Exhibit 10.1(iii)

 

ANTHEM 2001 STOCK INCENTIVE PLAN

 

Amended and Restated January 1, 2003

 

1.    PURPOSE.

 

The purpose of this Anthem 2001 Stock Incentive Plan is to further the long term
stability and financial success of Anthem, Inc. (the “Company”), and its
Subsidiaries, by attracting and retaining employees through the use of cash and
stock incentives and to encourage ownership in the Company by non-employee
members of the Board of Directors of the Company. It is believed that ownership
of Company Stock and the use of cash incentives will stimulate the efforts of
those employees upon whose judgment and interests the Employers are and will be
dependent for the successful conduct of their business. It is also believed that
Incentive Awards granted to such employees under this Plan will strengthen their
desire to remain employed with the Employers and will further the identification
of those employees’ interests with those of the Company’s shareholders. Finally,
it is believed that Options granted to non-employee members of the Board of
Directors of the Company will promote long-term shareholder value and will
provide non-employee members of the Board of Directors of the Company with an
incentive to continue as directors of the Company. The Plan is intended to
operate in compliance with the provisions of Rule 16b-3.

 

2.    DEFINITIONS.

 

As used in the Plan, the following terms have the meanings indicated:

 

(a)    “Act” means the Securities Exchange Act of 1934, as amended.

 

(b)    “Annual Meeting” means the annual meeting of shareholders at which
members of the Board are routinely elected.

 

(c)    “Applicable Withholding Taxes” means the aggregate amount of federal,
state and local income, payroll and other withholding taxes that an Employer is
required to withhold in connection with any Performance Award, any lapse of
restrictions on Restricted Stock, any grant of Phantom Stock, any exercise of a
Nonstatutory Stock Option or Stock Appreciation Right or any award of
Non-Restricted Stock.

 

(d)    “Beneficial Ownership” has the meaning in Rule 13d-3 promulgated under
the Act.

 

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

 

(f)    “Change of Control” means any of the following events:

 

(i)    the acquisition by a Group of Beneficial Ownership of 20% or more of the
Company Stock, but excluding for this purpose any acquisition by the Company (or
a Subsidiary) or an employee benefit plan of the Company;

 

(ii)    the Incumbent Board ceases to constitute at least a majority of the
Board, provided that any director whose nomination was approved by a majority of
the Incumbent Board shall be considered a member of the Incumbent Board;

 

(iii)    consummation of a reorganization, merger or consolidation, in each
case, in which the owners of the Company Stock do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of the stock of the corporation resulting from such
reorganization, merger or consolidation; or

 

(iv)    a complete liquidation or dissolution of the Company, or the sale or
other disposition of all or substantially all of the assets of the Company;

 

provided, however, that neither the Conversion nor the Initial Public Offering
shall constitute a Change of Control for purposes of this Plan.

 

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(g)    “Code” means the Internal Revenue Code of 1986, as amended or any
subsequently enacted federal revenue law.

 

(h)    “Code Section 162(m)” means Section 162(m) of the Code and the
regulations promulgated thereunder.

 

(i)    “Committee” means the Compensation Committee of the Board, provided that,
if any member of the Committee does not qualify as both an outside director for
purposes of Code section 162(m) and a non-employee director for purposes of Rule
16b-3, the remaining members of the Committee (but not less than two members)
shall be constituted as a subcommittee of the Committee to act as the Committee
for purposes of the Plan.

 

(j)     “Company” means Anthem, Inc., an Indiana corporation, and any successor
by merger, consolidation or otherwise.

 

(k)    “Company Stock” means common stock of the Company. In the event of a
change in the capital structure of the Company (as provided in Section 17), the
shares resulting from such a change shall be deemed to be Company Stock within
the meaning of the Plan.

 

(l)    “Conversion” means the transaction pursuant to which the Company’s sole
shareholder at the time of approval of this Plan, Anthem Insurance Companies,
Inc., converted from a mutual insurance company to a stock insurance company in
accordance with Indiana Code Section 27-15 et. seq. and, as a part of that same
transaction, established the Company as the parent company of Anthem Insurance
Companies, Inc.

 

(m)    “Covered Employee” means a Participant who is a “covered employee,” as
defined in Code Section 162(m).

 

(n)    “Date of Grant” means, with respect to eligible employees, independent
contractors and consultants, the date on which an Incentive Award is granted by
the Committee (or, in the case of Options granted in connection with the Initial
Public Offering, the first day the Company Stock trades on the New York Stock
Exchange) and, with respect to Eligible Directors, the date on which a director
is awarded an Option or Restricted Stock pursuant to Section 11.

 

(o)    “Disability” or “Disabled” means, as to an Incentive Stock Option, a
Disability within the meaning of Code Section 22(e)(3). As to all other
Incentive Awards, “Disability” or “Disabled” has the meaning contained in the
Anthem Group Long-term Disability Plan as may be applicable from time to time to
the particular Participant.

 

(p)    “Effective Date” means the date the Plan is adopted by shareholders of
the Company.

 

(q)    “Eligible Director” means a member of the Board who is not an employee of
the Company or any Subsidiary.

 

(r)    “Employer” means the Company, and each Subsidiary that employs or engages
one or more Participants.

 

(s)    “Fair Market Value” means the closing trading price of a share of Company
Stock, as reported on the New York Stock Exchange as of the Date of Grant or as
of any other date for which the value of Company Stock must be determined under
the Plan, or with respect to grants of Incentive Awards made as of the first day
the Company Stock trades on the New York Stock Exchange, the price at which
shares of the Company Stock are offered to the public in the Initial Public
Offering.

 

(t)    “Fees” means all amounts payable to an Eligible Director for services
rendered as a director, including meeting fees, and committee fees, but
excluding travel and other out of pocket expense reimbursements and excluding
Retainer Fees.

 

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(u)    “Group” means any individual, entity or group within the meanings of
Sections 13(d)(3) or 14(d)(2) of the Act.

 

(v)    “Incentive Award” means, collectively, a Performance Award or the award
of Restricted Stock, Phantom Stock, an Option, a Stock Appreciation Right or
Non-Restricted Stock under the Plan.

 

(w)    “Incentive Stock Option” means an Option intended to meet the
requirements of and qualify for favorable federal income tax treatment under
Code Section 422.

 

(x)    “Incumbent Board” means individuals who constitute the Board on the date
of approval of this Plan by shareholders.

 

(y)    “Initial Public Offering” means the registered public offering of the
Company Stock that was conducted by the Company in connection with the
Conversion.

 

(z)    “Mature Shares” means shares of Company Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (i) has held for at least six months or (ii) has purchased on
the open market.

 

(aa)    “New Issuance Shares” has the meaning ascribed to such term in Section
4(a).

 

(bb)    “Non-Restricted Stock” means Company Stock awarded pursuant to an award
as provided in Section 12.

 

(cc)    “Nonstatutory Stock Option” means an Option that does not meet the
requirements of Code Section 422, or, even if meeting the requirements of Code
Section 422, is not intended to be an Incentive Stock Option and is so
designated.

 

(dd)    “Option” means a right to purchase Company Stock granted under the Plan,
at a price determined in accordance with the Plan.

 

(ee)    “Original Issuance Shares” has the meaning ascribed to such term in
Section 4(a).

 

(ff)    “Participant” means any employee of the Company or any Subsidiary or any
individual who is an independent contractor or consultant who provides services
to the Company or any Subsidiary, who receives an Incentive Award under the
Plan.

 

(gg)    “Performance Award” means an Incentive Award made pursuant to Section 6.

 

(hh)    “Performance-Based Compensation” means an Incentive Award qualified as
Performance-Based Compensation under Code Section 162(m).

 

(ii)    “Performance Criteria” means any of the following areas of performance
of the Company, or any Subsidiary, as determined under generally accepted
accounting principles or as publicly reported by the Company: asset growth;
combined net worth; debt to equity ratio; earnings per share; revenues;
investment performance; operating income (with or without investment income or
income taxes); cash flow; margin; net income, before or after taxes; earnings
before interest, taxes, depreciation and/or amortization; return on total
capital, equity, revenue or assets; medical loss ratio; number of policyholders
or insureds; quality of service metrics; customer service metrics; productivity;
administrative expense management; or improved health of members. Any
Performance Criteria may be used with or without adjustment for extraordinary
items or nonrecurring items. The Performance Criteria shall not include or
derive from the number or frequency of (1) denials of authorization for benefit
coverage; or (2) reductions or limitations on hospital lengths of stay, medical
services, or charges. Performance Criteria shall not be designed, construed, or
used to incentivize the withholding of medically necessary services or the
denial of benefits to which members are entitled.

 

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(jj)    “Performance Goal” means if the Performance Award, Restricted Stock, or
Phantom Stock is intended to comply with Code Section 162(m), an objectively
determinable performance goal established by the Committee with respect to a
given Performance Award, grant of Restricted Stock, or grant of Phantom Stock
that is based on one or more Performance Criteria and if the Performance Award,
Restricted Stock, or Phantom Stock is not intended to comply with Code Section
162(m) any performance goal established by the Committee based on any
performance criteria.

 

(kk)    “Phantom Stock” means Company Stock awarded pursuant to an award as
provided in Section 8.

 

(ll)    “Plan” means this “Anthem 2001 Stock Incentive Plan,” as set forth
herein and as amended from time to time.

 

(mm)    “Plan Year” means the period commencing on the date of an Annual Meeting
and ending on the day before the next Annual Meeting.

 

(nn)    “Restricted Stock” means Company Stock awarded to Participants upon the
terms and subject to the restrictions set forth in Section 7 and to Eligible
Directors upon the terms and subject to the restrictions set forth in Section
11.

 

(oo)    “Retainer Fees” means all retainer fees paid to an Eligible Director to
retain that Eligible Director to perform services as a director.

 

(pp)    “Rule 16b-3” means Rule 16b-3 of the Securities and Exchange Commission
promulgated under the Act. A reference in the Plan to Rule 16b-3 shall include a
reference to any corresponding rule (or number redesignation) of any amendments
to Rule 16b-3 enacted after the effective date of the Plan’s adoption.

 

(qq)    “Stock Appreciation Right” means a right to receive amounts from the
Employer granted under Section 10.

 

(rr)    “Subsidiary” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, as of the Date of
Grant, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

(ss)    “Taxable Year” means the fiscal period used by the Company for reporting
taxes on income under the Code.

 

3.    GENERAL.

 

The following types of Incentive Awards may be granted to eligible employees,
independent contractors and consultants under the Plan: Performance Awards,
Restricted Stock, Phantom Stock, Options, Stock Appreciation Rights or
Non-Restricted Stock. Options granted to eligible employees under the Plan may
be Incentive Stock Options or Nonstatutory Stock Options. The following type of
Incentive Awards may be granted to Eligible Directors under the Plan:
Non-Restricted Stock, Restricted Stock and Nonstatutory Stock Options.

 

4.    STOCK.

 

(a)    Subject to Section 17 of the Plan, there shall be reserved for issuance
under the Plan an aggregate of 20,000,000 shares of Company Stock which shall be
authorized shares. This 20,000,000 shares shall include (i) an aggregate of
13,000,000 shares of Company Stock for the grant of Incentive Awards to eligible
employees and Eligible Directors pursuant to the amended and restated Plan (the
“New Issuance Shares”); and (ii) an aggregate of 7,000,000 shares of Company
Stock pursuant to the initial Plan (“Original Issuance Shares”) which were
comprised of: (A) 5,000,000 shares of Company Stock for the grant of Incentive
Awards to eligible employees and Eligible Directors, and (B) 2,000,000 shares of
Company Stock for the grant of Options (1) to substantially all eligible
employees of the Company or any Subsidiary and (2) to new eligible employees of
the Company and its Subsidiaries, including employees of any business acquired
by the Company or a Subsidiary.

 

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(b)    Shares allocable to Options, Restricted Stock or portions thereof granted
under the Plan that expire, are forfeited, or otherwise terminate unexercised
may again be subjected to an Incentive Award under the Plan.

 

(c)    Until after the date six months following the effective date of the
Conversion, no Company Stock or Option may be made to any Participant under this
Plan who, as of either the effective date of the Conversion or the date of grant
of Company Stock or Option, is: (i) a member of the Board; (ii) a member of the
Board of Directors of Anthem Insurance Companies, Inc.; or (iii) a participant
in the Company’s or its Subsidiaries’ long term incentive plan.

 

(d)    Subject to Section 17, (i) the maximum number of New Issuance Shares that
may be granted in the form of Restricted Stock, Phantom Stock, Non-Restricted
Stock or Performance Awards shall not exceed an aggregate of 4,000,000 shares of
Company Stock; and (ii) the maximum number of Original Issuance Shares that may
be granted in the form of Restricted Stock, Phantom Stock or Non-Restricted
Stock shall not exceed an aggregate of 1,000,000 shares of Company Stock.

 

(e)    Shares of Company Stock reserved for issuance under the Plan including,
without limitation, Restricted Stock and Non-Restricted Stock, may be used by
the Company, at the discretion of the Committee, to pay awards under the Anthem
Annual Incentive Plan and the Anthem Long Term Incentive Plan, as both may be
hereinafter amended, restated and replaced by successor plans.

 

5.    ELIGIBILITY.

 

(a)    All present and future employees, independent contractors and consultants
of the Company or any Subsidiary (whether now existing or hereafter created or
acquired) whom the Committee determines to have contributed or who are expected
to contribute to the successful performance of the Company or any Subsidiary
shall be eligible to receive Incentive Awards under the Plan. The Committee
shall have the power and complete discretion, as provided in Section 18, to
select eligible employees, independent contractors or consultants to receive
Incentive Awards and to determine the nature of the award and the terms and
conditions of each Incentive Award.

 

(b)    The grant of an Incentive Award shall not obligate an Employer to pay an
employee, independent contractor or consultant any particular amount of
remuneration, to continue the employment of the employee or the engagement of
the independent contractor or consultant after the grant or to make further
grants to the employee, independent contractor or consultant at any time
thereafter.

 

(c)    Each Eligible Director who was not an employee of the Company or any
Subsidiary for at least one year before the Date of Grant of an Option or
Restricted Stock under the Plan shall be eligible to receive Nonstatutory Stock
Options or Restricted Stock under Section 11. Each Eligible Director shall be
eligible to receive Company Stock or Restricted Stock in lieu of Fees and
Retainer Fees under Section 11 and to elect to defer receipt of Company Stock if
so permitted by the Committee as provided in Section 11.

 

6.    PERFORMANCE AWARDS.

 

(a)    Each Performance Award shall be evidenced by an agreement (an “Award
Agreement”) setting forth the Performance Goals for the award, the minimum,
target and maximum amounts payable, the date of the award and such other terms
and conditions as are applicable to the Performance Award. In the event of any
conflict between an Award Agreement and the Plan, the terms of the Plan shall
govern.

 

(b)    The Committee shall establish for each Performance Award the amount
payable at specified levels of performance, based on one or more Performance
Goals. If the Performance Award is intended to comply with Code Section 162(m),
any Performance Award shall be made not later than 90 days after the start of
the period for which the Performance Award relates and shall be made prior to
the completion of 25% of such period. All determinations regarding the
achievement of any Performance Goals will be made by the Committee. If the
Performance Award is intended to comply with Code Section 162(m), the Committee
may not increase after the

 

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conclusion of the time period described above the amount of cash or Company
Stock that would otherwise be payable upon achievement of the Performance
Goal(s) but may reduce or eliminate the payments as provided in a Performance
Award.

 

(c)    The actual payments to a Participant under a Performance Award will be
calculated by applying the achievement of one or more Performance Goals as
established in the Award Agreement. All calculations of actual payments shall be
verified by the Committee and the Committee shall, if the Performance Award is
intended to comply with Code Section 162(m), certify in writing the extent, if
any, to which the Performance Goals have been met.

 

(d)    Performance Awards will be paid in cash, Company Stock or both, at such
time or times as are provided in the Award Agreement. The Committee may provide
in the Award Agreement that the Participant may make a prior election to defer
the payment under a Performance Award subject to such terms and conditions as
the Committee may determine.

 

(e)    Nothing contained in the Plan will be deemed in any way to limit or
restrict any Employer or the Committee from making any award or payment to any
person under any other plan, arrangement or understanding, whether now existing
or hereafter in effect.

 

(f)    A Participant who receives a Performance Award payable in Company Stock
shall have no rights as a shareholder until the Company Stock is issued pursuant
to the terms of the Performance Award. The Company Stock may be issued without
cash consideration.

 

(g)    A Participant’s interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

 

(h)    The Committee may, at any time and in its sole discretion, accelerate the
time at which payments of a Performance Award may be made, subject to the
restrictions of this Section and Code Section 162(m) if the Performance Award is
intended to comply with Code Section 162(m).

 

(i)    Whenever payments under a Performance Award are to be made in cash to an
employee, the Employer will withhold therefrom the minimum statutory amount to
satisfy any Applicable Withholding Taxes. Each employee Participant shall agree,
as a condition of receiving a Performance Award payable in the form of Company
Stock, to pay to the Employer, or make arrangements satisfactory to the Employer
regarding the payment to the Employer of the minimum statutory amount to satisfy
any Applicable Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Employer have been made, no stock certificate
shall be issued to such Participant. As an alternative to making a cash payment
to the Employer to satisfy Applicable Withholding Taxes, if the Award Agreement
so provides or the Committee subsequently authorizes, the Participant may elect
(i) to deliver Mature Shares (valued at their Fair Market Value) or (ii) to have
the Employer retain that number of shares of Company Stock (valued at their Fair
Market Value) that would satisfy all or a specified portion of the Applicable
Withholding Taxes.

 

7.    RESTRICTED STOCK AWARDS.

 

(a)    The Committee may make grants of Restricted Stock to Participants.
Whenever the Committee deems it appropriate to grant Restricted Stock, notice
shall be given to the Participant stating the number of shares of Restricted
Stock granted and the terms and conditions to which the Restricted Stock is
subject. This notice, when accepted by the Participant, shall become an award
agreement between the Employer and the Participant. Restricted Stock may be
awarded by the Committee in its discretion without cash consideration.

 

(b)    No shares of Restricted Stock may be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered or disposed of until the
restrictions on such shares as set forth in the Participant’s award agreement
have lapsed or been removed pursuant to paragraph (d) or (e) below.

 

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(c)    Upon the acceptance by a Participant of an award of Restricted Stock,
such Participant shall, subject to the restrictions set forth in paragraph (b)
above, have all the rights of a shareholder with respect to such shares of
Restricted Stock, including, but not limited to, the right to vote such shares
of Restricted Stock and the right to receive all dividends and other
distributions paid thereon. Certificates representing Restricted Stock shall be
held by the Company until the restrictions lapse and the Participant shall
provide the Company with appropriate stock powers endorsed in blank.

 

(d)    The Committee shall establish as to each award of Restricted Stock the
terms and conditions upon which the restrictions set forth in paragraph (b)
above shall lapse. To the extent the award of Restricted Stock is intended to
comply with Code Section 162(m), the terms and conditions shall include the
achievement of a Performance Goal and to the extent that the award of Restricted
Stock is intended to comply with Code Section 162(m) the award of Restricted
Stock shall be governed by the provisions of Section 6. Such terms and
conditions may also include, without limitation, the lapsing of such
restrictions as a result of the Disability, death or retirement of the
Participant or the occurrence of a Change of Control.

 

(e)    Notwithstanding the provisions of paragraph (b) above, the Committee may
at any time, in its sole discretion, accelerate the time at which any or all
restrictions will lapse or remove any and all such restrictions, subject to the
restrictions of Section 6 as to any Performance Goal if the award is intended to
comply with the requirements of Code Section 162(m).

 

(f)    Each employee Participant shall agree, at the time his or her Restricted
Stock is granted, and as a condition thereof, to pay to the Employer, or make
arrangements satisfactory to the Employer regarding the payment to the Employer
of, the minimum statutory amount to satisfy any Applicable Withholding Taxes.
Until such amount has been paid or arrangements satisfactory to the Employer
have been made, no stock certificate shall be issued to such Participant. As an
alternative to making a cash payment to the Employer to satisfy Applicable
Withholding Taxes, if the Participant’s award agreement so provides or the
Committee subsequently authorizes, the Participant may elect (i) to deliver
Mature Shares (valued at their Fair Market Value) or (ii) to have the Employer
retain that number of shares of Company Stock (valued at their Fair Market
Value) that would satisfy all or a specified portion of the Applicable
Withholding Taxes.

 

(g)    To the extent the Restricted Stock award does not prohibit a Code Section
83(b) election, if a Participant makes an election pursuant to Section 83(b) of
the Code concerning a grant of Restricted Stock, the Participant shall promptly
file a copy of such election with the Company.

 

8.    PHANTOM STOCK AWARDS.

 

(a)    The Committee may make grants of Phantom Stock to Participants. Whenever
the Committee deems it appropriate to grant Phantom Stock, notice shall be given
to the Participant stating the number of shares of Phantom Stock granted, the
Date of Grant, and the terms and conditions to which the Phantom Stock is
subject. This notice, when accepted by the Participant, shall become an award
agreement between the Employer and the Participant.

 

(b)    Phantom Stock may be issued pursuant to the Plan from time to time by the
Committee and may contain such terms and conditions as the Committee may elect
including, without limitation, the achievement of Performance Goals before any
restrictions lapse or that the compensation to the Participant is based on an
increase in the value of Company Stock. Phantom Stock awards will be paid in
cash, Company Stock, or both, at such time or times as are provided in the
notice.

 

(c)    To the extent the award of Phantom Stock is intended to comply with Code
Section 162(m), the Committee shall establish Performance Goals for an award of
Phantom Stock which shall be governed by Section 6. Phantom Stock will be issued
only subject to the award agreement and the Plan and consistent with meeting the
goal or goals set by the Committee in the award agreement. A Participant shall
have no rights as a shareholder until the Company Stock is issued. Phantom Stock
may be issued without cash consideration.

 

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(d)    A Participant’s interest in a Phantom Stock award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.

 

(e)    The Committee may at any time, in its sole discretion, accelerate the
time at which any or all restrictions will lapse or remove any and all
restrictions or remove or revise any and all Performance Goals for an award of
Phantom Stock, subject to the restrictions of Section 6 as to any Performance
Goal if the award is intended to comply with Code Section 162(m).

 

(f)    Whenever payments under a grant of Phantom Stock are to be made in cash
to an employee, the Employer shall withhold therefrom the minimum statutory
amount to satisfy any Applicable Withholding Taxes. Each employee Participant
shall agree, at the time of receiving an award of Phantom Stock, and as a
condition thereof, to pay to the Employer, or make arrangements satisfactory to
the Employer regarding the payment to the Employer, of the minimum statutory
amount to satisfy any Applicable Withholding Taxes. Until such amount has been
paid or arrangements satisfactory to the Employer have been made, no stock
certificate shall be issued to such Participant. As an alternative to making a
cash payment to the Employer to satisfy Applicable Withholding Taxes, if the
Participant’s Award Agreement so provides or the Committee subsequently
authorizes, the Participant may elect (i) to deliver Mature Shares (valued at
their Fair Market Value) or (ii) to have the Employer retain that number of
shares of Company Stock (valued at their Fair Market Value) that would satisfy
all or a specified portion of the Applicable Withholding Taxes.

 

9.    STOCK OPTIONS.

 

(a)    The Committee may make grants of Options to Participants. Whenever the
Committee deems it appropriate to grant Options, notice shall be given to the
Participant (an “Option Award Notice”) stating the number of shares for which
Options are granted, the Date of Grant, the Option price per share, whether the
Options are Incentive Stock Options or Nonstatutory Stock Options, the extent to
which Stock Appreciation Rights are granted (as provided in Section 10), and the
conditions to which the grant and exercise of the Options are subject. This
Option Award Notice, along with the provisions of the Plan, shall define the
terms and conditions of the grant of the Option. In the event of any conflict
between an Option Award Notice and the Plan, the terms of the Plan shall govern.

 

(b)    The exercise price of shares of Company Stock covered by an Option shall
be not less than 100% of the Fair Market Value of such shares on the Date of
Grant.

 

(c)    Options may be exercised in whole or in part at such times as may be
specified by the Committee in the Participant’s Stock Option Agreement; provided
that (A) an Option shall not be exercisable more than 10 years after the Date of
Grant, and (B) the exercise provisions for Incentive Stock Options shall in all
events not be more favorable than the following provisions:

 

(i)    No Incentive Stock Option may be exercised before the Plan is approved by
the shareholders of the Company in the manner prescribed by Code section 422;
and the Company Stock under the Plan is registered with the Securities and
Exchange Commission; and after the first to occur of: (x) ten years from the
Date of Grant, (y) three months following the date of the Participant’s
retirement or termination of employment with all Employers for reasons other
than Disability or death, or (z) one year following the date of the
Participant’s termination of employment on account of Disability or death.

 

(ii)    An Incentive Stock Option by its terms, shall be exercisable in any
calendar year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Company Stock with respect to which
Incentive Stock Options are exercisable for the first time during the calendar
year does not exceed $100,000 (the “Limitation Amount”). Incentive Stock Options
granted under the Plan and all other plans of any Employer shall be aggregated
for purposes of determining whether the Limitation Amount has been exceeded. The
Committee granting the Option may impose such conditions as it deems appropriate
on an Incentive Stock Option to ensure that the foregoing requirement is met. If
Incentive Stock Options that first become exercisable in a calendar year exceed
the Limitation Amount, the excess Options will be treated as Nonstatutory Stock
Options to the extent permitted by law.

 

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(d)    Notwithstanding any other provision herein contained, no employee of the
Company or any Subsidiary may receive an Incentive Stock Option under the Plan
if such employee, on the Date of Grant, owns (as defined in Code section 424(d))
Company Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary, unless the exercise price for
such Incentive Stock Option is at least 110% of the Fair Market Value
(determined at the Date of Grant) and such Incentive Stock Option is not
exercisable after the date five (5) years from the Date of Grant.

 

(e)      Incentive Stock Options may only be granted to employees. Independent
contractors, consultants and Eligible Directors are not eligible to receive
Incentive Stock Options.

 

10.    STOCK APPRECIATION RIGHTS.

 

(a)    Whenever the Committee deems it appropriate, Stock Appreciation Rights
may be granted in connection with all or any part of an Option to a Participant
or in a separate Incentive Award.

 

(b)    The following provisions apply to all Stock Appreciation Rights that are
granted in connection with Options:

 

(i)    Stock Appreciation Rights shall entitle the Participant, upon exercise of
all or any part of the Stock Appreciation Rights, to surrender to the Employer
unexercised that portion of the underlying Option relating to the same number of
shares of Company Stock as is covered by the Stock Appreciation Rights (or the
portion of the Stock Appreciation Rights so exercised) and to receive in
exchange from the Employer an amount equal to the excess of (x) the Fair Market
Value on the date of exercise of the Company Stock covered by the surrendered
portion of the underlying Option over (y) the exercise price of the Company
Stock covered by the surrendered portion of the underlying Option. The Committee
may limit the amount that the Participant will be entitled to receive upon
exercise of Stock Appreciation Rights.

 

(ii)    Upon the exercise of a Stock Appreciation Right and surrender of the
related portion of the underlying Option, the Option, to the extent surrendered,
shall not thereafter be exercisable.

 

(iii)    Subject to any further conditions upon exercise imposed by the Board, a
Stock Appreciation Right shall be exercisable only to the extent that the
related Option is exercisable and a Stock Appreciation Right shall expire no
later than the date on which the related Option expires.

 

(iv)    A Stock Appreciation Right may only be exercised at a time when the Fair
Market Value of the Company Stock covered by the Stock Appreciation Right
exceeds the exercise price of the Company Stock covered by the underlying
Option.

 

(c)    The following provisions apply to all Stock Appreciation Rights that are
not granted in connection with Options:

 

(i)    Stock Appreciation Rights shall entitle the Participant, upon exercise of
all or any part of the Stock Appreciation Rights, to receive in exchange from
the Employer an amount equal to the excess of (x) the Fair Market Value on the
date of exercise of the Company Stock covered by the surrendered Stock
Appreciation Right over (y) the price of the Company Stock on the Date of Grant
of the Stock Appreciation Right. The Committee may limit the amount that the
Participant will be entitled to receive upon exercise of Stock Appreciation
Rights.

 

(ii)    A Stock Appreciation Right may only be exercised at a time when the Fair
Market Value of the Company Stock covered by the Stock Appreciation Right
exceeds the Fair Market Value of the Company Stock on the Date of Grant of the
Stock Appreciation Right.

 

(d)    The manner in which the Employer’s obligation arising upon the exercise
of a Stock Appreciation Right shall be paid shall be determined by the Committee
and shall be set forth in the Incentive Award. The Incentive Award may provide
for payment in Company Stock or cash, or a fixed combination of Company Stock or
cash, or the Committee may reserve the right to determine the manner of payment
at the time the Stock

 

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Appreciation Right is exercised. Shares of Company Stock, issued upon the
exercise of a Stock Appreciation Right, shall be valued at their Fair Market
Value on the date of exercise.

 

11.    NON-EMPLOYEE DIRECTOR INCENTIVE AWARDS.

 

(a)    GENERAL. Each Eligible Director may receive grants of Options and
Restricted Stock pursuant to this Section 11 of the Plan. All Options granted
under this Section 11 of the Plan shall be Nonstatutory Stock Options and shall
not be entitled to special tax treatment under Internal Revenue Code section
422.

 

(b)    OPTIONS. Each Option granted under this Section 11 of the Plan shall be
evidenced by an agreement in such form as the Board shall from time to time
approve, which agreement shall comply with and be subject to the following terms
and conditions:

 

(i)    AWARD OF OPTION. Options for the purchase of shares of Company Stock may
be awarded to Eligible Directors upon the satisfaction of each of the following:
(A) after the date the Plan is approved by the Board, (B) after the date the
Plan is approved by the shareholders in the manner prescribed by Code section
422, and (C) after the date the Company Stock under the Plan is registered with
the Securities and Exchange Commission. The time of the award and the number of
shares awarded shall be determined by the Board. If at any time under the Plan
there are not sufficient shares of Company Stock available to permit fully the
Option grants to the Eligible Directors described in this paragraph, the Option
grants shall be reduced pro rata (to zero if necessary) so as not to exceed the
number of shares of Company Stock available.

 

(ii)    OPTION EXERCISE PRICE. The Option exercise price shall be the Fair
Market Value of the Company Stock on the Date of Grant.

 

(iii)    EXERCISE OF OPTIONS. Subject to Section 11(b)(v) below, all Options
shall become exercisable as follows: one-third on the one-year anniversary of
the Date of Grant; one-third on the second anniversary of the Date of Grant, and
the remainder on the third anniversary of the Date of Grant. Once exercisable,
all or any portion of an Option may be exercised until the earlier of:

 

(1)    thirty-six months of the date the Eligible Director ceases to be a
director of the Company for any reason, including death or disability; or

 

(2)    the expiration of ten (10) years from the Date of Grant.

 

(iv)    METHOD OF EXERCISE. An Option may be exercised in the manner described
in Section 12.

 

(c)    RESTRICTED STOCK. Each grant of Restricted Stock under this Section 11 of
the Plan shall be evidenced by an agreement in such form as the Board shall from
time to time approve, which agreement shall comply with and be subject to the
following terms and conditions. The Board shall establish as to each award of
Restricted Stock restrictions to which such Restricted Stock is subject and the
terms and conditions upon which the restrictions shall lapse. The terms and
conditions may include the achievement of one or more Performance Goals and may
include the lapsing of such restrictions as a result of the disability of the
Eligible Director, death of the Eligible Director or the cessation of the
Eligible Director as a member of the Board or the occurrence of a Change of
Control. Notwithstanding the foregoing, the Board may at any time, in its sole
discretion, accelerate the time at which any or all restrictions will lapse or
remove any and all restrictions.

 

(d)    CHANGE OF CONTROL. Options granted to Eligible Directors shall become
fully vested and exercisable upon a Change of Control. Restrictions on
Restricted Stock granted to Eligible Directors shall lapse upon a Change of
Control.

 

(e)    RECEIPT OF FEES IN STOCK

 

(i)    The Board may elect to pay an Eligible Director up to 100% of his or her
Retainer Fees in Restricted Stock or Company Stock. The amount of Retainer Fees
to be paid to an Eligible Director during each calendar quarter shall be
determined on the first day of the applicable quarter. The number of shares of
Restricted Stock or Company Stock to be issued as Retainer Fees shall be
determined by multiplying the

 

10

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applicable percentage of Retainer Fees that the Board has elected to pay an
Eligible Director in Restricted Stock or Company Stock times the Retainer Fees
otherwise payable for the quarter and dividing the product by the Fair Market
Value of the Company Stock on the first day of the quarter. If this formula
produces a fractional share, the Eligible Director may be paid in cash the Fair
Market Value of the fractional share.

 

(ii)    An Eligible Director may elect to receive up to 100% of his or her
Retainer Fees or Fees in shares of Restricted Stock or Company Stock (a “Stock
Election”). A Stock Election must be in writing and shall be delivered to the
Corporate Secretary of the Company prior to the Annual Meeting for the Plan Year
to which the Stock Election pertains. Except as provided in this Section 11, a
Stock Election may be revoked prior to the last day of any calendar quarter for
all calendar quarters beginning after the revocation. A Stock Election must
specify the applicable percentage of the Fees that the Eligible Director wishes
to receive in shares of Restricted Stock or Company Stock (the “Designated
Percentage”). If a Stock Election is made, the amount of Fees to be paid to an
Eligible Director during each calendar quarter shall be determined on the first
day of the applicable quarter. The number of shares of Restricted Stock or
Company Stock to be issued in lieu of the Fees shall be determined by
multiplying the Designated Percentage times the Fees otherwise payable for the
quarter and dividing that product by the Fair Market Value of the Company Stock
on the first day of the quarter. If this formula produces a fractional share,
the Eligible Director may be paid in cash the Fair Market Value of the
fractional share.

 

(f)    WITHHOLDING.    If at any time it is determined that the Company is
obligated to withhold income taxes upon the transfer of Company Stock as a
result of the exercise of an Option or the lapsing of restrictions on Restricted
Stock or the receipt of Retainer Fees or Fees in Company Stock by an Eligible
Director, the Company shall have the right to retain or sell without notice
shares of Company Stock having a Fair Market Value sufficient on such date or
dates as may be determined by the Board (but not more than five business days
prior to the date on which such shares would otherwise have been delivered) to
cover the amount of any federal or state income tax if required to be withheld
or otherwise deducted and paid, remitting any balance to the Eligible Director;
provided, however, that the Eligible Director shall have the right to make other
arrangements satisfactory to the Company or to provide the Company with the
funds to enable it to pay such tax. Notwithstanding the foregoing, the Company
shall not sell shares of Company Stock if such sale will cause the Eligible
Director to incur a liability under Section 16b of the Act.

 

(g)    TRANSFERABILITY.    An Option granted under this Section 11 shall not be
transferable by the Eligible Director otherwise than by will, or by the laws of
descent and distribution, and shall be exercised during the lifetime of the
Eligible Director only by him or her; provided that an Eligible Director may
transfer any Option to members of the Eligible Directors’ immediate family or
trusts or family partnerships for the benefit of such persons, subject to such
terms and conditions as may be established by the Board. Shares of Restricted
Stock granted under this Section 11 shall not be transferable until the
restrictions on such shares as set forth in the Eligible Director’s award
agreement have lapsed or been removed pursuant to Section 11(c) or (d). Except
as specifically provided in a written agreement, no Option or Restricted Stock
grant or interest therein may be transferred, assigned, pledged or hypothecated
by the Eligible Director during his or her lifetime, whether by operation of law
or otherwise, or be made subject to execution, attachment or similar process.

 

(h)    ADMINISTRATION.    This Section 11 of the Plan shall be administered by
the Board. The Board shall have all powers necessary to administer this Section
11 of the Plan, including, without limitation, the authority (within the
limitations described herein) to prescribe the form of the agreement embodying
awards of Options or Restricted Stock under this Section 11 of the Plan, to
construe this Section 11 of the Plan, to determine all questions arising under
this Section 11 of the Plan, and to adopt and amend rules and regulations for
the administration of this Section 11 of the Plan as it may deem desirable. Any
decision of the Board in the administration of this Section 11 of the Plan shall
be final and conclusive. The Board may act only by a majority of its members in
office, except that members thereof may authorize any one or more of their
number or any officer of the Company to execute and deliver documents on behalf
of the Board. No member of the Board shall be liable for anything done or
omitted to be done by him or her or any other member of the Board in connection
with this Section 11 of the Plan, except for his or her own willful misconduct
or as expressly provided by statute.

 

11

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(i)    MODIFICATION, EXTENSION AND RENEWAL.    Subject to section 16 and except
for the terms of an Option and a Restricted Stock grant contained in this
Section 11, the Board shall have the power to modify, extend or renew
outstanding Options and Restricted Stock grants and to authorize the grant of
new Options and new Restricted Stock in substitution therefore, provided that
any such action may not have the effect of altering, enhancing or impairing any
rights or obligations of any person under any Option or Restricted Stock
previously granted without the consent of the Eligible Director.

 

(j)    LIMITATION OF RIGHTS

 

(i)    NO RIGHT TO CONTINUE AS A DIRECTOR.    Neither the Plan nor the granting
of an Option or Restricted Stock nor any other action taken pursuant to the
Plan, shall constitute or be evidence of any agreement or understanding, express
or implied, that the Company will retain any person as a director for any period
of time.

 

(ii)    SHAREHOLDER RIGHTS.    An Eligible Director shall have no rights as a
shareholder with respect to shares of Company Stock covered by his or her
Options until the date of exercise of the Option. Upon the acceptance by an
Eligible Director of an award of Restricted Stock such Eligible Director shall,
subject to the restrictions set forth in Sections 11(c) and (g) have all of the
rights of a shareholder with respect to such shares of Restricted Stock,
including, but not limited to, the right to vote such shares of Restricted Stock
and the right to receive all dividends and other distributions paid thereon.
Except as provided in Section 17, no adjustment will be made for dividends or
other rights for which the record date is prior to the date of such exercise of
the Option or lapsing or removal of restrictions on Restricted Stock.

 

12.    NON-RESTRICTED STOCK.

 

(a)    The Committee may make grants of Non-Restricted Stock to Participants.
Whenever the Committee deems it appropriate to grant Non-Restricted Stock,
notice shall be given to the Participant stating the number of shares of
Non-Restricted Stock granted, and the terms and conditions of any
transferability restrictions to which the Non-Restricted Stock is subject. This
notice, when accepted by the Participant, shall become an award agreement
between the Company and the Participant.

 

(b)    Non-Restricted Stock may be issued pursuant to the Plan from time to time
by the Committee whenever the Committee deems it appropriate with or without
terms or conditions. No award of Non-Restricted Stock shall comply with Code
Section 162(m).

 

(c)    The Committee may at any time, in its sole discretion, accelerate the
time at which any or all terms or conditions relating to transferability will
lapse.

 

(d)    Each employee Participant shall agree, at the time of receiving an award
of Non-Restricted Stock, and as a condition thereof, to pay to the Employer, or
make arrangements satisfactory to the Employer regarding the payment to the
Employer of, the minimum statutory amount of any Applicable Withholding Taxes.
Until such amount has been paid or arrangements satisfactory to the Employer
have been made, no stock certificate shall be issued to such Participant. As an
alternative to making a cash payment to the Employer to satisfy Applicable
Withholding Taxes, if the Participant’s award agreement so provides or the
Committee subsequently authorizes, the Participant may elect (i) to deliver
Mature Shares (valued at their Fair Market Value) or (ii) to have the Employer
retain that number of shares of Company Stock (valued at their Fair Market
Value) that would satisfy all or a specified portion of the Applicable
Withholding Taxes.

 

13.    METHOD OF EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS.

 

(a)    Options and Stock Appreciation Rights may be exercised by the Participant
giving notice of the exercise to the Employer stating the number of shares the
Participant has elected to purchase under the Option or the number of Stock
Appreciation Rights the Participant has elected to exercise. In the case of the
purchase of shares under an Option, such notice shall be effective only if
accompanied by the exercise price in full in cash; provided, however, that if
the terms of an Option so permit, and if permitted by applicable securities
laws, the

 

12

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Participant may (i) deliver Mature Shares (valued at their Fair Market Value) in
satisfaction of all or any part of the exercise price, (ii) cause to be withheld
from the Option shares, shares of Company Stock (valued at their Fair Market
Value) in satisfaction of all or any part of the exercise price or (iii) deliver
a properly executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Employer, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company Stock, the
amount necessary to pay the exercise price.

 

(b)    The Company may place on any certificate representing Company Stock
issued upon the exercise of an Option or a Stock Appreciation Right any legend
deemed desirable by the Company’s counsel to comply with federal or state
securities laws, and the Company may require a customary written indication of
the Participant’s investment intent. Until the Participant has made any required
payment, including any Applicable Withholding Taxes, and has had issued a
certificate for the shares of Company Stock acquired, he or she shall possess no
shareholder rights with respect to the shares of Company Stock.

 

(c)    Each Participant shall agree, as a condition of the exercise of an Option
or a Stock Appreciation Right, to pay to the Employer, or make arrangements
satisfactory to the Employer regarding the payment to the Employer of, the
minimum statutory amount to satisfy any Applicable Withholding Taxes. Until such
amount has been paid or arrangements satisfactory to the Employer have been
made, no stock certificate shall be issued upon the exercise of an Option or
cash paid upon the exercise of a Stock Appreciation Right.

 

(d)    As an alternative to making a cash payment to the Employer to satisfy
Applicable Withholding Taxes, and to the extent permitted by applicable law, if
the Option or Stock Appreciation Rights agreement so provides or the Committee
subsequently authorizes, the Participant may elect (i) to deliver Mature Shares
(valued at their Fair Market Value) or (ii) to have the Employer retain that
number of shares of Company Stock (valued at their Fair Market Value) that would
satisfy all or a specified portion of the Applicable Withholding Taxes.

 

14.    NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS.

 

Options (other than Incentive Stock Options) and Stock Appreciation Rights by
their terms, shall be transferable to the extent specifically provided in the
Incentive Award. Incentive Stock Options granted to Participants, by their
terms, shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable, during the Participant’s lifetime, only
by the Participant. The transferability of Options granted to Eligible Directors
shall be governed by Section 11 of this Plan.

 

15.    EFFECTIVE DATE OF THE PLAN.

 

The Plan was approved by the Company’s board of directors and shareholders on
July 30, 2001 and the effective date of the initial Plan is July 30, 2001. On
January 27, 2003, the Board approved an amendment and complete restatement of
the Plan to be effective January 1, 2003. The January 1, 2003 amended and
restated Plan shall be submitted to shareholders of the Company for approval.
Until (i) the January 1, 2003 amended and restated Plan has been approved by the
Company’s shareholders, and (ii) the requirements of any applicable Federal or
State securities laws have been met, only Original Issuance Shares shall be
allocated to Incentive Awards and in the event the January 1, 2003 amended and
restated Plan is not approved by shareholders the initial Plan shall continue in
full force and effect.

 

16.    TERMINATION, MODIFICATION, CHANGE.

 

If not sooner terminated by the Board, this Plan shall terminate at the close of
business on July 29, 2011. No Incentive Awards shall be made under the Plan
after its termination. The Board may amend or terminate the Plan in such
respects as it shall deem advisable; provided that no change shall be made that
(i) increases the total number of shares of Company Stock reserved for issuance
pursuant to Incentive Awards granted under the Plan (except pursuant to Section
17), (ii), if and to the extent required by the Code, materially modifies the

 

13

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requirements as to eligibility for participation in the Plan, (iii), with
respect to Covered Employees, would result in payments to Covered Employees not
qualifying for deductibility under Code Section 162(m) (if intended to be
qualified), (iv) re-prices outstanding Options (except pursuant to Section 17),
or (v) materially increases the benefits accruing to Participants under the
Plan, unless such change is authorized by the shareholders of the Company.
Notwithstanding the foregoing, the Board may unilaterally amend the Plan and
Incentive Awards with respect to Participants as it deems appropriate to ensure
compliance with Rule 16b-3 and to cause Incentive Stock Options to meet the
requirements of the Code and regulations thereunder. Except as provided in the
preceding two sentences, a termination or amendment of the Plan shall not,
without the consent of the Participant, adversely affect a Participant’s rights
under an Incentive Award previously granted to him or her.

 

17.    CHANGE IN CAPITAL STRUCTURE.

 

(a)    In the event of a stock dividend, stock split or combination of shares,
recapitalization or merger in which the Company is the surviving corporation or
other change in the Company’s capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or warrants
for the purchase of common stock or preferred stock of the Company), the number
and kind of shares of stock or securities of the Company to be subject to the
Plan and to Incentive Awards then outstanding or to be granted thereunder, the
maximum number of shares or securities which may be delivered under the Plan,
the maximum number of shares which may be granted to an individual Participant
under Section 4, the exercise price, the terms of Incentive Awards and other
relevant provisions shall be appropriately adjusted by the Committee, whose
determination shall be binding on all persons. If the adjustment would produce
fractional shares with respect to any unexercised Option or grant of Restricted
Stock, the Committee may adjust appropriately the number of shares covered by
the Option or grant of Restricted Stock so as to eliminate the fractional
shares.

 

(b)    If the Company is a party to a Change of Control, the Committee may take
such actions with respect to outstanding Incentive Awards as the Committee deems
appropriate.

 

(c)    Notwithstanding anything in the Plan to the contrary, the Committee may
take the foregoing actions without the consent of any Participant, and the
Committee’s determination shall be conclusive and binding on all persons for all
purposes.

 

18.    ADMINISTRATION OF THE PLAN.

 

Except as provided in Section 11(h), the Plan shall be administered by the
Committee. The Committee shall have general authority to impose any limitation
or condition upon an Incentive Award the Committee deems appropriate to achieve
the objectives of the Incentive Award and the Plan and, without limitation and
in addition to powers set forth elsewhere in the Plan, shall have the following
specific authority:

 

(a)    The Committee shall have the power and complete discretion to determine
(i) which eligible employees, independent contractors and consultants shall
receive Incentive Awards and the nature of each Incentive Award, (ii) the terms
and conditions of any Performance Award, (iii) whether all or any part of an
Incentive Award shall be accelerated upon a Change of Control; (iv) the number
of shares of Company Stock to be covered by each Incentive Award, (v) whether
Options shall be Incentive Stock Options or Nonstatutory Stock Options, (vi)
when, whether and to what extent Stock Appreciation Rights shall be granted,
(vii) the time or times when an Incentive Award shall be granted, (viii) whether
an Incentive Award shall become vested over a period of time and when it shall
be fully vested, (ix) when Options and Stock Appreciation Rights may be
exercised, (x) whether a Disability exists, (xi) the manner in which payment
will be made upon the exercise of Options or Stock Appreciation Rights, (xii)
conditions relating to the length of time before disposition of Company Stock
received upon the exercise of Options or Stock Appreciation Rights is permitted,
(xiii) whether to authorize a Participant (A) to deliver Mature Shares to
satisfy Applicable Withholding Taxes or (B) to have the Employer withhold from
the shares to be issued upon the exercise of an Incentive Award (other than an
Incentive Option) the number of shares necessary to satisfy Applicable
Withholding Taxes, (xiv) the terms and conditions applicable to Restricted

 

14

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Stock and Non-Restricted Stock awards, (xv) the terms and conditions on which
restrictions upon Restricted Stock shall lapse, (xvi) whether to accelerate the
time at which any or all restrictions with respect to Restricted Stock will
lapse or be removed, (xvii) the terms and conditions applicable to Phantom Stock
awards, (xviii) notice provisions relating to the sale of Company Stock acquired
under the Plan, and (xix) any additional requirements relating to Incentive
Awards that the Committee deems appropriate. Notwithstanding the foregoing, no
“tandem stock options” (where two stock options are issued together and the
exercise of one option affects the right to exercise the other option) may be
issued in connection with Incentive Stock Options. The Committee shall have the
power to amend the terms of previously granted Incentive Awards so long as the
terms as amended are consistent with the terms of the Plan and provided that the
consent of the Participant is obtained with respect to any amendment that would
be detrimental to him or her, except that such consent will not be required if
such amendment is for the purpose of complying with Rule 16b-3 or any
requirement of the Code applicable to the Incentive Award.

 

(b)    The Committee may adopt rules and regulations for carrying out the Plan
with respect to Participants. The interpretation and construction of any
provision of the Plan by the Committee shall be final and conclusive as to any
Participant. The Committee may consult with counsel, who may be counsel to the
Employer, and shall not incur any liability for any action taken in good faith
in reliance upon the advice of counsel.

 

(c)    A majority of the members of the Committee shall constitute a quorum, and
all actions of the Committee shall be taken by a majority of the members
present. Any action may be taken by a written instrument signed by all of the
members, and any action so taken shall be fully effective as if it had been
taken at a meeting.

 

19.    NOTICE.

 

All notices and other communications required or permitted to be given under
this Plan shall be in writing or other form approved by the Committee and shall
be deemed to have been duly given as follows (a) if to an Employer then
delivered personally to the stock plan administrator of the Company or mailed
first class, postage prepaid at the principal business address of the Company to
the attention of the stock plan administrator at the Company; or (b) if to any
Participant then delivered personally, mailed first class, postage prepaid at
the last address of the Participant known to the sender at the time the notice
or other communication is sent or delivered, or by e-mail, interoffice mail,
intranet or other means of office communication determined by the Committee.

 

20.    INTERPRETATION.

 

The terms of this Plan are subject to all present and future regulations and
rulings of the Secretary of the Treasury or his or her delegate relating to the
qualification of Incentive Stock Options under the Code and the qualification of
Incentive Awards as Performance-Based Compensation. If any provision of the Plan
conflicts with any such regulation or ruling, then that provision of the Plan
shall be void and of no effect. The terms of this Plan shall be governed by the
laws of the State of Indiana.

 

21.    LEGENDS.

 

In its sole and complete discretion, the Committee may elect to legend
certificates representing Company Stock sold or awarded under the Plan to make
appropriate references to the restrictions imposed on such Company Stock.

 

22.    TAX BENEFIT.

 

The Committee may, in its sole discretion, include a provision in any
Nonstatutory Stock Option agreement that provides for an additional cash payment
from the Company to the grantee of the Nonstatutory Stock Option as soon as
practicable after the exercise date of such Nonstatutory Stock Option equal to
all or a portion of the tax benefit to be received by the Company attributable
to its federal income tax deduction resulting from the exercise of such
Nonstatutory Stock Option.

 

15

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23.    SPECIAL PROVISIONS APPLICABLE TO COVERED EMPLOYEES.

 

Incentive Awards to Covered Employees shall be governed by the conditions of
this Section in addition to the requirements of the other provisions of the
Plan. Should conditions set forth under this Section conflict with the
requirements of the other provisions of the Plan, the conditions of this Section
shall prevail.

 

(a)    Subject to Section 17, the maximum aggregate award of Restricted Stock,
Options and Stock Appreciation Rights that a Participant may receive in any one
Taxable Year shall be 2,000,000 shares of Company Stock.

 

(b)    The maximum aggregate Performance Award and award of Phantom Stock that a
Participant may receive in any one Taxable Year shall not exceed $10,000,000.

 

(c)    All Performance Goals relating to Covered Employees for a relevant period
shall be established by the Committee in writing no later than as may be
permitted under Code Section 162(m).

 

(d)    The Performance Goals shall be objective and shall satisfy third party
“objectivity” standards under Code Section 162(m).

 

(e)    The Performance Goals shall not allow for any discretion by the Committee
as to an increase in any Incentive Award, but discretion to lower an Incentive
Award is permissible.

 

(f)    The Incentive Award and payment of any Incentive Award shall be
contingent upon the attainment of the Performance Goals that are applicable to
such Incentive Award. The Committee shall certify in writing prior to payment of
any such Incentive Award that such applicable Performance Goals have been
satisfied. Written resolutions adopted by the Committee may be used for this
purpose.

 

(g)    All Awards under this Plan to Covered Employees or to other Participants
who may become Covered Employees at a relevant future date shall be further
subject to such other conditions, restrictions, and requirements as the
Committee may determine to be necessary to carry out the purposes of this
Section which is to avoid the loss of deductions by the Company under Code
Section 162(m).

 

16