee shall
determine.  The amount of any Annual Incentive Awards shall be based on the
attainment of such Performance Goals as the Committee may determine.

 

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10.2         Performance Goals.  A Performance Goal must be objective such that
a third party having knowledge of the relevant facts could determine whether the
goal is met.  Such a Performance Goal may be based on one or more business
criteria that apply to the Holder, one or more business units of the Company, or
the Company as a whole, with reference to one or more of the following: 
earnings per share, total shareholder return, cash return on capitalization,
increased revenue, revenue ratios (per employee or per customer), net income,
stock price, market share, return on equity, return on assets, return on
capital, return on capital compared to cost of capital, return on capital
employed, return on invested capital, shareholder value, net cash flow,
operating income, earnings before interest and taxes, cash flow, cash flow from
operations, cost reductions and cost ratios (per employee or per customer). 
Goals may also be based on performance relative to a peer group of companies. 
Unless otherwise stated, such a Performance Goal need not be based upon an
increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting economic losses
(measured, in each case, by reference to specific business criteria).  In
interpreting Plan provisions applicable to Performance Goals and Performance
Stock or Performance Unit Awards, it is intended that the Plan will conform with
the standards of section 162(m) of the Code and Treasury Regulations
§ 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions.  Prior to the payment
of any compensation based on the achievement of Performance Goals, the Committee
must certify in writing that applicable Performance Goals and any of the
material terms thereof were, in fact, satisfied.  Subject to the foregoing
provisions, the terms, conditions and limitations applicable to any Annual
Incentive Awards made pursuant to the Plan shall be determined by the Committee.

 

10.3         Time of Establishment of Performance Goals.  A Performance Goal for
a particular Annual Incentive Award must be established by the Committee prior
to the earlier to occur of (a) 90 days after the commencement of the period of
service to which the Performance Goal relates or (b) the lapse of 25 percent of
the period of service, and in any event while the outcome is substantially
uncertain.

 

10.4         Written Agreement.  Each Annual Incentive Award shall be evidenced
by an Award Agreement that contains any vesting, transferability restrictions
and other provisions not inconsistent with the Plan as the Committee may
specify.

 

10.5         Form of Payment Under Annual Incentive Award.  Payment under an
Annual Incentive Award shall be made in cash.

 

10.6         Time of Payment Under Annual Incentive Award.  A Holder’s payment
under an Annual Incentive Award shall be made at such time as is specified in
the applicable Award Agreement.  The Award Agreement shall specify that the
payment will be made (1) by a date that is no later than the date that is two
and one-half (2 1/2) months after the end of the calendar year in which the
Annual Incentive Award payment is no longer subject to a Substantial Risk of
Forfeiture or (2) at a time that is permissible under Section 409A.

 

10.7         Increases Prohibited.  None of the Committee or the Board may
increase the amount of compensation payable under an Annual Incentive Award.  If
the time at which an Annual Incentive Award will be paid is accelerated for any
reason, the amount payable under the Annual Incentive Award shall be reduced
pursuant to Department of Treasury Regulation section 1.162-27(e)(2)(iii) to
reasonably reflect the time value of money.

 

10.8         Stockholder Approval.  No payments of cash will be made pursuant to
this Article X unless the stockholder approval requirements of Department of
Treasury Regulation section 1.162-27(e)(4) are satisfied.

 

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ARTICLE XI

OTHER STOCK-BASED AWARDS

 

11.1         Authority to Grant Other Stock-Based Awards.  The Committee may
grant to eligible persons other types of equity-based or equity-related Awards
not otherwise described by the terms and provisions of the Plan (including the
grant or offer for sale of unrestricted shares of Stock) in such amounts and
subject to such terms and conditions, as the Committee shall determine. Such
Awards may involve the transfer of actual shares of Stock to Holders, or payment
in cash or otherwise of amounts based on the value of shares of Stock and may
include, without limitation, Awards designed to comply with or take advantage of
the applicable local laws of jurisdictions other than the United States.

 

11.2         Value of Other Stock-Based Award.  Each Other Stock-Based Award
shall be expressed in terms of shares of Stock or units based on shares of
Stock, as determined by the Committee.

 

11.3         Payment of Other Stock-Based Award.  Payment, if any, with respect
to an Other Stock-Based Award shall be made in accordance with the terms of the
Award, in cash or shares of Stock as the Committee determines.

 

11.4         Termination of Employment.  The Committee shall determine the
extent to which a Holder’s rights with respect to Other Stock-Based Awards shall
be affected by the Holder’s Termination of Employment.  Such provisions shall be
determined in the sole discretion of the Committee and need not be uniform among
all Other Stock-Based Awards issued pursuant to the Plan

 

ARTICLE XII

CASH-BASED AWARDS

 

12.1         Authority to Grant Cash-Based Awards.  Subject to the terms and
provisions of the Plan, the Committee, at any time, and from time to time, may
grant Cash-Based Awards under the Plan to eligible persons in such amounts and
upon such terms as the Committee shall determine.

 

12.2         Value of Cash-Based Award.  Each Cash-Based Award shall specify a
payment amount or payment range as determined by the Committee.

 

12.3         Payment of Cash-Based Award.  Payment, if any, with respect to a
Cash-Based Award shall be made in accordance with the terms of the Award, in
cash.

 

12.4         Termination of Employment.  The Committee shall determine the
extent to which a Holder’s rights with respect to Cash-Based Awards shall be
affected by the Holder’s Termination of Employment.  Such provisions shall be
determined in the sole discretion of the Committee and need not be uniform among
all Cash-Based Awards issued pursuant to the Plan.

 

ARTICLE XIII

SUBSTITUTION AWARDS

 

Awards may be granted under the Plan from time to time in substitution for stock
options and other awards held by employees of other entities who are about to
become Employees, or whose employer is about to become an Affiliate as the
result of a merger or consolidation of the Company with another corporation, or
the

 

15

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acquisition by the Company of substantially all the assets of another
corporation, or the acquisition by the Company of at least fifty percent (50%)
of the issued and outstanding stock of another corporation as the result of
which such other corporation will become a subsidiary of the Company.  The terms
and conditions of the substitute Awards so granted may vary from the terms and
conditions set forth in the Plan to such extent as the Board at the time of
grant may deem appropriate to conform, in whole or in part, to the provisions of
the Award in substitution for which they are granted.

 

ARTICLE XIV

ADMINISTRATION

 

14.1         Awards.  The Plan shall be administered by the Committee or, in the
absence of the Committee, the Plan shall be administered by the Board.  The
members of the Committee shall serve at the discretion of the Board.  The
Committee shall have full and exclusive power and authority to administer the
Plan and to take all actions that the Plan expressly contemplates or are
necessary or appropriate in connection with the administration of the Plan with
respect to Awards granted under the Plan.

 

14.2         Authority of the Committee.  The Committee shall have full and
exclusive power to interpret and apply the terms and provisions of the Plan and
Awards made under the Plan, and to adopt such rules, regulations and guidelines
for implementing the Plan as the Committee may deem necessary or proper, all of
which powers shall be exercised in the best interests of the Company and in
keeping with the objectives of the Plan.  A majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting shall decide any
question brought before that meeting.  Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it
had been made by a majority vote at a meeting properly called and held.  All
questions of interpretation and application of the Plan, or as to Awards granted
under the Plan, shall be subject to the determination, which shall be final and
binding, of a majority of the whole Committee.  No member of the Committee shall
be liable for any act or omission of any other member of the Committee or for
any act or omission on his own part, including but not limited to the exercise
of any power or discretion given to him under the Plan, except those resulting
from his own gross negligence or willful misconduct.  In carrying out its
authority under the Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities to (a) determine the persons to whom and the time or times at which
Awards will be made; (b) determine the number and exercise price of shares of
Stock covered in each Award subject to the terms and provisions of the Plan; (c)
determine the terms, provisions and conditions of each Award, which need not be
identical and need not match the default terms set forth in the Plan; (d)
accelerate the time at which any outstanding Award will vest; (e) prescribe,
amend and rescind rules and regulations relating to administration of the Plan;
and (f) make all other determinations and take all other actions deemed
necessary, appropriate or advisable for the proper administration of the Plan.

 

The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Award to a Holder in the manner and to the
extent the Committee deems necessary or desirable to further the Plan’s
objectives. Further, the Committee shall make all other determinations that may
be necessary or advisable for the administration of the Plan.  As permitted by
law and the terms and provisions of the Plan, the Committee may delegate its
authority as identified in this Section 14.2.  The Committee may employ
attorneys, consultants, accountants, agents, and other persons, any of whom may
be an Employee, and the Committee, the Company, and its officers and Board shall
be entitled to rely upon the advice, opinions, or valuations of any such
persons.

 

14.3         Decisions Binding.  All determinations and decisions made by the
Committee or the Board, as the case may be, pursuant to the provisions of the
Plan and all related orders and resolutions of the Committee or

 

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the Board, as the case may be, shall be final, conclusive and binding on all
persons, including the Company, its stockholders, Holders and the estates and
beneficiaries of Holders.

 

14.4         No Liability.  Under no circumstances shall the Company, the Board
or the Committee incur liability for any indirect, incidental, consequential or
special damages (including lost profits) of any form incurred by any person,
whether or not foreseeable and regardless of the form of the act in which such a
claim may be brought, with respect to the Plan or the Company’s, the Committee’s
or the Board’s roles in connection with the Plan.

 

ARTICLE XV

AMENDMENT OR TERMINATION OF PLAN

 

15.1         Amendment, Modification, Suspension, and Termination.  Subject to
Section 15.2, the Committee may, at any time and from time to time, alter,
amend, modify, suspend, or terminate the Plan and any Award Agreement in whole
or in part; provided, however, that, without the prior approval of the Company’s
stockholders and except as provided in Section 4.5, the Committee shall not
directly or indirectly lower the Option Price of a previously granted Option,
and no amendment of the Plan shall be made without stockholder approval if
stockholder approval is required by applicable law or stock exchange rules.

 

15.2         Awards Previously Granted.  Notwithstanding any other provision of
the Plan to the contrary, no termination, amendment, suspension, or modification
of the Plan or an Award Agreement shall adversely affect in any material way any
Award previously granted under the Plan, without the written consent of the
Holder holding such Award.

 

ARTICLE XVI

MISCELLANEOUS

 

16.1         Unfunded Plan/No Establishment of a Trust Fund.  Holders shall have
no right, title, or interest whatsoever in or to any investments that the
Company or any of its Affiliates may make to aid in meeting obligations under
the Plan.  Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Holder, beneficiary, legal
representative, or any other person.  To the extent that any person acquires a
right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company.  All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts, except as expressly
set forth in the Plan.  No property shall be set aside nor shall a trust fund of
any kind be established to secure the rights of any Holder under the Plan.  The
Plan is not intended to be subject to the Employee Retirement Income Security
Act of 1974, as amended.

 

16.2         No Employment Obligation.  The granting of any Award shall not
constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ, or
utilize the services of, any Holder.  The right of the Company or any Affiliate
to terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Award has been granted to him, and nothing in the
Plan or an Award Agreement shall interfere with or limit in any way the right of
the Company or its Affiliates to terminate any Holder’s employment at any time
or for any reason not prohibited by law.

 

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16.3         Tax Withholding.  The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Holder any sums required by
federal, state or local tax law to be withheld with respect to the vesting or
exercise of an Award or lapse of restrictions on an Award.  In the alternative,
the Company may require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any Affiliate in
cash or by check within one day after the date of vesting, exercise or lapse of
restrictions. In the discretion of the Committee, and with the consent of the
Holder, the Company may reduce the number of shares of Stock issued to the
Holder upon such Holder’s exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value
of the shares of Stock held back shall not exceed the Company’s or the
Affiliate’s Minimum Statutory Tax Withholding Obligation.  The Committee may, in
its discretion, permit a Holder to satisfy any Minimum Statutory Tax Withholding
Obligation arising upon the vesting of  an Award by delivering to the Holder a
reduced number of shares of Stock in the manner specified herein.  If permitted
by the Committee and acceptable to the Holder, at the time of vesting of shares
under the Award, the Company shall (a) calculate the amount of the Company’s or
an Affiliate’s Minimum Statutory Tax Withholding Obligation on the assumption
that all such shares of Stock vested under the Award are made available for
delivery, (b) reduce the number of such shares of Stock made available for
delivery so that the Fair Market Value of the shares of Stock withheld on the
vesting date approximates the Company’s or an Affiliate’s Minimum Statutory Tax
Withholding Obligation and (c) in lieu of the withheld shares of Stock, remit
cash to the United States Treasury and/or other applicable governmental
authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax
Withholding Obligation.  The Company shall withhold only whole shares of Stock
to satisfy its Minimum Statutory Tax Withholding Obligation.  Where the Fair
Market Value of the withheld shares of Stock does not equal the amount of the
Minimum Statutory Tax Withholding Obligation, the Company shall withhold shares
of Stock with a Fair Market Value slightly less than the amount of the Minimum
Statutory Tax Withholding Obligation and the Holder must satisfy the remaining
minimum withholding obligation in some other manner permitted under this Section
16.3.  The withheld shares of Stock not made available for delivery by the
Company shall be retained as treasury shares or will be cancelled and the
Holder’s right, title and interest in such shares of Stock shall terminate.  The
Company shall have no obligation upon vesting or exercise of any Award or lapse
of restrictions on an Award until the Company or an Affiliate has received
payment sufficient to cover the Minimum Statutory Tax Withholding Obligation
with respect to that vesting, exercise or lapse of restrictions.  Neither the
Company nor any Affiliate shall be obligated to advise a Holder of the existence
of the tax or the amount which it will be required to withhold.

 

16.4         Gender and Number.  If the context requires, words of one gender
when used in the Plan shall include the other and words used in the singular or
plural shall include the other.

 

16.5         Severability.  In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 

16.6         Headings.  Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms and provisions of the Plan.

 

16.7         Other Compensation Plans.  The adoption of the Plan shall not
affect any other option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall the Plan preclude the Company
from establishing any other forms of incentive compensation arrangements for
Employees or Directors.

 

16.8         Other Awards.  The grant of an Award shall not confer upon the
Holder the right to receive any future or other Awards under the Plan, whether
or not Awards may be granted to similarly situated Holders, or the right to
receive future Awards upon the same terms or conditions as previously granted.

 

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16.9         Successors.  All obligations of the Company under the Plan with
respect to Awards granted hereunder shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.

 

16.10       Law Limitations/Governmental Approvals.  The granting of Awards and
the issuance of shares of Stock under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

16.11       Delivery of Title.  The Company shall have no obligation to issue or
deliver evidence of title for shares of Stock issued under the Plan prior to
(a)obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable; and (b)completion of any registration or
other qualification of the Stock under any applicable national or foreign law or
ruling of any governmental body that the Company determines to be necessary or
advisable.

 

16.12       Inability to Obtain Authority.  The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any shares of Stock hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such shares of Stock as to
which such requisite authority shall not have been obtained.

 

16.13       Investment Representations.  The Committee may require any person
receiving Stock pursuant to an Award under the Plan to represent and warrant in
writing that the person is acquiring the shares of Stock for investment and
without any present intention to sell or distribute such Stock.

 

16.14       Persons Residing Outside of the United States.  Notwithstanding any
provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company or any of its Affiliates operates or has
Employees, the Committee, in its sole discretion, shall have the power and
authority to (a)determine which Affiliates shall be covered by the Plan;
(b)determine which persons employed outside the United States are eligible to
participate in the Plan; (c)amend or vary the terms and provisions of the Plan
and the terms and conditions of any Award granted to persons who reside outside
the United States; (d)establish subplans and modify exercise procedures and
other terms and procedures to the extent such actions may be necessary or
advisable — any subplans and modifications to Plan terms and procedures
established under this Section 16.14 by the Committee shall be attached to the
Plan document as Appendices; and (e)take any action, before or after an Award is
made, that it deems advisable to obtain or comply with any necessary local
government regulatory exemptions or approvals. Notwithstanding the above, the
Committee may not take any actions hereunder, and no Awards shall be granted,
that would violate the Securities Exchange Act of 1934, as amended, the Code,
any securities law or governing statute or any other applicable law.

 

16.15       Arbitration of Disputes.  Any controversy arising out of or relating
to the Plan or an Award Agreement shall be resolved by arbitration conducted
pursuant to the arbitration rules of the American Arbitration Association.  The
arbitration shall be final and binding on the parties.

 

16.16       Governing Law.  The provisions of the Plan and the rights of all
persons claiming thereunder shall be construed, administered and governed under
the laws of the State of Texas.

 

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