Exhibit 10.1

UNITRIN, INC.

2009 Performance Incentive Plan

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TABLE OF CONTENTS

 

          Page

Article 1  

   Establishment, Purpose, and Duration    1

  1.1

   Establishment    1

  1.2

   Purpose of this Plan    1

Article 2  

   Definitions    1

  2.1

   “Affiliate”    1

  2.2

   “Annual Award Limit” or “Annual Award Limits”    1

  2.3

   “Annual Incentive Award”    1

  2.4

   “Award”    1

  2.5

   “Award Instrument”    1

  2.6

   “Board” or “Board of Directors”    2

  2.7

   “Code”    2

  2.8

   “Committee”    2

  2.9

   “Company”    2

  2.10

   “Corporate Performance Measures”    2

  2.11

   “Covered Employee”    2

  2.12

   “Disability or Disabled”    2

  2.13

   “Effective Date”    2

  2.14

   “Employee”    2

  2.15

   “Employer”    2

  2.16

   “Individual Performance Measures”    2

  2.17

   “Multi-Year Incentive Award”    2

  2.18

   “Participant”    2

  2.19

   “Performance-Based Compensation”    2

  2.20

   “Performance Measures”    2

  2.21

   “Performance Period”    3

  2.22

   “Plan”    3

  2.23

   “Plan Year”    3

  2.24

   “Retirement” or “Retires”    3

  2.25

   “Section 162(m)”    3

  2.26

   “Section 409A”    3

  2.27

   “Subject Employees”    3

 

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TABLE OF CONTENTS

(continued)

 

          Page

Article 3  

   Eligibility and Participation    3

  3.1

   Eligibility    3

  3.2

   Actual Participation    3

Article 4  

   Grant, Earning and Payment of Awards    3

  4.1

   Grant of Awards    3

  4.2

   Award Instruments    3

  4.3

   Awards to Covered Employees    4

  4.4

   Awards to Other Participants    4

  4.5

   Timing of Payments    4

Article 5  

   Performance Measures    5

  5.1

   Performance Measures    5

  5.2

   Individual Performance Measures    5

  5.3

   Corporate Performance Measures    5

  5.4

   Unusual and Nonrecurring Events    6

  5.5

   Committee Discretion    7

Article 6  

   Termination of Employment; Leave of Absence    7

  6.1

   Death or Disability    7

  6.2

   Retirement    7

  6.3

   Divestiture of Employer    7

  6.4

   Other Termination Provisions    8

  6.5

   Leave of Absence    8

Article 7  

   Transferability of Awards    8

  7.1

   Transferability    8

  7.2

   Domestic Relations Orders    8

Article 8  

   Arbitration    8

Article 9  

   Compliance with Section 409A    9

Article 10

   Rights of Participants    9

  10.1

   Employment    9

  10.2

   Participation    9

Article 11

   Change of Control    9

Article 12

   Administration    10

 

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TABLE OF CONTENTS

(continued)

 

          Page

  12.1

   General    10

  12.2

   Authority of the Committee    10

  12.3

   Performance Based Compensation    10

Article 13

   Amendment, Modification, Suspension, and Termination    10

  13.1

   Amendment, Modification, Suspension, and Termination    10

  13.2

   Awards Previously Granted    11

Article 14

   Tax Withholding    11

Article 15

   Successors    11

Article 16

   General Provisions    11

  16.1

   Forfeiture Events    11

  16.2

   Severability    11

  16.3

   Unfunded Plan    11

  16.4

   Non-exclusivity of this Plan    11

  16.5

   Governing Law    12

  16.6

   Beneficiaries    12

 

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Unitrin, Inc.

2009 Performance Incentive Plan

Article 1 Establishment, Purpose, and Duration

1.1 Establishment. Unitrin, Inc., a Delaware corporation (hereinafter referred
to as the “Company”), hereby establishes the 2009 Performance Incentive Plan
(the “Plan”). The Plan is effective as of February 3, 2009 (“Effective Date”).
This Plan permits the grant by the Company and its Affiliates of Annual
Incentive Awards and Multi-Year Incentive Awards, as defined hereafter. In
accordance with Section 162(m), provisions of this Plan applicable to Awards to
Covered Employees shall be subject to approval by the Company’s shareholders, at
a meeting duly held in accordance with the Company’s Amended and Restated Bylaws
and applicable law. Any Awards granted to Covered Employees in advance of the
requisite shareholders’ vote shall be made contingent upon such approval by the
Company’s shareholders. In no event shall any amounts be paid with respect to
Awards granted to Covered Employees unless and until the requisite shareholder
approval has been obtained.

1.2 Purpose of this Plan. The purpose of this Plan is to motivate and reward
eligible executive-level Employees through annual and multi-year cash incentive
awards tied to the achievement of performance goals established hereunder, and
to attract and retain superior Employees through these incentives. This Plan is
designed so that Awards to Covered Employees qualify as Performance-Based
Compensation under Section 162(m) in order to preserve the Company’s federal
income tax deduction for incentive compensation paid to such Employees.

Article 2 Definitions

Whenever used in this Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.

2.1 “Affiliate” means any person or entity controlled directly or indirectly by
the Company, whether by equity ownership, contract or otherwise and shall
include direct or indirect subsidiaries of the Company and mutual companies the
management of which is controlled by the Company and its subsidiaries.

2.2 “Annual Award Limit” or “Annual Award Limits” have the meaning set forth in
Section 4.3.

2.3 “Annual Incentive Award” means an arrangement under which a Participant is
given the opportunity to earn a cash bonus based on the achievement of
performance goals measured over a Performance Period of one year or less.

2.4 “Award” means, individually or collectively, a grant under this Plan of an
Annual Incentive Award or a Multi-Year Incentive Award, in each case subject to
the terms of this Plan.

2.5 “Award Instrument” means either: (a) a written agreement between a
Participant and his or her Employer setting forth the terms and conditions
applicable to an Award, or (b) a written or electronic statement issued by an
Employer to a Participant describing the terms and conditions of such Award.

 

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

2.7 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time, or any successor statute.

2.8 “Committee” means the Compensation Committee of the Board or any
subcommittee thereof, or any other committee designated by the Board to
administer this Plan.

2.9 “Company” means Unitrin, Inc., a Delaware corporation, and any successor
thereto as provided in Article 15 herein.

2.10 “Corporate Performance Measures” is defined in Section 5.3.

2.11 “Covered Employee” means any Employee who is or may become a “Covered
Employee,” as defined in Section 162(m).

2.12 “Disability or Disabled” when used with respect to a particular
Participant, means a physical or mental condition that: (a) is of a type that
would generally trigger benefits under the Company’s long-term disability plan
(as in effect from time to time), whether or not such Participant is actually
enrolled in such plan; or (b) in the absence of any such plan, would cause such
Participant to be unable to substantially perform his or her duties as an
Employee, as determined in the sole discretion of the Committee. Notwithstanding
the foregoing, if an Award becomes subject to Section 409A, “Disability” and
“Disabled” shall be defined as required thereunder.

2.13 “Effective Date” has the meaning set forth in Section 1.1.

2.14 “Employee” means any employee of the Company or any Affiliate of the
Company.

2.15 “Employer” means, with respect to a given Employee, whichever of the
Company or its Affiliates is the employer of such Employee.

2.16 “Individual Performance Measures” is defined in Section 5.2.

2.17 “Multi-Year Incentive Award” means an arrangement under which a Participant
is given the opportunity to earn a cash award based on the achievement of one or
more performance goals measured over a Performance Period of more than one year.

2.18 “Participant” means any Employee to whom an Award is granted.

2.19 “Performance-Based Compensation” means compensation under an Award that
satisfies the requirements of Section 162(m).

2.20 “Performance Measures” means measures described in Article 5 on which
performance goals for Awards are based and, for measures applicable to Covered
Employees, the measures which are approved by the Company’s shareholders
pursuant to this Plan in order to qualify Awards as Performance-Based
Compensation.

 

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2.21 “Performance Period” means the period of time with respect to which the
achievement of performance goals is measured to determine the amount of the
payout, if any, of an Award.

2.22 “Plan” is defined in Section 1.1 above.

2.23 “Plan Year” means a calendar year.

2.24 “Retirement” or “Retires” means the voluntary termination of employment by
a Participant who has attained age 55, is eligible for early retirement under a
retirement plan sponsored by the Company, and makes an election to begin
receiving retirement benefits under such retirement plan.

2.25 “Section 162(m)” means Section 162(m) of the Code, or any successor
provision, and the regulations, rulings and other guidance issued thereunder by
the Internal Revenue Service.

2.26 “Section 409A” means Section 409A of the Code, or any successor provision,
and the regulations, rulings and other guidance issued thereunder by the
Internal Revenue Service.

2.27 “Subject Employees” means the executive officers of the Company and the
officers of the Company’s Affiliates who are generally referred to by the
Company as the operating company presidents and group executives, and includes
the Covered Employees.

Article 3 Eligibility and Participation

3.1 Eligibility. All executive-level Employees, as determined in the discretion
of the Committee (or in the discretion of the Company’s Chief Executive Officer
or other executive officer pursuant to a delegation of authority made pursuant
to the terms of this Plan), shall be eligible to participate in this Plan.

3.2 Actual Participation. For Awards to Subject Employees, the Committee shall
have the sole power and authority, in its discretion, to select Award recipients
and determine the terms of Awards on its own initiative or to approve, modify or
reject Award recommendations from the management of the Company or its
Affiliates, and no such Awards shall be granted without the prior, express
approval of the Committee. For Awards to other Employees, the Committee may
delegate to the Company’s Chief Executive Officer (and such other executive
officers of the Company as determined appropriate by the Committee in its
discretion), the power and authority to select such additional Award recipients
and to approve and determine the terms of such Awards.

Article 4 Grant, Earning and Payment of Awards

4.1 Grant of Awards. At any time and from time to time, Annual Awards and/or
Multi-Year Awards may be granted to Participants under the terms and provisions
of this Plan.

4.2 Award Instruments. Each Award to a Participant shall be evidenced by an
Award Instrument that specifies the applicable Performance Period, Performance
Measures, performance goals, threshold, maximum and target payouts and such
other provisions as have been approved for such Participant in accordance with
this Plan, including, without limitation, such provisions as maybe determined
necessary or advisable to comply with Article 9.

 

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4.3 Awards to Covered Employees.

(a) Annual Award Limit. The maximum amount paid to a Covered Employee in any one
Plan Year under an Annual Incentive Award or a Multi-Year Incentive Award may
not exceed $2,000,000 (“Annual Award Limit”).

(b) Performance Goals. Within ninety (90) days of the beginning of each
Performance Period (or, if earlier, before twenty-five percent (25%) of the
period of service to which the Performance Measures relate has elapsed), the
Committee shall establish or approve the performance goals for the Performance
Period for Awards to Covered Employees. The performance goals established by the
Committee shall be stated in terms of an objective formula or standard and shall
be based on one of, or a combination of, the Corporate Performance Measures set
forth in Section 5.3.

(c) Data and Calculations. After each Performance Period, the Company shall
compile data and perform calculations as may be necessary to assess results and
achievements of performance goals that were previously established for such
Performance Period.

(d) Satisfaction of Performance Goals. After each Performance Period, the
Company shall submit a written report to the Committee providing such data and
calculations necessary to enable the Committee to assess the results and
achievement of performance goals for such Performance Period that were
previously established for Awards granted to Covered Employees. The Committee
shall review such report and make a determination for each Participant as to the
degree of achievement of each performance goal based upon the actual results for
such Performance Period. Prior to the payout of any Award to a Covered Employee,
the Committee shall certify in accordance with Section 162(m) the extent to
which the performance goal(s) for the applicable Performance Period have been
satisfied.

(e) Payouts. The Committee, in its sole discretion, may reduce the amount of the
payout that otherwise would be due to a Covered Employee upon application of the
performance goals for the Performance Period applicable to an Award to the
extent necessary to prevent a payout in excess of the Annual Award Limit for
such Award. Under no circumstances may the Committee increase the amount of any
Award that otherwise would be payable to a Covered Employee upon application of
the performance goals for the applicable Performance Period.

4.4 Awards to Other Participants. With respect to Participants other than
Covered Employees, data shall be provided by the Company and a determination
shall be made by the Committee or, pursuant to a delegation of authority made in
accordance with the terms of this Plan, by the Company’s Chief Executive Officer
or other executive officer, as to the degree of achievement of each performance
goal based upon the actual results for the Performance Period.

4.5 Timing of Payments. Awards shall be paid, in cash, as soon as practicable
after the end of a Performance Period in accordance with the terms of the Award
Instrument (but in no event later than March 15 of the calendar year immediately
following the end of the Performance Period).

 

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Article 5 Performance Measures

5.1 Performance Measures. Payouts of all Awards shall be conditioned upon the
attainment of performance goals that are established for the relevant
Performance Periods based upon specified Performance Measures. Performance goals
for Awards to Participants other than Covered Employees may be based on
Individual Performance Measures, Corporate Performance Measures, or a
combination of the two. Performance goals for Awards granted to Covered
Employees may only be based upon Corporate Performance Measures.

5.2 Individual Performance Measures. Performance goals may be established for
Awards to a Participant who is not a Covered Employee based on individual
performance measures which may be quantitative or qualitative in nature
(“Individual Performance Measures”). In the case of an Award based upon a
combination of Individual Performance Measures and Corporate Performance
Measures, specific limits may be imposed on the portion of the payout that is
based upon Individual Performance Measures. Such limits may be expressed in
terms of the total dollar amount or the percentage of the Award’s payout that
may be attributable to the attainment of Individual Performance Measures.

5.3 Corporate Performance Measures. Unless and until the Committee proposes for
shareholder vote and the shareholders of the Company approve a change in the
Performance Measures set forth in this Section 5.3, the corporate performance
goals upon which the payment of an Award may be conditioned shall be limited to
the following Performance Measures (“Corporate Performance Measures”):

 

  (a) Net earnings or net income (before or after taxes);

 

  (b) Operating earnings per share;

 

  (c) Net sales or revenue growth;

 

  (d) Operating income and/or average increase in dollars of operating income of
the Company or any of its Subsidiaries or operating units;

 

  (e) Return measures (including, but not limited to, return on assets, capital,
invested capital, investment portfolio performance returns or yields, equity,
sales, or revenue);

 

  (f) Cash flow (including, but not limited to, operating cash flow, free cash
flow, and cash flow return on equity);

 

  (g) Earnings before or after taxes, interest, depreciation, and/or
amortization;

 

  (h) Gross or operating margins;

 

  (i) Productivity ratios;

 

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  (j) Share price (including, but not limited to, growth measures and total
shareholder return);

 

  (k) Expense targets;

 

  (l) Margins;

 

  (m) Operating efficiency;

 

  (n) Market share;

 

  (o) Customer satisfaction;

 

  (p) Working capital targets;

 

  (q) Bad debt experience;

 

  (r) Reduction in costs;

 

 

(s)

Economic value added or EVA® (net operating profit after tax minus the sum of
capital multiplied by the cost of capital); and

 

  (t) Insurance company underwriting income, combined ratios, loss ratios or
expense ratios.

Any Corporate Performance Measure(s) may be defined in accordance with generally
acceptable accounting principles or otherwise, and may be used to measure the
performance of the Company and its Affiliates on a consolidated basis, or any
Affiliate or business unit or segment of the Company individually, or any
combination thereof, as the Committee may deem appropriate. Any Corporate
Performance Measure may also be compared against similar measures for a group of
comparator or peer companies, or against a published or special index that the
Committee, in its sole discretion, deems appropriate, or the Committee may
select Performance Measure (j) above as compared to various stock market
indices.

5.4 Unusual and Nonrecurring Events. An Award Instrument may provide that any
evaluation of performance may include or exclude any of the following events
that occurs during a Performance Period: (a) asset write-downs; (b) litigation
or claim judgments or settlements; (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results;
(d) any reorganization or restructuring; (e) extraordinary nonrecurring items as
described in Accounting Principles Board Opinion No. 30 (or a successor
pronouncement) and/or in the Company’s periodic reports filed with the
Securities and Exchange Commission for periods within the applicable Performance
Period; and (f) acquisitions or divestitures. In addition, an Award Instrument
may provide the Committee with authority to make, in its discretion, adjustments
to the established performance goals applicable to such Award to reflect changes
to the job responsibilities of the Participant or the structure of the Company
or its Affiliates that relate directly to such established performance goals for
all or a portion of the applicable Performance Period. To the extent such
inclusions or exclusions affect Awards to Covered Employees, they shall be
approved by the Committee and prescribed in a form that meets the requirements
of Section 162(m).

 

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5.5 Committee Discretion. In the event that applicable tax and/or securities
laws change to permit Committee discretion to alter the governing Performance
Measures for Awards to Covered Employees without obtaining shareholder approval
of such changes, the Committee shall have sole discretion to make such changes
without obtaining shareholder approval.

Article 6 Termination of Employment; Leave of Absence

6.1 Death or Disability. Upon termination of the employment of a Participant due
to death or Disability, for each outstanding Award previously granted to the
Participant, the Performance Period shall be deemed to have been completed and a
payout of the Award shall be due to the Participant (or, in the case of death,
to the Participant’s designated beneficiary, if any, or to his or her estate) at
the level defined in the Award Instrument as the “target” level as if the
applicable performance goal(s) had been achieved at such target level, but
reduced on a pro-rata basis by multiplying the amount that would have been
payable under the Award at such target level for the original Performance Period
by a fraction, the numerator of which is the number of full months in the
Performance Period during which the Participant was an active Employee and the
denominator of which is the total number of months in the original Performance
Period. A partial month worked shall be counted as a full month if the
Participant was an active Employee for fifteen (15) days or more in that month.
The Award shall be paid, in cash, as soon as practicable after the termination
of employment (but in no event later than March 15 of the calendar year
immediately following the end of such completed Performance Period).

6.2 Retirement. In the event that a Participant’s employment terminates due to
Retirement, for each outstanding Award previously granted to the Participant, a
payout of the Award shall be due, to the extent earned, based upon the actual
results relative to the applicable performance goal(s) for such Award for the
original Performance Period, but reduced on a pro-rata basis by multiplying the
amounts that would have been payable under the Award for the original
Performance Period by a fraction, the numerator of which is the number of full
months in the Performance Period during which the Participant was an active
Employee and the denominator of which is the total number of months in the
original Performance Period. A partial month worked shall be counted as a full
month if the Participant was an active Employee for fifteen (15) days or more in
that month. The Award shall be paid, in cash, as soon as practicable after the
completion of the original Performance Period when Award payouts are made to
active Employees (but in no event later than March 15 of the calendar year
immediately following the end of the Performance Period).

6.3 Divestiture of Employer. In the event that a Participant’s employment
terminates upon and as result of the sale or divestiture by the Company or any
of its Affiliates of its controlling interest in any Employer (“Divestiture”),
for each outstanding Award previously granted to such Participant, the term of
the applicable Performance Period shall be deemed revised so that the
Performance Period ends on the effective date of the Divestiture, and a payout
of the Award shall be due, to the extent earned, based on the actual results
relative to the applicable performance goal(s) for such Award for the revised
Performance Period. The Award shall be paid, in cash, as soon as practicable
after the termination of employment (but in no event later than March 15 of the
calendar year immediately following the end of such completed Performance
Period).

 

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6.4 Other Termination Provisions.

(a) Other Events. In the event a Participant’s employment terminates for any
reason other than death, Disability, Retirement, Divestiture, or an Event as
defined in Article 11, including but not limited to, termination with or without
cause by his or her Employer, or voluntary termination by the Participant, any
outstanding Award shall be canceled and the Participant shall receive no payment
for such Award under this Plan, unless, subject to Section 16.1, the Performance
Period associated with any such Award had been completed at the time of the
Participant’s termination of employment, in which case the payout, if any,
pursuant to such Award shall be computed and paid in accordance with the
relevant performance goals as if the Participant’s employment had not
terminated.

(b) Other Provisions. The Committee may, in its discretion, approve termination
provisions in connection with particular Awards or Participants that differ from
the terms of this Article 6 to the extent such provisions: (i) are consistent
with Section 162(m), if and as applicable; and (ii) do not adversely affect any
Award previously granted under this Plan in any material way without the written
consent of the Participant holding such Award.

6.5 Leave of Absence. In the event that the Participant is on an approved leave
of absence (other than a short-term disability leave) at the end of the
Performance Period, or takes such a leave of absence at any time during the
Performance Period, a payout of the Award shall be due, to the extent earned,
based upon the actual results relative to the applicable performance goal(s) for
such Award for the Performance Period, but reduced on a pro-rata basis by
multiplying the amount that would have been payable under the Award for the
Performance Period by a fraction, the numerator of which is the number of full
months in the Performance Period during which the Participant was an active
Employee not on such leave of absence and the denominator of which is the total
number of months in the Performance Period. A partial month worked shall be
counted as a full month if the Participant was an active Employee for fifteen
(15) days or more in that month. The Award shall be paid, in cash, as soon as
practicable after the completion of the original Performance Period when Award
payouts are made to active Employees (but in no event later than March 15 of the
calendar year immediately following the end of the Performance Period).

Article 7 Transferability of Awards

7.1 Transferability. Awards shall not be transferable other than by will or the
laws of descent and distribution. No Awards shall be subject, in whole or in
part, to attachment, execution, or levy of any kind, and any purported transfer
in violation hereof shall be null and void.

7.2 Domestic Relations Orders. Without limiting the generality of Section 7.1,
no domestic relations order purporting to authorize a transfer of an Award or
any interest in an Award shall be recognized as valid.

Article 8 Arbitration

As a condition to receiving an Award grant, a Participant may be required to
agree in writing to submit all disputes or claims arising out of or relating to
any such Award to binding arbitration in accordance with such terms as
prescribed when the Award is approved.

 

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Article 9 Compliance with Section 409A

Each Award that is granted under this Plan shall be designed and administered so
that the Award is either exempt from the application of, or compliant with, the
requirements of Section 409A. To the extent that the Committee determines that
any Award granted under this Plan is subject to Section 409A, the Award
Instrument shall include such terms and conditions as the Committee determines,
in its discretion, are necessary or advisable to avoid the imposition on the
Participant of an additional tax under Section 409A. Notwithstanding any other
provision of this Plan or any Award Instrument (unless the Award Instrument
provides otherwise with specific reference to this Section): (i) an Award shall
not be granted, deferred, accelerated, extended, paid out, settled, substituted,
adjusted or modified under this Plan in a manner that would result in the
imposition of an additional tax under Section 409A upon a Participant; and
(ii) if an Award Instrument provides for the deferral of compensation within the
meaning of Section 409A, no distribution or payment of any amount shall be made
before a date that is six (6) months following the date of such participant’s
separation from service (as defined in Section 409A) or, if earlier, the date of
the Participant’s death. Although the Company intends to administer this Plan so
that Awards will be exempt from, or will comply with, the requirements of
Section 409A, the Company does not warrant that any Award under this Plan will
qualify for favorable tax treatment under Section 409A or any other provision of
federal, state, local, or non-United States law. Neither the Company, its
Affiliates nor their respective directors, officers, employees or advisors shall
be liable to any Participant (or any other individual claiming a benefit through
the Participant) for any tax, interest or penalties the Participant may owe as a
result of the grant, holding, vesting or payment of any Award under this Plan.

Article 10 Rights of Participants

10.1 Employment. Nothing in this Plan or an Award Instrument shall interfere
with or limit in any way the right of an Employer to terminate any Participant’s
employment at any time or for any reason not prohibited by law, nor confer upon
any Participant any right to continue his or her employment for any specified
period of time. Neither an Award, an Award Instrument, nor any benefit arising
under this Plan shall constitute an employment contract with the Company or any
of its Affiliates and, accordingly, subject to Articles 12 and 13, this Plan and
the benefits hereunder may be terminated at any time in the sole and exclusive
discretion of the Committee without giving rise to any liability on the part of
the Company, its Affiliates or their respective directors, officers, employees
or advisors.

10.2 Participation. No Employee shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to receive
a future Award.

Article 11 Change of Control

Upon the dissolution or liquidation of the Company, or upon a reorganization,
merger or consolidation of the Company with one or more corporations as a result
of which the Company is not the surviving corporation, or upon a sale of
substantially all the property or more than eighty percent (80%) of the then
outstanding Shares of the Company to another corporation (any of the foregoing,
an “Event”), the applicable Performance Period for each Award then outstanding
under this Plan shall be deemed revised so that such Performance Period ends on
the effective date of the Event, and a payout of each such Award shall be due to
the respective Participant in the amount which is the greater of the payout that
would be due: (a) based upon the actual results for such revised

 

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Performance Period relative to the applicable performance goal(s) for such
Award; or (b) at the level defined in the respective Award Instrument as the
“target” level for such Award for such revised Performance Period. The Award
shall be paid, in cash, as soon as practicable after the Event (but in no event
later than March 15 of the calendar year immediately following the end of the
revised Performance Period).

Article 12 Administration

12.1 General. The Committee shall be responsible for oversight of the
administration of this Plan, subject to this Article 12 and the other provisions
of this Plan. The Committee may retain attorneys, consultants, accountants, or
other advisors, and the Committee, the Company and its Affiliates, and their
respective officers and directors shall be entitled to rely upon the advice,
opinions, or valuations of any such advisors. The fees of any such advisors
shall be paid by the Company. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the
Participants, beneficiaries, the Company, its Affiliates and all other
interested individuals.

12.2 Authority of the Committee.

(a) Power and Discretion. The Committee shall have full and, except as otherwise
expressly provided in this Plan, exclusive, power and discretion: (i) to
interpret the terms and the intent of this Plan and any Award Instrument or
other agreement or document ancillary to or in connection with this Plan, and to
adopt such rules, regulations, forms, instruments, and guidelines for
administering this Plan as the Committee may deem necessary or proper;
(ii) subject to Article 13, to adopt modifications and amendments to this Plan
or any Award Instrument, including without limitation, any that are necessary to
comply with the laws of the jurisdictions in which the Company and its
Affiliates operate or may operate.

(b) Delegation. Notwithstanding the other provisions of this Plan, including
Section 12.2(a), the Committee may in its discretion delegate such
administrative duties or powers as it may deem advisable to one or more of its
members and, except in connection with Awards to Subject Employees, to one or
more officers of the Company or its Affiliates.

12.3 Performance-Based Compensation. To enable Awards to Covered Employees to
qualify as Performance-Based Compensation, this Plan shall be administered in a
manner consistent with the terms and conditions of Section 162(m), as
applicable.

Article 13 Amendment, Modification, Suspension, and Termination

13.1 Amendment, Modification, Suspension, and Termination. Subject to Article 9
and Section 13.2, the Committee may, at any time and from time to time, alter,
amend, modify, suspend, or terminate this Plan in whole or in part; provided,
however, that, no material amendment of this Plan shall be made without
shareholder approval if shareholder approval is required by law. Furthermore, no
amendment, modification, suspension or termination may impact the distribution
of any Award that is subject to Section 162(m) or Section 409A, except as
permitted by such applicable Section.

 

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

Article 14 Tax Withholding

An Employer shall have the power and the right to deduct or withhold, or require
a Participant to remit to the Employer, the amount of any taxes which the
Employer may be required to withhold with respect to any taxable event arising
from such Participant’s Awards.

Article 15 Successors

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

Article 16 General Provisions

16.1 Forfeiture Events. An Award Instrument may specify that the Participant’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, violation of material Company
and/or Affiliate policies, breach of non-competition, confidentiality, or other
restrictive covenants that may apply to the Participant, or other conduct by the
Participant that is detrimental to the business or reputation of the Company
and/or its Affiliates.

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

16.3 Unfunded Plan. Nothing contained in this 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 any Participant and his or her Employer or
the Company or any of its Affiliates. Participants shall have no right, title,
or interest whatsoever in or to any assets of their Employers or of the Company
or any of its Affiliates with respect to the obligations arising out of any
Awards. To the extent that any person acquires a right to receive payments
pursuant to an Award, such right shall be no greater than the right of a general
unsecured creditor of the Participant’s Employer. No special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of amounts payable under this Plan.

16.4 Non-exclusivity of this Plan. The adoption of this Plan shall not be
construed as creating any limitations on the power of the Company or any of its
Affiliates to adopt such other compensation arrangements as it may deem
desirable for any Employee.

 

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16.5 Governing Law. This Plan and each Award Instrument shall be governed by the
laws of the State of Illinois, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this Plan
to the substantive law of another jurisdiction. Unless otherwise provided in the
Award Instrument (or other written agreement related to arbitration pursuant to
Article 8), each Participant is deemed to submit to the exclusive jurisdiction
and venue of the federal or state courts of Illinois and the state in which such
Participant’s regular office is located, to resolve any and all issues that may
arise out of or relate to this Plan or any related Award Instrument.

16.6 Beneficiaries. Each Participant may designate a beneficiary or
beneficiaries to receive, in the event of such Participant’s death, any payments
remaining to be made to the Participant under the Plan. Each Participant shall
have the right to revoke any such designation and to redesignate a beneficiary
or beneficiaries by written notice to the Employer to such effect. If a
Participant dies without naming a beneficiary or if all of the beneficiaries
named by a Participant predecease the Participant, then any amounts remaining to
be paid under this Plan shall be paid to the Participant’s estate.

 

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