Exhibit 10.4

 

 

JONES LANG LASALLE INCORPORATED

AMENDED AND RESTATED STOCK AWARD AND INCENTIVE PLAN

 

 

 

 

 

Amended and Restated as of May 30, 2007

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JONES LANG LASALLE INCORPORATED

AMENDED AND RESTATED STOCK AWARD AND INCENTIVE PLAN

TABLE OF CONTENTS

 

          Page

1.

   Purpose; Types of Awards; Construction    1

2.

   Definitions    1

3.

   Administration    4

4.

   Eligibility    5

5.

   Stock Subject to the Plan    5

6.

   Specific Terms of Awards    5

7

   Determining Performance Based Awards    7

8.

   Change in Control Provisions    8

9.

   Loan Provisions    9

10.

   Special Non-Employee Director Awards    9

11.

   General Provisions    11

 

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JONES LANG LASALLE INCORPORATED

AMENDED AND RESTATED STOCK AWARD AND INCENTIVE PLAN

Jones Lang LaSalle Incorporated (the “Company”) has previously established a
1997 Stock Award and Incentive Plan, as amended (the “Stock Award and Incentive
Plan”), and a Stock Compensation Program, as amended (the “Stock Compensation
Program”). The Stock Award and Incentive Plan and the Stock Compensation Program
are referred to herein collectively as the “Former Plans.” Each of the Former
Plans has been authorized by the Company’s Board of Directors and approved by
the Company’s shareholders.

In order to facilitate the efficient administration of the Former Plans and the
awards granted thereunder, the Company’s Board of Directors has authorized the
amendment and restatement of each of the Former Plans in order to combine the
Former Plans into a single plan. The Former Plans, as so combined and as
subsequently amended and restated as of the effective date of May 30, 2007 (the
“Effective Date”), are referred to herein as the “Plan.”

The Plan shall continue to supersede and replace the Former Plans in their
entirety, except that the adoption of the Plan shall not be deemed to amend or
modify the terms or conditions of any award granted or election made pursuant to
the Former Plans prior to the Effective Date. All awards granted and elections
made pursuant to the Former Plans prior to the Effective Date shall remain in
full force and effect in accordance with their terms and shall be administered
in accordance with the terms and conditions of the Plan.

1. Purpose; Types of Awards; Construction.

The purpose of the Plan is to afford an incentive to directors (including
non-employee directors), selected employees and independent contractors of the
Company, or any Subsidiary or Affiliate which now exists or hereafter is
organized or acquired, to acquire a proprietary interest in the Company, to
continue as directors, employees or independent contractors, as the case may be,
to increase their efforts on behalf of the Company and to promote the success of
the Company’s business in the interest of its shareholders. Pursuant to
Section 6 of the Plan, there may be granted Stock Options (including “incentive
stock options” and “nonqualified stock options”), stock appreciation rights and
limited stock appreciation rights (either in connection with options granted
under the Plan or independently of options), restricted stock, restricted stock
units, dividend equivalents, performance shares and other stock-or-cash-based
awards. Section 9 of the Plan contains provisions governing certain special
grants of Options to non-employee directors of the Company. The Plan also
provides the authority to make loans to purchase shares of common stock of the
Company, provided that such loans do not violate any applicable law, rule or
regulation. The Plan is designed to comply with the requirements of Regulation G
(12 C.F.R. § 207) regarding the purchase of shares on margin, the requirements
for “performance-based compensation” under Section 162(m) of the Code and the
conditions for exemption from short-swing profit recovery rules under Rule 16b-3
of the Exchange Act, and shall be interpreted in a manner consistent with the
requirements thereof.

The terms and conditions of the Plan (exclusive of those set forth in the Stock
Compensation Program) shall govern (i) all grants and awards made prior to the
effective date of the Plan under the Stock Award and Incentive Plan and (ii) all
Awards made pursuant to the Plan from and after the effective date of the Plan.
The terms and conditions of all grants and awards made prior to the effective
date of the Plan under the Stock Compensation Program shall govern such grants
and awards, except that from and after such date the Committee under the Plan
shall be responsible for the administration and interpretation of all such
grants and awards as provided in the Plan. New grants and awards shall not be
made pursuant to the Stock Compensation Program after the effective date of the
Plan.

2. Definitions.

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

(a) “Affiliate” means any entity if, at the time of granting of an Award or a
Loan, (i) the Company, directly or indirectly, owns at least 20% of the combined
voting power of all classes of such entity or at least 20% of the ownership
interests in such entity or (ii) such entity, directly or indirectly, owns at
least 20% of the combined voting power of all classes of stock of the Company.

(b) “Award” means any Option, SAR (including a Limited SAR), Restricted Stock,
Restricted Stock Unit, Dividend Equivalent, Performance Share or Other
Stock-Based Award or Other Cash-Based Award granted under the Plan.

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(c) “Award Agreement” means any written agreement, contract, or other instrument
or document evidencing an Award.

(d) “Beneficiary” means the person, persons, trust or trusts which have been
designated by a Grantee in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under the
Plan upon his or her death, or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive such
benefits.

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

(f) “Change in Control” means a change in control of the Company which will be
deemed to have occurred if:

(i) any “person,” as such term is used in Section 3(a)(9) of the Exchange Act,
as modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (A) the Company or any of its subsidiaries, (B) any trustee or
other fiduciary holding securities under an employee benefit plan of the Company
or any of its affiliates, (C) an underwriter temporarily holding securities
pursuant to an offering of such securities, (D) any corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of Stock, or (E) any person or group as used in
Rule 13d-1(b) under the Exchange Act, is or becomes the Beneficial Owner, as
such term is defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of securities of the Company (not including the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 50% or more of the
combined voting power of the Company’s then outstanding securities;

(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other than
(A) a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii), or (iv) of this
Section 2(f) or (B) other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose election by the Board or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds ( 2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;

(iii) there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) in combination with the ownership of
any trustee or other fiduciary holding securities under an employee benefit plan
of the Company or any subsidiary of the Company, at least 75% of the combined
voting power of the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation, or
(B) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person (as defined above) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such person any
securities acquired directly from the Company or its affiliates other than in
connection with the acquisition by the Company or its affiliates of a business)
representing 25% or more of the combined voting power of the Company’s then
outstanding securities; or

(iv) the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets
(or any transaction having a similar effect) other than a sale or disposition by
the Company of all or substantially all of the Company’s assets to an entity, at
least 75% of the combined voting power of the voting securities of which are
owned by shareholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.

(g) “Change in Control Price” means the higher of (i) the highest price per
share paid in any transaction constituting a Change in Control or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding or following a Change in Control.

(h) “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

 

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(i) “Committee” means the committee established by the Board to administer the
Plan, which committee shall be comprised solely of two or more outside
directors, as described in the regulations under Section 162(m) of the Code.

(j) “Company” means Jones Lang LaSalle Incorporated, a corporation organized
under the laws of the State of Maryland, or any successor corporation.

(k) “Covered Employee” means any employee of the Company, as such term is
defined for purposes of Section 162(m)(3) of the Code, who shall be eligible for
designation as a Covered Employee for Awards determined under this Plan.

(l) “Dividend Equivalent” means a right, granted to a Grantee under
Section 6(g), to receive cash, Stock, or other property equal in value to
dividends paid with respect to a specified number of shares of Stock. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award, and may be paid currently or on a deferred basis.

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, and as now or hereafter construed, interpreted and applied by
regulations, rulings and cases.

(n) “Fair Market Value” means, with respect to Stock or other property, the fair
market value of such Stock or other property determined by such methods or
procedures as shall be established from time to time by the Committee. Unless
otherwise determined by the Committee in good faith, the per share Fair Market
Value of Stock as of a particular date shall mean (i) the closing sales price
per share of Stock on the national securities exchange on which the Stock is
principally traded, for the last preceding date on which there was a sale of
such Stock on such exchange, or (ii) if the shares of Stock are then traded in
an over-the-counter market, the average of the closing bid and asked prices for
the shares of Stock in such over-the-counter market for the last preceding date
on which there was a sale of such Stock in such market, or (iii) if the shares
of Stock are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole discretion,
shall determine.

(o) “Grantee” means a person who, as an employee or independent contractor of
the Company, a Subsidiary or an Affiliate, has been granted an Award or Loan
under the Plan.

(p) “ISO” means any Option intended to be and designated as an incentive stock
option within the meaning of Section 422 of the Code.

(q) “Limited SAR” means a right granted pursuant to Section 6(c) which shall, in
general, be automatically exercised for cash upon a Change in Control.

(r) “Loan” means the proceeds from the Company borrowed by a Plan participant
under Section 8 of the Plan.

(s) “NQSO” means any Option that is designated as a nonqualified stock option.

(t) “Option” means a right, granted to a Grantee under Section 6(b) and
Section 9, to purchase shares of Stock. An Option may be either an ISO or an
NQSO, provided that, ISO’s may be granted only to employees of the Company or a
Subsidiary.

(u) “Other Cash-Based Award” means cash award under Section 6(h), including cash
awarded as a bonus or upon the attainment of specified performance criteria or
otherwise as permitted under the Plan.

(v) “Other Stock-Based Award” means a right or other interest granted to Grantee
under Section 6(h) that may be denominated or payable in, valued in whole or in
part by reference to, or otherwise based on, or related to, Stock, including,
but not limited to (1) unrestricted Stock awarded as a bonus or upon the
attainment of specified performance criteria or otherwise as permitted under the
Plan, and (2) a right granted to a Grantee to acquire Stock from the Company for
cash and/or a promissory note containing terms and conditions prescribed by the
Committee.

(w) “Performance Measures” shall mean for a calendar year, or other such period
as may be defined, one or more of the business criteria set forth in Section 7
herein.

(x) “Performance Share” means an Award of shares of Stock to a Grantee under
Section 6(h) that is subject to restrictions based upon the attainment of
specified performance criteria.

 

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(y) “Plan” means this Amended and Restated Stock Award and Incentive Plan, as
amended from time to time.

(z) “Restricted Stock” means an Award of shares of Stock to a Grantee under
Section 6(d) that may be subject to certain restrictions and to a risk of
forfeiture.

(aa) “Restricted Stock Unit” means a right granted to a Grantee under
Section 6(e) to receive Stock or cash at the end of a specified deferral period,
which right may be conditioned on the satisfaction of specified performance or
other criteria.

(bb) “Retirement” shall have the meaning given to that term in Section 10(k) of
this Plan.

(cc) “Rule 16b-3” means Rule 16b-3, as from time to time in effect promulgated
by the Securities and Exchange Commission under Section 16 of the Exchange Act,
including any successor to such Rule.

(dd) “Stock” means of the common stock, par value $0.01 per share, of the
Company.

(ee) “SAR” or “Stock Appreciation Right” means the right, granted to a Grantee
under Section 6(c), to be paid an amount measured by the appreciation in the
Fair Market Value of Stock from the date of grant to the date of exercise of the
right, with payment to be made in cash, Stock, or property as specified in the
Award or determined by the Committee.

(ff) “Subsidiary” means any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of granting of an 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.

(gg) “Variable Compensation Plan” shall mean any variable compensation plan or
other annual award plan adopted by the Company. A Covered Employee may
participate in more than one Variable Compensation Plan.

3. Administration.

The Plan shall be administered by the Committee. The Committee shall have the
authority in its discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers
and authorities either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without limitation, the
authority to grant Awards and make Loans; to determine the persons to whom and
the time or times at which Awards shall be granted and Loans shall be made; to
determine the type and number of Awards to be granted and the amount of any
Loan, the number of shares of Stock to which an Award may relate and the terms,
conditions, restrictions and performance criteria relating to any Award or Loan;
and to determine whether, to what extent, and under what circumstances an Award
may be settled, cancelled, forfeited, exchanged, or surrendered; to make
adjustments in the terms and conditions of, and the criteria and performance
objectives (if any) included in, Awards and Loans in recognition of unusual or
non-recurring events affecting the Company or any Subsidiary or Affiliate or the
financial statements of the Company or any Subsidiary or Affiliate, or in
response to changes in applicable laws, regulations, or accounting principles;
to designate Affiliates; to construe and interpret the Plan and any Award or
Loan; to prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the Award Agreements and any
promissory note or agreement related to any Loan (which need not be identical
for each Grantee); and to make all other determinations deemed necessary or
advisable for the administration of the Plan.

The Committee may appoint a chairperson and a secretary and may make such rules
and regulations for the conduct of its business as it shall deem advisable, and
shall keep minutes of its meetings. All determinations of the Committee shall be
made by a majority of its members either present in person or participating by
conference telephone at a meeting or by written consent. The Committee may
delegate to one or more of its members or to one or more agents such
administrative duties as it may deem advisable, and the Committee or any person
to whom it has delegated duties as aforesaid may employ one or more persons to
render advice with respect to any responsibility the Committee or such person
may have under the Plan. All decisions, determinations and interpretations of
the Committee shall be final and binding on all persons, including the Company,
and any Subsidiary, Affiliate or Grantee (or any person claiming any rights
under the Plan from or through any Grantee) and any shareholder.

No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
or Loan made hereunder.

 

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4. Eligibility.

Subject to the conditions set forth below, Awards may be granted to directors
(including non-employee directors), selected employees and independent
contractors of the Company and its present or future Subsidiaries and
Affiliates, and Loans may be made to any eligible person, except as may be
prohibited by applicable law, rule, or regulation, in each case in the
discretion of the Committee. In determining the persons to whom Awards and Loans
shall be granted and the type of any Award or the amount of any Loan (including
the number of shares to be covered by such Award), the Committee shall take into
account such factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan.

5. Stock Subject to the Plan.

The maximum number of shares of Stock reserved for the grant of Awards under the
Plan shall be 12,110,000 shares of Stock, subject to adjustment as provided
herein. No more than 75,000 of the total shares available for grant may be
awarded to a single individual in a single year. Such shares may, in whole or in
part, be authorized but unissued shares or shares that shall have been or may be
reacquired by the Company in the open market, in private transactions or
otherwise. If any shares subject to an Award are forfeited, cancelled, exchanged
or surrendered or if an Award otherwise terminates or expires without a
distribution of shares to the Grantee, the shares of Stock with respect to such
Award shall, to the extent of any such forfeiture, cancellation, exchange,
surrender, termination or expiration, again be available for Awards under the
Plan; provided that, in the case of forfeiture, cancellation, exchange or
surrender of shares of Restricted Stock or Restricted Stock Units with respect
to which dividends or Dividend Equivalents have been paid or accrued, the number
of shares with respect to such Awards shall not be available for Awards
hereunder unless, in the case of shares with respect to which dividends or
Dividend Equivalents were accrued but unpaid, such dividends and Dividend
Equivalents are also forfeited, exchanged or surrendered. Upon the exercise of
any Award granted in tandem with any other Awards or Awards, such related Awards
or Awards shall be cancelled to the extent of the number of shares of Stock as
to which the Award is exercised and, notwithstanding the foregoing, such number
of shares shall no longer be available for Awards under the Plan.

In the event that the Committee shall determine that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, Stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Stock such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Grantees under the Plan, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to any or all of
(i) the number and kind of shares of Stock which may thereafter be issued in
connection with Awards, (ii) the number and kind of shares of Stock issued or
issuable in respect of outstanding Awards, and (iii) the exercise price, grant
price, or purchase price relating to any Award; provided that, with respect to
ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code.

6. Specific Terms of Awards.

(a) General. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable
Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate
upon the grant, maturation, or exercise of an Award may be made in such forms as
the Committee shall determine at the date of grant or thereafter, including,
without limitation, cash, Stock, or other property, and may be made in a single
payment or transfer, in installments, or on a deferred basis. The Committee may
make rules relating to installment or deferred payments with respect to Awards,
including the rate of interest to be credited with respect to such payments. In
addition to the foregoing, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter, such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall determine.

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

(i) Type of Award. The Award Agreement evidencing the grant of an Option under
the Plan shall designate the Option as an ISO or an NQSO.

(ii) Exercise Price. The exercise price per share of Stock purchasable under an
Option shall be determined by the Committee; provided that, in the case of an
ISO, such exercise price shall be not less than the Fair Market Value of a share
on the date of grant of such Option, and in no event shall the exercise price
for the purchase of shares be less than par value. The exercise price for Stock
subject to an Option may be paid in cash or by an exchange of Stock previously
owned by the Grantee, or a combination of both, in an amount having a combined
value equal to such exercise price. A Grantee may also elect to pay all or a
portion of the aggregate exercise price by having shares of Stock with a Fair
Market Value on the date of exercise equal to the aggregate exercise price
withheld by the Company or sold by a broker-dealer under circumstances meeting
the requirements of 12 C.F.R. § 220 or any successor thereof.

 

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(iii) Term and Exercisability of Options. The date on which the Committee adopts
a resolution expressly granting an Option shall be considered the day on which
such Option is granted. Options shall be exercisable over the exercise period
(which shall not exceed ten years from the date of grant), at such times and
upon such conditions as the Committee may determine, as reflected in the Award
Agreement; provided that, the Committee shall have the authority to accelerated
the exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. An Option may be
exercised to the extent of any or all full shares of Stock as to which the
Option has become exercisable, by giving written notice of such exercise to the
Committee or its designated agent.

(iv) Termination of Employment, Etc. An Option may not be exercised unless the
Grantee is then in the employ of, or then maintains an independent contractor
relationship with, the Company or a Subsidiary or an Affiliate (or a company or
a parent or subsidiary company of such company issuing or assuming the Option in
a transaction to which Section 424(a) of the Code applies), and unless the
Grantee has remained continuously so employed, or continuously maintained such
relationship, since the date of grant of the Option; provided that, the Award
Agreement may contain provisions extending the exercisability of Options, in the
event of specified terminations, to a date not later than the expiration date of
such Option.

(v) Other Provisions. Options may be subject to such other conditions including,
but not limited to, restrictions on transferability of the shares acquired upon
exercise of such Options, as the Committee may prescribe in its discretion or as
may be required by applicable law.

(c) SARs and Limited SARs. The Committee is authorized to grant both stand-alone
and in-tandem SARs and Limited SARs to Grantees on the following terms and
conditions:

(i) In General. Unless the Committee determines otherwise, an SAR or a Limited
SAR (1) granted in tandem with an NQSO may be granted at the time of grant of
the related NQSO or at any time thereafter or (2) granted in tandem with an ISO
may only be granted at the time of grant of the related ISO. An SAR or Limited
SAR granted in tandem with an Option shall be exercisable only to the extent the
underlying Option is exercisable.

(ii) SARs. An SAR shall confer on the Grantee a right to receive an amount with
respect to each share subject thereto, upon exercise thereof, equal to the
excess of (1) the Fair Market Value of one share of Stock on the date of
exercise over (2) the grant price of the SAR (which in the case of an SAR
granted in tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other SAR shall be such price as
the Committee may determine).

(iii) Limited SARs. A Limited SAR shall confer on the Grantee a right to receive
with respect to each share subject thereto, automatically upon the occurrence of
a Change in Control, an amount equal in value to the excess of (1) the Change in
Control Price (in the case of a LSAR granted in tandem with an ISO, the Fair
Market Value), of one share of Stock on the date of such Change in Control over
(2) the grant price of the Limited SAR (which in the case of a Limited SAR
granted in tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other Limited SAR shall be such
price as the Committee determines); provided that, in the case of a Limited SAR
granted to a Grantee who is subject to the reporting requirements of
Section 16(a) of the Exchange Act (a “Section 16 Individual”), such Section 16
Individual shall only be entitled to receive such amount if such Limited SAR has
been outstanding for at least six (6) months as of the date of the Change in
Control.

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

(i) Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, if any, as the Committee
may impose at the date of grant or thereafter, which restrictions may lapse
separately or in combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. Such restrictions
may include factors relating to the increase in the value of the Stock or to
individual or Company performance such as the attainment of certain specified
individual, divisional or Company-wide performance goals, sales volume increases
or decreases in earnings per share. Except to the extent restricted under the
Award Agreement relating to the Restricted Stock, a Grantee granted Restricted
Stock shall have all of the rights of a shareholder including, without
limitation, the right to vote Restricted Stock and the right to receive
dividends thereon.

(ii) Forfeiture. Upon termination of employment with or service to the Company,
or upon termination of the independent contractor relationship, as the case may
be, during the applicable restriction period, Restricted Stock and any accrued
but unpaid

 

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dividends or Dividend Equivalents that are at that time subject to restrictions
shall be forfeited; provided that, the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part the
forfeiture of Restricted Stock.

(iii) Certificates for Stock. Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Grantee, such
certificates shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, and the
Company shall retain physical possession of the certificate.

(iv) Dividends. Dividends paid on Restricted Stock shall be either paid at the
dividend payment date, or deferred for payment to such date as determined by the
Committee, in cash or in shares of unrestricted Stock having a Fair Market Value
equal to the amount of such dividends. Stock distributed in connection with a
stock split or stock dividend, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other property has been
distributed.

(e) Restricted Stock Units. The Committee is authorized to grant Restricted
Stock Units to Grantees, subject to the following terms and conditions:

(i) Award and Restrictions. Delivery of Stock or cash, as determined by the
Committee, will occur upon expiration of the deferral period specified for
Restricted Stock Units by the Committee. In addition, Restricted Stock Units
shall be subject to such restrictions as the Committee may impose, at the date
of grant or thereafter, which restrictions may lapse at the expiration of the
deferral period or at earlier or later specified times, separately or in
combination, in installments or otherwise, as the Committee may determine. Such
restrictions may include factors relating to the increase in the value of the
Stock or to individual or Company performance such as the attainment of certain
specified individual, divisional or Company-wide performance goals, sales volume
increases or increases in earnings per share.

(ii) Forfeiture. Upon termination of employment or termination of the
independent contractor relationship during the applicable deferral period or
portion thereof to which forfeiture conditions apply, or upon failure to satisfy
any other conditions precedent to the delivery of Stock or cash to which such
Restricted Stock Units relate, all Restricted Stock Units that are then subject
to deferral or restriction shall be forfeited; provided that, the Committee may
provide, by rule or regulation or in any Award Agreement, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Restricted Stock Units will be waived in whole or in part in the event of
termination resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Restricted Stock Units.

(f) Stock Awards in Lieu of Cash Awards. The Committee is authorized to grant
Stock as a bonus, or to grant other Awards, in lieu of Company commitments to
pay cash under other plans or compensatory arrangements. Stock or Awards granted
hereunder shall have such other terms as shall be determined by the Committee.

(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Grantees. The Committee may provide, at the date of grant or
thereafter, that Dividend Equivalents shall be paid or distributed when accrued
or shall be deemed to have been reinvested in additional Stock, or other
investment vehicles as the Committee may specify, provided that Dividend
Equivalents (other than freestanding Dividend Equivalents) shall be subject to
all conditions and restrictions on the underlying Awards to which they relate.

(h) Performance Shares and Other Stock- or Cash-Based Awards. The Committee is
authorized to grant to Grantees Performance Shares and/or Other Stock-Based
Awards or Other Cash-Based Awards as an element of or supplement to any other
Award under the Plan, as deemed by the Committee to be consistent with the
purposes of the Plan. Such Awards may be granted with value and payment
contingent upon performance of the Company or any other factors designated by
the Committee, or valued by reference to the performance of specified
Subsidiaries or Affiliates.

7. Determining Annual Performance Based Awards

Awards to Covered Employees are intended to constitute performance-based
compensation within the meaning of Section 162(m) of the Code and to comply with
the exemption from the deduction prohibitions of Section 162(m) of the Code.

(a) For each calendar year, each Covered Employee may be entitled to receive a
payment (“Annual Performance Award”) pursuant to a Variable Compensation Plan in
an amount determined by the Committee as provided in this Plan. To the extent
permitted by a Variable Compensation Plan, the payment of an Annual Performance
Award may be made in cash, common stock or restricted stock of the Company, or
any other form as provided for in this Plan, or a combination thereof.

 

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(b) The maximum Annual Performance Award paid to a Participant for a calendar
year under any individual Variable Compensation Plan may not exceed the greater
of: (i) $5,000,000 or (ii) five times the Covered Employee’s most recently
disclosed Annual Performance Award.

(c) For any calendar year or performance period, the Committee may designate one
or more of the business criteria (“Performance Measures”) set forth in this
Section 7 for use in determining the amount of an Annual Performance Award for
an individual in relation to such year or period; provided that such designation
would not subject any Annual Performance Award to the deduction limitations of
Section 162(m). Performance Measures designated for any Participant in a
calendar year or other performance period may be different from year to year and
those designated for other Covered Employees as the Committee may determine. To
the extent applicable to any Performance Measure, the Committee may specify a
Performance Measure in relation to total Company performance or in relation to
the performance of identifiable business unit(s) of the Company.

(d) For each Performance Measure designated by the Committee, the Committee
shall designate a specific, objectively measurable target, schedule or threshold
(“Performance Goal”) against which actual performance is to be measured for
purposes of determining the amount of any Annual Performance Award; provided
that any such designation would not subject any Performance Award to the
deduction limitations of Section 162(m). A Performance Goal may be expressed in
any form as the Committee may determine including, but not limited to:
(1) percentage growth; (2) absolute growth; (3) cumulative growth;
(4) performance in relation to an index; (5) performance in relation to peer
company performance; (6) a designated absolute amount; (7) percent of sales; and
(8) per share of common stock outstanding.

(e) Performance Measures may be expressed in terms of one or more of the
following criteria on which Performance Goals may be based: (1) earnings (either
in the aggregate or on a per-share basis, reflecting dilution of shares as the
Committee deems appropriate and, if the Committee so determines, net of or
including dividends) before or after interest and taxes (“EBIT”) or before or
after interest, taxes, depreciation and amortization (“EBITDA”); (2) gross or
net revenue, or changes in annual revenues; (3) cash flow(s) (including either
operating or net cash flows); (4) financial return ratios; (5) total shareholder
return, shareholder return based on growth measures or the attainment by the
shares of a specified value for a specified period of time, share price or share
price appreciation; (6) earnings growth or growth in earnings per share;
(7) return measures, including return or net return on assets, net assets,
equity, capital or gross sales; (8) adjusted pre-tax margin; (9) pre-tax
profits; (10) operating margins; (11) operating profits; (12) operating
expenses; (13) net income or net operating income; (14) growth in operating
earnings or growth in earnings per share; (15) market share or market
penetration with respect to specific designated products or product groups
and/or specific geographic areas; (16) aggregate product price and other product
measures; (17) expense or cost levels, in each case, where applicable,
determined either on a Company-wide basis or in respect of any one or more
specified divisions; (18) reduction of losses, loss ratios or expense ratios;
(19) operating cost management; (20) debt reduction; (21) productivity
improvements; (22) satisfaction of specified business expansion goals or goals
relating to acquisitions or divestitures; (23) customer satisfaction based on
specified objective goals or a Company-sponsored customer survey; (24) employee
satisfaction based on specified objective goals or a Company-sponsored customer
survey; (25) employee diversity goals; (26) employee turnover; (27) specified
objective social goals, or (28) other strategic events that could alter the
normal course of business, the description of which would disclose material
competitive information. Any criteria may be measured in absolute terms or as
compared to another corporation or corporations. To the extent applicable, any
such performance objective shall be determined (i) in accordance with the
Company’s audited financial statements and generally accepted accounting
principles and reported upon by the Company’s independent accountants or (ii) so
that a third party having knowledge of the relevant facts could determine
whether such performance objective is met.

(f) The Committee shall determine the terms and conditions of such Awards at the
date of grant or, to the extent permitted by Section 162(m) of the Code,
thereafter; provided that Performance Goals for determining Covered Employees’
Annual Performance Awards shall be established by the Committee not later than
the latest date permissible under Section 162(m) of the Code.

(g) The Committee shall certify in writing prior to payment of any Annual
Performance Award, or other Award hereunder, that the relevant Performance Goals
and any other material terms were in fact satisfied.

8. Change in Control Provisions.

The following provisions shall apply in the event of a Change in Control unless
otherwise determined by the Committee or the Board in writing at or after the
grant of an Award, but prior to the occurrence of such Change in Control:

(a) any Award carrying a right to exercise that was not previously exercisable
and vested shall become fully exercisable and vested;

 

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(b) the restrictions, deferral limitations, payment conditions, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse and
such Awards shall be deemed fully vested, and any performance conditions imposed
with respect to Awards shall be deemed to be fully achieved; and

(c) the value of all outstanding Awards shall, to the extent determined by the
Committee at or after grant, be cased out on the basis of the Change in Control
Price as of the date the Change in Control occurs or such other date as the
Committee may determine prior the Change in Control.

9. Loan Provisions.

Subject to the provisions of the Plan and all applicable federal and state laws,
rules and regulations (including the requirements of Regulation G (12 C.F.R. §
207)) and the rules and regulations of any stock exchange on which Stock is
listed, the Committee shall have the authority to make Loans to Grantees (on
such terms and conditions as the Committee shall determine), to enable such
Grantees to purchase shares in connection with the realization of Awards under
the Plan. Loans shall be evidenced by a promissory note or other agreement,
signed by the borrower, which shall contain provisions for repayment and such
other terms and conditions as the Committee shall determine.

10. Special Non-Employee Director Awards.

(a) Restricted Stock and Restricted Stock Units

(i) Annual Grants. In addition to any other Award granted hereunder, as of the
2004 Annual Meeting of Shareholders, non-employee directors of the Company will
be granted the Restricted Stock Units described in clauses (I) and (II) of this
Section 9(a)(i) (the “Automatic Restricted Stock Units”). The grants will be
valued using the closing price of a share of Stock on the first business day
following each annual meeting of shareholders and will vest 20% each year over
five (5) years:

(I) Each non-employee director (a “New Director”) who, is elected to the Board
for the first time, will at the time such non-employee director is elected and
duly qualified, be granted automatically, without action by the Committee,
Restricted Stock Units with a value of, effective as of January 1, 2006,
$75,000.00.

(II) On the first business day following each annual meeting of shareholders,
each non-employee director (other than a New Director) who is continuing service
as a member of the Board, will be granted automatically, without action by the
Committee, Restricted Stock Units with a value of, effective as of January 1,
2006, $75,000.00.

(ii) In lieu of Annual Retainer. For the calendar year beginning January 1,
2003, non-employee directors may elect to receive, in lieu of any or all of
their annual retainer for a calendar year, Restricted Stock in increments of 5%
(i.e., 5%, 10%, 15%, etc.) as follows:

(I) Non-employee directors can elect to receive their Restricted Stock either:

i. during the calendar year in which the annual retainer is to be earned, in
quarterly installments equal to the percent of the annual retainer elected to be
received in Restricted Stock, divided by four, divided by the price per share of
Stock on the last day of each quarter, prorated for any partial calendar year or
quarter (for administrative purposes, shares may not actually be distributed
until after the end of the year in which the annual retainer was earned), or

ii. on a deferred basis:

a. until they retire from the Board,

b. ten (10) years from the date they retire from the Board,

 

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c. for a period of not less than 1 year and not more than 10 years, in
increments of 1 year, or

d. until they retire from their primary employment.

(II) Any election to defer Stock shall be made prior to the year in which the
annual retainer subject to deferral shall be paid and shall be irrevocable. Any
newly elected non-employee director shall have five (5) days from the date of
their election to the Board to elect to defer any percentage hereunder. An
election shall continue in effect until revoked. Any Stock for which receipt is
deferred shall be matched by the Company by a number of shares equal to not more
than 25% of the value of the quarterly amount so deferred, based on the price
per share of Stock on the last day of each quarter.

(b) Options.

(i) Automatic Options. Until the calendar year beginning January 1, 2004, at
which point this provision shall no longer be applicable, in addition to any
other Award granted hereunder, non-employee directors of the Company will be
granted the Options described in clauses (i) and (ii) of this Section 9(b)(i)
(the “Automatic Options”):

(I) Each non-employee director (a “New Director”) who, after the effective date
of the Plan, is elected to the Board for the first time, will at the time such
non-employee director is elected and duly qualified, be granted automatically,
without action by the Committee, an Option to purchase 5,000 shares of Stock.

(II) On the first business day following each annual meeting of the
shareholders’, each non-employee director (other than a New Director) who is
continuing service as a member of the Board, will be granted automatically,
without action by the Committee, an Option to purchase 5,000 shares of Stock.

(ii) Elected Options. Until the calendar year beginning January 1, 2003, at
which point this provision shall no longer be applicable, each non-employee
director could, at any time prior to the commencement of any calendar year
during which he or she was to serve as a member of the Board, irrevocably elect
to receive, in lieu of the annual directors’ retainer payable to such
non-employee director with respect to such calendar year (prorated for any
partial calendar year, an Option (an “Elected Option”) to purchase shares of
Stock. The number of shares of Stock covered by an Elected Option received in
lieu of an annual retainer for 2002 shall be the number (rounded to the nearest
whole number of shares) equal to (i) the annual, or prorated, retainer divided
by (ii) the value per share of the Elected Option, which value shall be equal to
thirty three percent (33%) of the exercise price. An Elected Option shall be
granted on January 1 of the year following the year in which the annual retainer
to which it relates is earned.

(c) Terms and Conditions of Options. Automatic Options and Elected Options shall
be subject to the following specific terms and conditions (and shall otherwise
be subject to all other provisions of the Plan not in conflict with this
Section 9):

(i) Each Automatic Option and each Elected Option shall be a NQSO.

(ii) The exercise price of Automatic Options shall be equal to the Fair Market
Value of the shares of Stock subject to such Automatic Options on the date of
grant. The exercise price of Elected Options shall be equal to (i) the average
closing price of the Stock on the national securities exchange on which the
Stock is principally traded on the last trading day in March, June, September
and December of the year in which the annual retainer is earned, or (ii) if the
shares of Stock are then traded in an over-the-counter market, the average of
the closing bid and asked prices for the shares of Stock in such
over-the-counter market on the last trading day on which a trade occurs in
March, June, September and December of the year in which the annual retainer is
earned, or (iii) if the shares of Stock are not then listed on a national
securities exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.

(iii) Automatic Options shall be exercisable as to twenty percent (20%) of the
Stock subject thereto on the first anniversary of the date of grant, and shall
become exercisable as to an additional twenty percent (20%) of such shares on
each of the second, third, fourth and fifth anniversaries of such date of grant.
Automatic Options shall be exercisable for a period of ten (10) years from the
date of grant of such Option; provided that, the exercise period shall be
subject to earlier termination in accordance with the provisions of
Section 6(b)(iv) hereof. Elected Options shall be exercisable for a period
ending ten (10) years from the December 31st of the year in which the retainer
was earned.

 

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11. General Provisions.

(a) Approval. The Plan shall take effect upon its adoption by the Board, subject
to approval by the shareholders of the Company in the manner and to the degree
required by applicable laws and regulations, including the applicable rules and
regulations of any stock exchange on which the Stock is listed.

(b) Nontransferability. Awards shall not be transferable by a Grantee except by
will or the laws of descent and distribution or, if then permitted under Rule
16b-3, pursuant to a qualified domestic relations order as defined under the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder, and shall be exercisable during the lifetime
of a Grantee only by such Grantee or his guardian or legal representative.

(c) No Right to Continued Employment, Etc. Nothing in the Plan or in any Award
or Loan granted or any Award Agreement, promissory note or other agreement
entered into pursuant hereto shall confer upon any Grantee the right to continue
in the employ of or to continue as an independent contractor of the Company, any
subsidiary or any Affiliate or to be entitled to any remuneration or benefits
not set forth in the Plan or such Award Agreement, promissory note or other
agreement or to interfere with or limit in any way the right of the Company or
any Subsidiary or Affiliate to terminate such Grantee’s employment or
independent contractor relationship.

(d) Taxes. The Company or any Subsidiary or Affiliate is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Grantees to satisfy obligations for the
payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other
property and to make cash payments in respect thereof in satisfaction of a
Grantee’s tax obligations.

(e) Amendment and Termination of the Plan. The Board may at any time and from
time-to-time alter, amend, suspend, or terminate the Plan in whole or in part.
Notwithstanding the foregoing, no amendment shall affect adversely any of the
rights of any Grantee, without such Grantee’s consent, under any Award or Loan
theretofore granted under the Plan.

The Company shall obtain shareholder approval of any Plan amendment to the
extent necessary or desirable to comply with applicable law, rule, or
regulation. Additionally, notwithstanding anything in the Plan to the contrary,
the Board may not, without approval of the Company’s shareholders:

(i) materially increase the number of shares of Stock issuable under the Plan,
except for permissible adjustment as provided for herein; or

(ii) reprice Options issued under the Plan by lowering the exercise price of a
previously granted award, by canceling outstanding Options and issuing
replacements, or by otherwise replacing existing Options with substitute Options
with a lower price.

(f) No Rights to Awards or Loans; No Shareholder Rights. No Grantee shall have
any claim to be granted any Award or Loan under the Plan, and there is no
obligation for uniformity of treatment of Grantees. Except as provided
specifically herein, a Grantee or a transferee of an Award shall have no rights
as a shareholder with respect to any shares covered by the Award until the date
of the issuance of a stock certificate to him for such shares.

(g) Unfunded Status of Awards. The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Grantee any rights that are greater than those of a
general creditor of the Company.

(h) No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

(i) Regulations and Other Approvals.

(i) The obligation of the Company to sell or deliver Common Stock with respect
to any Award granted under the Plan shall be subject to all applicable laws,
rules and regulations, including all applicable federal and state securities
laws, and the obtaining of all such approvals by governmental agencies as may be
deemed necessary or appropriate by the Committee.

 

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(ii) Each Award is subject to the requirement that, if at any time the Committee
determines, in its absolute discretion, that the listing, registration or
qualification of Common Stock issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Award or the issuance of
Common Stock, no such Award shall be granted or payment made or Common Stock
issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions not
acceptable to the Committee.

(iii) In the event that the disposition of Common Stock acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act and is not otherwise exempt from such registration, such Common
Stock shall be restricted against transfer to the extent required by the
Securities Act or regulations thereunder, and the Committee may require a
Grantee receiving Common Stock pursuant to the Plan, as a condition precedent to
receipt of such Common Stock, to represent to the Company in writing that the
Common Stock acquired by such Grantee is acquired for investment only and not
with a view to distribution.

(j) Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Maryland without
giving effect to the conflict of laws principles thereof.

(k) Standard Definition of Retirement. Effective for all determinations made on
or after February 23, 2006, and notwithstanding anything to the contrary in any
Award Agreement (whether issued before or after that date), the standard
definition of “Retirement” for each Grantee shall mean the termination of
employment when any one of the following conditions has been met: (i) being at
least fifty-five (55) years old with at least ten (10) years of service to the
Company and its Affiliates, (ii) being at least fifty-five years old and having
any combination of age plus years of service to the Company and its Affiliates
equal to at least sixty-five (65) or (iii) having reached age 55, attainment of
the statutory retirement age as defined within the country of the Grantee’s
residence or citizenship, as applicable. In addition, the Company may in its
discretion impose on a Grantee additional conditions regarding non-competition
and non-solicitation of clients and employees in order for the Grantee to
realize the benefits relating to a qualified Retirement for purposes of this
Plan.

 

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