Exhibit 10.2
Centene Corporation 
2007 Long-Term Incentive Plan 
 
Effective April 24, 2007 
 
 
 
B-1

 
 

--------------------------------------------------------------------------------

 

 

 
Contents
 

     
 
Article 1. Establishment, Purpose, and Duration
  
B-3
Article 2. Definitions
  
B-3
Article 3. Administration
  
B-6
Article 4. Adjustments in Awards
  
B-6
Article 5. Eligibility and Participation
  
B-7
Article 6. Cash-Based Awards
  
B-7
Article 7. Transferability of Awards
  
B-8
Article 8. Performance Measures
  
B-8
Article 9. Covered Employee Annual Incentive Award
  
B-9
Article 10. Beneficiary Designation
  
B-9
Article 11. Rights of Participants
  
B-10
Article 12. Amendment, Modification, Suspension, and Termination
  
B-10
Article 13. Tax Withholding
  
B-10
Article 14. Successors
  
B-11
Article 15. General Provisions
  
B-11

 
 
B-2

 
 

--------------------------------------------------------------------------------

 

 
Centene Corporation
2007 Long-Term Incentive Plan
 
Article 1. Establishment, Purpose, and Duration
 
 
1.1
Establishment. Centene Corporation, a Delaware corporation (hereinafter referred
to as the “Company”), establishes an incentive compensation plan to be known as
the Centene Corporation 2007 Long-Term Incentive Plan (hereinafter referred to
as the “Plan”), as set forth in this document.

 
 
    
This Plan permits the grant of Cash-Based Awards.

 
 
    
This Plan shall become effective upon shareholder approval (the “Effective
Date”) and shall remain in effect as provided in Section 1.3 hereof.

 
 
1.2
Purpose of this Plan. The purpose of this Plan is to provide a means whereby
Employees of the Company develop a sense of proprietorship and personal
involvement in the development and financial success of the Company, and to
encourage them to devote their best efforts to the business of the Company,
thereby advancing the interests of the Company and its shareholders. A further
purpose of this Plan is to provide a means through which the Company may attract
able individuals to become Employees of the Company and to retain key Employees
of the Company.

 
 
1.3
Duration of this Plan. Unless sooner terminated as provided herein, this Plan
shall terminate ten (10) years from the Effective Date. After this Plan is
terminated, no Awards may be granted but Awards previously granted shall remain
outstanding in accordance with their applicable terms and conditions and this
Plan’s terms and conditions.

 
Article 2. Definitions
 
Whenever used in this Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.
 
 
2.1
“Affiliate” shall mean any corporation or other entity (including, but not
limited to, a partnership or a limited liability company), that is affiliated
with the Company through stock or equity ownership or otherwise, and is
designated as an Affiliate for purposes of this Plan by the Committee.

 
 
2.2
“Award” means, individually or collectively, a grant under this Plan of
Cash-Based Awards or Covered Employee Annual Incentive Awards, subject to the
terms of this Plan.

 
 
2.3
“Award Agreement” means either (i) a written agreement entered into by the
Company and a Participant setting forth the terms and provisions applicable to
an Award granted under this Plan, or (ii) a written or electronic statement
issued by the Company to a Participant describing the terms and provisions of
such Award, including any amendment or modification thereof. The Committee may
provide for the use of electronic, internet or other non-paper Award Agreements,
and the use of electronic, internet or other non-paper means for the acceptance
thereof and actions thereunder by a Participant.

 
 
2.4
“Beneficial Owner” or “Beneficial Ownership” shall have the meaning ascribed to
such term in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act.

 
 
2.5
“Board” or “Board of Directors” means the Board of Directors of the Company.

 
 
2.6
“Cash-Based Award” means an Award, denominated in cash, granted to a Participant
as described in Article 6.

 
B-3

 
 

--------------------------------------------------------------------------------

 

 
 
2.7
“Cause” means, unless otherwise specified in an Award Agreement or in an
applicable employment agreement between the Company and a Participant, with
respect to any Participant, as determined by the Committee in its sole
discretion:

 
 
(a)
Willful failure to substantially perform his or her duties as an Employee (for
reasons other than physical or mental illness) or Director after reasonable
notice to the Participant of that failure;

 
 
(b)
Misconduct that materially injures the Company or any Subsidiary or Affiliate;

 
 
(c)
Conviction of, or entering into a plea of nolo contendere to, a felony; or

 
 
(d)
Breach of any written covenant or agreement with the Company or any Subsidiary
or Affiliate.

 
 
2.8
“Change of Control” means any of the following events:

 
 
(a)
The acquisition by any one person, or more than one person acting as a group (as
defined in paragraph (g)(5)(v)(B) of 26 CFR §1.409A-3), acquires ownership of
stock of the Company that, together with stock held by such person or group,
constitutes more than fifty (50) percent of the total fair market value or total
voting power of the stock of the Company. However, if any one person, or more
than one person acting as a group, is considered to own more than fifty
(50) percent of the total fair market value or total voting power of the stock
of the Company, the acquisition of additional stock by the same person or
persons is not considered to cause a Change of Control. An increase in the
percentage of stock owned by any one person, or persons acting as a group, as a
result of a transaction in which the Company acquires its stock in exchange for
property will be treated as an acquisition of stock for purposes of this section
(a);

 
 
(b)
A majority of members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Company's Board prior to the date of the appointment or election;
or

 
 
(c)
The acquisition by any one person, or more than one person acting as a group (as
defined in paragraph (g)(5)(v)(B) of 26 CFR §1.409A-3), acquires (or has
acquired during the 12- month period ending on the date of the most recent
acquisition by such person or persons) assets from the Company that have a total
gross fair market value equal to or more than forty (40) percent of the total
gross fair market value of all of the assets of the Company immediately prior to
such acquisition or acquisitions. For purposes of this paragraph (c), gross fair
market value means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.

 
 
2.9
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time. For purposes of this Plan, references to sections of the Code shall be
deemed to include references to any applicable regulations thereunder and any
successor or similar provision.

 
 
2.10
“Committee” means the Compensation Committee of the Board or a subcommittee
thereof, or any other committee designated by the Board to administer this Plan.
The members of the Committee shall be appointed from time to time by and shall
serve at the discretion of the Board. If the Committee does not exist or cannot
function for any reason, the Board may take any action under the Plan that would
otherwise be the responsibility of the Committee.

 
 
2.11
“Company” means Centene Corporation, a Delaware corporation, and any successor
thereto as provided in Article 14 herein.

 
 
2.12
“Consolidated Operating Earnings” means the consolidated earnings before income
taxes of the Company, computed in accordance with generally accepted accounting
principles, but shall exclude the effects of Extraordinary Items.

 
B-4

 
 

--------------------------------------------------------------------------------

 

 
 
2.13
“Covered Employee” means any Employee who is or may become a “Covered Employee,”
as defined in Code Section 162(m), and who is designated, either as an
individual Employee or class of Employees, by the Committee within the shorter
of (i) ninety (90) days after the beginning of the Performance Period, or
(ii) twenty-five percent (25%) of the Performance Period has elapsed, as a
“Covered Employee” under this Plan for such applicable Performance Period.

 
 
2.14
“Covered Employee Annual Incentive Award” means an Award granted to a Covered
Employee as described in Article 9.

 
 
2.15
“Effective Date” has the meaning set forth in Section 1.1.

 
 
2.16
“Employee” means any individual performing services for the Company, an
Affiliate, or a Subsidiary and designated as an employee of the Company, its
Affiliates, and/or its Subsidiaries on the payroll records thereof. An Employee
shall not include any individual during any period he or she is classified or
treated by the Company, Affiliate, and/or Subsidiary as an independent
contractor, a consultant, or any employee of an employment, consulting, or
temporary agency or any other entity other than the Company, Affiliate, and/or
Subsidiary, without regard to whether such individual is subsequently determined
to have been, or is subsequently retroactively reclassified as a common-law
employee of the Company, Affiliate, and/or Subsidiary during such period.

 
 
2.17
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, or any successor act thereto.

 
 
2.18
“Extraordinary Items” means (i) extraordinary, unusual, and/or nonrecurring
items of gain or loss; (ii) gains or losses on the disposition of a business;
(iii) changes in tax or accounting regulations or laws; or (iv) the effect of a
merger or acquisition, all of which must be identified in the audited financial
statements, including footnotes, or Management Discussion and Analysis section
of the Company’s annual report.

 
 
2.19
“Insider” shall mean an individual who is, on the relevant date, an officer, or
Director of the Company, or a more than ten percent (10%) Beneficial Owner of
any class of the Company’s equity securities that is registered pursuant to
Section 12 of the Exchange Act, as determined by the Board in accordance with
Section 16 of the Exchange Act.

 
 
2.20
“Net Income” means the consolidated net income before taxes for the Plan Year,
as reported in the Company’s annual report to shareholders or as otherwise
reported to shareholders.

 
 
2.21
“Operating Cash Flow” means cash flow from operating activities as defined in
Statement of Financial Accounting Standard No. 95, “Statement of Cash Flows.”

 
 
2.22
“Participant” means any eligible individual as set forth in Article 5 to whom an
Award is granted.

 
 
2.23
“Performance-Based Compensation” means compensation under an Award that is
intended to satisfy the requirements of Code Section 162(m) for certain
performance-based compensation paid to Covered Employees. Notwithstanding the
foregoing, nothing in this Plan shall be construed to mean that an Award which
does not satisfy the requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based compensation for other
purposes, including Code Section 409A.

 
 
2.24
“Performance Measures” means measures as described in Article 8 on which the
performance goals are based and which are approved by the Company’s shareholders
pursuant to this Plan in order to qualify Awards as Performance-Based
Compensation.

 
B-5

 
 

--------------------------------------------------------------------------------

 
 
 
 
2.25
“Performance Period” means the period of time during which the performance goals
must be met in order to determine the degree of payout and/or vesting with
respect to an Award.

 
 
2.26
“Plan” means the Centene Corporation 2007 Long-Term Incentive Plan.

 
 
2.27
“Plan Year” means the respective calendar year.

 
 
2.28
“Subsidiary” means any corporation or other entity, whether domestic or foreign,
in which the Company has or obtains, directly or indirectly, a proprietary
interest of more than fifty percent (50%) by reason of stock ownership or
otherwise.

 
Article 3. Administration
 
 
3.1
General. The Committee shall be responsible for administering this Plan, subject
to this Article 3 and the other provisions of this Plan. The Committee may
employ attorneys, consultants, accountants, agents, and other individuals, any
of whom may be an Employee, and the Committee, the Company, and its officers and
Directors shall be entitled to rely upon the advice, opinions, or valuations of
any such individuals. All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the
Participants, the Company, and all other interested individuals.

 
 
3.2
Authority of the Committee. The Committee shall have full and exclusive
discretionary power to interpret the terms and the intent of this Plan and any
Award Agreement or other agreement or document ancillary to or in connection
with this Plan, to determine eligibility for Awards and to adopt such rules,
regulations, forms, instruments, and guidelines for administering this Plan as
the Committee may deem necessary or proper. Such authority shall include, but
not be limited to, selecting Award recipients, establishing all Award terms and
conditions, including the terms and conditions set forth in Award Agreements,
granting Awards as an alternative to or as the form of payment for grants or
rights earned or due under compensation plans or arrangements of the Company,
construing any ambiguous provision of the Plan or any Award Agreement, and,
subject to Article 12 adopting modifications and amendments to this Plan or any
Award Agreement, including without limitation, any that are necessary to comply
with the laws of the countries and other jurisdictions in which the Company, its
Affiliates, and/or its Subsidiaries operate.

 
 
3.3
Delegation. The Committee may delegate to one or more of its members or to one
or more officers of the Company, and/or its Subsidiaries and Affiliates or to
one or more agents or advisors such administrative duties or powers as it may
deem advisable, and the Committee or any individuals to whom it has delegated
duties or powers as aforesaid may employ one or more individuals to render
advice with respect to any responsibility the Committee or such individuals may
have under this Plan. The Committee may, by resolution, authorize one or more
officers of the Company to do one or both of the following on the same basis as
can the Committee: (a) designate Employees to be recipients of Awards; determine
the size of any such Awards; provided, however, (i) the Committee shall not
delegate such responsibilities to any such officer for Awards granted to an
Employee who is considered an Insider; (ii) the resolution providing such
authorization sets forth the total number of Awards such officer(s) may grant;
and (iii) the officer(s) shall report periodically to the Committee regarding
the nature and scope of the Awards granted pursuant to the authority delegated.

 
Article 4. Adjustments in Awards
 
In the event of any corporate event or transaction (including, but not limited
to, a change in the Shares of the Company or the capitalization of the Company)
such as a merger, consolidation, reorganization, recapitalization, separation,
partial or complete liquidation, stock dividend, stock split, reverse stock
split, split up, spin-off, or
 
B-6

 
 

--------------------------------------------------------------------------------

 

other distribution of stock or property of the Company, combination of Shares,
exchange of Shares, dividend in-kind, or other like change in capital structure,
the Committee shall make appropriate adjustments in the terms of any Awards
under this Plan to reflect or relate to such changes or distributions and to
modify any other terms of outstanding Awards, including modifications of
performance goals and changes in the length of Performance Periods.
Notwithstanding anything herein to the contrary, following a Change in Control
the Committee may not take any such action as described in this Article 4 if
such action would result in a violation of the requirements of Code
Section 409A. The determination of the Committee as to the foregoing
adjustments, if any, shall be conclusive and binding on Participants under this
Plan.
 
Subject to the provisions of Article 12 and notwithstanding anything else herein
to the contrary, the Committee may authorize the issuance or assumption of
benefits under this Plan in connection with any merger, consolidation,
acquisition of property or stock, or reorganization upon such terms and
conditions as it may deem appropriate, subject to compliance with the rules
under Code Section 409A, where applicable.
 
Article 5. Eligibility and Participation
 
 
5.1
Eligibility. Individuals eligible to participate in this Plan include all
Employees.

 
 
5.2
Actual Participation. Subject to the provisions of this Plan, the Committee may,
from time to time, select from all eligible individuals, those individuals to
whom Awards shall be granted and shall determine, in its sole discretion, the
nature of, any and all terms permissible by law, and the amount of each Award.

 
Article 6. Cash-Based Awards
 
 
6.1
Grant of Cash-Based Awards. Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant Cash-Based Awards to
Participants in such amounts and upon such terms as the Committee may determine.

 
 
6.2
Value of Cash-Based Awards. Each Cash-Based Award shall specify a payment amount
or payment range as determined by the Committee. The Committee may establish
performance goals in its discretion. If the Committee exercises its discretion
to establish performance goals, the number and/or value of Cash-Based Awards
that will be paid out to the Participant will depend on the extent to which the
performance goals are met.

 
 
6.3
Payment of Cash-Based Awards. Payment, if any, with respect to a Cash-Based
Award shall be made in accordance with the terms of the Award, in cash or Shares
as the Committee determines.

 
 
6.4
Termination of Employment. The Committee shall determine the extent to which the
Participant shall have the right to receive Cash-Based Awards following
termination of the Participant’s employment with or provision of services to the
Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such
provisions shall be determined in the sole discretion of the Committee, such
provisions may be included in an agreement entered into with each Participant,
but need not be uniform among all Awards of Cash-Based Awards issued pursuant to
the Plan, and may reflect distinctions based on the reasons for termination.

 
 
6.5
Change of Control. The Committee shall determine the extent to which the
Participant shall have the right to receive Cash-Based Awards following a Change
of Control. Such provisions shall be determined in the sole discretion of the
Committee, such provisions may be included in an agreement entered into with
each Participant, but need not be uniform among all Awards of Cash-Based Awards
issued pursuant to the Plan.

 
B-7

 
 

--------------------------------------------------------------------------------

 

Article 7. Transferability of Awards
 
Except as otherwise provided in a Participant’s Award Agreement or otherwise
determined at any time by the Committee, no Award granted under this Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution; provided that the
Board or Committee may permit further transferability, on a general or a
specific basis, and may impose conditions and limitations on any permitted
transferability.
 
Article 8. Performance Measures
 
 
8.1
Performance Measures. The performance goals upon which the payment or vesting of
an Award to a Covered Employee (other than a Covered Employee Annual Incentive
Award awarded or credited pursuant to Article 9) that is intended to qualify as
Performance-Based Compensation shall be limited to the following Performance
Measures:

 
 
(a)
Net earnings or net income (before or after taxes);

 
(b)
Earnings per share;

 
(c)
Net sales or revenue growth;

 
(d)
Net operating profit;

 
(e)
Return measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales, or revenue);

 
(f)
Cash flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity, and cash flow return on investment);

 
(g)
Earnings before or after taxes, interest, depreciation, and/or amortization;

 
(h)
Gross or operating margins;

 
(i)
Productivity ratios;

 
(j)
Share price (including, but not limited to, growth measures and total
shareholder return);

 
(k)
Expense targets;

 
(l)
Margins;

 
(m)
Operating efficiency;

 
(n)
Market share;

 
(o)
Customer satisfaction;

 
(p)
Working capital targets; and

 
 
(q)
 
 
Economic value added or EVA® (net operating profit after tax minus the sum of
capital multiplied by the cost of capital).
 

 
 
    
Any Performance Measure(s) may be used to measure the performance of the
Company, Subsidiary, and/or Affiliate as a whole or any business unit of the
Company, Subsidiary, and/or Affiliate or any combination thereof, as the
Committee may deem appropriate, or any of the above Performance Measures as
compared to the performance of a group of comparator companies, or published or
special index that the Committee, in its sole discretion, deems appropriate, or
the Company may select Performance Measure (j) above as compared to various
stock market indices. The Committee also has the authority to provide for
accelerated vesting of any Award based on the achievement of performance goals
pursuant to the Performance Measures specified in this Article 8.

 
 
8.2
 
Evaluation of Performance. The Committee may provide in any such Award that any
evaluation of performance may include or exclude any of the following events
that occurs during a Performance Period: (a) asset write-downs, (b) litigation
or claim judgments or settlements, (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results,
(d) any reorganization and restructuring programs, (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion No. 30
and/or in management’s discussion and analysis of financial condition and
results of operations appearing in the Company’s annual report to shareholders
for the applicable year, (f) acquisitions or divestitures, and (g) foreign
exchange gains
 

 
B-8

 
 

--------------------------------------------------------------------------------

 
 
 
and losses. To the extent such inclusions or exclusions affect Awards to Covered
Employees, they shall be prescribed in a form that meets the requirements of
Code Section 162(m) for deductibility.
 

 
 
8.3
Adjustment of Performance-Based Compensation. Awards that are intended to
qualify as Performance-Based Compensation may not be adjusted upward. The
Committee shall retain the discretion to adjust such Awards downward, either on
a formula or discretionary basis or any combination, as the Committee
determines.

 
 
8.4
Committee Discretion. In the event that applicable tax and/or securities laws
change to permit Committee discretion to alter the governing Performance
Measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval, provided the exercise of such discretion does not violate Code
Section 409A. In addition, in the event that the Committee determines that it is
advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the
requirements of Code Section 162(m) and base vesting on Performance Measures
other than those set forth in Section 8.1.

 
Article 9. Covered Employee Incentive Award
 
 
9.1
Establishment of Incentive Pool. The Committee may designate Covered Employees
who are eligible to receive a monetary payment in any Plan Year based on a
percentage of an incentive pool equal to the greater of: (i) five percent
(5%) of the Company’s Consolidated Net Earnings before income taxes for this
Plan Year, (ii) three percent (3%) of the Company’s Operating Cash Flow for this
Plan Year, or (iii) eight percent (8%) of the Company’s Net Income for this Plan
Year. The Committee shall allocate an incentive pool percentage to each
designated Covered Employee for each Plan Year. In no event may (1) the
incentive pool percentage for any one Covered Employee exceed fifty percent
(50%) of the total pool and (2) the sum of the incentive pool percentages for
all Covered Employees cannot exceed one hundred percent (100%) of the total
pool.

 
 
9.2
Determination of Covered Employees’ Portions. As soon as possible after the
determination of the incentive pool for a Plan Year, the Committee shall
calculate each Covered Employee’s allocated portion of the incentive pool based
upon the percentage established at the beginning of this Plan Year. Each Covered
Employee’s incentive Award then shall be determined by the Committee based on
the Covered Employee’s allocated portion of the incentive pool subject to
adjustment in the sole discretion of the Committee. In no event may the portion
of the incentive pool allocated to a Covered Employee be increased in any way,
including as a result of the reduction of any other Covered Employee’s allocated
portion. The Committee shall retain the discretion to adjust such Awards
downward.

 
 
9.3
Change of Control. The Committee shall determine the extent to which the
Participant shall have the right to receive Covered Employee Annual Incentive
Award following a Change of Control. Such provisions shall be determined in the
sole discretion of the Committee, such provisions may be included in an
agreement entered into with each Participant, but need not be uniform among all
Covered Employee Annual Incentive Awards issued pursuant to the Plan.

 
Article 10. Beneficiary Designation
 
Each Participant under this Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under this Plan is to be paid in case of his death before he receives
any or all of such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime. In the absence of any such
beneficiary designation, benefits remaining unpaid at the Participant’s death
shall be paid to the Participant’s executor, administrator, or legal
representative.
 
B-9

 
 

--------------------------------------------------------------------------------

 

Article 11. Rights of Participants
 
 
11.1
Employment. Nothing in this Plan or an Award Agreement shall interfere with or
limit in any way the right of the Company, its Affiliates, and/or its
Subsidiaries, to terminate any Participant’s employment at any time or for any
reason not prohibited by law, nor confer upon any Participant any right to
continue his employment for any specified period of time.

 
 
    
Neither an Award nor any benefits arising under this Plan shall constitute an
employment contract with the Company, its Affiliates, and/or its Subsidiaries
and, accordingly, subject to Articles 3 and 12 this Plan and the benefits
hereunder may be terminated at any time in the sole and exclusive discretion of
the Committee without giving rise to any liability on the part of the Company,
its Affiliates, and/or its Subsidiaries.

 
 
11.2
Participation. No individual shall have the right to be selected to receive an
Award under this Plan, or, having been so selected, to be selected to receive a
future Award.

 
Article 12. Amendment, Modification, Suspension, and Termination
 
 
12.1
Amendment, Modification, Suspension, and Termination. Subject to Section 12.3,
the Committee may, at any time and from time to time, alter, amend, modify,
suspend, or terminate this Plan and any Award Agreement in whole or in part;
provided, however, that, no amendment of this Plan shall be made without
shareholder approval if shareholder approval is required by law, regulation, or
stock exchange rule, including, but not limited to, the Securities Exchange Act
of 1934, as amended, the Internal Revenue Code of 1986, as amended, and, if
applicable, the New York Stock Exchange Listed Company Manual/the Nasdaq issuer
rules.

 
 
12.2
Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee may make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events affecting the Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
unintended dilution or enlargement of the benefits or potential benefits
intended to be made available under this Plan. The determination of the
Committee as to the foregoing adjustments, if any, shall be conclusive and
binding on Participants under this Plan.

 
 
12.3
Awards Previously Granted. Notwithstanding any other provision of this Plan to
the contrary (other than Section 12.4), no termination, amendment, suspension,
or modification of this Plan or an Award Agreement shall adversely affect in any
material way any Award previously granted under this Plan, without the written
consent of the Participant holding such Award.

 
 
12.4
Amendment to Conform to Law. Notwithstanding any other provision of this Plan to
the contrary, the Board of Directors may amend the Plan or an Award Agreement,
to take effect retroactively or otherwise, as deemed necessary or advisable for
the purpose of conforming the Plan or an Award Agreement to any present or
future law relating to plans of this or similar nature (including, but not
limited to, Code Section 409A), and to the administrative regulations and
rulings promulgated thereunder. By accepting an Award under this Plan, a
Participant agrees to any amendment made pursuant to this Section 12.4 to any
Award granted under the Plan without further consideration or action.

 
Article 13. Tax Withholding
 
The Company shall have the power and the right to deduct or withhold, or require
a Participant to remit to the Company, the minimum statutory amount to satisfy
federal, state, and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable event arising as a result
of this Plan.
 
B-10

 
 

--------------------------------------------------------------------------------

 

Article 14. Successors
 
All obligations of the Company under this Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
 
Article 15. General Provisions
 
 
15.1
Forfeiture Events.

 
 
(a)
The Committee may specify in an Award Agreement that the Participant’s rights,
payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain specified
events, in addition to any otherwise applicable vesting or performance
conditions of an Award. Such events may include, but shall not be limited to,
termination of employment for cause, termination of the Participant’s provision
of services to the Company, Affiliate, and/or Subsidiary, violation of material
Company, Affiliate, and/or Subsidiary policies, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

 
 
(b)
If the Company is required to prepare an accounting restatement due to the
material noncompliance of the Company, as a result of misconduct, with any
financial reporting requirement under the securities laws, if the Participant is
one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, the Board may require the Participant to reimburse
the Company the amount of any payment in settlement of an Award earned or
accrued during the twelve- (12-) month period following the first public
issuance or filing with the United States Securities and Exchange Commission
(whichever just occurred) of the financial document embodying such financial
reporting requirement.

 
 
15.2
Gender and Number. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

 
 
15.3
Severability. In the event any provision of this Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of this Plan, and this Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

 
 
15.4
Requirements of Law. The granting of Awards under this Plan shall be subject to
all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 
 
15.5
Employees Based Outside of the United States. Notwithstanding any provision of
this Plan to the contrary, in order to comply with the laws in other countries
in which the Company, its Affiliates, and/or its Subsidiaries operate or have
Employees, the Committee, in its sole discretion, shall have the power and
authority to:

 
 
(a)
Determine which Affiliates and Subsidiaries shall be covered by this Plan;

 
 
(b)
Determine which Employees outside the United States are eligible to participate
in this Plan;

 
 
(c)
Modify the terms and conditions of any Award granted to Employees outside the
United States to comply with applicable foreign laws;

 
B-11

 
 

--------------------------------------------------------------------------------

 

 
 
(d)
Establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable. Any
subplans and modifications to Plan terms and procedures established under this
Section 15.5 by the Committee shall be attached to this Plan document as
appendices; and

 
 
(e)
Take any action, before or after an Award is made, that it deems advisable to
obtain approval or comply with any necessary local government regulatory
exemptions or approvals.

 
 
    
Notwithstanding the above, the Committee may not take any actions hereunder, and
no Awards shall be granted, that would violate applicable law.

 
 
15.6
Unfunded Plan. Participants shall have no right, title, or interest whatsoever
in or to any investments that the Company, and/or its Subsidiaries, and/or its
Affiliates may make to aid it in meeting its obligations under this Plan.
Nothing contained in this Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant, beneficiary, legal
representative, or any other individual. To the extent that any individual
acquires a right to receive payments from the Company, its Subsidiaries, and/or
its Affiliates under this Plan, such right shall be no greater than the right of
an unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as
the case may be. All payments to be made hereunder shall be paid from the
general funds of the Company, a Subsidiary, or an Affiliate, as the case may be
and no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as expressly set
forth in this Plan.

 
 
15.7
Retirement and Welfare Plans. Neither Awards made under this Plan nor cash paid
pursuant to such Awards except pursuant to Covered Employee Annual Incentive
Awards, may be included as “compensation” for purposes of computing the benefits
payable to any Participant under the Company’s or any Subsidiary’s or
Affiliate’s retirement plans (both qualified and non-qualified) or welfare
benefit plans unless such other plan expressly provides that such compensation
shall be taken into account in computing a Participant’s benefit.

 
 
15.8
Deferred Compensation. It is intended that any Award made under this Plan that
results in the deferral of compensation (as defined under Code Section 409A)
complies with the requirements of Code Section 409A.

 
 
15.9
Nonexclusivity of this Plan. The adoption of this Plan shall not be construed as
creating any limitations on the power of the Board or Committee to adopt such
other compensation arrangements as it may deem desirable for any Participant.

 
 
15.10
No Constraint on Corporate Action. Nothing in this Plan shall be construed to:
(i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s or an
Affiliate’s right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its
business or assets; or, (ii) limit the right or power of the Company or a
Subsidiary or an Affiliate to take any action which such entity deems to be
necessary or appropriate.

 
 
15.11
Governing Law. The Plan and each Award Agreement shall be governed by the laws
of the State of Delaware, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of this Plan
to the substantive law of another jurisdiction. Unless otherwise provided in the
Award Agreement, recipients of an Award under this Plan are deemed to submit to
the exclusive jurisdiction and venue of the federal or state courts of Delaware,
to resolve any and all issues that may arise out of or relate to this Plan or
any related Award Agreement.

 
B-12

 
 

--------------------------------------------------------------------------------

 

 
 
15.12
Indemnification. Subject to requirements of Delaware law, each individual who is
or shall have been a member of the Board, or a Committee appointed by the Board,
or an officer of the Company to whom authority was delegated in accordance with
Article 3, shall be indemnified and held harmless by the Company against and
from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
this Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his/her own behalf, unless such loss, cost, liability, or expense
is a result of his/her own willful misconduct or except as expressly provided by
statute.

 
 
    
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such individuals may be entitled under the
Company’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

 
B-13