Exhibit 10(G)

 

CARPENTER TECHNOLOGY CORPORATION

STOCK-BASED COMPENSATION PLAN FOR

NON-EMPLOYEE DIRECTORS

Effective October 20, 1997

As last amended October 22, 2001

 

1. Purpose:

 

The purposes of the Plan are to attract and retain the services of experienced
and knowledgeable non-employee Directors, to encourage Eligible Directors of
Carpenter Technology Corporation (the “Company”) to acquire a proprietary and
vested interest in the growth and performance of the Company, and to generate an
increased incentive for Directors to contribute to the Company’s future success
and prosperity, thus enhancing the value of the Company for the benefit of its
stockholders.

 

This Plan is an amendment and restatement of the Carpenter Technology
Corporation Non-Qualified Stock Option Plan for Non-Employee Directors as
adopted effective August 1, 1990 and last amended October 23, 1995. The rights
of any Director whose service as a Director ended on or before October 21, 2001
shall be governed by the terms of the Plan as in effect when that Director’s
service ended.

 

2. Definitions:

 

As used in the Plan, the following terms shall have the meanings set forth
below:

 

a) “Annual Retainer” shall mean base compensation for services as a Director.
Annual Retainer shall not include meeting fees, committee service fees, if any,
expense allowances or reimbursements or any other additional compensation for
services as a Director.

 

b) “Beneficiary” means the person that the Eligible Director designates to
receive any unpaid portion of the Eligible Director’s Account should the
Eligible Director’s death occur before the Eligible Director receives the entire
balance to the credit of such Eligible Director’s Account. If the Eligible
Director does not designate a Beneficiary, the Beneficiary shall be the person’s
spouse if the person is married at the time of death, or the Eligible Director’s
estate if unmarried at the time of the person’s death.

 

c) “Board” shall mean the Board of Directors of the Company.

 

d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time.

 

e) “Common Stock” shall mean the Common Stock, $5.00 par value, of the Company.

 

f) “Company” shall mean Carpenter Technology Corporation.

 

g) “Election Date” shall mean with respect to an Option hereunder the date of
the appointment, election, or re-election of the Eligible Director that prompted
the grant of such Option.

 

h) “Eligible Director” shall mean each Director of the Company who is not an
employee of the Company or any of the Company’s subsidiaries [as defined in
section 425 (f) of the Code], or who is not otherwise excluded from
participation by agreement.

 

i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

j) “Fair Market Value” shall mean with respect to the Common Stock (i) the last
sale price of the Common Stock on the date on which such value is determined, as
reported on the consolidated tape of New York Stock Exchange issues or, if there
shall be no trades on such date, on the date nearest preceding such date; (ii)
if the Common Stock is not then listed for trading on the New York Stock
Exchange, the last sale price of the Common Stock on the date of which such
value is determined, as reported on another recognized securities exchange or on
the NASDAQ National Market System if the Common Stock shall then be listed and
traded upon such exchange or system or, if there shall be no trades on such
date, on the date nearest preceding such date; or (iii) the mean between

 

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the bid and asked quotations for such stock on such date (as reported by a
recognized stock quotation services) or, in the event that there shall be no bid
or asked quotations on such date, then upon the basis of the mean between the
bid and asked quotations on the date nearest preceding such date.

 

k) “Grant Date” shall mean with respect to an Option hereunder the date upon
which such Option is granted.

 

l) “Option” shall mean any right granted to an Eligible Director allowing such
Eligible Director to purchase Shares at such price or prices and during such
period or periods as set forth under the Plan. All Options shall be
non-qualified options not entitled to special tax treatment under section 422A
of the Code.

 

m) “Option Letter” shall mean a written instrument evidencing an Option granted
hereunder and signed by an authorized representative of the Company.

 

n) “Performance Unit” shall mean the right to receive, following termination of
service as an Eligible Director, one share of Common Stock. Performance Units
will be awarded, if at all, based upon the attainment of a specified goal
(“Performance Goal”) by the end of a period specified by the Board based upon
one or more of the following criteria: (i) price of the Common Stock, (ii)
market share of the Company, (iii) sales by the Company, (iv) earnings per share
of the Common Stock, (v) return on shareholder equity of the Company, or (vi)
costs of the Company. Such goal shall be pre-determined by the Board at a time
when it is substantially uncertain that the Performance Goals will be met and
subject to verification by the Company’s independent auditors using generally
accepted accounting principles, consistently applied. For purposes of this Plan,
fractional Performance Units, measured to the nearest four decimal places, may
be credited.

 

o) “Release Date” shall mean the fifth business day occurring after the
Company’s earnings release for the preceding fiscal period. In calculating the
Release Date, the day of an earnings release shall be counted, if the earnings
release is made before the opening of trading on the New York Stock Exchange and
shall not be counted if such release is made after the opening of trading.

 

p) “Retirement” shall mean Retirement from the Board with a minimum of three
years service as an Eligible Director.

 

q) “SAR” or “Stock Appreciation Right” shall mean the right granted to an
Eligible Director to receive the increase in the Fair Market Value of a
specified number of Shares.

 

r) “Shares” shall mean Shares of Common Stock.

 

s) “Stock Unit” shall mean the right to receive, following both service as an
Eligible Director for one year following the grant of the Stock Unit and
termination of service as an Eligible Director, one share of Common Stock. For
purposes of this Plan, fractional Stock Units, measured to the nearest four
decimal places, may be credited.

 

t) “Unit” shall mean a Performance Unit, a Stock Unit, or both, as required by
context.

 

u) “Window” shall mean a 30 calendar-day period of time beginning on a Release
Date.

 

3. Administration:

 

The Plan shall be administered by the Company. Subject to the terms of the Plan,
the Board shall have the power to interpret the provisions and supervise the
administration of the Plan.

 

 

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4. Shares Subject to the Plan:

 

a) Total Number. Subject to adjustment as provided in this Section, the total
number of Shares as to which Options may be granted, or Performance Units, Stock
Units and SARs awarded shall be 329,000. Any Shares issued hereunder may
consist, in whole or in part, of authorized and unissued Shares or treasury
Shares.

 

b) Reduction of Shares Available.

 

(i) The grant of an Option will reduce the Shares as to which Options may be
granted by the number of Shares subject to such Option.

 

(ii) Any shares issued by the Company through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the Shares
available for grants under the Plan.

 

(iii) The grant of Performance Units or Stock Units will reduce the number of
Shares available for further grants by the number of Units granted.

 

(iv) The exercise of a SAR payable in Shares will reduce the number of Shares
that may be issued upon subsequent exercise of SARs.

 

c) Increase of Shares Available. The lapse, cancellation or other termination of
an Option, Unit or SAR that has not been fully exercised or paid shall increase
the available Shares for such Options, Units or SARs by the number of Shares
that have not been issued upon exercise of such Option or SAR or payment of such
Unit.

 

d) Other Adjustments. The total number and kind of Shares available for Options,
Units or SARs under the Plan or which may be allocated to any one Eligible
Director, the number and kind of Shares subject to outstanding Options, Units or
SARs, and the exercise price for such Options or SARs or the value of Units
shall be appropriately adjusted by the Board for any increase or decrease in the
number of outstanding Shares resulting from a stock dividend, subdivision,
combination of Shares, reclassification, or other change in corporate structure
affecting the Shares or for any conversion of the Shares into or exchange of the
Shares for other Shares as a result of any merger or consolidation (including a
sale of assets) or other recapitalization as may be necessary to maintain the
proportionate interest of the Option, SAR or Unit holder.

 

5. Initial Options:

 

Initial Options shall be granted to Eligible Directors as follows:

 

a) Initial Grant. Each Eligible Director who has not previously received a grant
under this Plan shall be granted an Option to acquire 2,000 Shares as follows:
(1) on the Election Date in the event that the Election Date occurs during a
Window, or (2) on the next Release Date in the event that the Election Date does
not occur during the Window.

 

b) Terms and Conditions. Any Option granted under this Section 5 shall be
subject to the following terms and conditions:

 

(i) Option Price. The purchase price per Share purchasable under an Option
granted under Section 5 shall be 100% of the Fair Market Value of a Share on the
Grant Date.

 

(ii) Exercisability. Unless otherwise provided by this Plan, an Option granted
under Section 5 shall become exercisable in whole or in part one year from the
Grant Date.

 

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6. Annual Options:

 

Annual Options shall be granted to Eligible Directors as follows:

 

a) Eligible Directors. Each Eligible Director on or after the Effective Date of
the Plan shall be granted an Option to acquire 4,000 Shares immediately after
the annual meeting of the Company’s stockholders.

 

b) Terms and Conditions. Any Option granted under this Section 6 shall be
subject to the following terms and conditions:

 

(i) Option Price. The purchase price per Share purchasable under an Option shall
be 100% of the Fair Market Value of a Share on the Grant Date.

 

(ii) Exercisability. Unless otherwise provided by this Plan, an Option granted
under this Section 6 shall become exercisable in whole or in part one year from
the Grant Date.

 

7. General Terms:

 

The following provisions shall apply to any Option:

 

a) Option Period. Each Option shall expire ten years from its Grant Date,
subject to earlier termination as hereinafter provided.

 

b) Each Option granted under this Plan shall become exercisable by the Eligible
Director only after the completion of one year of Board service immediately
following the Grant Date; provided, however, that for Annual Options under
Section 6, uninterrupted Board service by the Eligible Director until the annual
meeting of the Company’s stockholders next following the Grant Date shall be
deemed completion of one year of Board service. Exercise of any or all prior
existing Options shall not be required.

 

c) No Option under this Plan may be transferrable by the Eligible Director
except by will or the laws of descent and distribution. In the event of the
death of the Eligible Director more than one year after the Grant Date and not
more than three months after the termination of the Eligible Director’s Board
service, the Option may be transferred to the Eligible Director’s personal
representative, heirs or legatees (“Transferee”) and may be exercised by the
Transferee before the earlier of (i) the expiration of one year from the date of
the death of the Eligible Director or (ii) the expiration of ten years from the
Grant Date. In the event of the Retirement from Board service of an Eligible
Director, an Option may be exercised prior to its expiration during the five
year period beginning with the date of Retirement; provided, however, that in
the event of a retiree’s death during such five year period, unexercised Options
may be exercised by the Transferee before the earlier of either items (i) or
(ii) of this Section 7(c). In all other cases of termination of Board service of
an Eligible Director except for removal for cause, the Option, if otherwise
exercisable by the Eligible Director at the time of such termination, may be
exercised within three months after such termination. In the event of removal
for cause, all existing Options shall be of no force and effect.

 

d) Method of Exercise. Any Option may be exercised by the Eligible Director in
whole or in part at such time or times and by such methods as the Board may
specify. The applicable Option Letter may provide that the Eligible Director may
make payment of the Option price in cash, Shares, held for at least six months,
or such other consideration as the Board may specify, or any combination
thereof, having a Fair Market Value on the exercise date equal to the total
Option price.

 

8. Stock Units:

 

a) Grant of Stock Units. On the date of the annual meeting of stockholders, each
Eligible Director shall be awarded each year a number of Stock Units determined
by dividing 50% of the Director’s Annual Retainer by the Fair Market Value on
that date.

 

b) Election of Stock Units. By written election filed with the Board before the
end of any calendar year, an Eligible Director may elect to increase the
percentage in a) above to 100%, and thereby have the entire

 

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Director’s Annual Retainer payable in each calendar year beginning after the
date of the election awarded in Stock Units. An election under this Section 8 b)
shall remain in effect until changed, in writing, by the Director. Any such
change shall be effective in the first calendar year beginning after the date of
the written notice of change.

 

c) Forfeiture of Stock Units. Stock Units awarded at an annual meeting of
stockholders will be forfeited if the Director terminates service as a Director
for any reason other than Board approved Retirement, Board determined
disability, or death, before the immediately following annual meeting of
stockholders.

 

d) Stock Units in Lieu of Pension. Effective October 20, 1997, the present value
on that date of any Eligible Director’s accrued pension benefit under the
Carpenter Technology Corporation Director Retirement Plan, excluding any
Eligible Director who is required to retire on or before the 1998 Annual Meeting
of Stockholders, shall be converted to Stock Units. The number of Stock Units to
be awarded under this Section 8 d) shall be determined by dividing average of
the Fair Market Value on the last ten business days of October 1997 into the
present value of each Eligible Director’s accrued pension. The present value
will be determined using the UP-84 mortality table and a 7.5% interest rate.
Stock Units awarded under this Section 8 d) shall not be subject to the vesting
schedule of Section 8 c). Instead, such Stock Units will be payable upon the
earlier of the Director’s Retirement, Board determined disability, or death.

 

9. Performance Units:

 

a) Grant of Performance Units. Performance Units may be granted annually to
Eligible Directors in such amounts and subject to such Performance Goals as
shall be determined by the Board. Each Performance Unit shall have an initial
value equal to the Fair Market Value of a Share (or similar fractional Share) on
the Grant Date. The Board shall set one or more Performance Goals as described
in Section 2(n) of this Plan. The extent to which those Performance Goals are
met will determine the number and value of Performance Units that will be paid
out to the Eligible Director.

 

b) Form and Timing of Payment of Performance Units. Payment of earned
Performance Units shall be made as soon as practicable following the close of
the applicable period in a manner designated by the Board, in its sole
discretion. The Board, in its sole discretion, may pay earned Performance Units
in the form of cash or in Shares (or in a combination thereof) that have an
aggregate Fair Market Value equal to the value of the earned Performance Units
at the close of the applicable period. Such Shares may be granted subject to any
restrictions deemed appropriate by the Board.

 

c) Dividends on Earned but Undistributed Shares. Eligible Directors shall be
entitled to receive any dividends declared with respect to Shares that have been
earned in connection with grants of Performance Units, but not yet distributed
to Eligible Directors.

 

10. Nontransferability of Units:

 

Neither Performance Units nor Stock Units may be sold, transferred, pledged,
assigned or otherwise alienated, other than by will or by the laws of descent
and distribution.

 

11. Dividend Equivalents:

 

An Eligible Director who has been awarded Stock Units will also be awarded
additional Units, determined on a quarterly basis. The number of additional
Units to be awarded will be determined by multiplying the quarterly dividend per
Share for the immediately preceding quarter by the number of Units credited to
the Director on the first day of that calendar quarter and dividing the result
by the Fair Market Value on the last business day of that quarter.

 

 

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12. Payment of Units:

 

a) Following an Eligible Director’s Retirement, or termination of service on
account of disability, the Director shall be paid a number of Shares equal to
the number of whole Units credited to the Director, with cash paid in lieu of
any fractional Units. The amount of cash to be paid will be based on the Fair
Market Value on the date of the Director’s termination of service as a Director.
In the case of the Director’s death, the payment will be made to the Director’s
Beneficiary.

 

b) Manner of Payment.

 

(1) An Eligible Director may elect to receive Shares in payment of Units
credited to the Director’s account in a lump sum or in annual installments
payable over either ten or fifteen years.

 

(2) The election shall be made by the Director, in writing, filed with the Board
no later than the end of the calendar year immediately preceding the Director’s
termination of service. If no election is made, the Director’s Units will be
paid in a lump sum as soon as is practicable following the Director’s
termination of service.

 

(3) If a Director elects installment payments, the amount of each annual
installment will be the number of Units to the Director’s credit at the end of
the immediately preceding calendar year multiplied by a fraction the numerator
of which is one and the denominator of which is the number of years remaining in
the original installment period. Dividend equivalents will continue to be
credited to the Director’s account through the end of the calendar quarter
immediately preceding the final installment.

 

(4) An Eligible Director who has elected installment payment of Units may, with
the consent of the Board, which may be given or denied in the Board’s sole
discretion, change that election and receive a lump sum distribution of all
remaining Units credited to the Director’s account.

 

13. Stock Appreciation Rights or SARs:

 

SARs may be granted by the Board from time to time, subject to the following
provisions:

 

a) The Board may grant a SAR either in connection with the grant of an Option
(“Tandem SAR”) or independent of the grant of an Option (“Freestanding SAR”).
The grant of any Freestanding SAR must be related to the attainment of
Performance Goals under Section 9. Each Tandem SAR shall be exercisable only
with the exercise and surrender of the related Option or portion thereof and
shall entitle the Eligible Director to receive the excess of the Fair Market
Value of the Shares on the date the Tandem SAR is exercised over the option
price under the related Option. The excess is hereafter called the “Spread” for
both Tandem SARs and Freestanding SARs. If the Eligible Director elects instead
to exercise the related Option, the Tandem SAR shall be canceled automatically.

 

b) A Tandem SAR shall be exercisable only to the extent and at the same time
that the related Option is exercisable.

 

c) A Freestanding SAR shall be exercisable pursuant to the terms and conditions
that are specified in the agreement in which the Freestanding SAR is granted.

 

d) Upon the exercise of a SAR, the Company shall pay to the Eligible Director an
amount equivalent to the spread (less any applicable withholding taxes) in cash,
or in Shares, or a combination of both, as the Board shall determine. Such
determination may be made at the time of the granting of the SAR. No fractional
Shares of Stock shall be issued and the Board shall determine whether cash shall
be given in lieu of such fractional Share or whether such fractional Share shall
be eliminated.

 

e) A Tandem SAR shall terminate and may no longer be exercised upon the
termination or expiration of the related Option.

 

f) Income attributable to the exercise of a SAR shall not be included in the
calculation of any other benefits payable at any time by reason of the Eligible
Director’s service to the Company.

 

g) No SAR shall be transferable by the Eligible Director.

 

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h) The agreement under which a SAR is granted shall set forth the extent to
which the Eligible Director shall have the right to exercise the SAR following
termination of the Eligible Director’s service as a Director. Such provisions
shall be determined at the sole discretion of the Board and need not be uniform
among all SARs issued pursuant to this Section 13, and may reflect distinctions
based on the reasons for termination of service.

 

i) The Board may only grant Freestanding SARs pursuant to the achievement of
Performance Goals and it may impose additional restrictions upon the vesting and
exercise of such SARs on the attainment of Performance Goals. For all purposes
under this Plan, “Performance Goals” means goals that must be met by the end of
a period specified by the Board based upon one or more of the following
criteria: (i) price of the Common Stock, (ii) market share of the Company, (iii)
sales by the Company, (iv) earnings per share of the Common Stock, (v) return on
shareholder equity of the Company, or (vi) costs of the Company.

 

14. Change in Control:

 

a) Notwithstanding anything in this Plan to the contrary, in the event of a
Change in Control of the Company, the Options granted under Sections 5 and 6 and
any SARs granted under Section 13 shall vest and become immediately exercisable
and any unvested Stock Units granted under Section 8 shall vest.

 

b) For purposes of this Plan, “Change in Control of the Company” means:

 

(1) The acquisition by any individual, entity or group [within the meaning of
section 13(d)(3) or 14(d)(2) of the Exchange Act] (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (A) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (B) the combined voting
power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that, for purposes of this Section 14(b), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any affiliated company or (iv) any acquisition
by any corporation pursuant to a transaction that complies with Sections
14(b)(3)(A), 14(b)(3)(B) and 14(b)(3)(C);

 

(2) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;

 

(3) consummation of a reorganization, merger, consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the
acquisition of the assets or stock of another entity (a “Business Combination”),
in each case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the then-outstanding shares of
common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including,
without limitation, a corporation that, as a result of such transaction, owns
the Company or all or substantially all of the Company’s assets either directly
or through one or more subsidiaries) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities,
as the case may be, (B) no Person [excluding any corporation resulting from such
Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination]
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities of such corporation, except to the extent that such ownership existed
prior to the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or

 

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(4) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

 

c) Payment for Performance Units. Within 30 days following a Change in Control
of the Company, as defined in Section 14(b) of this Plan, there shall be paid in
cash to Eligible Directors holding Performance Units a pro rata amount based
upon the assumed achievement of all relevant Performance Goals at target levels,
and upon the length of time with the performance period that has elapsed before
the Change in Control of the Company; provided, however, that if the Board
determines that actual performance to the date of the Change in Control of the
Company exceeds targeted levels, the prorated payouts shall be made using the
actual performance data; and provided further, that there shall not be an
accelerated payout with respect to Performance Units that qualify as “Derivative
Securities” under Section 16 of the Exchange Act that were granted less than six
months before the Change in Control of the Company.

 

15. Amendments and Termination:

 

a) Board Authority. The Board may amend or terminate the Plan at any time;
provided that no amendment may be made (i) without the appropriate approval of
the Company’s stockholders if such approval is necessary to comply with any tax
or other regulatory requirement, including any stockholder approval required as
a condition to exemptive relief under section 16(b) of the Exchange Act; (ii)
which would adversely impair or affect, without the consent of the Eligible
Director, any rights or obligations under any Option, Unit or SAR theretofore
granted to such Eligible Director; or (iii) more than once every six months with
respect to the timing, amount and price of Options or SARs to be awarded to
Eligible Directors, other than to comport with changes to the Code, the Employee
Retirement Income Security Act, or the rules thereunder.

 

b) Prior Stockholder and Eligible Director Approval. Anything herein to the
contrary notwithstanding, in the event that amendments to the Plan are required
in order that the Plan or any other stock-based compensation plan of the Company
comply with the requirements of Rule 16b-3 issued under the Exchange Act, as
amended from time to time, or any successor rules promulgated by the Securities
and Exchange Commission related to the treatment of benefit and compensation
plans under section 16 of the Exchange Act, the Board is authorized to make such
amendments without the consent of Eligible Directors or the stockholders of the
Company.

 

16. General Provisions:

 

a) Compliance Regulations. All certificates for Shares delivered under this Plan
pursuant to any Option, Unit or SAR shall be subject to such stock-transfer
orders and other restrictions as the Board may deem advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Shares are then listed, and any applicable
federal or state securities law, and the Board may cause a legend or legends to
be put on any such certificates to make appropriate reference to such
restrictions. The Company shall not be required to issue or deliver any Shares
under the Plan prior to the completion of any registration or qualification of
such Shares under any federal or state law, or under any ruling or regulations
of any governmental body or national securities exchange that the Board in its
sole discretion shall deem to be necessary or appropriate.

 

b) Other Plans. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required by applicable law or the rules of any
stock exchange on which the Common Stock is then listed; and such arrangements
may be either generally applicable or applicable only in specific cases.

 

c) Governing Law. The validity, construction, and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware and applicable federal law.

 

d) Conformity With Law. If any provision of this Plan is or becomes or is deemed
invalid, illegal, or unenforceable in any jurisdiction, or would disqualify the
Plan or any Option under any law deemed applicable by

 

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the Board, such provision shall be construed or deemed amended in such
jurisdiction to conform to applicable laws or if it cannot be construed or
deemed amended without, in the determination of the Board, materially altering
the intent of the Plan, it shall be stricken and the remainder of the Plan shall
remain in full force and effect.

 

e) Insufficient Shares. In the event there are insufficient Shares remaining to
satisfy all of the grants of Options, Units or SARs made on the same day, such
Options, Units or SARs shall be reduced pro-rata.

 

17. Effective Date and Termination:

 

The Plan’s original effective date, as approved by the Board, was August 9,
1990, and last amended by the Board on August 10, 1995; and ratified by the
stockholders at the Annual Meeting held October 23, 1995. The effective date of
this amendment is October 22, 2001, while the effective date of the latest
restatement was October 20, 1997, as ratified by the Company’s stockholders at
the Annual Meeting held on October 20, 1997. The Plan will terminate upon the
date on which all outstanding Options have expired or terminated, and all
outstanding Units and SARs have been paid or otherwise provided for.

 

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