Exhibit 10.1

 
ARLINGTON ASSET INVESTMENT CORP.
 
2011 LONG-TERM INCENTIVE PLAN
 
Arlington Asset Investment Corp., a corporation existing under the laws of the
Commonwealth of Virginia (the “Company”), hereby establishes and adopts the
following 2011 Long-Term Incentive Plan (the “Plan”).
 
1. PURPOSE OF THE PLAN
 
1.1. Purpose. The purpose of the Plan is to assist the Company and its
Affiliates in attracting and retaining selected individuals to serve as
directors, employees, consultants and/or advisors of the Company who are
expected to contribute to the Company’s success and to achieve long-term
objectives which will inure to the benefit of all stockholders of the Company
through the additional incentives inherent in the Awards hereunder.
 
2. DEFINITIONS
 
2.1.  “Accounting Firm” shall have the meaning set forth in Section 11.4.
 
2.2. “Affiliate” shall mean (i) any person or entity that directly, or through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Company (including any Subsidiary) or (ii) any entity in which
the Company has a significant equity interest, as determined by the Committee.
 
2.3.  “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock
Award, Restricted Stock Unit Award, Performance Award, Dividend Equivalent,
Interest Equivalent, Other Stock-Based Award, or any other right, interest or
option relating to Shares or other property (including cash) granted pursuant to
the provisions of the Plan.
 
2.4.  “Award Agreement” shall mean any written agreement, contract or other
instrument or document evidencing any Award granted by the Committee hereunder.
 
2.5.  “Board” shall mean the board of directors of the Company.
 
2.6.  “Change in Control” shall have the meaning set forth in Section 11.1.
 
2.7.  “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
 
2.8.  “Committee” shall mean the Compensation Committee of the Board.
 
2.9.  “Covered Employee” shall mean a “covered employee” within the meaning of
Section 162(m)(3) of the Code, or any successor provision thereto.
 
 
 

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2.10.  “Director” shall mean a non-employee member of the Board.
 
2.11.  “Dividend Equivalents” shall have the meaning set forth in Section 12.5.
 
2.12.  “Employee” shall mean any employee of the Company or any Affiliate.
Solely for purposes of the Plan, an Employee shall also mean any consultant or
advisor who provides services to the Company or any Affiliate, so long as such
person (i) renders bona fide services that are not in connection with the offer
and sale of the Company’s securities in a capital-raising transaction and (ii)
does not directly or indirectly promote or maintain a market for the Company’s
securities.
 
2.13.  “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
 
2.14.  “Fair Market Value” shall mean, with respect to any property other than
Shares, the market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee. The Fair
Market Value of Shares as of any date shall be the per Share closing price of
the Shares as reported on the New York Stock Exchange on such date (or if there
was no reported closing price on such date, on the last preceding date on which
the closing price was reported) or, if the Company is not then listed on the New
York Stock Exchange, the Fair Market Value of Shares shall be determined by the
Committee in its sole discretion using appropriate criteria.
 
2.15.  “Freestanding Stock Appreciation Right” shall have the meaning set forth
in Section 6.1.
 
2.16.  “Interest Equivalent” shall have the meaning set forth in Section 12.5
 
2.17.  “Limitations” shall have the meaning set forth in Section 3.3.
 
2.18.  “Option” shall mean any right granted to a Participant under the Plan
allowing such Participant to purchase Shares at such price or prices and during
such period or periods as the Committee shall determine.
 
2.19.  “Other Stock-Based Award” shall have the meaning set forth in
Section 8.1.
 
2.20.  “Participant” shall mean an Employee or Director who is selected by the
Committee to receive an Award under the Plan.
 
2.21.  “Payee” shall have the meaning set forth in Section 13.1.
 
2.22.  “Performance Award” shall mean any Award of Performance Shares or
Performance Units granted pursuant to Section 9.
 
 
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2.23.  “Performance Period” shall mean that period established by the Committee
at the time any Performance Award is granted or at any time thereafter during
which any performance goals specified by the Committee with respect to such
Award are to be measured.
 
2.24.  “Performance Share” shall mean any grant pursuant to Section 9 of a unit
valued by reference to a designated number of Shares, which value may be paid to
the Participant by delivery of such property as the Committee shall determine,
including cash, Shares, other property, or any combination thereof, upon
achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.
 
2.25.  “Performance Unit” shall mean any grant pursuant to Section 9 of a unit
valued by reference to a designated amount of property (including cash) other
than Shares, which value may be paid to the Participant by delivery of such
property as the Committee shall determine, including cash, Shares, other
property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of
such grant or thereafter.
 
2.26.  “Permitted Assignee” shall have the meaning set forth in Section 12.3.
 
2.27.  “Prior Plans” shall mean, collectively, the FBR Stock and Annual
Incentive Plan, the Friedman, Billings, Ramsey Group, Inc. 2004 Long-Term
Incentive Plan, and the Company’s Non-Employee Director Stock Compensation Plan.
 
2.28.  “Restricted Stock” shall mean any Share issued with the restriction that
the holder may not sell, transfer, pledge or assign such Share and with such
other restrictions as the Committee, in its sole discretion, may impose
(including any restriction on the right to vote such Share and the right to
receive any dividends), which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise, as the
Committee may deem appropriate.
 
2.29.  “Restricted Stock Award” shall have the meaning set forth in Section 7.1.
 
2.30.  “Restricted Stock Unit” means an Award that is valued by reference to a
Share, which value may be paid to the Participant upon the satisfaction of
vesting restrictions as the Committee may establish, which restrictions may
lapse separately or in combination at such time or times, in installments or
otherwise, as the Committee may deem appropriate.
 
2.31.  “Restricted Stock Unit Award” shall have the meaning set forth in Section
7.1
 
2.32.  “Restriction Period” shall have the meaning set forth in Section 7.1.
 
2.33.  “Shares” shall mean the shares of Class A common stock of the Company,
par value $0.01 per share.
 
2.34.  “Stock Appreciation Right” shall mean the right granted to a Participant
pursuant to Section 6.
 
 
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2.35.  “Subsidiary” shall mean any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of the Award, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
 
2.36.  “Substitute Awards” shall mean Awards granted or Shares issued by the
Company in assumption of, or in substitution or exchange for, awards previously
granted, or the right or obligation to make future awards, by a company acquired
by the Company or any Subsidiary or with which the Company or any Subsidiary
combines.
 
2.37.  “Tandem Stock Appreciation Right” shall have the meaning set forth in
Section 6.1.
 
In addition, certain other terms used in the Plan have definitions provided to
them in the first place in which they are used herein.
 
3. SHARES SUBJECT TO THE PLAN
 
3.1. Number of Shares.
 
(a) Subject to adjustment as provided in Section 12.2, a total of 500,000 Shares
shall be authorized for grant under the Plan, plus any Shares remaining
available for grant under the Prior Plans on the effective date of the Plan
(determined without regard to the earlier expiration or termination of the Prior
Plan).
 
(b) If any Shares subject to an Award or to an award under the Prior Plans are
forfeited, expire or otherwise terminate without issuance of such Shares on or
after the effective date of the Plan, or any Award or award under the Prior
Plans is settled for cash or otherwise does not result in the issuance of all or
a portion of the Shares subject to such Award on or after the effective date of
the Plan, the Shares shall, to the extent of such forfeiture, expiration,
termination, cash settlement or non-issuance, again be available for Awards
under the Plan.
 
(c) In the event that (i) any Option or other Award granted hereunder is
exercised through the tendering of Shares (either actually or by attestation) or
by the withholding of Shares by the Company, or (ii) withholding tax liabilities
arising from such Option or other Award are satisfied by the tendering of Shares
(either actually or by attestation) or by the withholding of Shares by the
Company, then the Shares so tendered or withheld shall be available for issuance
under the Plan.  In the event that on or after the effective date of the Plan
(i) any option or award granted under the Prior Plans is exercised through the
tendering of Shares (either actually or by attestation) or by the withholding of
Shares by the Company, or (ii) withholding tax liabilities arising from such
options or awards are satisfied by the tendering of Shares (either actually or
by attestation) or by the withholding of Shares by the Company, then the Shares
so tendered or withheld shall again be available for Awards under the Plan.
 
 
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(d) Substitute Awards shall not reduce the Shares authorized for grant under the
Plan and Substitute Awards may be granted without regard to the Limitations
prescribed by Section 3.3.  Shares subject to a Substitute Award shall not again
be available for Awards under the Plan to the extent of any forfeiture,
expiration or cash settlement as provided in paragraph (b) above. Additionally,
in the event that a company acquired by the Company or any Subsidiary or with
which the Company or any Subsidiary combines has shares available under a
pre-existing plan approved by shareholders and not adopted in contemplation of
such acquisition or combination, the shares available for grant pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using
the exchange ratio or other adjustment or valuation ratio or formula used in
such acquisition or combination to determine the consideration payable to the
holders of common stock of the entities party to such acquisition or
combination) may be used for Awards under the Plan and shall not reduce the
Shares authorized for grant under the Plan; provided that Awards using such
available shares shall not be made after the date awards or grants could have
been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not Employees or
Directors or any Affiliate prior to such acquisition or combination.
 
3.2. Character of Shares. Any Shares issued hereunder may consist, in whole or
in part, of authorized and unissued shares, treasury shares or shares purchased
in the open market or otherwise.
 
3.3. Limitations on Grants to Individual Participant.  Subject to adjustment as
provided, in Section 12.2, no Participant may be granted (i) Options or Stock
Appreciation Rights during any calendar year with respect to more than 250,000
Shares or (ii) Restricted Stock, Restricted Stock Units, Performance Awards
and/or Other Stock-Based Awards that are denominated in Shares in any calendar
year with respect to more than 250,000 Shares (the “Limitations”).  In addition
to the foregoing, the maximum dollar value payable to any Participant in any
calendar year with respect to Performance Awards and/or Other Stock-Based Awards
that are valued with reference to property other than Shares is $10,000,000.  If
an Award is cancelled, the cancelled Award shall continue to be counted toward
the applicable Limitations and the dollar limit on Performance Awards and/or
Other Stock-Based Awards that are valued with reference to property other than
Shares.
 
4. ELIGIBILITY AND ADMINISTRATION
 
4.1. Eligibility.  Any Employee or Director shall be eligible to be selected as
a Participant.
 
4.2. Administration.
 
(a) The Plan shall be administered by the Committee. The Directors may remove
from, add members to, or fill vacancies on, the Committee.
 
(b) The Committee shall have full power and authority, subject to the provisions
of the Plan and subject to such orders or resolutions not inconsistent with the
provisions of the Plan as may from time to time be adopted by the Board, to:
(i) select the Employees and Directors to whom Awards may from time to time be
granted hereunder; (ii) determine the type or types of Awards, not inconsistent
with the provisions of the Plan, to be granted to each Participant hereunder;
(iii) determine the number of Shares to be covered by each Award granted
hereunder; (iv) determine the terms and conditions, not inconsistent with the
provisions of the Plan, of any Award granted hereunder; (v) determine whether,
to what extent and under what circumstances Awards may be settled in cash,
Shares or other property; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other property and other amounts payable with
respect to an Award made under the Plan shall be deferred either automatically
or at the election of the Participant; (vii) determine whether, to what extent
and under what circumstances any Award shall be canceled or suspended;
(viii) interpret and administer the Plan and any instrument or agreement entered
into under or in connection with the Plan, including any Award Agreement;
(ix) correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent that the Committee shall
deem desirable to carry it into effect; (x) establish such rules and regulations
and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; (xi) determine whether any Award will have Dividend
Equivalents or Interest Equivalents; and (xii) make any other determination and
take any other action that the Committee deems necessary or desirable for
administration of the Plan.
 
 
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(c) Decisions of the Committee shall be final, conclusive and binding on all
persons or entities, including the Company, any Participant, any stockholder and
any Employee or any Affiliate. A majority of the members of the Committee may
determine its actions and fix the time and place of its
meetings.  Notwithstanding the foregoing, any action or determination by the
Committee specifically affecting or relating to an Award to a Director shall
require the final approval of the Board.
 
(d) To the extent not inconsistent with applicable law or the rules and
regulations of the principal U.S. national securities exchange on which the
Shares are traded, the Committee may delegate to (i) a committee of one or more
Directors of the Company any of the authority of the Committee under the Plan,
including the right to grant, cancel or suspend Awards and (ii) to the extent
permitted by law, to one or more officers or a committee of officers the right
to grant Awards to Employees who are not Directors or officers of the Company
and the authority to take action on behalf of the Committee pursuant to the Plan
to cancel or suspend Awards to Employees who are not Directors or officers of
the Company.
 
5. OPTIONS
 
5.1. Grant of Options.  Options may be granted hereunder to Participants either
alone or in addition to other Awards granted under the Plan. Any Option shall be
subject to the terms and conditions of this Section 5 and to such additional
terms and conditions, not inconsistent with the provisions of the Plan, as the
Committee shall deem desirable.
 
5.2. Award Agreements. All Options granted pursuant to this Section 5 shall be
evidenced by a written Award Agreement in such form and containing such terms
and conditions as the Committee shall determine which are not inconsistent with
the provisions of the Plan. The terms and conditions of Options need not be the
same with respect to each Participant. The grant of an Option pursuant to the
Plan shall impose no obligation on the recipient to exercise such Option. Any
individual who is granted an Option pursuant to this Section 5 may hold more
than one Option granted pursuant to the Plan at the same time.
 
 
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5.3. Option Price. Other than in connection with Substitute Awards, the option
price per each Share purchasable under any Option granted pursuant to this
Section 5 shall not be less than 100% of the Fair Market Value of such Share on
the date of grant of such Option. Other than pursuant to Section 12.2, the
Committee shall not without the approval of the Company’s stockholders (a) lower
the option price per Share of an Option after it is granted, (b) cancel an
Option in exchange for cash or another Award (other than in connection with a
Change in Control as described in Section 11.2 or Substitute Awards), and
(c) take any other action with respect to an Option that may be treated as a
repricing under the rules and regulations of the principal U.S. national
securities exchange on which the Shares are traded.
 
5.4. Option Term. The term of each Option shall be fixed by the Committee in its
sole discretion; provided that no Option shall be exercisable after the
expiration of ten years from the date the Option is granted, except in the event
of death or disability.
 
5.5. Exercise of Options.
 
(a) Vested Options granted under the Plan shall be exercised by the Participant
or by a Permitted Assignee thereof (or by the Participant’s executors,
administrators, guardian or legal representative, as may be provided in an Award
Agreement) as to all or part of the Shares covered thereby, by giving notice of
exercise to the Company or its designated agent, specifying the number of Shares
to be purchased.  The notice of exercise shall be in such form, made in such
manner, and shall comply with such other requirements consistent with the
provisions of the Plan as the Committee may prescribe from time to time.
 
(b) Unless otherwise provided in an Award Agreement, full payment of such
purchase price shall be made at the time of exercise and shall be made (i) in
cash or cash equivalents (including by certified check or bank check or wire
transfer of immediately available funds), (ii) by tendering previously acquired
Shares (either actually or by attestation), valued at their then Fair Market
Value, (iii) with the consent of the Committee, by delivery of other
consideration (including, where permitted by law and the Committee, other
Awards) having a Fair Market Value on the exercise date equal to the total
purchase price, (iv) with the consent of the Committee, by withholding Shares
otherwise issuable in connection with the exercise of the Option, (v) through
any other method specified in an Award Agreement, or (vi) any combination of any
of the foregoing. The notice of exercise, accompanied by such payment, shall be
delivered to the Company at its principal business office or such other office
as the Committee may from time to time direct, and shall be in such form,
containing such further provisions consistent with the provisions of the Plan,
as the Committee may from time to time prescribe. In no event may any Option
granted hereunder be exercised for a fraction of a Share. Except under certain
circumstances contemplated by Section 11 or as may be set forth in an Award
Agreement with respect to death or disability of a Participant, Options granted
to employees of the Company or any Subsidiary will not be exercisable before the
expiration of one year from the date the Option is granted (but may be
exercisable pro rata over such time).
 
 
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(c) Notwithstanding the foregoing, an Award Agreement may provide that if on the
last day of the term of an Option the Fair Market Value of one Share exceeds the
option price per Share, the Participant has not exercised the Option (or a
Tandem Stock Appreciation Right, if applicable) and the Option has not expired,
the Option shall be deemed to have been exercised by the Participant on such day
with payment made by withholding Shares otherwise issuable in connection with
the exercise of the Option.  In such event, the Company shall deliver to the
Participant the number of Shares for which the Option was deemed exercised, less
the number of Shares required to be withheld for the payment of the total
purchase price and required withholding taxes; provided, however, any fractional
Share shall be settled in cash.
 
5.6. Form of Settlement. In its sole discretion, the Committee may provide, at
the time of grant, that the Shares to be issued upon an Option’s exercise shall
be in the form of Restricted Stock or other similar securities, or may reserve
the right so to provide after the time of grant.
 
6. STOCK APPRECIATION RIGHTS
 
6.1. Grant and Exercise. The Committee may grant Stock Appreciation Rights
(a) in conjunction with all or part of any Option granted under the Plan or at
any subsequent time during the term of such Option (“Tandem Stock Appreciation
Right”), (b) in conjunction with all or part of any Award (other than an Option)
granted under the Plan or at any subsequent time during the term of such Award,
or (c) without regard to any Option or other Award (a “Freestanding Stock
Appreciation Right”), in each case upon such terms and conditions as the
Committee may establish in its sole discretion.
 
6.2. Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, including the following:
 
(a) Upon the exercise of a Stock Appreciation Right, the holder shall have the
right to receive the excess of (i) the Fair Market Value of one Share on the
date of exercise or such other lesser amount as the Committee shall so determine
at any time during a specified period before the date of exercise over (ii) the
grant price of the right on the date of grant which, except in the case of
Substitute Awards or in connection with an adjustment provided in Section 12.2,
shall not be less than the Fair Market Value of one Share on such date of grant
of the right or, in the case of a Tandem Stock Appreciation Right granted on the
date of grant of the related Option, the option price per share of the related
Option.
 
(b) Upon the exercise of a Stock Appreciation Right, the Committee shall
determine in its sole discretion whether payment shall be made in cash, in whole
Shares or other property, or any combination thereof.
 
(c) Any Tandem Stock Appreciation Right may be granted at the same time as the
related Option is granted or at any time thereafter before exercise or
expiration of such Option.
 
 
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(d) Any Tandem Stock Appreciation Right related to an Option may be exercised
only when the related Option would be exercisable and the Fair Market Value of
the Shares subject to the related Option exceeds the option price at which
Shares can be acquired pursuant to the Option. Any Option related to a Tandem
Stock Appreciation Right shall no longer be exercisable to the extent the Tandem
Stock Appreciation Right has been exercised and any Tandem Stock Appreciation
Right shall no longer be exercisable to the extent the related Option has been
exercised; provided, however, that if a Tandem Stock Appreciation Right exists
with respect to less than the full number of Shares covered by a related Option,
then an exercise or termination of such Option shall not reduce the number of
Shares to which the Tandem Stock Appreciation Right applies until the number of
Shares then exercisable under such Option equals the number of Shares to which
the Tandem Stock Appreciation Right applies.
 
(e) The provisions of Stock Appreciation Rights need not be the same with
respect to each recipient.
 
(f) The Committee may impose such other conditions or restrictions on the terms
of exercise and the exercise price of any Stock Appreciation Right, as it shall
deem appropriate.  In connection with the foregoing, the Committee shall
consider the applicability and effect of Section 162(m) of the Code.
Notwithstanding the foregoing provisions of this Section 6.2(f), but subject to
Section 12.2, a Freestanding Stock Appreciation Right shall not have (i) an
exercise price less than Fair Market Value on the date of grant, or (ii) except
in the event of death or disability, a term of greater than ten years. Except
under certain circumstances contemplated by Section 11 or as may be set forth in
an Award Agreement with respect to death or disability of a Participant,
Freestanding Stock Appreciation Rights will not be exercisable before the
expiration of one year from the date the right is granted.
 
(g) The Committee may impose such terms and conditions on Stock Appreciation
Rights granted in conjunction with any Award (other than an Option) as the
Committee shall determine in its sole discretion.
 
(h) An Award Agreement may provide that if on the last day of the term of a
Stock Appreciation Right the Fair Market Value of one Share exceeds the grant
price per Share of the Stock Appreciation Right, the Participant has not
exercised the Stock Appreciation Right or the related Option (if applicable),
and the Stock Appreciation Right has not expired, the Stock Appreciation Right
(or the related Option, but not both) shall be deemed to have been exercised by
the Participant on such day.  In such event, the Company shall make payment to
the Participant in accordance with this Section, reduced by the number of Shares
(or cash) required for withholding taxes and any fractional Share shall be
settled in cash.
 
(i) Without the approval of the Company’s stockholders, other than pursuant to
Section 12.2, the Committee shall not (i) reduce the grant price of any Stock
Appreciation Right after the date of grant (ii) cancel any Stock Appreciation
Right in exchange for cash or another Award (other than in connection with a
Change in Control as defined in Section 11.3 or a Substitute Award)), or (iii)
take any other action with respect to a Stock Appreciation Right that would be
treated as a repricing under the rules and regulations of the principal U.S.
national securities exchange on which the Shares are traded.
 
 
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7. RESTRICTED STOCK AWARDS AND RESTRICTED STOCK UNITS
 
7.1. Grants. Awards of Restricted Stock and Restricted Stock Units may be issued
hereunder to Participants either alone or in addition to other Awards granted
under the Plan (a “Restricted Stock Award” or “Restricted Stock Unit Award,”
respectively).  To the extent provided in the Award Agreement evidencing a
Performance Award or the terms of other cash-based incentive compensation
awards, Restricted Stock Awards and Restricted Stock Unit Awards shall also be
available as a form of payment of Performance Awards and other earned cash-based
incentive compensation. A Restricted Stock Award or Restricted Stock Unit Award
shall be subject to vesting restrictions imposed by the Committee covering a
period of time specified by the Committee (the “Restriction Period”). The
provisions of Restricted Stock Awards and Restricted Stock Unit Awards need not
be the same with respect to each recipient. The Committee has absolute
discretion to determine whether any consideration (other than services) is to be
received by the Company or any Affiliate as a condition precedent to the
issuance of Restricted Stock or Restricted Stock Units.
 
7.2. Award Agreements. The terms of any Restricted Stock Award or Restricted
Stock Unit Award granted under the Plan shall be set forth in a written Award
Agreement which shall contain provisions determined by the Committee and not
inconsistent with the Plan.
 
7.3. Rights of Holders of Restricted Stock and Restricted Stock Units. Unless
otherwise provided in the Award Agreement, beginning on the date of grant of the
Restricted Stock Award and subject to execution of the Award Agreement, the
Participant shall become a shareholder of the Company with respect to all Shares
subject to the Award Agreement and shall have all of the rights of a
shareholder, including the right to vote such Shares and the right to receive
distributions made with respect to such Shares. A Participant receiving a
Restricted Stock Unit Award shall not possess voting or other rights of a
shareholder with respect to such Award (unless and until the Restricted Stock
Unit Award is settled in Shares) but the Award Agreement evidencing the
Restricted Stock Unit Award may provide for the payment (on a current or
deferred basis) of Dividend Equivalents under Section 12.5.  Except as otherwise
provided in an Award Agreement, any Shares or any other property (other than
cash) distributed as a dividend or otherwise with respect to any Restricted
Stock Award and any Dividend Equivalents representing a distribution of property
(but not cash) for the number of Shares covered by a Restricted Stock Unit Award
as to which the restrictions have not yet lapsed shall be subject to the same
restrictions as such Restricted Stock Award or Restricted Stock Unit
Award.  Notwithstanding the provisions of this Section, cash dividends with
respect to any Restricted Stock Award and any other property (other than cash)
distributed as a dividend or otherwise with respect to any Restricted Stock
Award that vests based on achievement of performance goals and any Dividend
Equivalents representing cash dividends or any property other than cash for the
number of Shares covered by a Restricted Stock Unit Award that vests based on
achievement of performance goals shall be accumulated, shall be subject to
restrictions and risk of forfeiture to the same extent as the Restricted Stock
or Restricted Stock Units with respect to which such cash, Shares or other
property has been distributed and shall be paid at the time such restrictions
and risk of forfeiture lapse.
 
 
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7.4. Minimum Vesting Period. Except for certain limited situations (including
the death, disability or retirement of the Participant or a Change in Control
referred to in Section 11), Restricted Stock Awards and Restricted Stock Unit
Awards subject solely to continued employment restrictions shall have a
Restriction Period of not less than three years from the date of grant (but
permitting pro-rata vesting over such time); provided, that the provisions of
this Section 7.4 shall not be applicable to any Substitute Awards or grants of
Restricted Stock in payment of Performance Awards pursuant to Section 9. Subject
to the foregoing three-year minimum vesting requirement, the Committee may, in
its sole discretion and subject to the limitations imposed under Section 162(m)
of the Code and the Treasury Regulations thereunder in the case of a Restricted
Stock Award intended to comply with the performance-based compensation exception
under Code Section 162(m), waive the forfeiture period and any other conditions
set forth in any Award Agreement subject to such terms and conditions as the
Committee shall deem appropriate. The minimum Vesting Period requirements of
this Section shall not apply to Restricted Stock Awards or Restricted Stock Unit
Awards granted to Directors.
 
8. OTHER STOCK-BASED AWARDS
 
8.1. Stock and Administration. Other Awards of Shares and other Awards that are
valued in whole or in part by reference to, or are otherwise based on, Shares or
securities convertible into Shares (“Other Stock-Based Awards”) may be granted
hereunder to Participants, either alone or in addition to other Awards granted
under the Plan, and such Other Stock-Based Awards shall also be available as a
form of payment in the settlement of other Awards granted under the Plan. Other
Stock-Based Awards shall be paid in Shares, cash or a combination, as determined
by the Committee. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees and Directors to
whom and the time or times at which such Other Stock-Based Awards shall be made,
the number of Shares to be granted pursuant to such Awards, and all other
conditions of the Awards. The provisions of Other Stock-Based Awards need not be
the same with respect to each recipient. Except for certain limited situations
(including the death, disability or retirement of the Participant or a Change in
Control referred to in Section 11), Other Stock-Based Awards subject solely to
continued employment restrictions shall be subject to restrictions imposed by
the Committee for a period of not less than three years from date of grant (but
permitting pro-rata vesting over such time); provided, that such restrictions
shall not be applicable to any Substitute Awards, grants of Other Stock-Based
Awards in payment of Performance Awards pursuant to Section 9, or grants of
Other Stock-Based Awards on a deferred basis.  The minimum Vesting Period
requirements of this Section shall not apply to Other Stock-Based Awards granted
to Directors or any consultant or advisor who provides services to the Company
or an Affiliate.  In addition, the Committee may award unrestricted Shares to
Participants in lieu of certain cash payments awarded under other compensation
plans or programs of the Company.
 
8.2. Terms and Conditions. Shares (including securities convertible into Shares)
subject to Awards granted under this Section 8 may be issued for no
consideration or for such minimum consideration as may be required by applicable
law. Shares (including securities convertible into Shares) purchased pursuant to
a purchase right awarded under this Section 8 shall be purchased for such
consideration as the Committee shall determine in its sole discretion.
 
 
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8.3. Deferral of Director Fees. Directors shall, if determined by the Board,
receive Other Stock-Based Awards in the form of deferred stock units in lieu of
all or a portion of their annual retainer.  In addition Directors may elect to
receive Other Stock-Based Awards in the form of deferred stock units in lieu of
all or a portion of their annual and committee retainers and annual meeting
fees, provided that such election is made in accordance with the requirements of
Section 409A of the Code.  The Committee shall, in its absolute discretion,
establish such rules and procedures as it deems appropriate for such elections
and for the payment the deferred stock units.
 
9. PERFORMANCE AWARDS
 
9.1. Terms of Performance Awards. Performance Awards in the form of Performance
Shares or Performance Units may be issued hereunder to Participants, for no
consideration or for such minimum consideration as may be required by applicable
law, either alone or in addition to other Awards granted under the Plan. The
performance criteria to be achieved during any Performance Period and the length
of the Performance Period shall be determined by the Committee upon the grant of
each Performance Award; provided, however, that a Performance Period shall not
be shorter than 12 months. The performance goals to be achieved for each
Performance Period shall be conclusively determined by the Committee and may be
based upon the criteria set forth in Section 10.2.
 
9.2. Award Agreements.  The terms of any Performance Award granted under the
Plan shall be set forth in an Award Agreement (or, if applicable, in a
resolution duly adopted by the Committee) which shall contain provisions
determined by the Committee and not inconsistent with the Plan, including
whether such Awards shall have Dividend Equivalents. The terms of Performance
Awards need not be the same with respect to each Participant.
 
9.3. Payment. Except as provided in Section 11 or as may be provided in an Award
Agreement, Performance Awards will be distributed only after the end of the
relevant Performance Period. Performance Awards may be paid in cash, Shares,
other property, or any combination thereof, in the sole discretion of the
Committee at the time of payment. The amount of the Award to be distributed
shall be conclusively determined by the Committee. Performance Awards may be
paid in a lump sum or in installments following the close of the Performance
Period or, in accordance with procedures established by the Committee, on a
deferred basis, subject to the requirements of Section 409A of the Code.
 
10. CODE SECTION 162(m) PROVISIONS
 
10.1. Covered Employees.  Notwithstanding any other provision of the Plan, if
the Committee determines at the time a Restricted Stock Award, a Restricted
Stock Unit Award, a Performance Award or an Other Stock-Based Award is granted
to a Participant who is, or is likely to be, as of the end of the tax year in
which the Company would claim a tax deduction in connection with such Award, a
Covered Employee, then the Committee may provide that this Section 10 is
applicable to such Award.
 
 
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10.2. Performance Criteria. If the Committee determines that a Restricted Stock
Award, a Restricted Stock Unit Award, a Performance Award or an Other
Share-Based Award is intended to be subject to this Article 10, then the lapsing
of restrictions on such an Award and the distribution of cash, Shares or other
property pursuant thereto, as applicable, shall be subject to the achievement of
one or more objective performance goals established by the Committee, which
shall be based on the attainment of specified levels of one or any combination
of the following: net sales; revenues; revenue growth; asset growth; combined
net worth; debt to equity ratio; debt to capitalization ratio; debt reduction;
earnings before interest, and taxes, or earnings before interest, taxes,
depreciation and amortization; operating income (before or after taxes);
operating margin, gross margin; operating cash flow; pre- or after-tax net
income or loss (before of after allocation of corporate overhead and/or bonus);
cash flow or free cash flow; cash flow or free cash flow per share (before or
after dividends); year-end cash; cash margin; net income or loss (before of
after taxes); earnings per share; return on equity; return on investment; return
on total capital; return on capital employed; return on assets or net assets;
return on revenue; cash flow return on investment; economic value added (or an
equivalent metric); share price performance; total shareholder return;
comparisons with various stock market indices; attainment of strategic and
operational initiatives; improvement in or attainment of expense levels or
improvement in or attainment of working capital levels of the Company or any
Affiliate, division or business unit of the Company for or within which the
Participant is primarily employed. Such performance goals also may be based
solely by reference to the Company’s performance or the performance of an
Affiliate, division or business unit of the Company, or based upon the relative
performance of other companies or upon comparisons of any of the indicators of
performance relative to other companies. The Committee may also exclude the
impact of an event or occurrence which the Committee determines should
appropriately be excluded, including (a) restructurings, discontinued
operations, extraordinary items, and other unusual or non-recurring charges,
(b) an event either not directly related to the operations of the Company or not
within the reasonable control of the Company’s management, or (c) the cumulative
effects changes in tax or accounting standards required by generally accepted
accounting principles. Such performance goals shall be set by the Committee
within the time period prescribed by, and shall otherwise comply with the
requirements of, Section 162(m) of the Code, or any successor provision thereto,
and the regulations thereunder.
 
10.3. Adjustments. Notwithstanding any provision of the Plan (other than
Section 11), with respect to any Restricted Stock, Performance Award or Other
Stock-Based Award that is subject to this Section 10, the Committee may adjust
downwards, but not upwards, the amount payable pursuant to such Award, and the
Committee may not waive the achievement of the applicable performance goals,
except in the case of the death or disability of the Participant.
 
10.4. Restrictions. The Committee shall have the power to impose such other
restrictions on Awards subject to this Section 10 as it may deem necessary or
appropriate to ensure that such Awards satisfy all requirements for
“performance-based compensation” within the meaning of Section 162(m)(4)(C) of
the Code, or any successor provision thereto.
 
 
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11. CHANGE IN CONTROL PROVISIONS
 
11.1. Definition of Change in Control. For purposes of the Plan, a “Change in
Control” shall mean the happening of any of the following events:
 
(a) acquisition by any individual, entity or group (with the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 50% 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 subsection (a), the following acquisitions shall not
constitute a Change in Control: (1) any acquisition directly from the Company,
(2) any acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, (4) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (c) of this Section 11.1 or (5) any acquisition of beneficial
ownership by Eric Billings or any entity that is controlled by Eric Billings; or
 
(b) During any 24 month period, individuals who, as of the beginning of such
period, constitute the Board (the “Incumbent Board”) cease to constitute at
least a majority of the Board; provided, however, that any individual becoming a
director subsequent to the beginning of such period whose election, or
nomination for election by the Company’s shareholders, 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; or
 
(c) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or the
acquisition of assets or stock of another corporation (a “Business
Combination”), in each case, unless, following such Business Combination, (A)
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, 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 which 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 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 or the Founders or Founder Affiliates) beneficially owns, directly
or indirectly, 50% 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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(d) Consummation of a complete liquidation or dissolution of the Company.

If a Change in Control constitutes a payment event with respect to any Award
that provides for the deferral of compensation and that is subject to Section
409A of the Code, no payment will be made under that Award on account of a
Change in Control unless the event described in subsection (a), (b) or (c)
above, as applicable, constitutes a “change in control event” under Treasury
Regulation Section 1.409A-3(i)(5).
 
11.2. Assumption Upon Change in Control.  In the event of a Change in Control
the successor company may assume or grant a substitute for an Option, Stock
Appreciation Right, share of Restricted Stock, Restricted Stock Unit,
Performance Award or Other Stock-Based Award.  For the purposes of this
Section 11.2, an Option, Stock Appreciation Right, share of Restricted Stock,
Restricted Stock Unit, Performance Award or Other Stock-Based Award shall be
considered assumed or substituted for if following the Change in Control the
award confers the right to purchase or receive, for each Share subject to the
Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit
Award, Performance Award or Other Stock-Based Award immediately prior to the
Change in Control, the consideration (whether stock, cash or other securities or
property) received in the transaction constituting a Change in Control by
holders of Shares for each Share held on the effective date of such transaction
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the transaction
constituting a Change in Control is not solely common stock of the successor
company, the Committee may, with the consent of the successor company, provide
that the consideration to be received upon the exercise or vesting of an Option,
Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award,
Performance Award or Other Stock-Based Award, for each Share subject thereto,
will be solely common stock of the successor company substantially equal in fair
market value to the per share consideration received by holders of Shares in the
transaction constituting a Change in Control. The determination of such
substantial equality of value of consideration shall be made by the Committee in
its sole discretion and its determination shall be conclusive and binding.
Notwithstanding the foregoing, on such terms and conditions as may be set forth
in an Award Agreement, in the event of an involuntary termination without cause
or a voluntary termination for good reason of a Participant’s employment in such
successor company within a 24-month period following such Change in Control,
each Award held by such Participant at the time of the Change in Control shall
be accelerated as described in Sections 11.3 below.
 
 
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11.3. Impact of Change in Control.  Notwithstanding the foregoing, if the
successor company in a Change in Control does not assume or make a substitute
grant for an Award in accordance with Section 11.2 (a) Options and Stock
Appreciation Rights outstanding as of the date of the Change in Control shall
immediately vest and become fully exercisable, (b) restrictions and deferral
limitations on Restricted Stock and Restricted Stock Units shall lapse and the
Restricted Stock become free of all restrictions and limitations and become
fully vested and the Restricted Stock Units shall be earned and payable (either
in full or pro rata based on the portion of the Restriction Period completed as
of the date of the Change in Control), (c) all Performance Awards shall be
considered to be earned and payable (either in full or pro-rata based on the
portion of Performance Period completed as of the date of the Change in
Control), and any deferral or other restriction shall lapse and such Performance
Awards shall be immediately settled or distributed, (d) the restrictions and
deferral limitations and other conditions applicable to any Other Stock-Based
Awards or any other Awards shall lapse, and such Other Stock-Based Awards or
such other Awards shall become free of all restrictions, limitations or
conditions and become fully vested and transferable to the full extent of the
original grant, and (e) such other additional benefits as the Committee deems
appropriate shall apply, subject in each case to any terms and conditions
contained in the Award Agreement evidencing such Award.  Notwithstanding the
preceding sentence, if an Option or Stock Appreciation Right is not assumed or
replaced with a substitute grant in accordance with Section 11.2, the Committee,
in its discretion, may determine that each such Option and Stock Appreciation
Right shall terminate within a specified number of days after notice to the
Participant, and such Participant shall receive, with respect to each Share
subject to such Option or Stock Appreciation Right, an amount equal to the
excess of the Fair Market Value of such Share immediately prior to the
occurrence of such Change in Control over the exercise price per share of such
Option and/or Stock Appreciation Right; such amount to be payable in cash, in
one or more kinds of stock or property (including the stock or property, if any,
payable in the transaction) or in a combination thereof, as the Committee, in
its discretion, shall determine.
 
11.4. Limitations on Benefits.
 
The benefits that a Participant may be entitled to receive under this Plan and
other benefits that a Participant is entitled to receive under other plans,
agreements and arrangements (which, together with the benefits provided under
this Plan, are referred to as “Payments”), may constitute Parachute Payments
that are subject to Sections 280G and 4999 of the Code.  As provided in this
Section 11.4, the Parachute Payments will be reduced pursuant to this Section
11.4 if, and only to the extent that, a reduction will allow a Participant to
receive a greater Net After Tax Amount than the Participant would receive absent
a reduction.

The Accounting Firm will first determine the amount of any Parachute Payments
that are payable to a Participant.  The Accounting Firm also will determine the
Net After Tax Amount attributable to the Participant’s total Parachute Payments.

The Accounting Firm will next determine the largest amount of Payments that may
be made to the Participant without subjecting the Participant to tax under
Section 4999 of the Code (the “Capped Payments”).  Thereafter, the Accounting
Firm will determine the Net After Tax Amount attributable to the Capped
Payments.

 
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The Participant will receive the total Parachute Payments or the Capped
Payments, whichever provides the Participant with the higher Net After Tax
Amount.  If the Participant will receive the Capped Payments, the total
Parachute Payments will be adjusted by first reducing the amount of any benefits
under this Plan or any other plan, agreement or arrangement that are not subject
to Section 409A of the Code (with the source of the reduction to be directed by
the Participant) and then by reducing the amount of any benefits under this Plan
or any other plan, agreement or arrangement that are subject to Section 409A of
the Code (with the source of the reduction to be directed by the Participant) in
a manner that results in the best economic benefit to the Participant (or, to
the extent economically equivalent, in a pro rata manner).  The Accounting Firm
will notify the Participant and the Company if it determines that the Parachute
Payments must be reduced to the Capped Payments and will send the Participant
and the Company a copy of its detailed calculations supporting that
determination.

As a result of the uncertainty in the application of Sections 280G and 4999 of
the Code at the time that the Accounting Firm makes it determinations under this
Section 11.4, it is possible that amounts will have been paid or distributed to
the Participant that should not have been paid or distributed under this Section
11.4 (“Overpayments”), or that additional amounts should be paid or distributed
to the Participant under this Section 11.4 (“Underpayments”).  If the Accounting
Firm determines, based on either the assertion of a deficiency by the Internal
Revenue Service against the Company or the Participant, which assertion the
Accounting Firm believes has a high probability of success or controlling
precedent or substantial authority, that an Overpayment has been made, the
Participant must repay to the Company with interest; provided, however, that no
loan will be deemed to have been made and no amount will be payable by the
Participant to the Company unless, and then only to the extent that, the deemed
loan and payment would either reduce the amount on which the Participant is
subject to tax under Section 4999 of the Code or generate a refund of tax
imposed under Section 4999 of the Code.  If the Accounting Firm determines,
based upon controlling precedent or substantial authority, that an Underpayment
has occurred, the Accounting Firm will notify the Participant and the Company of
that determination and the amount of that Underpayment will be paid to the
Participant promptly by the Company.

For purposes of this Section 11.4, the term “Accounting Firm” means the
independent accounting firm engaged by the Company immediately before the Change
in Control.  For purposes of this Section 11.4, the term “Net After Tax Amount”
means the amount of any Parachute Payments or Capped Payments, as applicable,
net of taxes imposed under Sections 1, 3101(b) and 4999 of the Code and any
State or local income taxes applicable to the Participant on the date of
payment.  The determination of the Net After Tax Amount shall be made using the
highest combined effective rate imposed by the foregoing taxes on income of the
same character as the Parachute Payments or Capped Payments, as applicable, in
effect on the date of payment.  For purposes of this Section 11.4, the term
“Parachute Payment” means a payment that is described in Section 280G(b)(2) of
the Code, determined in accordance with Section 280G of the Code and the
regulations promulgated or proposed thereunder.

Notwithstanding any other provision of this Section 11.4, the limitations and
provisions of this Section 11.4 shall not apply to any Participant who, pursuant
to an agreement with the Company or the terms of another plan maintained by the
Company, is entitled to indemnification for any liability that the Participant
may incur under Section 4999 of the Code.  In addition, nothing in this Section
11.4 shall limit or otherwise supersede the provisions of any other agreement or
plan which provides that a Participant cannot receive Parachute Payments in
excess of the Capped Payments.
 
 
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12. GENERALLY APPLICABLE PROVISIONS
 
12.1. Amendment and Modification of the Plan.  The Board may, from time to time,
alter, amend, suspend or terminate the Plan as it shall deem advisable;
provided, however, that no such action may adversely impair the rights of
Participants with respect to outstanding Awards.  In addition, an amendment,
alteration or modification of the Plan shall be subject to the approval of the
Company’s stockholders to the extent required by law, the rules and regulations
of any exchange or quotation system on which the Shares are listed or quoted or
if such action would materially increase the benefits accruing to Participants
under the Plan, materially increase the number of Shares that may be issued
under the Plan (other than an adjustment pursuant to Section 12.2) or materially
modify the requirements for eligibility to participate in the Plan.
 
12.2. Adjustments.  The number, class and kind of securities that may be issued
under the Plan, the terms of outstanding Awards and the Limitations shall be
adjusted as the Board shall determine to be equitably required in the event that
(i) the Company (a) effects one or more nonreciprocal transactions between the
Company and its shareholders such as a stock dividend, stock split-up,
extraordinary cash dividend, subdivisions or consolidations of shares that
affect the number or kind of shares (or other securities of the Company) or the
Fair Market Value (or the value of other Company securities) and causes a change
in the Fair Market Value of the Shares subject to outstanding Awards or (b)
engages in a transaction to which Section 424 of the Code applies or (ii) there
occurs any other event which, in the judgment of the Board necessitates such
action.  Any determination made under this Section 12.2 by the Board shall be
nondiscretionary, final and conclusive.
 
12.3. Transferability of Awards. Except as provided below, and except as
otherwise authorized by the Committee in an Award Agreement, no Award and no
Shares subject to Awards that have not been issued or as to which any applicable
restriction, performance or deferral period has not lapsed, may be sold,
assigned, transferred, pledged or otherwise encumbered, other than by will or
the laws of descent and distribution, or pursuant to a qualified domestic
relations order, and such Award may be exercised during the life of the
Participant only by the Participant or the Participant’s guardian or legal
representative. Notwithstanding the foregoing, a Participant may assign or
transfer an Award with the consent of the Committee (each transferee thereof, a
“Permitted Assignee”) to (i) the Participant’s spouse, children or grandchildren
(including any adopted and step children or grandchildren), parents,
grandparents or siblings, (ii) to a trust for the benefit of one or more of the
Participant or the persons referred to in clause (i), (iii) to a partnership,
limited liability company or corporation in which the Participant or the persons
referred to in clause (i) are the only partners, members or shareholders or (iv)
for charitable donations; provided that such Permitted Assignee shall be bound
by and subject to all of the terms and conditions of the Plan and the Award
Agreement relating to the transferred Award and shall execute an agreement
satisfactory to the Company evidencing such obligations; and provided further
that such Participant shall remain bound by the terms and conditions of the
Plan. The Company shall cooperate with any Permitted Assignee and the Company’s
transfer agent in effectuating any transfer permitted under this Section 12.3.
 
 
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12.4. Termination of Employment. Unless the Committee shall determine otherwise
at or after the date of grant, the following termination provisions shall apply:
 
(a) Death or Disability. Upon a Participant’s termination due to death or
disability, as those terms may be defined in the Award Agreement, (i) Options
and Stock Appreciation Rights outstanding as of the date of termination shall
immediately vest and become fully exercisable, and remain exercisable for one
year, even if one year exceeds the original option term, and even if death
occurs during a post-termination exercise period; (ii) Performance Awards shall
be considered to be earned and payable (either in full or pro-rata based on the
portion of Performance Period completed as of the date of termination and
performance to such date), and any deferral or other restriction shall lapse and
such Performance Awards shall be immediately settled or distributed;
(iii) restrictions and deferral limitations on Restricted Stock, Other
Stock-Based Awards, and any other Awards shall lapse and the Restricted Stock
shall become free of all restrictions, limitations, or conditions and become
fully vested and transferable to the full extent of the original grant; and
(iv) such other additional benefits as the Committee deems appropriate shall
apply, subject in each case to any terms and conditions contained in the Award
Agreement evidencing such Award.
 
(b) Retirement. Upon a Participant’s retirement, as that term may be defined in
the Award Agreement, and conditioned upon the Participant entering into
non-compete, non-solicitation, non-disclosure, and non-disparagement agreements,
(i) Options and Stock Appreciation Rights outstanding as of the date of
termination shall continue to vest and, once vested, shall remain exercisable
for the lesser of three (3) years from vesting date or their original terms;
(ii) Performance Awards shall continue to vest and shall be payable upon
completion of the applicable Performance Period to the extent the associated
performance goals are achieved; (iii) Restricted Stock, Other Stock-Based
Awards, or any other Awards shall continue to vest, as applicable; and (iv) such
other additional benefits as the Committee deems appropriate shall apply,
subject in each case to any terms and conditions contained in the Award
Agreement evidencing such Award.
 
(c) Involuntary Termination Without Cause due to a Reduction in Force. Upon a
Participant’s involuntary termination without cause due to a reduction in force,
as that term may be defined in the Award Agreement, and conditioned upon the
Participant entering into non-solicitation, non-disclosure, and
non-disparagement agreements, (i) vested Options and Stock Appreciation Rights
outstanding as of the date of termination shall remain exercisable for 90 days,
and unvested Options and Stock Appreciation Rights shall be forfeited;
(ii) Performance Awards shall be payable at the end of the applicable
Performance Period, to the extent the associated performance goals are achieved,
pro-rata based on the number of months of the Performance Period that have been
completed as of the date of termination divided by the total number of months in
the Performance Period; (iii) Restricted Stock, Other Stock-Based Awards or any
other Awards subject to a cliff vesting or annual pro rata vesting provision
shall vest pro-rata based on the number of months of the vesting period
completed as of the date of termination divided by the total number of months in
the vesting period, and unvested Restricted Stock, unvested Other Stock-Based
Awards or any other unvested Awards shall be forfeited; and (iv) such other
additional benefits as the Committee deems appropriate shall apply, subject in
each case to any terms and conditions contained in the Award Agreement
evidencing such Award.
 
 
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(d) Termination for Cause. Upon a Participant’s termination for cause, as that
term may be defined in the Award Agreement, (i) all Options and Stock
Appreciation Rights outstanding as of the date of termination, whether vested or
not vested, shall be immediately canceled, and (ii) any unvested awards of
Restricted Stock, Performance Awards, Other Stock-Based Awards or other Awards
shall be immediately forfeited.
 
(e) Other Termination. Upon a Participant’s termination for any other reason,
including voluntary resignation and involuntary termination without cause not
due to a reduction in force, as those terms may be defined in the Award
Agreement, (i) vested Options and Stock Appreciation Rights outstanding on the
date of termination shall remain exercisable for 90 days, and unvested Options
and Stock Appreciation Rights shall be forfeited, and (ii) unvested Restricted
Stock, Performance Awards, Other Stock-Based Awards or other Awards shall be
immediately forfeited.
 
12.5. Deferral; Dividend Equivalents and Interest Equivalents. The Committee
shall be authorized to establish procedures pursuant to which the payment of any
Award may be deferred. Subject to the provisions of the Plan and any Award
Agreement, the recipient of an Award (including any deferred Award) may, if so
determined by the Committee, be entitled to receive, currently or on a deferred
basis, cash, stock or other property dividends, or cash payments in amounts
equivalent to cash, stock or other property dividends on Shares (“Dividend
Equivalents”) with respect to the number of Shares covered by the Award, as
determined by the Committee, in its sole discretion, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in
additional Shares or otherwise reinvested. Any cash-based Award, including
deferred Awards or accumulated cash Dividend Equivalents, may be credited with
interest (“Interest Equivalents”) on the same basis as provided above.
 
13. MISCELLANEOUS
 
13.1. Tax Withholding. The Company shall have the right to make all payments or
distributions pursuant to the Plan to a Participant (or a Permitted Assignee
thereof) (any such person, a “Payee”) net of any applicable federal, state and
local taxes required to be paid or withheld as a result of (a) the grant of any
Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the
delivery of Shares or cash, (d) the lapse of any restrictions in connection with
any Award or (e) any other event occurring pursuant to the Plan. The Company or
any Affiliate shall have the right to withhold from wages or other amounts
otherwise payable to such Payee such withholding taxes as may be required by
law, or to otherwise require the Payee to pay such withholding taxes. If the
Payee shall fail to make such tax payments as are required, the Company or its
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to such Payee or to take
such other action as may be necessary to satisfy such withholding obligations.
The Committee shall be authorized to establish procedures for election by
Participants to satisfy such obligation for the payment of such taxes by
tendering previously acquired Shares (either actually or by attestation, valued
at their then Fair Market Value), or by directing the Company to retain Shares
(up to the employee’s minimum required tax withholding rate or such other rate
that will not cause an adverse accounting consequence or cost) otherwise
deliverable in connection with the Award.
 
 
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13.2. Right of Discharge Reserved; Claims to Awards. Nothing in the Plan nor the
grant of an Award hereunder shall confer upon any Employee or Director the right
to continue in the employment or service of the Company or any Affiliate or
affect any right that the Company or any Affiliate may have to terminate the
employment or service of (or to demote or to exclude from future Awards under
the Plan) any such Employee or Director at any time for any reason. Except as
specifically provided by the Committee, the Company shall not be liable for the
loss of existing or potential profit from an Award granted in the event of
termination of an employment or other relationship. No Employee or Participant
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Employees or Participants under the
Plan.
 
13.3. Prospective Recipient. The prospective recipient of any Award under the
Plan shall not, with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award, until and unless
such recipient shall have executed an agreement or other instrument evidencing
the Award and delivered a copy thereof to the Company, and otherwise complied
with the then applicable terms and conditions.
 
13.4. Cancellation of Award. Notwithstanding anything to the contrary contained
herein, all outstanding Awards granted to any Participant shall be canceled if
the Participant, without the consent of the Company, while employed by the
Company or any Affiliate or after termination of such employment or service,
establishes a relationship with a competitor of the Company or any Affiliate or
engages in activity that is in conflict with or adverse to the interest of the
Company or any Affiliate, as determined by the Committee in its sole discretion.
The Committee may provide in an Award Agreement that if within the time period
specified in the Agreement the Participant establishes a relationship with a
competitor or engages in an activity referred to in the preceding sentence, the
Participant will forfeit any gain realized on the vesting or exercise of the
Award and must repay such gain to the Company.
 
13.5. Stop Transfer Orders. All certificates for Shares delivered under the Plan
pursuant to any Award shall be subject to such stop-transfer orders and other
restrictions as the Committee 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 Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.
 
13.6. Nature of Payments. All Awards made pursuant to the Plan are in
consideration of services performed or to be performed for the Company or any
Affiliate, division or business unit of the Company. Any income or gain realized
pursuant to Awards under the Plan constitute a special incentive payment to the
Participant and shall not be taken into account, to the extent permissible under
applicable law, as compensation for purposes of any of the employee benefit
plans of the Company or any Affiliate except as may be determined by the
Committee or by the Board or board of directors of the applicable Affiliate.
 
 
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13.7. Other Plans. Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
 
13.8. Severability. If any provision of the Plan shall be held unlawful or
otherwise invalid or unenforceable in whole or in part by a court of competent
jurisdiction, such provision shall (a) be deemed limited to the extent that such
court of competent jurisdiction deems it lawful, valid and/or enforceable and as
so limited shall remain in full force and effect, and (b) not affect any other
provision of the Plan or part thereof, each of which shall remain in full force
and effect. If the making of any payment or the provision of any other benefit
required under the Plan shall be held unlawful or otherwise invalid or
unenforceable by a court of competent jurisdiction, such unlawfulness,
invalidity or unenforceability shall not prevent any other payment or benefit
from being made or provided under the Plan, and if the making of any payment in
full or the provision of any other benefit required under the Plan in full would
be unlawful or otherwise invalid or unenforceable, then such unlawfulness,
invalidity or unenforceability shall not prevent such payment or benefit from
being made or provided in part, to the extent that it would not be unlawful,
invalid or unenforceable, and the maximum payment or benefit that would not be
unlawful, invalid or unenforceable shall be made or provided under the Plan.
 
13.9. Construction. All references in the Plan to “Section or Sections” are
intended to refer to the Section or Sections, as the case may be, of the Plan.
As used in the Plan, the words “include” and “including,” and variations
thereof, shall not be deemed to be terms of limitation, but rather shall be
deemed to be followed by the words “without limitation.”
 
13.10. Unfunded Status of the Plan. The Plan is intended to constitute an
“unfunded” plan for incentive compensation. With respect to any payments not yet
made to a Participant by the Company, nothing contained herein shall give any
such Participant any rights that are greater than those of a general creditor of
the Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver the Shares or payments in lieu of or with respect to Awards hereunder;
provided, however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.
 
13.11. Governing Law. The Plan and all determinations made and actions taken
thereunder, to the extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the Commonwealth of Virginia and
construed accordingly.
 
13.12. Effective Date of Plan; Termination of Plan. The Plan shall be effective
if the votes cast in favor of the approval of the Plan by the stockholders of
the Company exceed the votes cast opposing such proposal at a duly constituted
meeting of the stockholders of the Company; provided that the total votes cast
on the proposal with respect to the Plan represents over 50% in interest of all
shares entitled to vote on such proposal.  The Plan shall be null and void and
of no effect if the foregoing condition is not fulfilled and in such event each
Award shall, notwithstanding any of the preceding provisions of the Plan, be
null and void and of no effect.  Awards may be granted under the Plan at any
time and from time to time on or prior to the tenth anniversary of the effective
date of the Plan, on which date the Plan will expire except as to Awards then
outstanding under the Plan.  Such outstanding Awards shall remain in effect
until they have been exercised or terminated, or have expired.
 
 
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13.13. Foreign Employees. Awards may be granted to Participants who are foreign
nationals or employed outside the United States, or both, on such terms and
conditions different from those applicable to Awards to Employees employed in
the United States as may, in the judgment of the Committee, be necessary or
desirable in order to recognize differences in local law or tax policy. The
Committee also may impose conditions on the exercise or vesting of Awards in
order to minimize the Company’s obligation with respect to tax equalization for
Employees on assignments outside their home country.
 
13.14. Captions. The captions in the Plan are for convenience of reference only,
and are not intended to narrow, limit or affect the substance or interpretation
of the provisions contained herein.
 
13.15. Compliance with Section 409A of the Code.  All awards made under this
Plan are intended to comply with, or otherwise be exempt from, Section 409A of
the Code (“Section 409A”), after giving effect to the exemptions in Treasury
Regulation sections 1.409A-1(b)(3) through (b)(12).  This Plan and all Award
Agreements shall be administered, interpreted and construed in a manner
consistent with Section 409A.  If any provision of this Plan or any Award
Agreement is found not to comply with, or otherwise not be exempt from, the
provisions of Section 409A, it shall be modified and given effect, in the sole
discretion of the Committee and without requiring the Participant’s consent, in
such manner as the Committee determines to be necessary or appropriate to comply
with, or effectuate an exemption from, Section 409A.  Each payment under an
award granted under this Plan shall be treated as a separate identified payment
for purposes of Section 409A.

If a payment obligation under an Award or an Award Agreement arises on account
of the Participant’s termination of employment and such payment obligation
constitutes “deferred compensation” (as defined under Treasury Regulation
section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury
Regulation sections 1.409A-1(b)(3) through (b)(12)), it shall be payable only
after the Participant’s “separation from service” (as defined under Treasury
Regulation section 1.409A-1(h)); provided, however, that if the Participant is a
“specified employee” (as defined under Treasury Regulation section 1.409A-1(i)),
any such payment that is scheduled to be paid within six months after such
separation from service shall accrue without interest and shall be paid on the
first day of the seventh month beginning after the date of the Participant’s
separation from service or, if earlier, within fifteen days after the
appointment of the personal representative or executor of the Participant’s
estate following the Participant’s death.
 
 
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