Exhibit 10.1

COVENTRY HEALTH CARE, INC.

 

2004 INCENTIVE PLAN

 

SECTION 1.  Purpose; Definitions.

 

The purpose of the 2004 Incentive Plan (the “Plan”) is to enable Coventry Health
Care, Inc., a Delaware corporation (the “Company”), to attract, retain and
reward key employees of and consultants to the Company and its Subsidiaries and
Affiliates, and directors who are not also employees of the Company, and to
strengthen the mutuality of interests between such key employees, consultants,
and directors by awarding such key employees, consultants, and directors
performance-based stock incentives and/or other equity interests or equity-based
incentives in the Company, as well as incentives payable in cash. The creation
of the Plan shall not diminish or prejudice other compensation programs approved
from time to time by the Board. With respect to any awards granted under the
Plan that are intended to comply with the requirements of “performance-based
compensation” under Section 162(m) of the Code, the Plan shall be interpreted in
a manner consistent with those requirements.

 

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

 

A. “Affiliate” means any entity other than the Company and its Subsidiaries that
is designated by the Board as a participating employer under the Plan, provided
that the Company directly or indirectly owns at least 20% of the combined voting
power of all classes of stock of such entity or at least 20% of the ownership
interests in such entity.

 

B. “Board” means the Board of Directors of the Company.

 

C. “Cause” has the meaning provided in Section 5(j) of the Plan.

 

D. “Change in Control” has the meaning provided in Section 12(b) of the Plan.

 

E. “Change in Control Price” has the meaning provided in Section 12(d) of the
Plan.

 

F. “Code” means the Internal Revenue Code of 1986, as amended from time to time,
and any successor thereto.

 

G. “Common Stock” means the Company’s Common Stock, par value $.01 per share.

 

H. “Committee” means the Compensation Committee of the Board of Directors of the
Company.

 

I. “Company” means Coventry Health Care, Inc., a corporation organized under the
laws of the State of Delaware or any successor corporation.

 

J. “Covered Officer” shall mean at any date (i) any individual who, with respect
to the previous taxable year of the Company, was a “covered employee” of the
Company within the meaning of Section 162(m); provided, however, that the term
“Covered Officer” shall not include any such individual who is designated by the
Committee, in its discretion, at the time of any Award or at any subsequent
time, as reasonably expected not to be such a “covered employee” with respect to
the current taxable year of the Company and (ii) any individual who is
designated by the Committee, in its discretion, at the time of any Award or at
any subsequent time, as reasonably expected to be such a “covered employee” with
respect to the current taxable year of the Company or with respect to the
taxable year of the Company in which any applicable Award will be paid.

 

K. “Disability” means disability as determined under the Company’s Group Long
Term Disability Insurance Plan.

L. “Early Retirement” means retirement, for purposes of this Plan with the
express consent of the Company at or before the time of such retirement, from
active employment with the Company and any Subsidiary or Affiliate prior to
age 65, in accordance with any applicable early retirement policy of the Company
then in effect or as may be approved by the Committee.

 

M. “Effective Date” has the meaning provided in Section 16 of the Plan.

 

N. “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.

 

O. “Fair Market Value” means with respect to the Common Stock, as of any given
date or dates, unless otherwise determined by the Committee in good faith, the
reported closing price on the date of grant, or if such date shall fall on a
non-business day, the reported closing price on the business day immediately
preceding the date of grant of a share of Common Stock on the New York Stock
Exchange or such other market or exchange as is the principal trading market for
the Common Stock, or, if no such sale of a share of Common Stock is reported on
the New York Stock Exchange or other exchange or principal trading market on
such date, the fair market value of a share of Common Stock as determined by the
Committee in good faith.

 

P. “Incentive Stock Option” means any Stock Option intended to be and designated
as an “Incentive Stock Option” within the meaning of Section 422 of the Code.

 

Q. “Immediate Family” means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.

 

R. “Independent Director” means a member of the Board who is an “Independent
Director” within the meaning of Rule 16b-3(b)(3) promulgated under the Exchange
Act, an outside director within the meaning of Treasury Regulation Sec.
162-27(e)(3) promulgated under the Code, and who satisfies the applicable
independence requirements of the New York Stock Exchange.

 

S. “Non-Qualified Stock Option” means any Stock Option that is not an Incentive
Stock Option.

 

T. “Normal Retirement” means retirement from active employment with the Company
and any Subsidiary or Affiliate on or after age 65.

 

U. “Other Stock-Based Award” means an award under Section 10 below that is
valued in whole or in part by reference to, or is otherwise based on, the Common
Stock.

 

V. “Outside Director” means a member of the Board who is not then (i) an officer
or employee of the Company or any Subsidiary or Affiliate of the Company, or
(ii) the direct or beneficial owner of five percent (5%) or more of the Common
Stock of the Company.

 

W. “Outside Director Stock Option” means an award to an Outside Director under
Section 11 below.

 

X. “Performance Award” means an award under Sections 8 and 9 below.

 

Y. “Plan” means this 2004 Stock Incentive Plan, as amended from time to time.

 

Z. “Restricted Stock” means an award of shares of Common Stock that is subject
to restrictions under Section 7 and/or Section 11 of the Plan.

 

AA. “Restriction Period” has the meaning provided in Section 7 of the Plan.

 

BB. “Retirement” means Normal or Early Retirement.

CC. “Section 162(m) Maximum” has the meaning provided in Section 3(b) hereof.

 

DD. “Stock Appreciation Right” or “SAR” means the right, pursuant to an award
granted under Section 6 below, to receive in cash and/or shares upon exercise
the increase in the Fair Market Value of a share of Common Stock above the Fair
Market Value (or other price established by the Committee) of a share of Common
Stock on the date of grant.

 

EE. “Stock Option” or “Option” means any option to purchase shares of Common
Stock (including Restricted Stock, if the Committee so determines) granted
pursuant to Section 5 and/or Section 11 below.

 

FF. “Stock Unit” means a unit awarded under Section 11, Awards to Outside
Directors, with a value equal to the value of one share of the Company’s Common
Stock. A Stock Unit shall not be evidenced by or convertible into any actual
share of the Company’s common stock until it is distributed from the Plan.

 

GG. “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if 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 the chain.

 

SECTION 2.  Administration.

 

The Plan shall be administered by the Committee. Each member of the Committee
shall be an Independent Director. The Committee shall have authority to grant,
pursuant to the terms of the Plan, to officers, other key employees, Outside
Directors and consultants eligible under Section 4: (i) Stock Options,
(ii) Stock Appreciation Rights, (iii) Restricted Stock, (iv) Performance Awards
and/or (v) Other Stock-Based Awards; provided, however, that the power to grant
and establish the terms and conditions of awards to Outside Directors under the
Plan other than pursuant to Section 11 shall be reserved to the Board.

 

In particular, the Committee, or the Board, as the case may be, shall have the
authority, consistent with the terms of the Plan:

 

(a) to select the officers, key employees and Outside Directors of and
consultants to the Company and its Subsidiaries and Affiliates to whom Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Awards, and/or
Other Stock-Based Awards may from time to time be granted hereunder;

 

(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Awards and/or Other Stock-Based Awards, or any combination thereof,
are to be granted hereunder to one or more eligible persons;

 

(c) to determine the number of shares to be covered by each such award granted
hereunder;

 

(d) to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any award granted hereunder (including, but not limited to, the
share price and any restriction or limitation, performance requirement or any
vesting acceleration or waiver of forfeiture restrictions regarding any Stock
Option or other award and/or the shares of Common Stock relating thereto, based
in each case on such factors as the Committee shall determine, in its sole
discretion); and to amend or waive any such terms and conditions to the extent
permitted by Section 13 hereof;

 

(e) to determine whether and under what circumstances a Stock Option may be
settled in cash or Restricted Stock under Section 5(l) or (m), as applicable,
instead of Common Stock;

(f) to determine whether, to what extent, and under what circumstances Option
grants and/or other awards under the Plan are to be made, and operate, on a
tandem basis vis-a-vis other awards under the Plan and/or cash awards made
outside of the Plan;

 

(g) to determine whether, to what extent, and under what circumstances shares of
Common Stock and other amounts payable with respect to an award under this Plan
shall be deferred either automatically or at the election of the participant
(including providing for and determining the amount (if any) of any deemed
earnings on any deferred amount during any deferral period);

 

(h) to determine whether to require payment of tax withholding requirements in
shares of Common Stock subject to the award; and

 

(i) to impose any holding period required to satisfy Section 16 under the
Exchange Act.

 

The Committee shall have the authority to adopt, alter, and repeal such rules,
guidelines, and practices governing the Plan as it shall, from time to time,
deem advisable; to interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.

 

All decisions made by the Committee pursuant to the provisions of the Plan shall
be made in the Committee’s sole discretion and shall be final and binding on all
persons, including the Company and Plan participants.

SECTION 3.  Shares of Common Stock Subject to Plan.

 

(a) The maximum number shares of Common Stock that may be issued pursuant to
awards under this Plan and the Company’s Amended and Restated 1998 Stock
Incentive Plan and the Assumed Plans as defined therein (collectively, the “1998
Plan”) shall be 18,000,000 shares plus any shares that are available or may
become available at any time under the 1998 Plan, subject to adjustments set
forth herein. No further grants may be made under the 1998 Plan.

 

(b) The shares of Common Stock issuable under the Plan may consist, in whole or
in part, of authorized and unissued shares or treasury shares. No officer of the
Company or other person whose compensation may be subject to the limitations on
deductibility under Section 162(m) of the Code shall be eligible to receive
awards pursuant to this Plan in excess of 1,000,000 shares of Common Stock in
any fiscal year (the “Section 162(m) Maximum”).

 

(c) If any shares of Common Stock that have been optioned hereunder cease to be
subject to such option, or if any shares of Common Stock that are subject to any
Restricted Stock, Performance Awards settled in stock or Other Stock-Based Award
granted hereunder are forfeited, or any such award otherwise terminates without
a payment being made to the participant in the form of Common Stock, such shares
shall again be available for distribution in connection with future awards under
the Plan, so long as the total does not exceed the number specified in 3(a)
above.

 

(d) Awards other than Stock Options and Stock Appreciation Rights shall be
counted against the maximum number of shares available for grant in a 1.75-to-1
ratio.

 

(e) In the event of any merger, reorganization, consolidation, equity
restructuring, recapitalization, extraordinary cash dividend, stock dividend or
stock split affecting the shares of Common Stock, then the Committee shall make
an equitable and proportionate adjustment in the maximum number of shares that
may be awarded under the Plan, in the number and option price of shares subject
to outstanding Options granted under the Plan, in the number of shares
underlying Outside Director Stock Options to be granted under Section 11 hereof,
in the Section 162(m) Maximum and in the number of shares and price subject to
other outstanding awards granted under the Plan, provided that the number of
shares subject to any award shall always be a whole number. An adjusted option
price shall also be used to determine the amount payable by the Company upon the
exercise of any Stock Appreciation Right.

 

SECTION 4.  Eligibility.

 

Officers, other key employees and Outside Directors of and consultants to the
Company and its Subsidiaries and Affiliates who are responsible for or
contribute to the management, growth and/or profitability of the business of the
Company and/or its Subsidiaries and Affiliates are eligible to be granted awards
under the Plan. Outside Directors are eligible to receive awards pursuant to
Section 11 and as otherwise determined by the Board.

 

SECTION 5.  Stock Options.

 

Stock Options may be granted alone, in addition to, or in tandem with other
awards granted under the Plan and/or cash awards made outside of the Plan. Any
Stock Option granted under the Plan shall be in such form as the Committee may
from time to time approve.

 

Stock Options granted under the Plan may be of two types: (i) Incentive Stock
Options and (ii) Non-Qualified Stock Options. Incentive Stock Options may be
granted only to individuals who are employees of the Company or any Subsidiary
of the Company.

 

The Committee shall have the authority to grant to any optionee Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options.

Options granted to officers, key employees, Outside Directors and consultants
under the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable.

 

(a) Option Price.  The option price per share of Common Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant but
shall be not less than 100% (or, in the case of any employee who owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of any of its Subsidiaries, not less than 110%) of the
Fair Market Value of the Common Stock at grant, in the case of Incentive Stock
Options, and not less than 100% of the Fair Market Value of the Common Stock at
grant, in the case of Non-Qualified Stock Options.

 

(b) Option Term.  The term of each Stock Option shall be fixed by the Committee,
but no Stock Option shall be exercisable more than ten years (or, in the case of
an Incentive Stock Option issued to an employee who owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries or parent corporations, more than five years)
after the date the Option is granted.

 

(c) Exercisability.  Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the Committee
at or after grant; provided, however, that except as provided in Section 5(g)
and (h) and Section 12, unless otherwise determined by the Committee at or after
grant, no Stock Option shall be exercisable prior to the first anniversary date
of the granting of the Option. The Committee may provide that a Stock Option
shall vest over a period of future service at a rate specified at the time of
grant, or that the Stock Option is exercisable only in installments. If the
Committee provides, in its sole discretion, that any Stock Option is exercisable
only in installments, the Committee may waive such installment exercise
provisions at any time at or after grant, in whole or in part, based on such
factors as the Committee shall determine in its sole discretion.

 

(d) Method of Exercise.  Subject to whatever installment exercise restrictions
apply under Section 5(c), Stock Options may be exercised in whole or in part at
any time during the option period, by giving written notice of exercise to the
Company specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price, either by check, by wire
transfer, or such other form of funds transfer as the Committee may accept. As
determined by the Committee, in its sole discretion, at or (except in the case
of an Incentive Stock Option) after grant, payment in full or in part may also
be made in the form of shares of Common Stock already owned for at least six
months by the optionee. In the case of a Non-Qualified Stock Option, the
Committee, in its discretion, at or after grant, may permit option holders, in
lieu of the payment of withholding taxes due, but only to the extent the Company
is required to withhold such taxes, to surrender shares subject to purchase
without restriction under such Option or another award hereunder (in each case
valued at the Fair Market Value of the Common Stock on the date the Option is
exercised). No shares of Common Stock shall be issued until full payment
therefor has been made. An optionee shall generally have the rights to dividends
or other rights of a shareholder with respect to shares subject to the Option
when the optionee has given written notice of exercise, has paid in full for
such shares, and, if requested, has given the representation described in
Section 15(a).

 

(e) Transferability of Options.  No Non-Qualified Stock Option shall be
transferable by the optionee other than (i) transfers by the optionee to a
member of his or her Immediate Family or a trust for the benefit of the optionee
or a member of his or her Immediate Family, or (ii) transfers by will or by the
laws of descent and distribution. No Incentive Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution and all Incentive Stock Options shall be exercisable, during
the optionee’s lifetime, only by the optionee. Following any such transfer, any
transferred Options shall continue to be subject to the same terms and
conditions as in effect prior to transfer.

(f) Bonus for Taxes.  In the case of a Non-Qualified Stock Option or an optionee
who elects to make a disqualifying disposition (as defined in Section 422(a)(1)
of the Code) of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option, the Committee in its discretion may award at the time of grant or
thereafter the right to receive upon exercise of such Stock Option a cash bonus
calculated to pay part or all of the federal and state, if any, income tax
incurred by the optionee upon such exercise.

 

(g) Termination by Death.  Subject to Section 5(k), if an optionee’s employment
by the Company and any Subsidiary or (except in the case of an Incentive Stock
Option) Affiliate terminates by reason of death, any Stock Options held by such
optionee shall vest in full and may thereafter be exercised by the legal
representative of the estate or by the legatee of the optionee under the will of
the optionee, for a period of one year (or such other period as the Committee
may specify at or after grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.

 

(h) Termination by Reason of Disability.  Subject to Section 5(k), if an
optionee’s employment by the Company and any Subsidiary or (except in the case
of an Incentive Stock Option) Affiliate terminates by reason of Disability, any
Stock Options held by such optionee shall vest in full and may thereafter be
exercised by the optionee for a period of (i) three years (or such other period
as the Committee may specify at or after grant) from the date of such
termination of employment or until the expiration of the stated term of such
Stock Option, whichever period is the shorter, in the case of a Non-Qualified
Stock Option and (ii) one year from the date of termination of employment or
until the expiration of the stated term of such Stock Option, whichever period
is shorter, in the case of an Incentive Stock Option; provided, however, that,
if the optionee dies within the period specified in (i) above (or other such
period as the Committee shall specify at or after grant), any unexercised
Non-Qualified Stock Option held by such optionee shall thereafter be exercisable
for a period of twelve months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
In the event of termination of employment by reason of Disability, if an
Incentive Stock Option is exercised after the expiration of the exercise period
applicable to Incentive Stock Options, but before the expiration of any period
that would apply if such Stock Option were a Non-Qualified Stock Option, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.

 

(i) Termination by Reason of Retirement.  Subject to Section 5(k), if an
optionee’s employment by the Company and any Subsidiary or (except in the case
of an Incentive Stock Option) Affiliate terminates by reason of Normal or Early
Retirement, any Stock Option held by such optionee may thereafter be exercised
by the optionee, to the extent it was exercisable at the time of such Retirement
or (except in the case of an Incentive Stock Option) on such accelerated basis
as the Committee may determine at or after grant (or, except in the case of an
Incentive Stock Option, as may be determined in accordance with procedures
established by the Committee), for a period of (i) three years (or such other
period as the Committee may specify at or after grant) from the date of such
termination of employment or the expiration of the stated term of such Stock
Option, whichever period is the shorter, in the case of a Non-Qualified Stock
Option and (ii) ninety (90) days from the date of such termination of employment
or the expiration of the stated term of such Stock Option, whichever period is
the shorter, in the event of an Incentive Stock Option; provided however, that,
if the optionee dies within the period specified in (i) above (or other such
period as the Committee shall specify at or after grant), any unexercised
Non-Qualified Stock Option held by such optionee shall thereafter be exercisable
to the extent to which it was exercisable at the time of death for a period of
twelve months from the date of such death or until the expiration of the stated
term of such Stock Option, whichever period is shorter. In the event of
termination of employment by reason of Retirement, if an Incentive Stock Option
is exercised after the expiration of the exercise period applicable to Incentive
Stock Options, but before the expiration of the period that would apply if such
Stock Option were a Non-Qualified Stock Option, the option will thereafter be
treated as a Non-Qualified Stock Option.

(j) Other Termination.  Subject to Section 5(k), unless otherwise determined by
the Committee (or pursuant to procedures established by the Committee) at or
(except in the case of an Incentive Stock Option) after grant, if an optionee’s
employment by the Company and any Subsidiary or (except in the case of an
Incentive Stock Option) Affiliate is involuntarily terminated for any reason
other than death, Disability or Normal or Early Retirement, the Stock Option
shall thereupon terminate, except that such Stock Option may be exercised, to
the extent otherwise then exercisable, for the lesser of ninety (90) days or the
balance of such Stock Option’s term if the involuntary termination is without
Cause. For purposes of this Plan, “Cause” means termination by the Company,
acting in good faith, by written notice to the Executive specifying the event
relied upon for such termination, due to; (i) the Executive’s indictment or
conviction of a felony, (ii) the Executive’s intentional perpetration of a
fraud, theft, embezzlement or other acts of dishonesty, (iii) the Executive’s
intentional breach of a trust or fiduciary duty which materially adversely
affects the Company or its shareholders. If an optionee voluntarily terminates
employment with the Company and any Subsidiary or (except in the case of an
Incentive Stock Option) Affiliate (except for Disability, Normal or Early
Retirement), the Stock Option shall thereupon terminate; provided, however, that
the Committee at grant or (except in the case of an Incentive Stock Option)
thereafter may extend the exercise period in this situation for the lesser of
ninety (90) days or the balance of such Stock Option’s term.

 

(k) Incentive Stock Options.  Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended, or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the optionee(s) affected, to
disqualify any Incentive Stock Option under such Section 422. No Incentive Stock
Option shall be granted to any participant under the Plan if such grant would
cause the aggregate Fair Market Value (as of the date the Incentive Stock Option
is granted) of the Common Stock with respect to which all Incentive Stock
Options are exercisable for the first time by such participant during any
calendar year (under all such plans of the Company and any Subsidiary) to exceed
$100,000. To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue Service
pronouncement:

 

(i) if (x) a participant’s employment is terminated by reason of death,
Disability, or Retirement and (y) the portion of any Incentive Stock Option that
is otherwise exercisable during the post-termination period specified under
Section 5(g), (h) or (i), applied without regard to the $100,000 limitation
contained in Section 422(d) of the Code, is greater than the portion of such
Option that is immediately exercisable as an “Incentive Stock Option” during
such post-termination period under Section 422, such excess shall be treated as
a Non-Qualified Stock Option; and

 

(ii) if the exercise of an Incentive Stock Option is accelerated by reason of a
Change in Control, any portion of such Option that is not exercisable as an
Incentive Stock Option by reason of the $100,000 limitation contained in
Section 422(d) of the Code shall be treated as a Non-Qualified Stock Option.

 

(l) Settlement Provisions.  If the option agreement so provides at grant or
(except in the case of an Incentive Stock Option) is amended after grant and
prior to exercise to so provide (with the optionee’s consent), the Committee may
require that all or part of the shares to be issued with respect to the spread
value of an exercised Option take the form of Restricted Stock, which shall be
valued on the date of exercise on the basis of the Fair Market Value (as
determined by the Committee) of such Restricted Stock.

 

(m) Performance and Other Conditions.  The Committee may condition the grant,
vesting or exercise of any Option upon the attainment of specified performance
goals or other factors as the Committee may determine, in its sole discretion.
The Committee in its discretion may also provide in the option agreement that
any such conditional Option shall vest immediately prior to its expiration if
the conditions to exercise have not theretofore been satisfied.

SECTION 6.  Stock Appreciation Rights.

 

(a) Grant and Exercise.  Stock Appreciation Rights may be granted on such terms
as shall be consistent with the Plan. A Stock Appreciation Right may be
exercised by an optionee, subject to Section 6(b), in accordance with the
procedures established by the Committee for such purpose. Upon such exercise,
the optionee shall be entitled to receive an amount determined in the manner
prescribed in Section 6(b).

 

(b) Terms and Conditions.  Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the following:

 

(i) SARs shall be exercisable only at such time or times during such periods and
for such number of SARs as shall be determined by the Committee, provided that
no SAR may be exercised more than 10 years after the date of grant, and any SAR
may be subject to earlier termination, cancellation or expiration as provided in
the Plan.

 

(ii) Upon the exercise of a SAR, an optionee shall be entitled to receive an
amount in cash and/or shares of Common Stock with a Fair Market Value equal in
value to the excess of the Fair Market Value of one share of Common Stock on the
date of exercise over the Fair Market Value per share of Common Stock on the
date of grant, or such other price per share as the Committee shall determine,
multiplied by the number of SARs which shall have been exercised, with the
Committee having the right to determine the form of payment at or after grant.
SARs exercised and settled in shares of Common Stock shall be counted in full
amount exercised against the number of shares available for grant under the 2004
Plan, regardless of the number of net shares issued upon settlement of the SAR.

 

(iii) Stock Appreciation Rights shall be transferable only to the extent that
Stock Options would be transferable under Section 5(e) of the Plan.

 

(iv) The Committee may condition the grant, vesting or exercise of any Stock
Appreciation Right upon the attainment of specified performance goals or other
factors as the Committee may determine, in its sole discretion.

 

SECTION 7.  Restricted Stock.

 

(a) Administration.  Shares of Restricted Stock may be issued either alone, in
addition to, or in tandem with other awards granted under the Plan and/or cash
awards made outside the Plan. The Committee shall determine the eligible persons
to whom, and the time or times at which, grants of Restricted Stock will be
made, the number of shares of Restricted Stock to be awarded to any person, the
price (if any) to be paid by the recipient of Restricted Stock (subject to
Section 7(b)), the time or times within which such awards may be subject to
forfeiture, and the other terms, restrictions and conditions of the awards in
addition to those set forth in Section 7(c). The Committee may condition the
grant of Restricted Stock upon the attainment of specified performance goals or
such other factors as the Committee may determine, in its sole discretion. The
provisions of Restricted Stock awards need not be the same with respect to each
recipient.

 

(b) Awards and Certificates.  The prospective recipient of a Restricted Stock
award shall not have any rights with respect to such award, unless and until
such recipient has executed an agreement evidencing the award and has delivered
a fully executed copy thereof to the Company, and has otherwise complied with
the applicable terms and conditions of such award.

 

(i) The purchase price for shares of Restricted Stock shall be established by
the Committee and may be zero.

 

(ii) Awards of Restricted Stock must be accepted within a period of 60 days (or
such shorter period as the Committee may specify at grant) after the award date,
by executing a Restricted Stock Award Agreement and paying whatever price (if
any) is required under Section 7(b)(i).

(iii) Each participant receiving a Restricted Stock award shall be issued either
a stock certificate in respect of such shares of Restricted Stock or such shares
may be held in an uncertificated book account by the Company’s transfer agent.
Shares shall be registered in the name of such participant, and, in the case of
a stock certificate, such certificate shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such award.

 

(iv) The Committee shall require that the stock certificates or book entry
accounts evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock power,
endorsed in blank, relating to the shares of Common Stock covered by such award.

 

(c) Restrictions and Conditions.  The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:

 

(i) In accordance with the provisions of this Plan and the award agreement,
during a period set by the Committee commencing with the date of such award (the
“Restriction Period”), the participant shall not be permitted to sell, transfer,
pledge, assign, or otherwise encumber shares of Restricted Stock awarded under
the Plan. Within these limits, the Committee, in its sole discretion, may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or in part, based on service, performance, or
such other factors or criteria as the Committee may determine in its sole
discretion.

 

(ii) Except as provided in this paragraph (ii) and Section 7(c)(i), the
participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a shareholder of the Company, including the right to vote the
shares, and the right to receive any cash dividends. The Committee, in its sole
discretion, as determined at the time of award, may permit or require the
payment of cash dividends to be deferred and, if the Committee so determines,
reinvested, subject to Section 15(e), in additional Restricted Stock to the
extent shares are available under Section 3, or otherwise reinvested. Pursuant
to Section 3 above, stock dividends issued with respect to Restricted Stock
shall be treated as additional shares of Restricted Stock that are subject to
the same restrictions and other terms and conditions that apply to the shares
with respect to which such dividends are issued. If the Committee so determines,
the award agreement may also impose restrictions on the right to vote and the
right to receive dividends.

 

(iii) Subject to the applicable provisions of the award agreement and this
Section 7, upon termination of a participant’s employment with the Company and
any Subsidiary or Affiliate for any reason other than death or Disability during
the Restriction Period, all shares still subject to restriction will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after grant.

 

(iv) Upon termination of a participant’s employment with the Company and any
Subsidiary or Affiliate by reason of death or Disability during the Restriction
Period, all shares still subject to restriction will fully vest, the
restrictions shall lapse and the unrestricted shares shall be delivered promptly
to the participant or to the legal representative of the estate or by the
legatee of the participant under the will of the participant.

 

(v) If and when the Restriction Period expires without a prior forfeiture of the
Restricted Stock subject to such Restriction Period, certificates for an
appropriate number of unrestricted shares shall be delivered to the participant
promptly.

 

(d) Minimum Value Provisions.  In order to better ensure that award payments
actually reflect the performance of the Company and service of the participant,
the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Common Stock to the recipient of a restricted stock award, subject to
such performance, future service, deferral, and other terms and conditions as
may be specified by the Committee.

SECTION 8.  Performance Awards.

 

8.1 Grant.  The Committee shall have sole and complete authority to determine
the Participants who shall receive a Performance Award, which shall consist of a
right that is (i) denominated in cash or Common Stock, Stock Option, SAR or
Restricted Stock, (ii) valued, as determined by the Committee, in accordance
with, or subject to, the achievement of such performance goals during such
performance periods as the Committee shall establish, and (iii) payable at such
time and in such form as the Committee shall determine. All Performance Awards
shall be subject to the terms and provisions of Section 9 hereof.

 

8.2 Terms and Conditions.  Subject to the terms of the Plan and any applicable
Award Agreement, the Committee shall determine the performance goals to be
achieved (as set forth in Section 9.2) during any performance period, the length
of any performance period, the amount of any Performance Award and the amount
and kind of any payment or transfer to be made pursuant to any Performance
Award, and may amend specific provisions of the Performance Award; provided,
however, that such amendment may not adversely affect existing Performance
Awards made within a performance period commencing prior to implementation of
the amendment.

 

8.3 Payment of Performance Awards.  Performance Awards may be paid in a lump sum
or in installments following the close of the performance period or, in
accordance with the procedures established by the Committee, on a deferred
basis. Termination of employment prior to the end of any performance period,
other than for reasons of death or Disability, will result in the forfeiture of
the Performance Award for that period, and no payments will be made with respect
to that period, except that the Committee at grant may provide that certain
awards that are performance based, paid in cash, and designed primarily for
retention of key executives may be paid upon termination by the Company other
than for cause. Upon termination of a participant’s employment with the Company
and by reason of death or Disability during the performance period, the
Performance Award for that period shall be paid to the participant or to the
legal representative of the estate or by the legatee of the participant under
the will of the participant. A participant’s rights to any Performance Award may
not be sold, assigned, transferred, pledged, hypothecated or otherwise
encumbered or disposed of in any manner, except by will or the laws of descent
and distribution, and/or except as the Committee may determine at or after
grant.

 

SECTION 9.  Provisions Applicable To Performance Awards.

 

9.1 General.  Notwithstanding anything in the Plan to the contrary, Performance
Awards to Covered Officers shall be subject to the terms and provisions of this
Section 9.

 

9.2 Performance Measures.  The Committee may grant Performance Awards to Covered
Officers based solely upon the attainment of performance targets related to one
or more performance goals selected by the Committee from among the goals
specified below. For the purposes of this Section 9, performance goals shall be
limited to one or more of the following Company, Subsidiary, operating unit or
division financial performance measures:

 

(a) earnings before interest, taxes, depreciation and/or amortization;

 

(b) operating income or profit;

 

(c) return on equity, assets, capital, capital employed, or investment;

 

(d) after tax operating income;

 

(e) net income;

 

(f) earnings or book value per share of Common Stock;

 

(g) cash flow(s);

(h) total sales or revenues or sales or revenues per employee;

 

(i) stock price or total shareholder return;

 

(j) dividends;

 

(k) strategic business objectives, consisting of one or more objectives based on
meeting specified cost targets, business expansion goals, and goals relating to
acquisitions or divestitures; or

 

(l) any combination thereof.

 

Each goal may be expressed on an absolute and/or relative basis, may be based on
or otherwise employ comparisons based on internal targets, the past performance
of the Company or any Subsidiary, operating unit or division of the Company
and/or the past or current performance of other companies, and in the case of
earnings-based measures, may use or employ comparisons relating to capital,
shareholders’ equity and/or shares of Common Stock outstanding, or to assets or
net assets.

 

9.3 Maximums.  With respect to any Covered Officer, the maximum annual number of
shares in respect of which all Performance Awards may be granted under Section 9
of this Plan is 500,000 shares and the maximum annual amount of any cash award
attributable to or earned in any performance period is $5,000,000.

 

9.4 Other Requirements.  To the extent necessary to comply with Section 162(m),
with respect to grants of Performance Awards, no later than 90 days following
the commencement of each performance period (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (1) select the performance goal or goals applicable to the performance
period, (2) establish the various targets and bonus amounts which may be earned
for such performance period, and (3) specify the relationship between
performance goals and targets and the amounts to be earned by each Covered
Officer for such performance period. Following the completion of each
performance period, the Committee shall certify in writing whether the
applicable performance targets have been achieved and the amounts, if any,
payable to Covered Officers for such performance period. In determining the
amount earned by a Covered Officer for a given performance period, subject to
any applicable award agreement, the Committee shall have the right to reduce
(but not increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the performance period.

 

SECTION 10.  Other Stock-Based Awards.

 

(a) Administration.  Other Stock-Based Awards, including, without limitation,
performance shares, convertible preferred stock, convertible debentures,
exchangeable securities and Common Stock awards or options valued by reference
to earnings per share or Subsidiary performance, may be granted either alone, in
addition to, or in tandem with Stock Options, Stock Appreciation Rights, or
Restricted Stock granted under the Plan and cash awards made outside of the
Plan; provided that no such Other Stock-Based Awards may be granted in tandem
with Incentive Stock Options if that would cause such Stock Options not to
qualify as Incentive Stock Options pursuant to Section 422 of the Code. Subject
to the provisions of the Plan, the Committee shall have authority to determine
the persons to whom and the time or times at which such awards shall be made,
the number of shares of Common Stock to be awarded pursuant to such awards, and
all other conditions of the awards. The Committee may also provide for the grant
of Common Stock upon the completion of a specified performance period. The
provisions of Other Stock-Based Awards need not be the same with respect to each
recipient.

 

(b) Terms and Conditions.  Other Stock-Based Awards made pursuant to this
Section 10 shall be subject to the following terms and conditions:

(i) Subject to the provisions of this Plan and the award agreement and unless
otherwise determined by the Committee at grant, the recipient of an award under
this Section 10 shall be entitled to receive, currently or on a deferred basis,
interest or dividends or interest or dividend equivalents with respect to the
number of shares covered by the award, as determined at the time of the award by
the Committee, in its sole discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been reinvested in additional shares of
Common Stock or otherwise reinvested.

 

(ii) Any award under Section 10 and any shares of Common Stock covered by any
such award shall vest or be forfeited to the extent so provided in the award
agreement, as determined by the Committee in its sole discretion, except as set
forth under this Section 10.

 

(iii) In the event of the participant’s Retirement, or in cases of special
circumstances, the Committee may, in its sole discretion, waive in whole or in
part any or all of the remaining limitations imposed hereunder (if any) with
respect to any or all of an award under this Section 10.

 

(iv) In the event of the participant’s death or Disability, all remaining
limitations imposed hereunder with respect to all awards under this Section 10,
shall be waived and shall be delivered promptly to the participant or to the
legal representative of the estate or by the legatee of the participant under
the will of the participant

 

(iv) Each award under this Section 10 shall be confirmed by, and subject to the
terms of, an agreement or other instrument by the Company and the participant.

 

SECTION 11.  Awards to Outside Directors.

 

(a) Applicability and Administration.  The provisions of this Section 11 shall
apply only to awards to Outside Directors in accordance with this Section 11.
The Committee shall have no authority to determine the timing of or the terms or
conditions of any award under this Section 11. Instead, the Board shall have the
authority to interpret its provisions and supervise its administration, subject
to the provisions provided herein. All decisions made by the Board under this
Section 11 shall be made by the affirmative vote of a majority of its members
then in office.

 

(b) Awards.

 

(i) On January 1st of each year, beginning with the year 2006, each person who
is an Outside Director may elect to receive all or a portion of his or her
annual compensation in the form of cash, Stock Options, Restricted Stock, or a
combination thereof and/or to defer all or a portion of his or her compensation
in the form of deferred cash or Stock Units. Compensation allocated to cash is
paid out quarterly in arrears. Compensation allocated to deferred cash is
credited quarterly with interest based on the Company’s borrowing rate set at
the beginning of each year. Compensation allocated to stock awards (Stock
Options, Restricted Stock or deferred Stock Units) will be converted to awards
of equivalent value determined by using the same method used to expense the
awards for financial accounting purposes. The exercise price of each Outside
Director Stock Option granted pursuant to this Section 11(b) shall equal the
Fair Market Value of the Common Stock on such option’s date of grant. No Outside
Director Stock Option granted pursuant to this Section 11 shall qualify as an
Incentive Stock Option.

 

(ii) Upon joining the Board, new Outside Directors would receive a one-time
initial grant of a non-qualified stock option to purchase 10,000 shares of
Common Stock vesting in equal increments over four years. Compensation for
directors elected after January 1st will be prorated.

(c) Exercisability of Stock Options and Method of Exercise.  Outside Director
Stock Options vest in equal quarterly increments over the year compensation is
payable. Outside Director Stock Options may be exercised, in whole or in part,
only by notice in writing to the Company (i) stating the number of shares as to
which such option is to be exercised and the address to which the certificates
for such shares are to be sent, accompanied by cash, certified check or bank
draft payable to the order of the Company, in an amount equal to such option’s
exercise price per share multiplied by the number of shares of the Common Stock
as to which such option is then being exercised or (ii) instructing the Company
to deliver the shares being purchased to a broker, subject to the broker’s
delivery of cash to the Company equal to such option purchase price per share
multiplied by the number of shares as to which such Outside Director Stock
Option is then being exercised, or (iii) delivering shares of Common Stock
already owned by the Outside Director as partial or full payment of the Outside
Director Stock Option in accordance with the terms and restrictions set forth
under Section 5(d).

 

(d) Delivery of Lapsed Restricted Stock.  Outside Director Restricted Stock
vests in equal quarterly increments over the year compensation is payable. Upon
the lapse of restrictions, that increment of Restricted Stock lapsing shall be
delivered to the Outside Director.

 

(e) Distribution of Stock Units.  Outside Director Stock Units vest in equal
quarterly increments over the year compensation is payable. Stock Units will not
be evidenced by or convertible into any actual shares of the Company’s common
stock until distribution. Vested Stock Units will not be distributed until an
Outside Director’s termination from service on the Board, or upon his or her
death or upon a change in control (as defined under Section 409A of the Internal
Revenue Code of 1986, as amended). Distributions may be allowed in the case of
an unforeseeable emergency in accordance with criteria and procedures
established by the Board.

 

(f) Transferability

 

(i) Stock Options.  Outside Director Stock Options shall not be transferable
other than (i) transfers to a member of the Outside Director’s Immediate Family
or a trust for the benefit of the Outside Director or a member of his or her
Immediate Family, or (ii) transfers by will or by the laws of descent and
distribution.

 

(ii) Stock Units.  Vested stock units are not transferable, except pursuant to a
qualified domestic relations order or by will or the laws of descent and
distribution.

 

(g) Restricted Stock and Option Agreement.  Grantees of Outside Director Stock
Options and Outside Director Restricted Stock shall enter into a stock option
agreement in a form approved by the Board, which shall be subject to the terms
and conditions of this Plan. Any agreement may contain such other terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Board.

 

(h) Deferral Election Form.  Outside Directors must make a valid election
deferral in writing in accordance with procedures established by the Board.

 

(i) Termination.  The termination of Outside Director Stock Options or Outside
Director Restricted Stock shall be governed by the provisions of Sections 5(g),
5(i) and 5(j) hereof as if Outside Directors were employees of the Company,
except that any determination to accelerate the vesting of an Outside Director
Stock Option or Outside Director Restricted Stock will be made by the Board and
not by the Committee. Non-vested Stock Units shall be forfeited upon termination
of an Outside Director, except in the case of termination by reason of death,
which shall be governed by the provisions of Section 5(g) hereof as if the
Outside Director were an employee of the Company.

(j) Certain Changes.  Outside Director Stock Options and Outside Director
Restricted Stock shall be subject to Section 12. Stock Units shall be subject to
Section 409A of the Internal Revenue Code of 1986, as amended. The number of
shares and the exercise price per share of each Outside Director Stock Option
and Outside Director Restricted Stock shall be adjusted automatically in the
same manner as the number of shares and the exercise price for Stock Options and
Restricted Stock under Section 3 hereof at any time that Stock Options are
adjusted as provided in Section 3. Stock Units will be credited with any
dividends, stock splits, reverse stock splits or other changes in the Company’s
capitalization as if they were actual shares of the Company’s common stock.

 

(k) Taxes.  The Company may make such provision as it deems appropriate for the
withholding of any taxes which the Company determines are required in connection
with the grant or exercise of any award under this Section 11.

 

(l) Other Awards.  Outside Directors are eligible to receive other awards as may
be determined by the Board of Directors.

 

SECTION 12.  Change in Control Provisions.

 

(a) Impact of Event.  The Committee may determine, at or after grant (subject to
any right of approval expressly reserved by the Committee or the Board at the
time of such determination), that in the event of a “Change in Control” as
defined in Section 12(b), the following acceleration provisions shall apply:

 

(i) any Stock Appreciation Rights, any Stock Option or Outside Director Stock
Option awarded under the Plan not previously exercisable and vested shall become
fully exercisable and vested.

 

(ii) the restrictions applicable to any Restricted Stock, Outside Director
Restricted Stock, Performance Awards and Other Stock-Based Awards, in each case
to the extent not already vested under the Plan, shall lapse and such shares and
awards shall be deemed fully vested.

 

(iii) the Board or the Committee may impose additional conditions on the
acceleration or valuation of any award in the award agreement.

 

(b) Definition of Change in Control.  For purposes of Section 12(a), a “Change
in Control” means the happening of any of the following:

 

(i) any person or entity, including a “group” as defined in Section 13(d)(3) of
the Exchange Act, other than the Company or a wholly-owned subsidiary thereof or
any employee benefit plan of the Company or any of its Subsidiaries, becomes the
beneficial owner of the Company’s securities having 35% or more of the combined
voting power of the then outstanding securities of the Company that may be cast
for the election of directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary course of
business or other than transactions which are approved by a majority of the
Board); or

 

(ii) as the result of, or in connection with, any cash tender or exchange offer,
merger or other business combination, sales of assets or contested election, or
any combination of the foregoing transactions, less than a majority of the
combined voting power of the then outstanding securities of the Company or any
successor corporation or entity entitled to vote generally in the election of
the directors of the Company or such other corporation or entity after such
transactions are held in the aggregate by the holders of the Company’s
securities entitled to vote generally in the election of directors of the
Company immediately prior to such transaction; or

(iii) during any period of two consecutive years, individuals who at the
beginning of any such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company’s shareholders, of each director of the Company
first elected during such period was approved by a vote of at least two-thirds
of the directors of the Company then still in office who were directors of the
Company at the beginning of any such period.

 

SECTION 13.  Amendments and Termination.

 

The Board may at any time amend, alter or discontinue the Plan; provided,
however, that, without the approval of the Company’s shareholders, no amendment
or alteration may be made which would (a) except as a result of the provisions
of Section 3(d) of the Plan, increase the maximum number of shares that may be
issued under the Plan or increase the Section 162(m) Maximum, (b) change the
provisions governing Incentive Stock Options except as required or permitted
under the provisions governing incentive stock options under the Code, or
(c) make any change for which applicable law or regulatory authority (including
the regulatory authority of the New York Stock Exchange or any other market or
exchange on which the Common Stock is traded) would require shareholder approval
or for which shareholder approval would be required to secure full deductibility
of compensation received under the Plan under Section 162(m) of the Code. No
amendment, alteration, or discontinuation shall be made which would impair the
rights of an optionee or participant under a Stock Option, Stock Appreciation
Right, Restricted Stock, Performance Award, Other Stock-Based Award, Outside
Director Stock Option or Outside Director Restricted Stock theretofore granted,
without the participant’s consent.

 

The Committee may amend the terms of any Stock Option or other award theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without the holder’s
consent. The Committee may also substitute new Stock Options for previously
granted Stock Options (on a one for one or other basis); provided, however, the
Committee may not, without the approval of the Company’s shareholders, modify
any outstanding Stock Option so as to specify a lower exercise price or accept
the surrender of an outstanding Stock Option and authorize the granting of a new
Stock Option in substitution therefor specifying a lower exercise price. Solely
for purposes of computing the Section 162(m) Maximum, if any Stock Options or
other awards previously granted to a participant are canceled and new Stock
Options or other awards having a lower exercise price or other more favorable
terms for the participant are substituted in their place, both the initial Stock
Options or other awards and the replacement Stock Options or other awards will
be deemed to be outstanding (although the canceled Stock Options or other awards
will not be exercisable or deemed outstanding for any other purposes).

 

SECTION 14.  Unfunded Status of Plan.

 

The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a participant or
optionee by the Company, nothing contained herein shall give any such
participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or payments in lieu of or with respect to
awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the “unfunded” status of the
Plan.

SECTION 15.  General Provisions.

 

(a) The Committee may require each person purchasing shares pursuant to a Stock
Option or other award under the Plan to represent to and agree with the Company
in writing that the optionee or participant is acquiring the shares without a
view to distribution thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any restrictions on
transfer. All certificates for shares of Common Stock or other securities
delivered under the Plan shall be subject to such stock-transfer orders and
other restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

 

(b) Nothing contained in this Plan shall prevent the Board from adopting other
or additional compensation arrangements, subject to shareholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.

 

(c) The adoption of the Plan shall not confer upon any employee of the Company
or any Subsidiary or Affiliate any right to continued employment with the
Company or a Subsidiary or Affiliate, as the case may be, nor shall it interfere
in any way with the right of the Company or a Subsidiary or Affiliate to
terminate the employment of any of its employees at any time.

 

(d) No later than the date as of which an amount first becomes includible in the
gross income of the participant for Federal income tax purposes with respect to
any award under the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such amount. The Committee may require withholding obligations to be
settled with Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements and the Company
and its Subsidiaries or Affiliates shall, to the extent permitted by law, have
the right to deduct any such taxes from any payment of any kind otherwise due to
the participant.

 

(e) The actual or deemed reinvestment of dividends or dividend equivalents in
additional Restricted Stock (or other types of Plan awards) at the time of any
dividend payment shall only be permissible if sufficient shares of Common Stock
are available under Section 3 for such reinvestment (taking into account then
outstanding Stock Options and other Plan awards).

 

(f) The Plan and all awards made and actions taken thereunder shall be governed
by and construed in accordance with the laws of the State of Delaware.

 

(g) The members of the Committee and the Board shall not be liable to any
employee or other person with respect to any determination made hereunder in a
manner that is not inconsistent with their legal obligations as members of the
Board. In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys’
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
is approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Committee member is liable for negligence or
misconduct in the performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding, the Committee member shall
in writing offer the Company the opportunity, at its own expense, to handle and
defend the same.

(h) In addition to any other restrictions on transfer that may be applicable
under the terms of this Plan or the applicable award agreement, no Stock Option,
Stock Appreciation Right, Restricted Stock award, Performance Award, Other
Stock-Based Award, Outside Director Stock Option, Outside Director Restricted
Stock or other right issued under this Plan is transferable by the participant
without the prior written consent of the Committee, or, in the case of an
Outside Director, the Board, other than (i) transfers by an optionee to a member
of his or her Immediate Family or a trust for the benefit of the optionee or a
member of his or her Immediate Family or (ii) transfers by will or by the laws
of descent and distribution. The designation of a beneficiary will not
constitute a transfer.

 

(i) The Committee may, at or after grant, condition the receipt of any payment
in respect of any award or the transfer of any shares subject to an award on the
satisfaction of a six-month holding period, if such holding period is required
for compliance with Section 16 under the Exchange Act.

 

SECTION 16.  Effective Date of Plan.

 

The Plan shall be effective upon approval by the Board and by the affirmative
vote of a majority of the shares of the Company’s Common Stock entitled to vote.

 

SECTION 17.  Term of Plan.

 

No Stock Option, Stock Appreciation Right, Restricted Stock award, Performance
Award, Other Stock-Based Award, Outside Director Stock Option or Outside
Director Restricted Stock award shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date of the Plan, but awards
granted prior to such tenth anniversary may extend or be extended beyond that
date.