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SCP POOL CORPORATION
2002 LONG-TERM INCENTIVE PLAN

1.

Purpose. The purpose of the 2002 Long-Term Incentive Plan (the “Plan”) of SCP
Pool Corporation (“SCP”) is to increase shareholder value and to advance the
interests of SCP and its subsidiaries (collectively, the “Company”) by
furnishing stock-based economic incentives (the “Incentives”) designed to
attract, retain, reward and motivate key employees, officers and consultants and
advisors to the Company and to strengthen the mutuality of interests between
such persons and SCP’s shareholders. Incentives consist of opportunities to
purchase or receive shares of common stock, $.001 par value per share, of SCP
(the “Common Stock”), on terms determined under the Plan. As used in the Plan,
the term “subsidiary”means any corporation, limited liability company or other
entity, of which SCP owns (directly or indirectly) within the meaning of Section
424(f) of the Internal Revenue Code of 1986, as amended (the “Code”), 50% or
more of the total combined voting power of all classes of stock, membership
interests or other equity interests issued thereby.

2.

Administration.

 

2.1

Composition. The Plan shall be administered by the Compensation Committee of the
Board of Directors of SCP or by a subcommittee thereof (the “Committee”). The
Committee shall consist of not fewer than two members of the Board of Directors,
each of whom shall (a) qualify as a “non-employee director”under Rule 16b-3
under the Securities Exchange Act of 1934 (the “1934 Act”) or any successor
rule, and (b) qualify as an “outside director”under Section 162(m) of the Code
(“Section 162(m)”).

 

2.2

Authority. The Committee shall have plenary authority to award Incentives under
the Plan, to interpret the Plan, to establish any rules or regulations relating
to the Plan that it determines to be appropriate, to enter into agreements with
or provide notices to participants as to the terms of the Incentives (the
“Incentive Agreements”) and to make any other determination that it believes
necessary or advisable for the proper administration of the Plan. Its decisions
in matters relating to the Plan shall be final and conclusive on the Company and
participants. The Committee may delegate its authority hereunder to the extent
provided in Section 3 hereof.

3.

Eligible Participants. Key employees, officers (including officers who are also
directors) and persons providing services as consultants or advisors to the
Company shall become eligible to receive Incentives under the Plan when
designated by the Committee. Employees may be designated individually or by
groups or categories, as the Committee deems appropriate. With respect to
participants not subject to Section 16 of the 1934 Act or Section 162(m) of the
Code, the Committee may delegate to appropriate officers of the Company its
authority to designate participants, to determine the size and type of
Incentives to be received by those participants and to set and modify the terms
of the Incentives; provided, however, that the per share exercise price of any
options granted by an officer, rather than by the Committee, shall be equal to
the Fair Market Value (as defined in Section 9.11) of a share of Common Stock.
Directors who are not also employees of the Company are not eligible to receive
awards under the Plan.

4.

Types of Incentives. Incentives may be granted under the Plan to eligible
participants in the forms of (a) incentive stock options; (b) non-qualified
stock options; and (c) restricted stock.

5.

Shares Subject to the Plan.

 

5.1

Number of Shares. Subject to adjustment as provided in Section 9.5, the maximum
number of shares of Common Stock that may be delivered to participants and their
permitted transferees under the Plan shall be 700,000. No additional awards will
be made under the Company’s predecessor stock option plans (The SCP Pool
Corporation 1995 Stock Option Plan and The SCP Pool Corporation 1998 Stock
Option Plan).

 

5.2

Share Counting. To the extent any shares of Common Stock covered by a stock
option are not delivered to a participant or permitted transferee because the
Option is forfeited or canceled or because of a Net Share Exercise, as defined
in Section 6.5 hereof, or shares of Common Stock are not delivered because an
Incentive is paid or settled in cash or used to satisfy the applicable tax
withholding obligation, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares of Common Stock
available for delivery under this Plan. In the event that shares of Common Stock
are issued as an Incentive and thereafter are forfeited or reacquired by the
Company pursuant to rights reserved upon issuance thereof, such forfeited and
reacquired Shares may again be issued under the Plan. If the exercise price of
any stock option granted under the Plan or the applicable withholding tax
obligation is satisfied by tendering shares of Common Stock to the Company (by
either actual delivery or by attestation), only the number of shares of Common
Stock issued net of the shares of Common Stock tendered shall be deemed
delivered for purposes of determining the maximum number of shares of Common
Stock available for delivery under the Plan.

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  5.3

Limitations on Awards. Subject to Section 9.5, the following additional
limitations are imposed under the Plan:

  A.

The maximum number of shares of Common Stock that may be issued upon exercise of
stock options intended to qualify as incentive stock options under Section 422
of the Code shall be 700,000 shares. Notwithstanding any other provision herein
to the contrary, (i) all shares issuable under incentive stock options shall be
counted against this limit and (ii) shares that are issued and are later
forfeited, cancelled or reacquired by the Company, shares withheld to satisfy
withholding tax obligations and shares delivered in payment of the option
exercise price or withholding taxes shall have no effect on this limitation.

  B.

The maximum number of shares of Common Stock that may be covered by Incentives
granted under the Plan to any one individual during any one calendar-year period
shall be 200,000.

  C.

The maximum number of shares of Common Stock that may be issued as restricted
stock shall be 50,000 shares.

  5.4

Type of Common Stock. Common Stock issued under the Plan may be authorized and
unissued shares or issued shares held as treasury shares.

6.

Stock Options. A stock option is a right to purchase shares of Common Stock from
SCP. Stock options granted under the Plan may be incentive stock options (as
such term is defined in Section 422 of the Code) or non-qualified stock options.
Any option that is designated as a non-qualified stock option shall not be
treated as an incentive stock option. Each stock option granted by the Committee
under this Plan shall be subject to the following terms and conditions:

 

6.1

Price. The exercise price per share shall be determined by the Committee,
subject to adjustment under Section 9.5; provided that in no event shall the
exercise price be less than the Fair Market Value of a share of Common Stock on
the date of grant, except in case of a stock option granted in assumption or
substitution for an outstanding award of a company acquired by the Company or
with which the Company combines.

 

6.2

Number. The number of shares of Common Stock subject to the option shall be
determined by the Committee, subject to Section 5 and subject to adjustment as
provided in Section 9.5.

 

6.3

Duration and Time for Exercise. The term of each stock option shall be
determined by the Committee but shall not exceed 10 years from date of grant.
Each stock option shall become exercisable at such time or times during its term
as shall be determined by the Committee. Notwithstanding the foregoing, the
Committee may accelerate the exercisability of any stock option at any time, in
addition to the automatic acceleration of stock options under Section 9.10.

 

6.4

Repurchase. Upon approval of the Committee, the Company may repurchase a
previously granted stock option from a participant by mutual agreement before
such option has been exercised by payment to the participant of the amount per
share by which: (i) the Fair Market Value (as defined in Section 9.11) of the
Common Stock subject to the option on the business day immediately preceding the
date of purchase exceeds (ii) the exercise price.

 

6.5

Manner of Exercise. A stock option may be exercised, in whole or in part, by
giving written notice to the Company, specifying the number of shares of Common
Stock to be purchased. The exercise notice shall be accompanied by the full
purchase price for such shares. The option price shall be payable in United
States dollars and may be paid (a) in cash; (b) by check; (c) by delivery of
shares of Common Stock which, unless otherwise determined by the Committee,
shall have been held by the optionee for at least six months, and which shares
shall be valued for this purpose at the Fair Market Value on the business day
immediately preceding the date such option is exercised; (d) by delivery of
irrevocable written instructions to a broker approved by the Company (with a
copy to the Company) to immediately sell a portion of the shares issuable under
the option and to deliver promptly to the Company the amount of sale proceeds
(or loan proceeds if the broker lends funds to the participant for delivery to
the Company) to pay the exercise price; (e) if permitted by the Committee, by
authorizing the Company to withhold from the exercise that number of shares of
Common Stock which, when multiplied by the Fair Market Value of a share of
Common Stock on the date of exercise, is equal to the aggregate exercise price
payable with respect to the options being exercised (a “Net Share Exercise”) or
(f) in such other manner as may be authorized from time to time by the
Committee.

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6.6

Incentive Stock Options. Notwithstanding anything in the Plan to the contrary,
the following additional provisions shall apply to the grant of stock options
that are intended to qualify as incentive stock options (as such term is defined
in Section 422 of the Code):

  A.

Any incentive stock option agreement authorized under the Plan shall contain
such other provisions as the Committee shall deem advisable, but shall in all
events be consistent with and contain or be deemed to contain all provisions
required in order to qualify the options as incentive stock options.

  B.

All incentive stock options must be granted within ten years from the date on
which this Plan is adopted by the Board of Directors.

  C.

No incentive stock options shall be granted to any participant who, at the time
such option is granted, would own (within the meaning of Section 422 of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the employer corporation or of its parent or subsidiary
corporation.

  D.

The aggregate Fair Market Value (determined with respect to each incentive stock
option as of the time such incentive stock option is granted) of the Common
Stock with respect to which incentive stock options are exercisable for the
first time by a participant during any calendar year (under the Plan or any
other plan of SCP or any of its subsidiaries) shall not exceed $100,000. To the
extent that such limitation is exceeded, such options shall not be treated, for
federal income tax purposes, as incentive stock options.

 

6.7

Repricing. Except for adjustments pursuant to Section 9.5 or actions permitted
to be taken by the Committee under Section 9.10C. in the event of a Change of
Control, unless approved by the stockholders of the Company, (a) the exercise
price for any outstanding option granted under this Plan may not be decreased
after the date of grant; and (b) an outstanding option that has been granted
under this Plan may not, as of any date that such option has a per share
exercise price that is less than the then current Fair Market Value of a share
of Common Stock, be surrendered to the Company as consideration for the grant of
a new option with a lower exercise price, shares of Common Stock or a cash
payment.

7.

Restricted Stock.

 

7.1

Grant of Restricted Stock. The Committee may award shares of restricted stock to
such eligible participants as the Committee determines pursuant to the terms of
Section 3. An award of restricted stock shall be subject to such restrictions on
transfer and forfeitability provisions and such other terms and conditions,
including the attainment of specified performance goals, as the Committee may
determine, subject to the provisions of the Plan. To the extent restricted stock
is intended to qualify as “performance-based compensation”under Section 162(m),
it must be granted subject to the attainment of performance goals as described
in Section 8 below and meet the additional requirements imposed by Section
162(m).

 

7.2

The Restricted Period.At the time an award of restricted stock is made, the
Committee shall establish a period of time during which the transfer of the
shares of restricted stock shall be restricted and after which the shares of
restricted stock shall be vested (the “Restricted Period”). Except for shares of
restricted stock that vest based on the attainment of performance goals, the
Restricted Period shall be a minimum of three years, with incremental vesting of
portions of the award over the three-year period permitted. If the vesting of
the shares of restricted stock is based upon the attainment of performance
goals, a minimum Restricted Period of one year is allowed, with incremental
vesting of portions of the award over the one-year period permitted. Each award
of restricted stock may have a different Restricted Period. The expiration of
the Restricted Period shall also occur as provided under Section 9.3 and under
the conditions described in Section 9.10 hereof.

 

7.3

Escrow.The participant receiving restricted stock shall enter into an Incentive
Agreement with the Company setting forth the conditions of the grant.
Certificates representing shares of restricted stock shall be registered in the
name of the participant and deposited with the Company, together with a stock
power endorsed in blank by the participant. Each such certificate shall bear a
legend in substantially the following form:

 

The transferability of this certificate and the shares of Common Stock
represented by it are subject to the terms and conditions (including conditions
of forfeiture) contained in the SCP Pool Corporation 2002 Long-Term Incentive
Plan (the “Plan”), and an agreement entered into between the registered owner
and SCP Pool Corporation thereunder. Copies of the Plan and the agreement are on
file at the principal office of the Company.

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7.4

Dividends on Restricted Stock.Any and all cash and stock dividends paid with
respect to the shares of restricted stock shall be subject to any restrictions
on transfer, forfeitability provisions or reinvestment requirements as the
Committee may, in its discretion, prescribe in the Incentive Agreement.

 

7.5

Forfeiture.In the event of the forfeiture of any shares of restricted stock
under the terms provided in the Incentive Agreement (including any additional
shares of restricted stock that may result from the reinvestment of cash and
stock dividends, if so provided in the Incentive Agreement), such forfeited
shares shall be surrendered and the certificates cancelled. The participants
shall have the same rights and privileges, and be subject to the same forfeiture
provisions, with respect to any additional shares received pursuant to Section
9.5 due to a recapitalization, merger or other change in capitalization.

 

7.6

Expiration of Restricted Period.Upon the expiration or termination of the
Restricted Period and the satisfaction of any other conditions prescribed by the
Committee, the restrictions applicable to the restricted stock shall lapse and a
stock certificate for the number of shares of restricted stock with respect to
which the restrictions have lapsed shall be delivered, free of all such
restrictions and legends, except any that may be imposed by law, to the
participant or the participant’s estate, as the case may be.

 

7.7

Rights as a Shareholder.Subject to the terms and conditions of the Plan and
subject to any restrictions on the receipt of dividends that may be imposed in
the Incentive Agreement, each participant receiving restricted stock shall have
all the rights of a shareholder with respect to shares of stock during the
Restricted Period, including without limitation, the right to vote any shares of
Common Stock.

8.

Performance Goals for Section 162(m) Awards.

     To the extent that shares of restricted stock granted under the Plan are
intended to qualify as “performance-based compensation” under Section 162(m),
the vesting or grant of such awards shall be conditioned on the achievement of
one or more performance goals and must satisfy the other requirements of Section
162(m). The performance goals pursuant to which such shares of restricted stock
shall vest or be granted shall be any or a combination of the following
performance measures applied to the Company, SCP, a division or a subsidiary:
earnings per share, return on assets, an economic value added measure,
shareholder return, earnings, stock price, return on equity, return on total
capital, reduction of expenses, increase in cash flow, increase in revenues or
customer growth. The performance goals may be subject to such adjustments as are
specified in advance by the Committee. For any performance period, such
performance objectives may be measured on an absolute basis or relative to a
group of peer companies selected by the Committee, relative to internal goals or
relative to levels attained in prior years. For grants intended to qualify as
performance-based compensation under Section 162(m), the Committee may not waive
any of the pre-established performance goal objectives, except for an automatic
waiver under Section 9.10 hereof, or as may be provided by the Committee in the
event of death or disability.

9.

General.

 

9.1

Duration.Subject to Section 9.9, the Plan shall remain in effect until all
Incentives granted under the Plan have either been satisfied by the issuance of
shares of Common Stock or otherwise been terminated under the terms of the Plan
and all restrictions imposed on shares of Common Stock in connection with their
issuance under the Plan have lapsed.

 

9.2

Transferability.No Incentives granted hereunder may be transferred, pledged,
assigned or otherwise encumbered by a participant except: (a) by will; (b) by
the laws of descent and distribution; (c) pursuant to a domestic relations
order, as defined in the Code; or (d) as to options only, if permitted by the
Committee and so provided in the Incentive Agreement or an amendment thereto,
(i) to Immediate Family Members, (ii) to a partnership in which the participant
and/or Immediate Family Members, or entities in which the participant and/or
Immediate Family Members are the sole owners, members or beneficiaries, as
appropriate, are the sole partners, (iii) to a limited liability company in
which the participant and/or Immediate Family Members, or entities in which the
participant and/or Immediate Family Members are the sole owners, members or
beneficiaries, as appropriate, are the sole members, (iv) to a trust for the
sole benefit of the participant and/or Immediate Family Members or (v) to a
charitable organization. “Immediate Family Members”shall be defined as the
spouse and natural or adopted children or grandchildren of the participant and
their spouses. To the extent that an incentive stock option is permitted to be
transferred during the lifetime of the participant, it shall be treated
thereafter as a nonqualified stock option. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of Incentives, or levy of attachment
or similar process upon Incentives not specifically permitted herein, shall be
null and void and without effect.

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9.3

Effect of Termination of Employment or Death. In the event that a participant
ceases to be an employee of the Company or to provide services to the Company
for any reason, including death, disability, early retirement or normal
retirement, any Incentives may be exercised, shall vest or shall expire at such
times as may be determined by the Committee and provided in the Incentive
Agreement.

 

9.4

Additional Conditions.Anything in this Plan to the contrary notwithstanding: (a)
the Company may, if it shall determine it necessary or desirable for any reason,
at the time of award of any Incentive or the issuance of any shares of Common
Stock pursuant to any Incentive, require the recipient of the Incentive, as a
condition to the receipt thereof or to the receipt of shares of Common Stock
issued pursuant thereto, to deliver to the Company a written representation of
present intention to acquire the Incentive or the shares of Common Stock issued
pursuant thereto for his own account for investment and not for distribution;
and (b) if at any time the Company further determines, in its sole discretion,
that the listing, registration or qualification (or any updating of any such
document) of any Incentive or the shares of Common Stock issuable pursuant
thereto is necessary on any securities exchange or under any federal or state
securities or blue sky law, or that the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with the award of any Incentive, the issuance of shares of Common Stock pursuant
thereto, or the removal of any restrictions imposed on such shares, such
Incentive shall not be awarded or such shares of Common Stock shall not be
issued or such restrictions shall not be removed, as the case may be, in whole
or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.

 

9.5

Adjustment.In the event of any recapitalization, stock dividend, stock split,
combination of shares or other similar change in the Common Stock, the number of
shares of Common Stock then subject to the Plan, including shares subject to
outstanding Incentives, and all limitations on the number of shares that may be
issued hereunder shall be adjusted in proportion to the change in outstanding
shares of Common Stock. In the event of any such adjustments, the purchase price
of any option and the performance objectives of any Incentive, shall also be
adjusted as and to the extent appropriate, in the reasonable discretion of the
Committee, to provide participants with the same relative rights before and
after such adjustment. No substitution or adjustment shall require the Company
to issue a fractional share under the Plan and the substitution or adjustment
shall be limited by deleting any fractional share.

 

9.6

Withholding.

  A.

The Company shall have the right to withhold from any stock issued under the
Plan or to collect as a condition of issuance or vesting, any taxes required by
law to be withheld. At any time that a participant is required to pay to the
Company an amount required to be withheld under applicable income tax laws in
connection with the lapse of restrictions on Common Stock or the exercise of an
option, the participant may, subject to disapproval by the Committee, satisfy
this obligation in whole or in part by electing (the “Election”) to deliver
currently owned shares of Common Stock or to have the Company withhold shares of
Common Stock, in each case having a value equal to the minimum statutory amount
required to be withheld under federal, state and local law. The value of the
shares to be delivered or withheld shall be based on the Fair Market Value of
the Common Stock on the date that the amount of tax to be withheld shall be
determined (“Tax Date”).

  B.

Each Election must be made prior to the Tax Date. The Committee may disapprove
of any Election, may suspend or terminate the right to make Elections, or may
provide with respect to any Incentive that the right to make Elections shall not
apply to such Incentive. If a participant makes an election under Section 83(b)
of the Code with respect to shares of restricted stock, an Election to have
shares withheld to satisfy withholding taxes is not permitted to be made.

  9.7

No Continued Employment. No participant under the Plan shall have any right,
because of his or her participation, to continue in the employ of the Company
for any period of time or to any right to continue his or her present or any
other rate of compensation.

  9.8

Deferral Permitted. Payment of an Incentive may be deferred at the option of the
participant if permitted in the Incentive Agreement.

 

9.9

Amendments to or Termination of the Plan. The Board may amend or discontinue
this Plan at any time; provided, however, that no such amendment may:

  A.

without the approval of the shareholders, (i) except for adjustments permitted
herein, increase the maximum number of shares of Common Stock that may be issued
through the Plan, (ii) materially increase the benefits accruing to participants
under the Plan, (iii) materially expand the classes of persons eligible to
participate in the Plan, or (iv) amend Section 6.7 to permit repricing of
options; or

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  B.

materially impair, without the consent of the recipient, an Incentive previously
granted.

 

9.10

Change of Control.

  A.

A Change of Control shall mean:

  (i)

the acquisition by any person of beneficial ownership of 50% or more of the
outstanding shares of the Common Stock or 50% or more of the combined voting
power of SCP’s then outstanding securities entitled to vote generally in the
election of directors; provided, however, that for purposes of this subsection
(i), the following acquisitions shall not constitute a Change of Control:

  (a)

any acquisition (other than a Business Combination (as defined below) which
constitutes a Change of Control under Section 9.10(A)(iii) hereof) of Common
Stock directly from the Company,

  (b)

any acquisition of Common Stock by the Company,

  (c)

any acquisition of Common Stock by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or

  (d)

any acquisition of Common Stock by any corporation pursuant to a Business
Combination that does not constitute a Change of Control under Section
9.10(A)(iii) hereof.

  (ii)

individuals who, as of January 1, 2002, constituted the Board of Directors of
SCP (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that any individual
becoming a director subsequent to such date whose election, or nomination for
election by SCP’s shareholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board shall be considered a member
of the Incumbent Board, unless such individual’s initial assumption of office
occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Incumbent
Board; or

  (iii)

consummation of a reorganization, share exchange, merger or consolidation
(including any such transaction involving any direct or indirect subsidiary of
SCP) or sale or other disposition of all or substantially all of the assets of
the Company (a “Business Combination”); provided, however, that in no such case
shall any such transaction constitute a Change of Control if immediately
following such Business Combination:

  (a)

the individuals and entities who were the beneficial owners of SCP’s outstanding
Common Stock and SCP’s voting securities entitled to vote generally in the
election of directors immediately prior to such Business Combination have direct
or indirect beneficial ownership, respectively, of more than 50% of the then
outstanding shares of common stock, and more than 50% of the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors of the surviving or successor corporation, or, if
applicable, the ultimate parent company thereof (the “Post-Transaction
Corporation”), and

  (b)

except to the extent that such ownership existed prior to the Business
Combination, no person (excluding the Post-Transaction Corporation and any
employee benefit plan or related trust of either SCP, the Post-Transaction
Corporation or any subsidiary of either corporation) beneficially owns, directly
or indirectly, 50% or more of the then outstanding shares of common stock of the
corporation resulting from such Business Combination or 50% or more of the
combined voting power of the then outstanding voting securities of such
corporation, and

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  (c)

at least a majority of the members of the board of directors of the
Post-Transaction Corporation were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board of
Directors, providing for such Business Combination; or

  (iv)

approval by the shareholders of SCP of a complete liquidation or dissolution of
SCP.

     For purposes of this Section 9.10, the term “person” shall mean a natural
person or entity, and shall also mean the group or syndicate created when two or
more persons act as a syndicate or other group (including, without limitation, a
partnership or limited partnership) for the purpose of acquiring, holding, or
disposing of a security, except that “person” shall not include an underwriter
temporarily holding a security pursuant to an offering of the security.

  B.

Upon a Change of Control of the type described in clause (A)(i) or (A)(ii) of
this Section 9.10 or immediately prior to any Change of Control of the type
described in clause (A)(iii) or (A)(iv) of this Section 9.10, all outstanding
Incentives granted pursuant to this Plan shall automatically become fully vested
and exercisable, all restrictions or limitations on any Incentives shall
automatically lapse and, unless otherwise provided in the applicable Incentive
Agreement, all performance criteria and other conditions relating to the payment
of Incentives shall be deemed to be achieved or waived by SCP without the
necessity of action by any person. As used in the immediately preceding
sentence, ‘immediately prior’to the Change of Control shall mean sufficiently in
advance of the Change of Control to permit the grantee to take all steps
reasonably necessary (i) if an optionee, to exercise any such option fully and
(ii) to deal with the shares purchased or acquired under any such option and any
formerly restricted shares on which restrictions have lapsed so that all types
of shares may be treated in the same manner in connection with the Change of
Control as the shares of Common Stock of other shareholders.

  C.

No later than 30 days after a Change of Control of the type described in
subsections (A)(i) or (A)(ii) of this Section 9.10 and no later than 30 days
after the approval by the Board of a Change of Control of the type described in
subsections (A)(iii) or (A)(iv) of this Section 9.10, the Committee, acting in
its sole discretion without the consent or approval of any participant (and
notwithstanding any removal or attempted removal of some or all of the members
thereof as directors or Committee members), may act to effect one or more of the
alternatives listed below, which may vary among individual participants and
which may vary among Incentives held by any individual participant:

  (i)

require that all outstanding options be exercised on or before a specified date
(before or after such Change of Control) fixed by the Committee, after which
specified date all unexercised options and all rights of participants thereunder
shall terminate,

  (ii)

make such equitable adjustments to Incentives then outstanding as the Committee
deems appropriate to reflect such Change of Control (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary),

  (iii)

provide for mandatory conversion of some or all of the outstanding options held
by some or all participants as of a date, before or after such Change of
Control, specified by the Committee, in which event such options shall be deemed
automatically cancelled and the Company shall pay, or cause to be paid, to each
such participant an amount of cash per share equal to the excess, if any, of the
Change of Control Value of the shares subject to such option, as defined and
calculated below, over the exercise price of such options or, in lieu of such
cash payment, the issuance of Common Stock or securities of an acquiring entity
having a Fair Market Value equal to such excess, or

  (iv)

provide that thereafter, upon any exercise of an option, the holder shall be
entitled to purchase or receive under such option, in lieu of the number of
shares of Common Stock then covered by such option, the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the holder would have been entitled pursuant to the terms of the
agreement providing for the reorganization, share exchange, merger,
consolidation or asset sale, if, immediately prior to such Change of Control,
the holder had been the record owner of the number of shares of Common Stock
then covered by such option.

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  D.

For the purposes of paragraph (iii) of Section 9.10(C), the "Change of Control
Value" shall equal the amount determined by whichever of the following items is
applicable:

  (i)

the per share price to be paid to holders of Common Stock in any such merger,
consolidation or other reorganization,

  (ii)

the price per share offered to holders of Common Stock in any tender offer or
exchange offer whereby a Change of Control takes place,

  (iii)

in all other events, the fair market value per share of Common Stock into which
such options being converted are exercisable, as determined by the Committee as
of the date determined by the Committee to be the date of conversion of such
options, or

  (iv)

in the event that the consideration offered to holders of Common Stock in any
transaction described in this Section 9.10 consists of anything other than cash,
the Committee shall determine the fair cash equivalent of the portion of the
consideration offered that is other than cash.

 

9.11

Definition of Fair Market Value. Whenever “Fair Market Value”of Common Stock
shall be determined for purposes of this Plan, it shall be determined as
follows: (i) if the Common Stock is listed on an established stock exchange or
any automated quotation system that provides sale quotations, the closing sale
price for a share of the Common Stock on such exchange or quotation system on
the applicable date, or if no sale of the Common Stock shall have been made on
that day, on the next preceding day on which there was a sale of the Common
Stock; (ii) if the Common Stock is not listed on any exchange or quotation
system, but bid and asked prices are quoted and published, the mean between the
quoted bid and asked prices on the applicable date, and if bid and asked prices
are not available on such day, on the next preceding day on which such prices
were available; and (iii) if the Common Stock is not regularly quoted, the fair
market value of a share of Common Stock on the applicable date as established by
the Committee in good faith.

 

9.12

Incentive Agreements. Each award of an Incentive hereunder shall be evidenced by
an agreement or notice delivered to the participant, by paper copy or electronic
copy, that shall specify the terms and conditions thereof and any rules
applicable thereto, including but not limited to the effect on such Incentive of
the participant’s ceasing to be employed by or to provide services to the
Company. The Incentive Agreement may also provide for the forfeiture of an
Incentive in the event that the participant competes with the Company or engages
in other activities that are harmful to or against the interests of the Company.

8