Exhibit 10.4

 

SCIENTIFIC GAMES CORPORATION

 

 

2003 Incentive Compensation Plan

As Amended and Restated

 

 

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SCIENTIFIC GAMES CORPORATION

 

2003 Incentive Compensation Plan, As Amended and Restated

 

Section

 

 

 

 

 

1.

Purpose

 

 

 

 

 

2.

Definitions

 

 

 

 

 

3.

Administration

 

 

 

 

 

 

(a)

Authority of the Committee

 

 

(b)

Manner of Exercise of Committee Authority

 

 

(c)

Limitation of Liability

 

 

 

 

 

4.

Shares Available Under the Plan

 

 

 

 

 

 

(a)

Number of Shares Available for Delivery

 

 

(b)

Share Counting Rules

 

 

 

 

 

5.

Eligibility; Per-Person Award Limitations

 

 

 

 

 

 

(a)

Grants to Eligible Persons

 

 

(b)

Annual Per-Person Award Limitations

 

 

 

 

 

6.

Specific Terms of Awards

 

 

 

 

 

 

(a)

General

 

 

(b)

Options

 

 

(c)

Stock Appreciation Rights

 

 

(d)

Restricted Stock

 

 

(e)

Deferred Stock

 

 

(f)

Bonus Stock and Awards in Lieu of Obligations

 

 

(g)

Dividend Equivalents

 

 

(h)

Other Stock-Based Awards

 

 

 

 

 

7.

Performance Awards, Including Annual Incentive Awards

 

 

 

 

 

 

(a)

Performance Awards Generally

 

 

(b)

Performance Awards Granted to Covered Employees

 

 

(c)

Annual Incentive Awards Granted to Designated Covered Employees

 

 

(d)

Exemptions from Section 16(b) Liability

 

 

 

 

 

8.

Certain Provisions Applicable to Awards

 

 

 

 

 

 

(a)

Stand-Alone, Additional, Tandem, and Substitute Awards

 

 

(b)

Term of Awards

 

 

(c)

Form and Timing of Payment under Awards; Deferrals

 

 

(d)

Additional Award Forfeiture Provisions

 

 

(e)

Exemptions from Section 16(b) Liability

 

 

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Section

 

 

 

 

 

9.

Change in Control

 

 

 

 

 

 

(a)

Effect of “Change in Control”

 

 

(b)

Definition of “Change in Control”

 

 

(c)

Definition of “Change in Control Price”

 

 

 

 

 

10.

General Provisions

 

 

 

 

 

 

(a)

Compliance with Legal and Other Requirements

 

 

(b)

Limits on Transferability; Beneficiaries

 

 

(c)

Adjustments

 

 

(d)

Taxes

 

 

(e)

Changes to the Plan and Awards

 

 

(f)

Limitation on Rights Conferred under Plan

 

 

(g)

Unfunded Status of Awards; Creation of Trusts

 

 

(h)

Certain Limitations on Awards to Ensure Compliance with Section 409A

 

 

(i)

Certain Limitations Relating to Accounting Treatment of Awards

 

 

(j)

Nonexclusivity of the Plan

 

 

(k)

Payments in the Event of Forfeitures; Fractional Shares

 

 

(l)

Awards to Participants Outside the United States

 

 

(m)

Governing Law

 

 

(n)

Preexisting Plan

 

 

(o)

Plan Effective Date and Termination

 

 

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SCIENTIFIC GAMES CORPORATION

 

2003 Incentive Compensation Plan

As Amended and Restated as of June 14, 2005

 

1.                                       Purpose.  The purpose of this 2003
Incentive Compensation Plan, as amended and restated (the “Plan”), is to assist
Scientific Games Corporation, a Delaware corporation (the “Company”), and its
subsidiaries in attracting, retaining, motivating and rewarding executives,
directors, employees, and other persons who provide services to the Company
and/or its subsidiaries, to provide for equitable and competitive compensation
opportunities, to encourage long-term service, to recognize individual
contributions and reward achievement of Company goals, and promote the creation
of long-term value for stockholders by closely aligning the interests of
participants with those of stockholders.  The Plan authorizes stock-based and
cash-based performance incentives for participants, to encourage such persons to
expend their maximum efforts in the creation of stockholder value. The Plan is
also intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Internal Revenue Code to the extent
deemed appropriate by the Committee which administers the Plan.

 

2.                                       Definitions.  For purposes of the Plan,
the following terms shall be defined as set forth below, in addition to such
terms defined in Section 1 hereof:

 

(a)                                  “Annual Incentive Award” means a type of
Performance Award granted to a Participant under Section 7(c) representing a
conditional right to receive cash, Stock or other Awards or payments, as
determined by the Committee, based on performance in a performance period of one
fiscal year or a portion thereof.

 

(b)                                 “Award” means any award of an Option, SAR
(including Limited SAR), Restricted Stock, Deferred Stock, Stock granted as a
bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award,
or Performance Award (including an Annual Incentive Award) together with any
other right or interest granted to a Participant under the Plan.

 

(c)                                  “Beneficiary” means the person, persons,
trust, or trusts which have been designated by a Participant in his or her most
recent written beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant’s death or to which
Awards or other rights are transferred if and to the extent permitted under
Section 10(b) hereof.  If, upon a Participant’s death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary means
person, persons, trust, or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

 

(d)                                 “Beneficial Owner” shall have the meaning
ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to
such Rule.

 

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

 

(f)                                    “Change in Control” means Change in
Control as defined with related terms in Section 9 of the Plan.

 

(g)                                 “Change in Control Price” means the amount
calculated in accordance with Section 9(c) of the Plan.

 

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(h)                                 “Code” means the Internal Revenue Code of
1986, as amended from time to time, including regulations thereunder and
successor provisions and regulations, proposed regulations and other applicable
guidance or pronouncement of the Department of the Treasury and Internal Revenue
Service.

 

(i)                                     “Committee” means the Compensation
Committee of the Board of Directors, the composition and governance of which is
established in the Committee’s Charter as approved from time to time by the
Board and other corporate governance documents of the Company.  No action of the
Committee shall be void or deemed to be without authority due to the failure of
any member, at the time the action was taken, to meet any qualification standard
set forth in the Committee Charter or this Plan.

 

(j)                                     “Covered Employee” means a person
designated by the Committee as likely to be a “covered employee,” as defined
under Code Section 162(m), with respect to a specified fiscal year or other
performance period.

 

(k)                                  “Deferred Stock” means a conditional right,
granted to a Participant under Section 6(e) hereof, to receive Stock, at the end
of a specified deferral period.

 

(l)                                     “Dividend Equivalent” means a
conditional right, granted to a Participant under Section 6(g), to receive cash,
Stock, other Awards, or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.

 

(m)                               “Effective Date” means the date of approval of
the Plan by stockholders of the Company.

 

(n)                                 “Eligible Person” means each executive
officer and other officer or full-time employee of the Company or of any
subsidiary, including each such person who may also be a director of the
Company, each non-employee director of the Company, each other person who
provides substantial services to the Company and/or its subsidiaries and who is
designated as eligible by the Committee, and any person who has been offered
employment by the Company or a subsidiary or affiliate, provided that such
prospective employee may not receive any payment or exercise any right relating
to an Award until such person has commenced employment with the Company or a
subsidiary.  An employee on leave of absence may be considered as still in the
employ of the Company or a subsidiary for purposes of eligibility for
participation in the Plan.

 

(o)                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended from time to time, including rules thereunder and
successor provisions and rules thereto.

 

(p)                                 “Fair Market Value” means the fair market
value of Stock, Awards, or other property as determined in good faith by the
Committee or under procedures established by the Committee.  Unless otherwise
determined by the Committee, the Fair Market Value of Stock shall be the average
of the high and low sales prices of Stock on a given date or, if there are no
sales on that date, on the latest previous date on which there were sales,
reported for composite transactions in securities listed on the principal
trading market on which Stock is then listed.  Fair Market Value relating to the
exercise price or grant price of any Non-409A Option or SAR shall conform to
requirements under Code Section 409A.

 

(q)                                 “409A Awards” means Awards that constitute a
deferral of compensation under Code Section 409A and regulations thereunder. 
“Non-409A Awards” means Awards other than 409A Awards; an Award granted before
January 1, 2005 which is eligible for “grandfathering” under Code Section 409A
(generally such an Award must be vested before January 1, 2005 in order to be
grandfathered) constitutes a Non-409A Award unless the Committee instead
designates it as a 409A Award.  Although the Committee retains authority under
the Plan to grant Options, SARs and Restricted Stock on terms that will qualify
those Awards as 409A Awards, Options, SARs exercisable for Stock, and Restricted
Stock will be Non-409A Awards

 

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(with conforming terms, as provided in Section 10(h)) unless otherwise expressly
specified by the Committee.

 

(r)                                    “Incentive Stock Option” or “ISO” means
any Option intended to be and designated as an incentive stock option within the
meaning of Code Section 422 or any successor provision thereto that may be
granted to Eligible Persons who are employees.

 

(s)                                  “Limited SAR” means a conditional right
granted to a Participant under Section 6(c) hereof.

 

(t)                                    “Option” means a conditional right,
granted to a Participant under Section 6(b) hereof, to purchase Stock or other
Awards at a specified price during specified time periods.

 

(u)                                 “Other Stock-Based Awards” means Awards
granted to a Participant under Section 6(h) hereof.

 

(v)                                 “Participant” means a person who has been
granted an Award under the Plan which remains outstanding, including a person
who is no longer an Eligible Person.

 

(w)                               “Performance Award” means a conditional right,
granted to a Participant under Section 7, to receive cash, Stock or other Awards
or payments, as determined by the Committee, based upon performance criteria
specified by the Committee.

 

(x)                                   “Preexisting Plan” mean the Company’s 1997
Incentive Compensation Plan, as amended and restated.

 

(y)                                 “Restricted Stock” means Stock granted to a
Participant under Section 6(d) hereof, that is subject to certain restrictions
and to a risk of forfeiture.

 

(z)                                   “Rule 16b-3” means Rule 16b-3, as from
time to time in effect and applicable to the Plan and Participants, promulgated
by the Securities and Exchange Commission under Section 16 of the Exchange Act.

 

(aa)                            “Stock”  means the Company’s Class A Common
Stock, $.01 par value, and such other securities as may be substituted (or
resubstituted) for Stock pursuant to Section 10(c) hereof.

 

(bb)                          “Stock Appreciation Rights” or “SAR” means a
conditional right granted to a Participant under Section 6(c) hereof.

 

3.                                       Administration.

 

(a)                                  Authority of the Committee.  Except as
otherwise provided below, the Plan shall be administered by the Committee.  The
Committee shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number, and other terms and
conditions of, and all other matters relating to, Awards, prescribe Award
agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan
and Award agreements and correct defects, supply omissions, or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee may deem necessary or advisable for the administration of the
Plan.  The foregoing notwithstanding, the Board shall perform the functions of
the Committee for purposes of granting Awards under the Plan to non-employee
directors, and may perform any function of the Committee under the Plan

 

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for any other purpose (subject to Nasdaq Marketplace Rule 4350(c)(3)), including
for the purpose of ensuring that transactions under the Plan by Participants who
are then subject to Section 16 of the Exchange Act in respect of the Company are
exempt under Rule 16b-3.  In any case in which the Board is performing a
function of the Committee under the Plan, each reference to the Committee herein
shall be deemed to refer to the Board, except where the context otherwise
requires.  Any action of the Committee shall be final, conclusive and binding on
all persons, including the Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof, or other persons claiming
rights from or through a Participant, and stockholders.

 

(b)                                 Manner of Exercise of Committee Authority. 
The Committee may act through subcommittees, including for purposes of
perfecting exemptions under Rule 16b-3 or qualifying Awards under Code
Section 162(m) as performance-based compensation, in which case the subcommittee
shall be subject to and have authority under the charter applicable to the
Committee, and the acts of the subcommittee shall be deemed to be acts of the
Committee hereunder. The express grant of any specific power to the Committee,
and the taking of any action by the Committee, shall not be construed as
limiting any power or authority of the Committee.  The Committee may delegate to
officers or managers of the Company or any subsidiary or affiliate, or
committees thereof, the authority, subject to such terms as the Committee shall
determine, to perform such functions, including administrative functions, as the
Committee may determine, to the fullest extent permitted under Section 157 and
other applicable provisions of the Delaware General Corporation Law.  The
Committee may appoint agents to assist it in administering the Plan.

 

(c)                                  Limitation of Liability.  The Committee and
each member thereof, and any person acting pursuant to authority delegated by
the Committee, shall be entitled, in good faith, to rely or act upon any report
or other information furnished by any executive officer, other officer or
employee of the Company or a subsidiary or affiliate, the Company’s independent
auditors, consultants or any other agents assisting in the administration of the
Plan.  Members of the Committee, any person acting pursuant to authority
delegated by the Committee, and any officer or employee of the Company or a
subsidiary or affiliate acting at the direction or on behalf of the Committee or
a delegee shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.

 

4.                                       Shares Available Under the Plan.

 

(a)    Number of Shares Available for Delivery.  Subject to adjustment as
provided in Section 10(c) hereof, the total number of shares of Stock reserved
and available for delivery in connection with Awards under the Plan shall be
8.5 million plus the number of shares that, under the Preexisting Plan, remain
available at the Effective Date or thereafter would become available under the
terms of the Preexisting Plan.  Any shares of Stock delivered under the Plan
shall consist of authorized and unissued shares or treasury shares.

 

(b)    Share Counting Rules.  The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards) and make adjustments if the
number of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award.  Shares subject to an Award that
is canceled, expired, forfeited, settled in cash or terminated or settled
without delivery of the full number of shares subject to such Award to the
Participant will again be available for Awards, and shares withheld in payment
of the exercise price or taxes relating to an Award and shares equal to the
number surrendered in payment of any exercise price or taxes relating to an
Award shall be deemed to constitute shares not delivered to the Participant and
shall be deemed to again be available for Awards under the Plan; provided,
however, that shares shall not become available under this Section 4(b) in an
event that would constitute a “material amendment” of the

 

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Plan subject to shareholder approval under Marketplace Rule 4350(i) and other
applicable rules of the Nasdaq National Market.  For purposes of determining the
number of Shares that become available as of the Effective Date under the
Preexisting Plan, the share counting rules of the Preexisting Plan will apply,
and the share counting rules of this Plan shall thereafter apply with respect to
awards that remain outstanding under the Preexisting Plan and Awards granted
under this Plan.  In addition, in the case of any Award granted in substitution
for an award of a company or business acquired by the Company or a subsidiary or
affiliate, shares issued or issuable in connection with such substitute Award
shall not be counted against the number of shares reserved under the Plan, but
shall be available under the Plan by virtue of the Company’s assumption of the
plan or arrangement of the acquired company or business.  This
Section 4(b) shall apply to the number of shares reserved and available for ISOs
only to the extent consistent with applicable regulations relating to ISOs under
the Code.  Because shares will count against the number reserved in
Section 4(a) upon delivery (or later vesting) and subject to the share counting
rules under this Section 4(b), the Committee may determine that Awards may be
outstanding that relate to more shares than the aggregate remaining available
under the Plan, so long as Awards will not result in delivery and vesting of
shares in excess of the number then available under the Plan.

 

5.                                       Eligibility; Per-Person Award
Limitations.

 

(a)                                  Grants to Eligible Persons.  Awards may be
granted under the Plan only to Eligible Persons.

 

(b)                                 Annual Per-Person Award Limitations.  In
each calendar year during any part of which the Plan is in effect, an Eligible
Person may be granted Awards under each of Sections 6(b), 6(c), 6(d), 6(e),
6(f), 6(g), and 6(h) (including Performance Awards under Section 7 based on
Awards authorized by each referenced subsection) relating to a number of shares
of Stock up to his or her Annual Limit.  A Participant’s Annual Limit, in any
year during any part of which the Participant is then eligible under the Plan,
shall equal 1.5 million shares plus the amount of the Participant’s unused
Annual Limit relating to the same type of Award as of the close of the previous
year, subject to adjustment as provided in Section 10(c).  In the case of a
cash-denominated Award for which the limitation set forth in the preceding
sentence would not operate as an effective limitation satisfying Treasury
Regulation 1.162-27(e)(4) (including a cash Performance Award under Section 7),
an Eligible Person may not be granted Awards authorizing the earning during any
calendar year of an amount that exceeds the Participant’s Annual Limit, which
for this purpose shall equal $3 million plus the amount of the Participant’s
unused cash Annual Limit as of the close of the previous year (this limitation
is separate and not affected by the number of Awards granted during such
calendar year subject to the limitation in the preceding sentence).  For this
purpose, (i) ”earning” means satisfying performance conditions so that an amount
becomes payable, without regard to whether it is to be paid currently or on a
deferred basis or continues to be subject to any service requirement or other
non-performance condition, and (ii) a Participant’s Annual Limit is used to the
extent a cash amount or number of shares may be potentially earned or paid under
an Award, regardless of whether such amount or shares are in fact earned or
paid.

 

6.                                       Specific Terms of Awards.

 

(a)                                  General.  Awards may be granted on the
terms and conditions set forth in this Section 6.  In addition, the Committee
may impose on any Award or the exercise thereof, at the date of grant or
thereafter (subject to Sections 10(e) and 10(h)), such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant and terms permitting a Participant
to make elections relating to his or her Award.  The Committee shall retain full
power and discretion to accelerate, waive or modify, at any time, any term or
condition of an Award that is not mandatory under the Plan.  The Committee shall
require the payment of lawful consideration for an Award to the extent necessary
to satisfy

 

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the requirements of the Delaware General Corporation Law, and may otherwise
require payment of consideration for an Award except as limited by the Plan.

 

(b)                                 Options.  The Committee is authorized to
grant Options to Participants on the following terms and conditions:

 

(i)                                     Exercise Price.  The exercise price per
share of Stock purchasable under an Option shall be determined by the Committee,
provided that such exercise price shall be not less than the Fair Market Value
of a share of Stock on the date of grant of such Option except as provided under
Section 6(f) or 8(a) hereof.  In addition, in connection with a merger,
consolidation or reorganization of the Company or any of its subsidiaries, the
Committee may grant Options with an exercise price per share less than the
market value of the Common Stock on the date of grant if such Options are
granted in exchange for, or upon conversion of, options to purchase capital
stock of any other entity which is a party to such merger, consolidation or
reorganization.

 

(ii)                                  Time and Method of Exercise.  The
Committee shall determine the time or times at which or the circumstances under
which an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the
methods by which such exercise price may be paid or deemed to be paid, the form
of such payment (subject to Section 10(h) and (i)), including, without
limitation, cash, Stock (including Stock deliverable upon exercise, if such
withholding will not result in additional accounting expense to the Company),
other Awards or awards granted under other plans of the Company or any
subsidiary or affiliate, or other property (including through broker-assisted
“cashless exercise” arrangements, to the extent permitted by applicable law),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered in satisfaction of Options to Participants (including, to the extent
permitted under Code Section 409A, deferred delivery of shares as mandated by
the Committee, with such deferred shares subject to any vesting, forfeiture or
other terms as the Committee may specify).

 

(iii)                               ISOs.  The terms of any ISO granted under
the Plan shall comply in all respects with the provisions of Code Section 422. 
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to ISOs (including any SAR in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be exercised, so as to disqualify either the Plan or any ISO under Code
Section 422, unless the Participant has first consented to the change that will
result in such disqualification.  ISOs may be granted only to employees of the
Company or any of its subsidiaries.  To the extent that the aggregate Fair
Market Value (determined as of the time the Option is granted) of the Stock with
respect to which ISOs granted under this Plan and all other plans of the Company
and any subsidiary are first exercisable by any employee during any calendar
year shall exceed the maximum limit (currently, $100,000), if any, imposed from
time to time under Code Section 422, such Options shall be treated as Options
that are not ISOs.

 

(c)                                  Stock Appreciation Rights.  The Committee
is authorized to grant SARs to Participants on the following terms and
conditions:

 

(i)                                     Right to Payment.  A SAR shall confer on
the Participant to whom it is granted a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one share of Stock on the date of
exercise (or, in the case of a “Limited SAR,” the Fair Market Value determined
by reference to the Change in Control Price, as defined under
Section 9(c) hereof) over (B) the grant price of the SAR as determined by the
Committee, which grant price shall be not less than the Fair Market Value of a
share of Stock on the date of grant of such SAR..

 

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(ii)                                  Other Terms.  The Committee shall
determine, at the date of grant or thereafter, the term of each SAR, provided
that in no event shall the term of an SAR exceed a period of ten years from the
date of grant, the time or times at which and the circumstances under which an
SAR may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the method of exercise,
method of settlement, form of consideration payable in settlement, method by or
forms in which Stock will be delivered or deemed to be delivered to
Participants, whether or not an SAR shall be in tandem or in combination with
any other Award, whether or not the SAR will be a 409A Award or Non-409A Award
(cash SARs will in all cases be 409A Awards), and any other terms and conditions
of any SAR.  Limited SARs that may only be exercised in connection with a Change
in Control, termination of service following a Change in Control, or other event
as specified by the Committee may be granted on such terms, not inconsistent
with this Section 6(c), as the Committee may determine.  SARs and Limited SARs
may be either freestanding or in tandem with other Awards.  The Committee may
require that an outstanding Option be exchanged for an SAR exercisable for Stock
having vesting, expiration, and other terms substantially the same as the
Option, so long as such exchange will not result in additional accounting
expense to the Company.

 

(d)                                 Restricted Stock.  The Committee is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:

 

(i)                                     Grant and Restrictions.  Restricted
Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which
restrictions may lapse separately or in combination at such times, under such
circumstances (including based on achievement of performance goals and/or future
service requirements), in such installments or otherwise, as the Committee may
determine at the date of grant or thereafter.  Except to the extent restricted
under the terms of the Plan and any Award agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee).  During the restricted period applicable
to the Restricted Stock, subject to Section 10(b) below, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined, or otherwise
encumbered by the Participant.

 

(ii)                                  Forfeiture.  Except as otherwise
determined by the Committee, upon termination of employment during the
applicable restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided that the
Committee may provide, by rule or regulation or in any Award agreement, or may
determine in any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock.

 

(iii)                               Certificates for Stock.  Restricted Stock
granted under the Plan may be evidenced in such manner as the Committee shall
determine.  If certificates representing Restricted Stock are registered in the
name of the Participant, the Committee may require that such certificates bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, and/or that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.

 

(iv)                              Dividends and Splits.  As a condition to the
grant of an Award of Restricted Stock, the Committee may require that any cash
dividends paid on a share of Restricted Stock be automatically reinvested in
additional shares of Restricted Stock or applied to the purchase of additional
Awards

 

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under the Plan.  Unless otherwise determined by the Committee, Stock distributed
in connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Stock with respect to which such
Stock or other property has been distributed.

 

(e)                                  Deferred Stock.  The Committee is
authorized to grant Deferred Stock to Participants, which are rights to receive
Stock at the end of a specified deferral period, subject to the following terms
and conditions:

 

(i)    Award and Restrictions.  Settlement of an Award of Deferred Stock shall
occur upon expiration of the deferral period specified for such Deferred Stock
by the Committee (or, if permitted by the Committee, as elected by the
Participant).  In addition, Deferred Stock shall be subject to such restrictions
(which may include a risk of forfeiture) as the Committee may impose, if any,
which restrictions may lapse at the expiration of the deferral period or at
earlier specified times (including based on achievement of performance goals
and/or future service requirements), separately or in combination, in
installments or otherwise, as the Committee may determine.

 

(ii)   Forfeiture.  Except as otherwise determined by the Committee, upon
termination of employment during the applicable deferral period or portion
thereof to which forfeiture conditions apply (as provided in the Award agreement
evidencing the Deferred Stock), all Deferred Stock that is at that time subject
to deferral (other than a deferral at the election of the Participant) shall be
forfeited; provided that the Committee may provide, by rule or regulation or in
any Award agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Deferred Stock shall be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Deferred Stock.  Deferred Stock subject to a risk of forfeiture may be called
“restricted stock units” or otherwise designated by the Committee.

 

(iii)    Dividend Equivalents.  Unless otherwise determined by the Committee at
date of grant, Dividend Equivalents on the specified number of shares of Stock
covered by an Award of Deferred Stock shall be either (A) paid with respect to
such Deferred Stock at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such Deferred Stock and the amount or
value thereof automatically deemed reinvested in additional Deferred Stock,
other Awards or other investment vehicles, as the Committee shall determine or
permit the Participant to elect.

 

(f)                                    Bonus Stock and Awards in Lieu of
Obligations.  The Committee is authorized to grant Stock as a bonus, or to grant
Stock or other Awards in lieu of obligations of the Company or a subsidiary or
affiliate to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, subject to such terms as shall be determined
by the Committee.

 

(g)                                 Dividend Equivalents.  The Committee is
authorized to grant Dividend Equivalents to a Participant, entitling the
Participant to receive cash, Stock, other Awards, or other property equivalent
to all or a portion of the dividends paid with respect to a specified number of
shares of Stock.  Dividend Equivalents may be awarded on a free-standing basis
or in connection with another Award.  The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment vehicles, and
subject to restrictions on transferability, risks of forfeiture and such other
terms as the Committee may specify.

 

(h)                                 Other Stock-Based Awards.  The Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in

 

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part by reference to, or otherwise based on, or related to, Stock, as deemed by
the Committee to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights
convertible or exchangeable into Stock, purchase rights for Stock, Awards with
value and payment contingent upon performance of the Company or any other
factors designated by the Committee, and Awards valued by reference to the book
value of Stock or the value of securities of or the performance of specified
subsidiaries.  The Committee shall determine the terms and conditions of such
Awards.  Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 6(h) shall be purchased for such consideration, paid
for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine.

 

7.                                       Performance Awards, Including Annual
Incentive Awards

 

(a)                                  Performance Awards Generally.  The
Committee is authorized to grant Performance Awards on the terms and conditions
specified in this Section 7.  Performance Awards may be denominated as a cash
amount, number of shares of Stock, or specified number of other Awards (or a
combination) which may be earned upon achievement or satisfaction of performance
conditions specified by the Committee.  In addition, the Committee may specify
that any other Award shall constitute a Performance Award by conditioning the
right of a Participant to exercise the Award or have it settled, or the timing
thereof, upon achievement or satisfaction of such performance conditions as may
be specified by the Committee.  The Committee may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce or increase
the amounts payable under any Award subject to performance conditions, except as
limited under Sections 7(b) and 7(c) in the case of a Performance Award intended
to qualify as “performance-based compensation” under Code Section 162(m).

 

(b)                                 Performance Awards Granted to Covered
Employees.  If the Committee determines that a Performance Award to be granted
to an Eligible Person who is designated by the Committee as a Covered Employee
should qualify as “performance-based compensation” for purposes of Code
Section 162(m), the grant, exercise and/or settlement of such Performance Award
shall be contingent upon achievement of a preestablished performance goal and
other terms set forth in this Section 7(b).

 

(i)    Performance Goals Generally.  The performance goal for such Performance
Awards shall consist of one or more business criteria and a targeted level or
levels of performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 7(b).  The performance goal shall be
objective and shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder (including Treasury Regulation 1.162-27 and successor
regulations thereto), including the requirement that the level or levels of
performance targeted by the Committee result in the achievement of performance
goals being “substantially uncertain.” The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled upon achievement
of any one performance goal or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or settlement of such Performance
Awards.  Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.

 

(ii)   Business Criteria.  One or more of the following business criteria for
the Company, on a consolidated basis, and/or for specified subsidiaries or
affiliates or other business units or lines of business of the Company shall be
used by the Committee in establishing performance goals for such Performance
Awards: (1) earnings per share (basic or fully diluted); (2) revenues;
(3) earnings, before or after taxes, from operations (generally or specified
operations), before or after interest expense, depreciation, amortization,
incentives, or extraordinary or special items; (4) cash flow, free cash flow,
cash flow return on investment (discounted or otherwise), net cash provided by
operations, or cash flow in excess of cost of capital; (5) return on net assets,
return on assets, return on investment, return

 

9

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on capital, return on equity; (6) economic value created; (7) operating margin
or operating expense; (8) net income; (9) Stock price or total stockholder
return; and (10) strategic business criteria, consisting of one or more
objectives based on meeting specified market penetration, geographic business
expansion goals, new products, ventures or facilities, cost targets, internal
controls, compliance, customer satisfaction and services, human resources
management, supervision of litigation and information technology, and goals
relating to acquisitions or divestitures of subsidiaries, affiliates, joint
ventures or facilities.  The targeted level or levels of performance with
respect to such business criteria may be established at such levels and in such
terms as the Committee may determine, in its discretion, including in absolute
terms, as a goal relative to performance in prior periods, or as a goal compared
to the performance of one or more comparable companies or an index covering
multiple companies.

 

(iii)    Performance Period; Timing for Establishing Performance Goals;
Per-Person Limit.  Achievement of performance goals in respect of such
Performance Awards shall be measured over a performance period of up to one year
or more than one year, as specified by the Committee.  A performance goal shall
be established not later than the earlier of (A) 90 days after the beginning of
any performance period applicable to such Performance Award or (B) the time 25%
of such performance period has elapsed.  In all cases, the maximum Performance
Award of any Participant shall be subject to the limitation set forth in
Section 5(b).

 

(iv)  Performance Award Pool.  The Committee may establish a Performance Award
pool, which shall be an unfunded pool, for purposes of measuring performance of
the Company or a business unit in connection with Performance Awards.  The
amount of such Performance Award pool shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria set
forth in Section 7(b)(ii) during the given performance period, as specified by
the Committee in accordance with Section 7(b)(i).  The Committee may specify the
amount of the Performance Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as another
amount which need not bear a strictly mathematical relationship to such business
criteria.

 

(v)   Settlement of Performance Awards; Other Terms.  Settlement of such
Performance Awards shall be in cash, Stock, other Awards or other property, in
the discretion of the Committee.  The Committee may, in its discretion, increase
or reduce the amount of a settlement otherwise to be made in connection with
such Performance Awards, but may not exercise discretion to increase any such
amount payable to a Covered Employee in respect of a Performance Award subject
to this Section 7(b).  Any settlement which changes the form of payment from
that originally specified shall be implemented in a manner such that the
Performance Award and other related Awards do not, solely for that reason, fail
to qualify as “performance-based compensation” for purposes of Code
Section 162(m).  The Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of termination of
employment by the Participant or other event (including a Change in Control)
prior to the end of a performance period or settlement of such Performance
Awards; any resulting payments need not qualify as performance-based
compensation under Section 162(m) if the authorization of such non-qualifying
payments would not otherwise disqualify the Performance Award apart from the
termination or change in control.

 

(c)    Annual Incentive Awards Granted to Designated Covered Employees.  The
Committee may grant a Performance Award in the form of an Annual Incentive Award
to an Eligible Person who is designated by the Committee as likely to be a
Covered Employee.  Such Annual Incentive Award will be intended to qualify as
“performance-based compensation” for purposes of Code Section 162(m), and
therefore its grant,

 

10

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exercise and/or settlement shall be contingent upon achievement of
preestablished performance goals and shall comply with the other requirements
set forth in Section 7(b).

 

(d)    Written Determinations.  Determinations by the Committee as to the
establishment of performance goals, the amount potentially payable in respect of
Performance Awards, the level of actual achievement of the specified performance
goals relating to Performance Awards and the amount of any final Performance
Award shall be recorded in writing in the case of Performance Awards intended to
qualify under Section 162(m).  Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under Section 162(m),
prior to settlement of each such Award granted to a Covered Employee, that the
performance objective relating to the Performance Award and other material terms
of the Award upon which settlement of the Award was conditioned have been
satisfied.

 

8.                                       Certain Provisions Applicable to
Awards.

 

(a)    Stand-Alone, Additional, Tandem, and Substitute Awards.  Subject to
Section 10(e), Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any subsidiary or affiliate, or any business entity to be
acquired by the Company or a subsidiary or affiliate, or any other right of a
Participant to receive payment from the Company or any subsidiary or affiliate;
provided, however, that a 409A Award may not be granted in tandem with a
Non-409A Award.  Awards granted in addition to or in tandem with other Awards or
awards may be granted either as of the same time as or a different time from the
grant of such other Awards or awards.  Subject to Sections 10(h) and (i), the
Committee may determine that, in granting a new Award, the in-the-money value or
fair value of any surrendered Award or award may be applied to reduce the
exercise price of any Option, grant price of any SAR, or purchase price of any
other Award.

 

(b)    Term of Awards.  The term of each Award shall be for such period as may
be determined by the Committee; provided that in no event shall the term of any
Option or SAR exceed a period of ten years (or, in the case of an ISO, such
shorter term as may be required under Code Section 422).

 

(c)    Form and Timing of Payment under Awards; Deferrals.  Subject to the terms
of the Plan (including Sections 10(h) and (i)) and any applicable Award
agreement, payments to be made by the Company or a subsidiary upon the exercise
of an Option or other Award or settlement of an Award may be made in cash,
Stock, other Awards, or other property, and may be made in a single payment or
transfer, in installments, or on a deferred basis.  The settlement of any Award
may be accelerated in the discretion of the Committee or upon occurrence of one
or more specified events (in addition to a Change in Control, subject to
Sections 10(h) and (i)).  Installment or deferred payments may be required by
the Committee (subject to Section 10(e) of the Plan, including the consent
provisions thereof in the case of any deferral of an outstanding Award not
provided for in the original Award agreement) or permitted at the election of
the Participant on terms and conditions established by the Committee.  Payments
may include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.  Any payment deferred pursuant to this
Section 8(c) shall represent only an unfunded, unsecured promise by the Company
to pay the amount credited thereto to the Participant in the future.  In the
case of any 409A Award that is vested and no longer subject to a risk of
forfeiture (within the meaning of Code Section 83) and deferred at the election
of the Participant, such Award will be distributed to the Participant, upon
application of the Participant, if the Participant has had an unforeseeable
emergency within the meaning of Code Sections 409A(a)(2)(A)(vi) and
409A(a)(2)(B)(ii), in accordance with Section 409A(a)(2)(B)(ii).

 

11

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(d)    Additional Award Forfeiture Provisions.  The Committee may condition a
Participant’s right to receive a grant of an Award, to exercise the Award, to
retain Stock acquired in connection with an Award, or to retain the profit or
gain realized by a Participant in connection with an Award, including cash
received upon sale of Stock acquired in connection with an Award, upon
compliance by the Participant with specified conditions relating to
non-competition, confidentiality of information relating to the Company,
non-solicitation of customers, suppliers, and employees of the Company,
cooperation in litigation, non-disparagement of the Company and its officers,
directors and affiliates, and other restrictions upon or covenants of the
Participant, including during specified periods following termination of
employment or service to the Company.

 

(e)    Exemptions from Section 16(b) Liability.  With respect to a Participant
who is then subject to the reporting requirements of Section 16(a) of the
Exchange Act in respect of the Company, the Committee shall implement
transactions under the Plan and administer the Plan in a manner that will ensure
that each transaction with respect to such a Participant is exempt from
liability under Rule 16b-3 or otherwise not subject to liability under
Section 16(b), except that this provision shall not limit sales by such a
Participant, and such a Participant may elect to engage in other non-exempt
transactions under the Plan.  The Committee may authorize the Company to
repurchase any Award or shares of Stock deliverable or delivered in connection
with any Award (subject to Section 10(i)) in order to avoid a Participant who is
subject to Section 16 of the Exchange Act incurring liability under
Section 16(b).  Unless otherwise specified by the Participant, equity securities
or derivative securities acquired under the Plan which are disposed of by a
Participant shall be deemed to be disposed of in the order acquired by the
Participant.

 

9.                                       Change in Control.

 

(a)                                  Effect of “Change in Control.”    In the
event of a “Change in Control,” the following provisions shall apply unless
otherwise provided in the Award agreement:

 

(i)    Any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested as of the time
of the Change in Control;

 

(ii)   If any optionee holds an Option immediately prior to a Change in Control
that was not previously exercisable and vested in full throughout the 60-day
period preceding the Change in Control, he shall be entitled to elect, during
the 60-day period following the Change in Control, in lieu of acquiring the
shares of Stock covered by the portion of the Option that was not vested and
exercisable within such 60-day period, to receive, and the Company shall be
obligated to pay, in cash the excess of the Change in Control Price over the
exercise price of such Option, multiplied by the number of shares of Stock
covered by such portion of the Option;

 

(iii)  The restrictions, deferral of settlement, and forfeiture conditions
applicable to any other Award granted under the Plan shall lapse and such Awards
shall be deemed fully vested as of the time of the Change in Control, except to
the extent of any waiver by the Participant and subject to applicable
restrictions set forth in Section 10(a) hereof; and

 

(iv)  With respect to any outstanding Award subject to achievement of
performance goals and conditions under the Plan, such performance goals and
other conditions will be deemed to be met if and to the extent so provided by
the Committee in the Award agreement relating to such Award.

 

The foregoing notwithstanding, any benefit or right provided under this
Section 9 in the case of any non-409A Award shall be limited to those benefits
and rights permitted under Code Section 409A, and any benefit or right provided
under this Section 9 that would result in a distribution of a 409A Award at a
time or

 

12

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in a manner not permitted by Section 409A shall be limited to the extent
necessary so that the distribution is permitted under Section 409A.  For this
purpose, the distribution of a 409A Award (i) triggered by a Change in Control
will remain authorized if the Change in Control also constitutes a change in the
ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, within the meaning of Code
Section 409A(a)(2)(A)(v), and (ii) triggered by a termination of employment with
or service to the Company or a subsidiary following a Change in Control by a
specified employee, within the meaning of Code Section 409A(a)(2)(B)(i), will
remain authorized to occur six months after such termination.

 

(b)                                 Definition of “Change in Control.”    A
“Change in Control” shall mean the occurrence of any of the following:

 

(i)    when any “person” as defined in Section 3(a)(9) of the Exchange Act and
as used in Sections 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d) of the Exchange Act but excluding the Company and any subsidiary
and any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of such plan acting as trustee), directly or
indirectly, becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act) of securities of the Company representing at least 40% percent (or
such greater percentage as the Committee may specify in connection with the
grant of any Award) of the combined voting power of the Company’s
then-outstanding securities; or

 

(ii)   the occurrence of a transaction requiring stockholder approval for the
acquisition of the Company by an entity other than the Company or a subsidiary
by merger or otherwise or for the purchase by an entity other than the Company
or a subsidiary of substantially all of the assets of the Company.

 

(c)                                  Definition of “Change in Control
Price.”    The “Change in Control Price” means an amount in cash equal to the
higher of (i) the amount of cash and fair market value of property that is the
highest price per share paid (including extraordinary dividends) in any
transaction triggering the Change in Control, or (ii) the highest Fair Market
Value per share at any time during the 60-day period preceding the Change in
Control.

 

10.                                 General Provisions.

 

(a)    Compliance with Legal and Other Requirements.  The Company may, to the
extent deemed necessary or advisable by the Committee and subject to
Section 10(h), postpone the issuance or delivery of Stock or payment of other
benefits under any Award until completion of such registration or qualification
of such Stock or other required action under any federal or state law, rule, or
regulation, listing or other required action with respect to any stock exchange
or automated quotation system upon which the Stock or other securities of the
Company are listed or quoted, or compliance with any other obligation of the
Company, as the Committee may consider appropriate, and may require any
Participant to make such representations, furnish such information and comply
with or be subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Stock or payment of other benefits
in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations.  The foregoing notwithstanding, in
connection with a Change in Control, the Company shall take or cause to be taken
no action, and shall undertake or permit to arise no legal or contractual
obligation, that results or would result in any postponement of the issuance or
delivery of Stock or payment of benefits under any Award or the imposition of
any other conditions on such issuance, delivery or payment, to the extent that
such postponement or other condition would represent a greater burden on a
Participant than existed on the 90th day preceding the Change in Control.

 

13

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(b)    Limits on Transferability; Beneficiaries.  No Award or other right or
interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party, or assigned or transferred by such Participant
otherwise than by will or the laws of descent and distribution or to a
Beneficiary upon the death of a Participant, and such Awards or rights that may
be exercisable shall be exercised during the lifetime of the Participant only by
the Participant or his or her guardian or legal representative, except that
Awards and other rights (other than ISOs and SARs in tandem therewith) may be
transferred for estate planning purposes to one or more Beneficiaries or other
transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent such transfers are permitted by the Committee pursuant to the express
terms of an Award agreement (subject to any terms and conditions which the
Committee may impose thereon).  A Beneficiary, transferee, or other person
claiming any rights under the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and any Award agreement
applicable to such Participant, except as otherwise determined by the Committee,
and to any additional terms and conditions deemed necessary or appropriate by
the Committee.

 

(c)    Adjustments.  In the event that any large, special and non-recurring
dividend or other distribution (whether in the form of cash or property other
than Stock), recapitalization, forward or reverse split, Stock dividend,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or
event affects the Stock such that an adjustment is determined by the Committee
to be appropriate or, in the case of any outstanding Award, necessary in order
to prevent dilution or enlargement of the rights of the Participant, then the
Committee shall, in such equitable manner as it may determine, adjust any or all
of (A) the number and kind of shares of Stock which may be delivered in
connection with Awards granted thereafter, (B) the number and kind of shares of
Stock by which annual per-person Award limitations are measured under
Section 5(b), (C) the number and kind of shares of Stock subject to or
deliverable in respect of outstanding Awards and (D) the exercise price, grant
price or purchase price relating to any Award or, if deemed appropriate, the
Committee may make provision for a payment of cash or property to the holder of
an outstanding Option (subject to Section 10(i)).  In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards (including Performance Awards and performance goals and any
hypothetical funding pool relating thereto) in recognition of unusual or
nonrecurring events (including, without limitation, events described in the
preceding sentence, as well as acquisitions and dispositions of businesses and
assets) affecting the Company, any subsidiary or affiliate or other business
unit, or the financial statements of the Company or any subsidiary or affiliate,
or in response to changes in applicable laws, regulations, accounting
principles, tax rates and regulations or business conditions or in view of the
Committee’s assessment of the business strategy of the Company, any subsidiary
or affiliate or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that the existence of such authority
(A) would cause Options, SARs, or Performance Awards granted under Section 7 to
Participants designated by the Committee as Covered Employees and intended to
qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder to otherwise fail to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder, or (B) would
cause the Committee to be deemed to have authority to change the targets, within
the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the performance
goals relating to Options or SARs granted to Covered Employees and intended to
qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder; and provided further, that adjustments to Non-409A
Awards will be made only to the extent permitted under 409A.

 

(d)    Taxes.  The Company and any subsidiary is authorized to withhold from any
Award granted, any payment relating to an Award under the Plan, including from a
distribution of Stock, or any payroll or other payment to a Participant, amounts
of withholding and other taxes due or potentially payable in connection with any
Award, and to take such other action as the Committee may deem advisable to
enable the Company

 

14

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and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award.  This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant’s tax obligations,
either on a mandatory or elective basis, in the discretion of the Committee, or
in satisfaction of other tax obligations if such withholding will not result in
additional accounting expense to the Company.  Other provisions of the Plan
notwithstanding, only the minimum amount of Stock deliverable in connection with
an Award necessary to satisfy statutory withholding requirements will be
withheld, unless withholding of any additional amount of Stock will not result
in additional accounting expense to the Company.

 

(e)    Changes to the Plan and Awards.  The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee’s authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Company’s stockholders not later than the annual meeting the record date for
which is at or following the date of such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Stock may then be
listed or quoted, and the Board may otherwise, in its discretion, determine to
submit other such changes to the Plan to stockholders for approval; provided
that, without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award.  (For this purpose, actions that alter
the timing of federal income taxation of a Participant will not be deemed
material unless such action results in an income tax penalty on the
Participant.)  The Committee may waive any conditions or rights under, or amend,
alter, suspend, discontinue, or terminate any Award theretofore granted and any
Award agreement relating thereto; provided that the Committee shall have no
authority to waive or modify any Award term after the Award has been granted to
the extent the waived or modified term would be mandatory under the Plan for any
Award newly granted at the date of the waiver or modification; and provided
further, that, without the consent of an affected Participant, no such Committee
action may materially and adversely affect the rights of such Participant under
such Award.  Without the prior approval of stockholders, the Committee will not
amend or replace previously granted Options in a transaction that constitutes a
“repricing.” For this purpose, a “repricing” means: (1) amending the terms of an
Option after it is granted to lower its exercise price, except pursuant to
Section 10(c) hereof; (2) any other action that is treated as a repricing under
generally accepted accounting principles; and  (3) canceling an Option at a time
when its strike price is equal to or greater than the fair market value of the
underlying Stock, in exchange for another Option, Restricted Stock, or other
equity, unless the cancellation and exchange occurs in connection with a merger,
acquisition, spin-off or other similar corporate transaction.  A cancellation
and exchange described in clause (3) of the preceding sentence will be
considered a repricing regardless of whether the Option, Restricted Stock or
other equity is delivered simultaneously with the cancellation, regardless of
whether it is treated as a repricing under generally accepted accounting
principles, and regardless of whether it is voluntary on the part of the Option
holder.

 

(f)    Limitation on Rights Conferred under Plan.  Neither the Plan nor any
action taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or a subsidiary, (ii) interfering in any way
with the right of the Company or a subsidiary to terminate any Eligible Person’s
or Participant’s employment or service at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the Plan or to be
treated uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.

 

(g)    Unfunded Status of Awards; Creation of Trusts.  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

 

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obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company’s obligations
under the Plan.  Such trusts or other arrangements shall be consistent with the
“unfunded” status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant.  The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee may specify
and in accordance with applicable law.

 

(h)    Certain Limitations on Awards to Ensure Compliance with Section 409A. 
For purposes of this Plan, references to an Award term or event (including any
authority or right of the Company or a Participant) being “permitted” under
Section 409A mean, for a 409A Award, that the term or event will not cause the
Participant to be liable for payment of interest or a tax penalty under
Section 409A and, for a Non-409A Award, that the term or event will not cause
the Award to be treated as subject to Section 409A.  Other provisions of the
Plan notwithstanding, the terms of any 409A Award and any Non-409A Award,
including any authority of the Company and rights of the Participant with
respect to the Award, shall be limited to those terms permitted under
Section 409A, and any terms not permitted under Section 409A shall be
automatically modified and limited to the extent necessary to conform with
Section 409A.  For this purpose, other provisions of the Plan notwithstanding,
the Company shall have no authority to accelerate distributions relating to 409A
Awards in excess of the authority permitted under Section 409A, any distribution
subject to Section 409A(a)(2)(A)(i) (separation from service) to a “key
employee” as defined under Section 409A(a)(2)(B)(i), shall not occur earlier
than the earliest time permitted under Section 409A(a)(2)(B)(i), and any
authorization of payment of cash to settle a Non-409A Award shall apply only to
the extent permitted under Section 409A for such Award.  Non-409A Awards that
are “grandfathered” under Section 409A and that, but for such grandfathered
status, would be deemed 409A Awards shall be subject to the terms and conditions
of the Plan as amended and restated as of May 5, 2005 other than Sections
6(b)(ii) and 6(c)(ii), provided that if any provision adopted by amendment to
the Plan or an Award Agreement after October 3, 2004, would constitute a
material modification of a grandfathered Non-409A Award, such provision will not
be effective as to such Award unless so stated by the Committee in writing with
specific reference to this last sentence of Section 10(h).

 

(i)    Certain Limitations Relating to Accounting Treatment of Awards.  At any
time that the Company is accounting for stock-denominated Awards (other than
SARs) under Accounting Principles Board Opinion 25 (“APB 25”), the Company
intends that, with respect to such Awards, the compensation measurement date for
accounting purposes shall occur at the date of grant or the date performance
conditions are met if an Award is fully contingent on achievement of performance
goals, unless the Committee specifically determines otherwise.  Therefore, other
provisions of the Plan notwithstanding, in order to preserve this fundamental
objective of the Plan, if any authority granted to the Committee hereunder or
any provision of the Plan or an Award agreement would result, under APB 25, in
“variable” accounting or a measurement date other than the date of grant or the
date such performance conditions are met with respect to such Awards, if the
Committee was not specifically aware of such accounting consequence at the time
such Award was granted or provision otherwise became effective, such authority
shall be limited and such provision shall be automatically modified and reformed
to the extent necessary to preserve the accounting treatment of the award
intended by the Committee, subject to Section 10(e) of the Plan.  This provision
shall cease to be effective if and at such time as the Company elects to no
longer account for equity compensation under APB 25.

 

(j)    Nonexclusivity of the Plan.  Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of

 

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the Board or a committee thereof to adopt such other incentive arrangements as
it may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).

 

(k)    Payments in the Event of Forfeitures; Fractional Shares.  Unless
otherwise determined by the Committee, in the event of a forfeiture of an Award
with respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other consideration.  No
fractional shares of Stock shall be issued or delivered pursuant to the Plan or
any Award.  The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

 

(l)    Awards to Participants Outside the United States.  The Committee may
modify the terms of any Award under the Plan made to or held by a Participant
who is then resident or primarily employed outside of the United States in any
manner deemed by the Committee to be necessary or appropriate in order that such
Award shall conform to laws, regulations, and customs of the country in which
the Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States.  An
Award may be modified under this Section 10(l) in a manner that is inconsistent
with the express terms of the Plan, so long as such modifications will not
contravene any applicable law or regulation or result in actual liability under
Section 16(b) for the Participant whose Award is modified.

 

(m)    Governing Law.  The validity, construction and effect of the Plan, any
rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the Delaware General Corporation Law, the contract
and other laws of the State of New York without giving effect to principles of
conflicts of laws, and applicable federal law.

 

(n)    Preexisting Plan.  Upon stockholder approval of the Plan as provided
under Section 10(o), no further grants of Awards will be made under the
Preexisting Plan.

 

(o)    Plan Effective Date and Termination.  The Plan was adopted by the Board
of Directors on April 24, 2003 and became effective upon its approval by the
Company’s stockholders on June 23, 2003.  This amendment and restatement of the
Plan shall be effective upon its approval by the Company’s stockholders by the
affirmative vote of the holders of a majority of the voting securities of the
Company entitled to be cast in person or by proxy at the Company’s 2005 annual
meeting of stockholders.(1) Unless earlier terminated by action of the Board of
Directors, the Plan will remain in effect until such time as no Stock remains
available for delivery under the Plan and the Company has no further rights or
obligations under the Plan with respect to outstanding Awards under the Plan;
provided, however, that no new Awards may be granted more then ten years after
the date of the latest approval of the Plan by stockholders of the Company.

 

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(1) The amendment and restatement of the Plan was approved by the Company’s
stockholders on June 14, 2005.

 

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