Exhibit 10.6
 
 
 
2016 STOCK INCENTIVE PLAN
OF
ADVANSIX INC.
AND ITS AFFILIATES

ARTICLE I

ESTABLISHMENT AND PURPOSE

1.1  Purpose. The purpose of this 2016 Stock Incentive Plan of AdvanSix Inc. and
its Affiliates (the “Plan”) is to enable the Company to achieve superior
financial performance, as reflected in the performance of its Common Stock and
other key financial or operating indicators by (a) providing incentives and
rewards to certain employees and service providers who are in a position to
contribute materially to the success and long-term objectives of the Company,
(b) aiding in the recruitment and retention of employees and service providers
of exceptional ability, (c) providing employees an opportunity to acquire or
expand equity interests in the Company and (d) promoting the growth and success
of the Company’s business by aligning the financial interests of employees and
service providers with that of the other stockholders of the Company. Towards
these objectives, the Plan provides for the grant of Stock Options, Stock
Appreciation Rights, Performance Awards, Restricted Stock Units, Restricted
Stock, Other Stock-Based Awards, and Non-Share-Based Awards.

1.2 Effective Date; Stockholder Approval. The Plan is effective as of the
effective date of the Company’s Registration Statement on Form 10 filed with the
Securities and Exchange Commission in connection with the distribution of its
Shares by Honeywell International Inc. (the “Effective Date”), provided that the
Plan shall have been adopted by the Board and approved by the Company’s sole
stockholder in a manner that satisfies the requirements of the General
Corporation Law of the State of Delaware and the rules of the New York Stock
Exchange.

ARTICLE II
DEFINITIONS

For purposes of the Plan, the following terms have the following meanings:

2.1 “1933 Act” means the Securities Act of 1933, as amended, and the regulations
and interpretations thereunder.

2.2 “Affiliate” means (a) any subsidiary of the Company of which at least 50
percent of the aggregate outstanding voting common stock or capital stock is
owned directly or indirectly by the Company, (b) any other parent of a
subsidiary described in clause (a), or (c) any other entity in which the Company
has a substantial ownership interest and which has been designated as an
Affiliate by the Committee in its sole discretion.

2.3 “Award” means any form of incentive or performance award granted under the
Plan, whether singly or in combination, to a Participant by the Committee
pursuant to any terms and conditions that the Committee may establish and set
forth in the applicable Award Agreement. Awards granted under the Plan may
consist of: (a) “Stock Options” awarded pursuant to Section 4.3; (b) “Stock
Appreciation Rights” awarded pursuant to Section 4.3; (c) “Performance Awards”
(including any Non-Share Based Awards) awarded pursuant to Section 4.4; (d)
“Restricted Stock
 
 

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Units” awarded pursuant to Section 4.5; (e) “Restricted Stock” awarded pursuant
to Section 4.5; (f) “Other Stock-Based Awards” awarded pursuant to Section 4.6.

2.4 “Award Agreement” means the document issued, either in writing or an
electronic medium, to a Participant evidencing the grant of an Award.

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

2.6  “Cause” means, unless otherwise provided in an Award Agreement, any of the
following: (i) clear evidence of a significant violation of the Company’s Code
of Business Conduct; (ii) a fraud committed against the Company; (iii) the
misappropriation, embezzlement or reckless or willful destruction of Company
property; (iv) the willful failure to perform, or gross negligence in the
performance of, duties; (v) the conviction (treating a nolo contendere plea as a
conviction) of a felony (whether or not any right to appeal has been or may be
exercised); (vi) the knowing falsification of any records or documents of the
Company; (vii) a significant breach of any statutory or common law duty of
loyalty to the Company; (viii) intentional and improper conduct significantly
prejudicial to the business of the Company; (ix) the failure to cooperate fully
in a Company investigation or the failure to be fully truthful when providing
evidence or testimony in such investigation; or (x) the violation of Company
rules and policies that, based on a single occurrence, might not meet the
significance thresholds of (i), (vii) or (viii) above, but that shall, for
purposes of such significance thresholds, be deemed to constitute a violation
thereof in the event any such violation occurs more than once. Cause shall be
determined by the Committee for Reporting Persons or by the Company for all
other Participants, in its sole and absolute discretion; provided that if an
event would constitute cause under an individual service agreement by and
between the Company and the applicable Participant, then such event shall also
constitute Cause for purposes of the Plan for such Participant.

2.7 “Change in Control” means, unless otherwise provided in an Award Agreement,
the occurrence of any of the following events following the Effective Date:

(i) during any period of 24 consecutive calendar months, individuals who were
directors of the Company on the first day of such period (the “Incumbent
Directors”) cease for any reason to constitute a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
first day of such period whose election, or nomination for election, by the
Company’s stockholders was approved by a vote of at least a majority of the
Incumbent Directors shall be considered as though such individual were an
Incumbent Director, but excluding, for purposes of this proviso, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened proxy contest with respect to election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on behalf
of a “person” (as used in Section 13(d) of the Exchange Act) (a “Person”), in
each case other than the Board;

(ii) the consummation of (A) a merger, consolidation, statutory share exchange
or similar form of corporate transaction involving (x) the Company or (y) any of
its Subsidiaries, but in the case of this clause (y) only if Company Voting
Securities (as defined below) are issued or issuable (each of the events
referred to in this clause (A) being hereinafter referred to as a
“Reorganization”) or (B) the sale or other disposition of all or substantially
all the assets of the Company to an entity that is not an Affiliate (a “Sale”),
 
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unless, immediately following such Reorganization or Sale, (1) all or
substantially all the Persons who were the “beneficial owners” (as used in Rule
13d-3 under the Exchange Act (or a successor rule thereto)) of the securities
eligible to vote for the election of the Board (“Company Voting Securities”)
outstanding immediately prior to the consummation of such Reorganization or Sale
continue to beneficially own, directly or indirectly, more than 50% of the
combined voting power of the then outstanding voting securities of the
corporation or other entity resulting from such Reorganization or Sale
(including a corporation or other entity that, as a result of such transaction,
owns the Company or all or substantially all the Company’s assets either
directly or through one or more subsidiaries) (the “Continuing Company”) in
substantially the same proportions as their ownership, immediately prior to the
consummation of such Reorganization or Sale, of the outstanding Company Voting
Securities (excluding, for such purposes, any outstanding voting securities of
the Continuing Company that such beneficial owners hold immediately following
the consummation of the Reorganization or Sale as a result of their ownership
prior to such consummation of voting securities of any corporation or other
entity involved in or forming part of such Reorganization or Sale other than the
Company), (2) no Person (excluding any employee benefit plan (or related trust)
sponsored or maintained by the Continuing Company or any entity controlled by
the Continuing Company) beneficially owns, directly or indirectly, 30% or more
of the combined voting power of the then outstanding voting securities of the
Continuing Company and (3) at least a majority of the members of the board of
directors of the Continuing Company were Incumbent Directors at the time of the
execution of the definitive agreement providing for such Reorganization or Sale
or, in the absence of such an agreement, at the time at which approval of the
Board was obtained for such Reorganization or Sale;

(iii) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company unless such liquidation or dissolution is part of a
transaction or series of transactions described in paragraph (ii) above that
does not otherwise constitute a Change in Control; or

(iv) any Person, corporation or other entity or “group” (as used in Section
13(d) of the Exchange Act) (other than (A) the Company, (B) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or an
Affiliate or (C) any entity owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of the
voting power of the Company Voting Securities) becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company Voting Securities; provided, however,
that for purposes of this subparagraph (iv), the following acquisitions shall
not constitute a Change in Control: (w) any acquisition directly from the
Company, (x) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or an Affiliate, (y) any acquisition by
an underwriter temporarily holding such Company Voting Securities pursuant to an
offering of such securities or any acquisition by a pledgee of Company Voting
Securities holding such securities as collateral or temporarily holding such
securities upon foreclosure of the underlying obligation or (z) any acquisition
pursuant to a Reorganization or Sale that does not constitute a Change in
Control for purposes of subparagraph (ii) above;
 
provided that, to the extent any Award provides for the payment of non-qualified
deferred compensation subject to Section 409A of the Code, an event set forth
above shall not constitute a
 
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“Change in Control” unless it also constitutes a “change in ownership”, a
“change in the effective control” or a “change in the ownership of substantial
assets” of the Company within the meaning of Treasury Regulation Section
1.409A-3(i)(5) and such limitation is necessary to avoid an impermissible
distribution or other event resulting in adverse tax consequences under Section
409A of the Code.

2.8 “Code” means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

2.9 “Committee” means the Compensation Committee of the Board or any successor
committee or subcommittee of the Board or other committee or subcommittee
designated by the Board, which committee or subcommittee is comprised solely of
two or more persons who are outside directors within the meaning of Section
162(m)(4)(C)(i) of the Code and Non-Employee Directors within the meaning of
Rule 16b-3(b)(3) under the Exchange Act.

2.10 “Common Stock” means the common stock of the Company.

2.11 “Company” means AdvanSix Inc. and its successors.

2.12 “Covered Employee” means an Employee who the Committee determines, at the
time an Award is granted to such Employee, is, or is reasonably likely to be, as
of the end of the tax year in which the Company would claim a tax deduction in
connection with such Award, a covered employee within the meaning of Section
162(m) of the Code.

2.13 “Disabled” and “Disability”, with respect to a Participant, have the
meanings assigned to such terms under the long-term disability plan maintained
by the Company or an Affiliate in which such Participant is covered at the time
the determination is made, and if there is no such plan, mean the permanent
inability as a result of accident or sickness to perform any and every duty
pertaining to such Participant’s occupation or employment for which the
Participant is suited by reason of the Participant’s previous training,
education and experience; provided that, to the extent an Award subject to
Section 409A of the Code shall become payable upon a Participant’s Disability, a
Disability shall not be deemed to have occurred for such purposes unless the
circumstances would also result in a “disability within the meaning of Section
409A of the Code, unless otherwise provided in an Award Agreement.

2.14 “Dividend Equivalent” means an amount equal to the cash dividend or the
Fair Market Value of the stock dividend that would be paid on each Share
underlying an Award if the Share were duly issued and outstanding on the date on
which the dividend is payable.

2.15 “Eligible Individual” shall mean any Non-Employee Director, Employee or
consultant (or any prospective director, employee or consultant) of the Company
or its Affiliates.

2.16 “Employee” means any individual who performs services as an employee of the
Company or an Affiliate. “Employee” does not include any leased employees.

2.17 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the regulations and interpretations thereunder.
 
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2.18 “Exercise Price” means the price of a Share, as fixed by the Committee,
that may be purchased under a Stock Option or with respect to which the amount
of any payment pursuant to a Stock Appreciation Right is determined.

2.19 “Fair Market Value” means, except as otherwise provided in the applicable
Award Agreement, (a) with respect to any property other than Shares, the fair
market value of such property determined by such methods or procedures as shall
be established from time to time by the Committee and (b) with respect to
Shares, as of any date, (i) the average (mean) of the highest and lowest sales
prices of a Share, as reported on the New York Stock Exchange (or any other
reporting system selected by the Committee, in its sole discretion) on the date
as of which the determination is being made or, if no sale of Shares is reported
on this date, on the most recent preceding day on which there were sales of
Shares reported or (ii) in the event there shall be no public market for the
Shares on such date, the fair market value of the Shares as determined in good
faith by the Committee.

2.20 “GAAP” means U.S. generally accepted accounting principles.

2.21 “Incentive Stock Option” means a Stock Option granted under Section 4.3 of
the Plan that meets the requirements of Section 422 of the Code and is
designated in the Award Agreement to be an Incentive Stock Option.

2.22 “Non-Employee Director” means any member of the Board, elected or
appointed, who is not an Employee. An individual who is elected to the Board at
a meeting of the stockholders of the Company shall be deemed to be a member of
the Board as of the date of the meeting.

2.23 “Non-Share-Based Award” means a Performance Award that is valued with
reference to property other than Shares (including cash).

2.24 “Nonqualified Stock Option” means any Stock Option granted under Section
4.3 of the Plan that is not an Incentive Stock Option.

2.25 “Objective Performance Measure” means any one or combination of the
following measures, separately or in relation to each other, or relative to a
selected comparator group, as determined by the Committee, which (to the extent
applicable) shall be determined in accordance with GAAP: (a) Sales (or any
component of sales); (b) Operating income; (c) Net income; (d) Earnings per
Share (or Proforma EPS); (e) Return on equity; (f) Cash flow (including
operating cash flow, free cash flow, cash flow yield and/or cash flow
conversion); (g) Cash flow per Share; (h) Return on invested capital; (i) Return
on investments (or ROI expansion); (j) Return on assets; (k) Economic value
added (or an equivalent metric, as determined by the Committee); (l) Share
price; (m) Total stockholder return; (n) Cost and expense reduction; (o) Working
capital (or working capital turns or days); (p) Revenues (including specified
types or categories thereof); (q) Product volume; (r) Gross or net
profitability/profit margins (including profitability of an identifiable
business unit or product); (s) Objective measures of productivity or operating
efficiency; (t) Implementation or completion of critical projects; and (u)
Safety and accident rates.
 
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Objective Performance Measures may be defined and measured before or after
taking into consideration taxes, interest, depreciation, amortization,
pension-related expense or income, and/or any pension mark to market adjustment,
the determination of which shall be at the discretion of the Committee and may
be with respect to the Company and/or a business unit, segment, division, or
subsidiary of the Company or an Affiliate.

In determining attainment of Objective Performance Measures, the negative impact
of the following shall be excluded unless the Committee determines otherwise:
unusual or infrequently occurring items and the cumulative effect of changes in
accounting treatment, changes in foreign currency exchange rates, the impact of
acquisitions or divestitures, discontinued operations, and charges for
restructurings (employee severance liabilities, asset impairment costs, and exit
costs), each determined in accordance with GAAP (to the extent applicable) and
as identified in the financial statements, notes to the financial statements or
discussion and analysis of management. In addition, the Committee may determine
to exclude the negative impact of other items but in the case of Section 162(m)
Awards, such determination must be made no later than 90 days after the
commencement of the applicable Performance Cycle.

2.26 “Other Stock-Based Award” means an Award granted under Section 4.6 and
denominated in Shares.

2.27 “Participant” means any Eligible Individual who has been granted an Award
under the Plan.

2.28 “Performance Award” means an Award granted under Section 4.4 of the Plan,
the payment of which is conditioned on the attainment of one or more performance
criteria determined by the Committee.

2.29 “Performance Cycle” means, with respect to any Performance Award, a period
(or periods) of at least one year, unless otherwise specified by the Committee,
over which the level of attainment of performance of the applicable performance
criteria shall be determined.

2.30 “Potential Change in Control Period” is, unless otherwise provided in an
Award Agreement, deemed to commence at the time of the earliest of the following
events to occur: (a) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control; (b) the Company or
any person or group publicly announces an intention to take or to consider
taking actions that, if consummated, would constitute a Change in Control; (c)
any person or group (other than the Company or any of its Affiliates, or any
savings, pension or other benefit plan for the benefit of employees of the
Company or any Affiliate) becomes the beneficial owner, directly or indirectly,
of securities of the Company representing 15 percent or more of either the then
outstanding Shares or the combined voting power of the Company’s then
outstanding securities (not including in the securities beneficially owned by
such person or group any securities acquired directly from the Company or its
Affiliates); or (d) the Board adopts a resolution to the effect that, for
purposes of the Plan, a Potential Change in Control Period has commenced. The
Potential Change in Control Period is deemed to continue until the adoption by
the Board of a resolution stating that, for purposes of the Plan, the Potential
Change in Control Period has expired.
 
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2.31 “Retirement” means the Termination of Service on or after attainment of age
55 with 10 years of service with the Company and its Affiliates, other than on
account of an involuntary Termination of Service for Cause. For purposes of this
Section, “years of service” is determined using the Participant’s most-recent
adjusted service date, as reflected at the Participant’s Termination of Service
in the Company’s records.

2.32 “Reporting Person” means any Non-Employee Director and any Employee who is
subject to the reporting requirements of Section 16(a) of the Exchange Act.

2.33 “Restricted Stock” means Shares issued pursuant to Section 4.5 that are
subject to any restrictions that the Committee, in its discretion, may impose.

2.34 “Restricted Stock Unit” means a right granted under Section 4.5 to acquire
Shares or an equivalent amount in cash that is subject to any restrictions that
the Committee, in its discretion, may impose.

2.35 “Section 162(m) Award” means an Award granted to a Covered Employee and
intended to be “performance-based compensation” for purposes of Section 162(m)
of the Code.

2.36 “Share” means a share of Common Stock.

2.37 “Stock Appreciation Right” means a right granted under Section 4.3 to an
amount in cash or a number of Shares with a Fair Market Value equal to the
excess of the Fair Market Value of the Shares on the date on which the Stock
Appreciation Right is exercised over the applicable Exercise Price (with any
fractional Shares treated in accordance with Section 5.5).

2.38 “Stock Option” means a right granted under Section 4.3 to purchase from the
Company a stated number of Shares at the applicable Exercise Price. Stock
Options awarded under the Plan may be in the form of Incentive Stock Options or
Nonqualified Stock Options.

2.39 “Target Amount” means the amount of property (including cash) in respect of
a Non-Share-Based Award that shall be paid if the applicable performance
criteria are met at the 100% level, as determined by the Committee.

2.40 “Target Vesting Percentage” means the percentage of Performance Awards
(other than Non-Share-Based Awards) that shall vest or become exercisable if the
applicable performance criteria are met at the 100% level, as determined by the
Committee.

2.41 “Termination of Service” means the date of cessation of a Participant’s
provision of services to the Company and its Affiliates for any reason, with or
without Cause, as determined by the Company; provided that a Participant will be
deemed to have incurred a Termination of Service on the date that such
Participant provides notice of termination to the Company and its Affiliates.
Except as otherwise provided in an Award Agreement, Termination of Service shall
be determined without regard to any statutory or contractual notice periods for
termination of employment, dismissal, redundancy, and similar events.
Notwithstanding the foregoing, (x) if an Affiliate ceases to be an Affiliate
while an Award granted to a Participant who provides services to such Affiliate
is outstanding, the Committee may, in its discretion, deem such Participant to
have a Termination of
 
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Service on the date the Affiliate ceases to be an Affiliate or on a later date
specified by the Committee; (y) the Committee shall make any determination
described in clause (x) before or not more than a reasonable period after the
date the Affiliate ceases to be an Affiliate; and (z) each such Participant’s
Termination of Service shall be treated as an involuntary termination not for
Cause. For purposes of clarification, any non-qualified deferred compensation
(within the meaning of Section 409A of the Code) payable to any Participant upon
a Termination of Service pursuant to the terms and conditions of this Plan shall
be paid to the Participant upon a “separation from service” as determined in
accordance with Section 409A of the Code without the imposition of additional
taxes or penalties.

ARTICLE III
ADMINISTRATION

3.1 The Committee. The Plan shall be administered by the Committee.

3.2 Authority of the Committee. The Committee shall have authority, in its sole
and absolute discretion and subject to the terms of the Plan, to (a) interpret
the Plan; (b) prescribe the rules and regulations that it deems necessary for
the proper operation and administration of the Plan, and amend or rescind any
existing rules or regulations relating to the Plan; (c) select Eligible
Individuals to receive Awards under the Plan; (d) determine the form of Awards,
the number of Shares subject to each Award, all the terms and conditions of an
Award including, without limitation, the conditions on exercise or vesting, the
designation of Stock Options as Incentive Stock Options or Nonqualified Stock
Options and the terms of Award Agreements; (e) determine whether Awards shall be
granted singly, in combination or in tandem; (f) establish and administer
performance criteria in connection with Performance Awards, and certify the
level of performance attained with respect to such performance criteria; (g)
waive or amend any terms, conditions, restrictions or limitations on an Award,
except that the prohibition on the repricing of Stock Options and Stock
Appreciation Rights, as described in Section 4.3(g), may not be waived; (h) in
accordance with Article V, make any adjustments to the Plan (including but not
limited to adjustment of the number of Shares available under the Plan or any
Award) and any Award granted under the Plan that may be appropriate; (i) provide
for the deferred payment of Awards and the extent to which payment shall be
credited with Dividend Equivalents; (j) determine whether Awards may be
transferable to family members, a family trust, a family partnership or
otherwise; (k) determine whether, to what extent and under what circumstances
Awards may be settled in cash, Shares or other property; (l) interpret,
administer, reconcile any inconsistency in, correct any default in and/or supply
any omission in, the Plan and any instrument or agreement relating to (including
any Award Agreement), or Award made under, the Plan; (m) waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate any Award; (n) accelerate the vesting or exercisability of, payment
for or lapse of restrictions on, Awards; (o) establish any provisions that the
Committee may determine to be necessary in order to implement and administer the
Plan in foreign countries; and (p) take any and all other actions it deems
necessary or advisable for the proper operation or administration of the Plan.

3.3 Effect of Determinations. All determinations of the Committee shall be
final, binding and conclusive on all persons having an interest in the Plan.

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3.4 Delegation of Authority. The Committee, in its discretion and consistent
with applicable law and regulations, may delegate its authority and duties under
the Plan to one or more subcommittees of the Committee or to the Chief Executive
Officer of the Company or any other individual as it deems to be advisable,
under any conditions and subject to any limitations that the Committee may
establish. Other than as provided in Section 3.7 of the Plan, only the Committee
(or a subset thereof), however, shall have authority to grant and administer
Awards to Reporting Persons and any delegate of the Committee and any Section
162(m) Awards, including to establish and certify Objective Performance
Measures.

3.5 Employment of Advisors. The Committee may select and employ attorneys,
consultants, accountants and other advisors at the Company’s expense (and may
determine the compensation thereof), and the Committee, the Company, and the
officers and directors of the Company may rely upon the advice, opinions or
valuations of the advisors employed.

3.6 No Liability. No member of the Committee, nor any person acting as a
delegate of the Committee with respect to the Plan, shall be liable for any
losses resulting from any action taken or omitted to be taken, interpretation or
construction made in good faith with respect to the Plan or any Award granted
under the Plan.

3.7 Awards to Non-Employee Directors. The Board may, in its sole and plenary
discretion, at any time and from time to time, grant Awards to Non-Employee
Directors or administer the Plan with respect to such Awards. In any such case,
the Board shall have all the authority and responsibility granted to the
Committee herein.

ARTICLE IV
AWARDS

4.1 Eligibility. All Eligible Individuals are eligible to receive Awards granted
under the Plan, except as otherwise provided in this Article IV.

4.2 Form of Awards. Awards shall be in the form determined by the Committee, in
its discretion, and shall be evidenced by an Award Agreement. Awards may be
granted singly or in combination or in tandem with other Awards.

4.3 Stock Options and Stock Appreciation Rights. The Committee may grant Stock
Options and Stock Appreciation Rights under the Plan to those Eligible
Individuals whom the Committee may from time to time select, in the amounts and
pursuant to the other terms and conditions that the Committee, in its
discretion, may determine and set forth in the Award Agreement, subject to the
provisions below:

(a) Form. Stock Options granted under the Plan shall, at the discretion of the
Committee and as set forth in the Award Agreement, be in the form of Incentive
Stock Options, Nonqualified Stock Options, or a combination of the two. If an
Incentive Stock Option and a Nonqualified Stock Option are granted to the same
Participant under the Plan at the same time, the form of each shall be clearly
identified, and they shall be deemed to have been granted in separate grants. In
no event shall the exercise of one Award affect the right to exercise the other
Award. Stock Appreciation Rights

 
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may be granted either alone or in connection with concurrently or previously
issued Nonqualified Stock Options.

 

(b) Exercise Price. The Committee shall set the Exercise Price of Stock Options
or Stock Appreciation Rights granted under the Plan at a price that is equal to
or greater than the Fair Market Value of a Share on the date of grant, subject
to adjustment as provided in Section 5.3. The Exercise Price of Incentive Stock
Options, however, shall be equal to or greater than 110 percent of the Fair
Market Value of a Share on the date of grant if the Participant receiving the
Stock Options owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or of any subsidiary or
parent corporation of the Company, as defined in Section 424 of the Code. The
Exercise Price of a Stock Appreciation Right granted in tandem with a Stock
Option shall be equal to the Exercise Price of the related Stock Option. The
Exercise Price of a Stock Option or Stock Appreciation Right shall be set forth
in the Award Agreement.

 

(c)  Term and Timing of Exercise. Stock Options and Stock Appreciation Rights
shall lapse not later than 10 years after the date of grant, as determined by
the Committee at the time of grant. Except as otherwise provided in an Award
Agreement or other individual agreement between a Participant and the Company or
an Affiliate, each Stock Option or Stock Appreciation Right granted under the
Plan shall be exercisable in whole or in part, subject to the following
conditions:

 

(i) The date on which any Award of Stock Options or Stock Appreciation Rights to
a Participant may first be exercised shall be set forth in the Award Agreement;
provided, however, that, except for Stock Options and Stock Appreciation Rights
granted as Performance Awards and except as provided in Section 5.1(b), such
Award shall not become fully vested for at least three years following the date
of grant, subject to any earlier vesting in accordance with the terms of the
Plan.

 

(ii) A Stock Appreciation Right granted in tandem with a Stock Option shall be
subject to the same terms and conditions as the related Stock Option and shall
be exercisable only to the extent that the related Stock Option is exercisable.

 

(iii) Stock Options and Stock Appreciation Rights shall vest and remain
exercisable as follows, subject to Section 5.4:

 
Event
Vesting
Exercise Period for Vested Awards
Death
Immediate vesting as of death
Expires earlier of (i) original expiration date, or (ii) 3 years after death.
Disability
Immediate vesting as of Termination of Service due to the incurrence of
Disability
Expires earlier of (i) original expiration date, or (ii) 3 years after
Termination of Service due to Disability.
Retirement
Unvested Awards forfeited as of Retirement
Expires earlier of (i) original expiration date, or (ii) 3 years after
Retirement.
Voluntary Termination of Service
Unvested Awards forfeited as of Termination of Service
Expires earlier of (i) original expiration date, or (ii) 30 days after
Termination of Service.
Involuntary Termination of Service not for Cause
Unvested Awards forfeited as of Termination of Service
Expires earlier of (i) original expiration date, or (ii) 1 year after
Termination of Service.
Involuntary Termination of Service for Cause
Unvested Awards forfeited as of Termination of Service
Vested Awards immediately cancelled.

 
 
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(iv) Stock Options and Stock Appreciation Rights of a deceased Participant may
be exercised only by the estate of the Participant or by the person given
authority to exercise the Stock Options or Stock Appreciation Rights by the
Participant’s will or by applicable laws of descent and distribution. If a Stock
Option or Stock Appreciation Right is exercised by the executor or administrator
of a deceased Participant’s estate, or by the person or persons to whom the
Stock Option or Stock Appreciation Right has been transferred by the
Participant’s will or the applicable laws of descent and distribution, the
Company shall be under no obligation to deliver Shares or cash until the Company
is satisfied that the person exercising the Stock Option or Stock Appreciation
Right is the duly appointed executor or administrator of the deceased
Participant’s estate or the person to whom the Stock Option or Stock
Appreciation Right has been transferred by the Participant’s will or by
applicable laws of descent and distribution.

 

(d) Payment of Exercise Price. The Exercise Price of a Stock Option must be paid
in full when the Stock Option is exercised. Stock certificates shall be
registered and delivered only upon receipt of payment. Payment of the Exercise
Price may be made in cash or by certified check, bank draft, wire transfer, or
postal or express money order. No portion of the Exercise Price of a Stock
Option may be paid from the proceeds of a loan of cash from the Company to the
Participant. In addition, the Committee may also permit payment of all or a
portion of the Exercise Price to be made by any other method, provided that, for
Awards to Reporting Persons, permissible methods shall be set forth in the
applicable Award Agreement, including:

(i) Delivering a properly executed exercise notice to the Company or its agent,
together with irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale proceeds with respect to the portion of the Shares to
be acquired having a Fair Market Value on the date of exercise equal to the sum
of the applicable portion of the Exercise Price being so paid; or

 

(ii) Tendering (actually or by attestation) to the Company previously acquired
Shares that have been held by the Participant for at least six months, subject

 
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to paragraph (d)(v), and that have a Fair Market Value on the day prior to the
date of exercise equal to the applicable portion of the Exercise Price being so
paid; or

 

(iii) Instructing the Company to withhold Shares that would otherwise be issued
having a Fair Market Value on the date of exercise equal to the applicable
portion of the Exercise Price being so paid; or

 

(iv) Any combination of the methods described in paragraphs (i), (ii), and
(iii).

 

(v) The Committee, in consideration of applicable accounting standards, may
waive any holding period on Shares required to tender pursuant to paragraph
(d)(ii).

 

(e) Incentive Stock Options. Incentive Stock Options granted under the Plan
shall be subject to the following additional conditions, limitations, and
restrictions:

(i) Eligibility. Incentive Stock Options may be granted only to Employees of the
Company or an Affiliate that is a subsidiary or parent corporation of the
Company, within the meaning of Section 424 of the Code.

 

(ii) Amount of Award. The aggregate Fair Market Value as of the date of grant of
the Shares with respect to which the Incentive Stock Options awarded to any
Participant first become exercisable during any calendar year may not exceed
$100,000. For purposes of this $100,000 limit, the Participant’s Incentive Stock
Options under this Plan and all other plans maintained by the Company and its
Affiliates shall be aggregated. To the extent any Incentive Stock Option would
exceed the $100,000 limit, the Incentive Stock Option shall afterwards be
treated as a Nonqualified Stock Option for all purposes.

 

(iii) Timing of Exercise. If the Committee exercises its discretion in the Award
Agreement to permit an Incentive Stock Option to be exercised by a Participant
more than three months after the Participant has ceased being an Employee (or
more than 12 months if the Participant is permanently and totally disabled,
within the meaning of Section 22(e) of the Code), the Incentive Stock Option
shall be treated as a Nonqualified Stock Option for all purposes following the
date that is three months after the Participant has ceased being an Employee.
For purposes of this paragraph (e)(iii), an Employee’s employment relationship
shall be treated as continuing intact while the Employee is on military leave,
sick leave, or another approved leave of absence if the period of leave does not
exceed 90 days, or a longer period to the extent that the Employee’s right to
reemployment with the Company or an Affiliate is guaranteed by statute or by
contract. Where the period of leave exceeds 90 days and the Employee’s right to
reemployment is not guaranteed by statute or contract, the employment
relationship shall be deemed to have ceased on the 91st day of the leave.

 
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(iv) Transfer Restrictions. In no event shall the Committee permit an Incentive
Stock Option to be transferred by a Participant other than by will or the
applicable laws of descent and distribution, and any Incentive Stock Option
awarded under this Plan shall be exercisable only by the Participant during the
Participant’s lifetime.

 

(f) Exercise of Stock Appreciation Rights. Upon exercise, Stock Appreciation
Rights may be redeemed for cash or Shares or a combination of cash and Shares,
in the discretion of the Committee, and as described in the Award Agreement.
Cash payments shall be equal to the excess of the Fair Market Value of a Share
on the date of exercise over the Exercise Price for each Share for which a Stock
Appreciation Rights was exercised. If the Stock Appreciation Right is redeemed
for Shares, the Participant shall receive a number of Shares equal to the
quotient of the cash payment amount divided by the Fair Market Value of a Share
on the date of exercise (with any fractional Shares to be treated in accordance
with Section 5.5).

(g) Certain Prohibitions. The following terms or actions shall not be permitted
with respect to any Award of Stock Options or Stock Appreciation Rights:

(i) No Repricing. Except as otherwise provided in Section 5.3, in no event shall
the Committee decrease the Exercise Price of a Stock Option or Stock
Appreciation Right after the date of grant, or cancel outstanding Stock Options
or Stock Appreciation Rights and grant replacement Stock Options or Stock
Appreciation Rights with a lower Exercise Price than that of the replaced Stock
Options or Stock Appreciation Rights or other Awards, or purchase underwater
Stock Options from a Participant for cash or replacement Awards without first
obtaining the approval of the Company’s stockholders in a manner that complies
with the rules of the New York Stock Exchange.

 

(ii) No Reload Options. The Committee shall not grant Stock Options or Stock
Appreciation Rights that have reload features under which the exercise of a
Stock Option or Stock Appreciation Right by a Participant automatically entitles
the Participant to a new Stock Option or Stock Appreciation Right.

 
4.4 Performance Awards. The Committee may grant Performance Awards to the
Eligible Individuals that the Committee may from time to time select, in the
amounts and, pursuant to the terms and conditions that the Committee may
determine and set forth in the Award Agreement, subject to the provisions below:

(a) Performance Cycles. Performance Awards shall be awarded in connection with a
Performance Cycle determined by the Committee. Performance Awards shall be based
on the performance criteria and payment formulas that the Committee, in its
discretion, may establish for these purposes. No Award shall vest until the
Committee (or a delegate of the Committee) certifies in writing the level of
attainment of the applicable performance criteria. The Committee shall also set
forth the minimum level of performance that must be attained during the
Performance Cycle before any Award shall be paid or vest, and the percentage of
the

 
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 target Award that shall be paid or vest upon attainment of various levels of
performance that equal or exceed the minimum required level.

 

(b) Increases; Reductions. The Committee, in its discretion, may, on a
case-by-case basis, reduce or increase the amount that is paid or vests pursuant
to a Performance Award.

(c) Death; Disability. Unless otherwise provided in an Award Agreement or other
individual agreement between a Participant and the Company or an Affiliate, a
Participant (or his or her beneficiaries or estate) whose services were
terminated because of death or Disability will receive a prorated portion of the
payment of his or her Performance Award, based upon the portion of the
Performance Cycle during which he or she provided services to the Company or an
Affiliate, at such time as such Performance Award is otherwise payable, but only
to the extent performance criteria for the applicable Performance Cycle are
subsequently achieved.

(d) Form of Payment. Performance Awards may be paid in cash or Shares, or a
combination of cash and Shares, in the discretion of the Committee, subject to
the terms and conditions set forth in the Award Agreement. Payment with respect
to any fractional Shares shall be determined in accordance with Section 5.5.

(e) Section 162(m). With respect to Performance Awards that are Section 162(m)
Awards, the following additional provisions will apply:

(i) The lapsing of restrictions applicable to any Section 162(m) Award and the
distribution of Shares or other property (including cash) pursuant thereto, as
applicable, shall be conditioned on the attainment of specified levels of
achievement under one or more Objective Performance Measures established by the
Committee (which for purposes of this Section 4.4(e) shall be deemed to consist
solely of those members of the Committee who qualify as “outside directors”
within the meaning of Section 162(m) of the Code).

 

(ii) Within 90 days after the commencement of the applicable Performance Cycle,
the Committee shall determine the Covered Employees who shall be eligible to
receive an Award for such Performance Cycle.

 

(iii) Within 90 days after the commencement of the applicable Performance Cycle,
the Committee shall fix and establish, in writing (A) the Objective Performance
Measures that apply to that Performance Cycle; (B) the Target Amount and the
Target Vesting Percentage for each Covered Employee; and (C) subject to Section
4.4(e)(iv), the criteria for computing the amount that shall be paid or shall
vest with respect to each level of attained performance.

 

(iv) The Committee, in its discretion, may, on a case-by-case basis, reduce (but
not increase) the amount that is paid or vests pursuant to a Section 162(m)
Award including pursuant to performance conditions that are not Objective
Performance Measures; provided, however, that no reduction shall result in

 
14

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an increase in the dollar amount or number of Shares payable to another Covered
Employee.

 

(v) No Award shall vest or be payable until the Committee certifies in writing
the level of attainment of the applicable Objective Performance Measures for the
applicable Performance Cycle.

 

(vi) Dividends or Dividend Equivalents shall not be payable unless, until, and
except to the extent that the Committee certifies in writing the level of
attainment of the applicable Objective Performance Measures for the applicable
Performance Cycle.

 

(vii) It is the intent of the Company that unless otherwise expressly stated in
an Award Agreement, Performance Awards granted to Covered Employees be Section
162(m) Awards, that this Section 4.4(e) be interpreted in a manner that
satisfies the applicable requirements of Section 162(m)(C) of the Code, and that
the Plan be operated so that the Company is eligible to take a full tax
deduction for Performance Awards. If any provision of this Plan or any
Performance Award would otherwise frustrate or conflict with this intent, the
provision shall be interpreted and deemed amended so as to avoid this conflict.
Nothing in this Section 4.4(e) is intended to limit the Committee’s discretion
to grant Performance Awards to Covered Employees that are not Section 162(m)
Awards.

 
4.5 Restricted Stock Units and Restricted Stock. The Committee may grant
Restricted Stock Units and Restricted Stock under the Plan to those Eligible
Individuals whom the Committee may from time to time select, in the amounts and
pursuant to the terms and conditions that the Committee, in its discretion, may
determine and set forth in the Award Agreement, subject to the provisions below:

(a) Grant of Restricted Stock Units. The Committee may grant Restricted Stock
Units to any Employee, which are denominated in, valued in whole or in part by
reference to, or otherwise related to, Shares. The Committee shall determine, in
its discretion, the terms and conditions that apply to Restricted Stock Units
granted pursuant to this Section 4.5, including whether and how Dividend
Equivalents shall be credited with respect to any Award. The terms and
conditions of the Restricted Stock Units shall be set forth in the applicable
Award Agreement.

(b) Grant of Restricted Stock. As soon as practicable after Restricted Stock has
been granted, certificates for all Shares of Restricted Stock shall be
registered in the name of the Participant and held for the Participant by the
Company. The Participant shall have all rights of a stockholder with respect to
the Shares, including the right to vote and to receive dividends or other
distributions, except that the Shares may be subject to a vesting schedule and
forfeiture and, except as otherwise provided in Section 7.1, may not be sold,
transferred, assigned, pledged or otherwise encumbered or disposed until the
restrictions are satisfied or lapse.

 
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(c) Dividends and Dividend Equivalents. At the discretion of the Committee and
as described in the Award Agreement, dividends issued on Shares of Restricted
Stock may be paid immediately or withheld and deferred in the Participant’s
account. In the event of a payment of dividends on Common Stock, to the extent
permissible under Section 409A of the Code, the Committee may credit Restricted
Stock Units with Dividend Equivalents. Except as otherwise described in the
Award Agreement or determined by the Committee, Dividend Equivalents may be
withheld and deferred in the Participant’s account subject to a vesting
schedule, or used to credit additional Restricted Stock Units that vest on the
same schedule and subject to any other conditions as the underlying Restricted
Stock Units. The Committee shall determine any terms and conditions on deferral
of Dividend Equivalents.

(d) Vesting and Forfeiture. The Committee may, in its discretion and as set
forth in the Award Agreement, impose any restrictions on Restricted Stock Units
and/or their related Dividend Equivalents or Restricted Stock that it deems to
be appropriate. Except as otherwise provided in an Award Agreement or other
individual agreement between a Participant and the Company or an Affiliate, the
Restricted Stock Units, related Dividend Equivalents and Restricted Stock
granted to Employees shall be subject to the following restrictions:

(i) Vesting and Forfeiture. Except for Restricted Stock Units and Restricted
Stock granted as Performance Awards and except as provided in Section 5.1(b),
restrictions on Restricted Stock Units and Restricted Stock shall vest in full
over a period of not less than three years from the date of grant. Subject to
Section 5.4, if the restrictions have not lapsed or been satisfied as of the
Participant’s Termination of Service, the Restricted Stock Units or Restricted
Stock shall be forfeited by the Participant if the termination is for any reason
other than death or Disability.

 

(ii) Death or Disability. All restrictions on Restricted Stock Units and/or
their related Dividend Equivalents or Restricted Stock granted pursuant to this
Section 4.5 shall lapse upon the Participant’s death or Termination of Service
due to Disability.

 

(iii) Legend. To enforce any restrictions that the Committee may impose on
Restricted Stock, the Committee shall cause a legend referring to the
restrictions to be placed on all certificates for Shares of Restricted Stock.
When restrictions lapse or are satisfied, a new certificate, without the legend,
for the number of Shares with respect to which restrictions have lapsed or been
satisfied shall be issued and delivered to the Participant.

 

(e) Redemption of Restricted Stock Units. Restricted Stock Units may be redeemed
for cash or whole Shares, or a combination of cash and whole Shares, in the
discretion of the Committee, when the restrictions lapse and any other
conditions set forth in the Award Agreement have been satisfied provided that
with respect to any Restricted Stock Units subject to Section 409A of the Code
such redemption shall occur in a manner that complies with Section 409A of the
Code. Each Restricted Stock Unit

 
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may be redeemed for one Share or an amount in cash equal to the Fair Market
Value of a Share as of the date on which the Restricted Stock Unit vests.

 

(f) Deferred Units. Subject to Section 7.14 and to the extent determined by the
Committee, Participants may be permitted to request the deferral of payment of
vested Restricted Stock Units (including the value of related Dividend
Equivalents) to a date later than the payment date specified in the Award
Agreement, provided that any such election be made in accordance with Section
409A of the Code. The Committee shall determine any terms and conditions on
deferral.

4.6 Other Stock-Based Awards. The Committee may, from time to time, grant Awards
(other than Stock Options, Stock Appreciation Rights, Restricted Stock Units or
Restricted Stock) to any Employee that consist of, or are denominated in,
payable in, valued in whole or in part by reference to, or otherwise related to,
Shares. These Awards may include, among other things, phantom or hypothetical
Shares. The Committee shall determine, in its discretion, the terms and
conditions that will apply to Other Stock-Based Awards granted pursuant to this
Section 4.6, including whether Dividend Equivalents will be credited with
respect to any such Award in the event of a payment of dividends on Common
Stock. The terms and conditions of Other Stock-Based Awards shall be set forth
in the applicable Award Agreement and except as otherwise provided in an Award
Agreement or other individual agreement between a Participant and the Company or
an Affiliate, the Other Stock-Based Awards granted to Participants shall be
subject to the following restrictions:

(a) Vesting. Except for Other Stock-Based Awards granted as Performance Awards
and except as provided in Section 5.1(b), Other-Stock Based Awards shall vest in
full over a period of not less than three years from the date of grant. Subject
to Section 5.4, if the restrictions on Other Stock-Based Awards have not lapsed
or been satisfied as of the Participant’s Termination of Service, the Shares
shall be forfeited by the Participant if the termination is for any reason other
than death or Disability.

(b) Death or Disability. All restrictions on Other Stock-Based Awards granted
pursuant to this Section 4.6 shall lapse upon the Participant’s death or
Termination of Service due to Disability.

4.7 Limit on Individual Grants. Subject to Section 5.3, no Participant may be
granted in any fiscal year of the Company (a) Section 162(m) Awards (other than
Non-Share-Based Awards) relating to more than 835,000 Shares (or, in the case of
such Awards that are settled in cash, the equivalent thereof in cash determined
based on the per-Share Fair Market Value as of the relevant grant date) or (b)
Section 162(m) Awards that are Non-Share-Based Awards that could result in an
aggregate payment of property other than Shares (including cash) in excess of
$5,000,000.

4.8 Limit on Individual Non-Employee Director Grants. No Non-Employee Director
may be granted Awards in any fiscal year of the Company relating to more than
20,000 Shares (or, in the case of Restricted Stock Units or Other-Stock-Based
Awards that are settled in cash, the equivalent thereof in cash determined based
on the per-Share Fair Market Value as of the relevant grant date) for service in
such capacity . The maximum amount that may be paid in any fiscal year of the
Company in property other than Shares (including cash) pursuant to
Non-Share-Based Awards to any one Non-Employee Director is $400,000.
 
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4.9 Termination for Cause. If a Participant incurs a Termination of Service for
Cause, then all outstanding Awards shall immediately be cancelled, except as
otherwise provided in an Award Agreement.

ARTICLE V
SHARES SUBJECT TO THE PLAN; ADJUSTMENTS

5.1 Shares Available. The Shares issuable under the Plan shall be authorized but
unissued Shares or Shares held in the Company’s treasury. The total number of
Shares with respect to which Awards may be issued under the Plan may equal but
may not exceed 3,350,000, subject to adjustment in accordance with Section 5.3;
provided, however, that from the aggregate limit:

(a) no more than 3,350,000 Shares may be available for grant in the form of
Incentive Stock Options; and

(b) up to, but not more than, 165,000 Shares (i.e. less than 5%) may be
available for grant in the form of Awards, other than Performance Awards and
Awards to Non-Employee Directors, that fully vest in fewer than three years; and

(c) up to 1,750,000 Shares related to Awards other than Stock Options or Stock
Appreciation Rights may be granted under the Plan on a one-for-one basis; after
the Shares related to Awards other than Stock Options and Stock Appreciation
Rights exceed 1,750,000 under the Plan, each Share subject to future Awards
other than Stock Options or Stock Appreciation Rights shall be counted as four
Shares for purposes of this Article V; provided that Awards to Non-Employee
Directors shall not count towards such limit and Shares related to such Awards
shall always be counted on a one-for-one basis.

5.2 Counting Rules.

(a) The following Shares related to Awards to be issued under this Plan may
again be available for issuance under the Plan, in addition to the Shares
described in Section 5.1:

(i) Shares related to Awards paid in cash; and

 

(ii) Shares related to Awards that expire, are forfeited or cancelled or
terminate for any other reason without issuance of Shares; and

 

(iii) Any Shares issued in connection with Awards that are assumed, converted or
substituted as a result of the acquisition of another company by the Company or
an Affiliate or a combination of the Company or an Affiliate with another
company.

 

(b) Shares described in Sections 5.2(a)(i), (ii), and (iii) shall not count
against the limits set forth in Sections 5.1(a) and (b).

 
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(c) Shares related to Awards other than Stock Options or Stock Appreciation
Rights that were originally granted on a one-for-one basis and that are again
available for issuance under the Plan under Sections 5.2(a)(i), (ii), or (iii)
may again be granted under the Plan on a one-for-one basis.

(d) For purposes of clarity, Shares that are tendered or withheld in payment of
all or part of the Exercise Price of an Award or in satisfaction of withholding
tax obligations, and Shares that are reacquired with cash tendered in payment of
the Exercise Price of an Award, shall not be reincluded in or added back to the
number of Shares available for issuance under the Plan. Upon the settlement of
any Stock Appreciation Right issued under the Plan, the gross number of Shares
used to determine the settlement value will count against the number of Shares
available for issuance under the Plan.

5.3 Adjustment Upon Certain Changes.

(a) Adjustments. In the event of any change in corporate structure affecting
outstanding Shares or the value thereof, including any dividend or distribution
(whether in cash, Shares or other property), stock split, reverse stock split,
spin-off, recapitalization, merger, reorganization, consolidation, combination
or exchange of shares or similar transaction, such adjustments and other
substitutions shall be made to the Plan and to outstanding Awards as the
Committee, in its sole discretion, deems equitable or appropriate, including
such adjustments in (i)(1) the maximum aggregate number, class and kind of
securities that may be delivered under the Plan, (2) each of the limitations set
forth in Sections 5.1(a), (b), and (c) and (3) the maximum aggregate number of
Shares with respect to which the Committee may grant Awards to any individual in
any fiscal year of the Company under Sections 4.7 and 4.8, and (ii) the number,
class, kind and Exercise Price of securities subject to outstanding Awards
granted under the Plan (including, if the Committee deems appropriate, the full
or partial substitution of similar options to purchase the shares of, or other
awards denominated in the shares of, another company).

(b) Other Changes. The Committee may make other adjustments in the terms and
conditions of Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 5.3(a))
affecting the Company, any Affiliate, or the financial statements of the Company
or any Affiliate, or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits to be
made available under the Plan.

(c) No Other Rights or Changes. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares or amount of other property

 
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subject to, or the terms related to, any Award. Except as expressly provided by
this Section 5.3, and without limiting the generality of Section 6.1, no adverse
change may be made to the terms of an Award granted to a Participant as a result
of an event described in this Section 5.3 without the consent of the
Participant.

 
5.4 Change in Control.

(a) Assumption Upon Change in Control; Accelerated Vesting Upon Certain
Termination Events. Unless otherwise provided in the Award Agreement evidencing
the applicable Award, in the event of a Change in Control, if the successor
company assumes or substitutes for an outstanding Award (or in which the Company
is the ultimate parent corporation and continues the Award), then such Award
shall be continued in accordance with its applicable terms and vesting shall not
be accelerated as described in Section 5.4(b). For the purposes of this Section
5.4(a), an Award shall be considered assumed or substituted for if, following
the Change in Control, the Award confers the right to purchase or receive, for
each Share subject to the Award immediately prior to the Change in Control, the
consideration (whether stock, cash or other securities or property) received in
the transaction constituting a Change in Control by holders of Shares for each
Share held on the effective date of such transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares); provided, however, that if
such consideration received in the transaction constituting a Change in Control
is not solely common stock of the successor company, the Committee may, with the
consent of the successor company, provide that the consideration to be received
upon the exercise or vesting of an Award, for each Share subject thereto, will
be solely common stock of the successor company or cash, in each case,
substantially equal in fair market value (determined as of the date of the
Change in Control) to the per share consideration received by holders of Shares
in the transaction constituting a Change in Control. The determination of such
substantial equality of value of consideration shall be made by the Committee in
its sole discretion and its determination shall be conclusive and binding.
Notwithstanding the foregoing, in the event of a Participant’s Termination of
Service involuntarily without Cause or voluntarily by the Participant for Good
Reason (as defined below) in such successor company within two years following
such Change in Control, the vesting of each Award held by such Participant at
the time of the Change in Control shall be accelerated as described in Section
5.4(b) at such time. Notwithstanding the foregoing, no Award shall be assumed or
substituted pursuant to this Section 5.4(a) to the extent such action would
cause an Award not otherwise “deferred compensation” within the meaning of
Section 409A of the Code to become “deferred compensation” within the meaning of
Section 409A of the Code.

(b) Acceleration Vesting Upon Change in Control. In the event of a Change in
Control after the date of the adoption of the Plan, unless provision is made in
connection with the Change in Control for the assumption, substitution or
continuation of an outstanding Award in accordance with Section 5.4(a), then the
vesting of such Award shall accelerate and all restrictions shall lapse as of
immediately prior to the Change in Control, and (i) in the case of an
outstanding Stock Option or Stock Appreciation

 
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(b) Right, such Award shall be exercisable as of immediately prior to such
Change in Control, or (ii) in the case of an Award other than a Stock Option or
a Stock Appreciation Right, such Award shall be settled or otherwise paid to the
applicable Participant as soon as practicable following such vesting. For
purposes of determining vesting and payment under this Section 5.4(b), all
performance criteria, including Objective Performance Measures, shall be deemed
achieved at the greater of (i) target levels of achievement and (ii) actual
levels of achievement determined by the Committee in its sole discretion as of
the date of the Change in Control. Notwithstanding any provision of this Section
5.4(b), unless otherwise provided in the applicable Award Agreement, if any
amount payable pursuant to an Award constitutes deferred compensation within the
meaning of Section 409A of the Code, in the event of a Change in Control that
does not qualify as an event described in Section 409A(a)(2)(A)(v) of the Code,
such Award (and any other Awards that constitute deferred compensation that
vested prior to the date of such Change in Control but are outstanding as of
such date) shall vest and cease to be forfeitable but shall not be settled until
the earliest permissible payment event under Section 409A of the Code following
such Change in Control. Notwithstanding any other provision of the Plan, the
Committee, in its discretion, may determine that, upon the occurrence of a
Change in Control, (i) each Stock Option and Stock Appreciation Right
outstanding shall terminate within a specified number of days after notice to
the Participant, and such Participant shall receive, with respect to each Share
subject to such Stock Option or Stock Appreciation Right, an amount equal to the
excess of the fair market value (as determined by the Committee, in its
discretion, in a manner that complies with Section 409A of the Code) of such
Share immediately prior to the occurrence of such Change in Control over the
Exercise Price, as applicable, per Share of such Stock Option and/or Stock
Appreciation Right; such amount to be payable in cash, in one or more kinds of
stock or property (including the stock or property, if any, payable in the
transaction) or in a combination thereof, as the Committee, in its discretion,
shall determine and (ii) each Stock Option and Stock Appreciation Right
outstanding at such time with an Exercise Price per Share that exceeds the fair
market value (as determined by the Committee, in its discretion, in a manner
that complies with Section 409A of the Code) of such Share immediately prior to
the occurrence of such Change in Control shall be canceled for no consideration.

 

(c) Definition of Good Reason. For purposes of this Section 5.4, with respect to
the Termination of Service of any Participant, “Good Reason” has the meaning
assigned to such term in any written individual agreement between the Company or
an Affiliate and the Participant in which such term is defined and in the
absence of any such written agreement, has the meaning assigned to such term in
any severance plan of the Company or an Affiliate, in each case, that is
applicable to such Participant, in each case, as of immediately prior to the
Change in Control (but assuming that a Change in Control has occurred for
purposes of such agreement or plan).

5.5 Fractional Shares. No fractional Shares shall be issued under the Plan, and
unless the Committee determines otherwise, an amount in cash equal to the Fair
Market Value of any fractional Shares that would otherwise be issuable shall be
paid in lieu of such fractional Shares. The
 
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Committee may, in its sole discretion, cancel, terminate, otherwise eliminate or
transfer or pay other securities or other property in lieu of issuing any
fractional Shares.

ARTICLE VI
AMENDMENT AND TERMINATION

6.1 Amendment. The Plan may be amended at any time and from time to time by the
Board without the approval of stockholders of the Company, except that no
revision to the terms of the Plan shall be effective until the amendment is
approved by the stockholders of the Company if such approval is required by the
rules of the New York Stock Exchange or such amendment materially increases the
number of Shares that may be issued under the Plan (other than an increase
pursuant to Section 5.3 of the Plan). No amendment of the Plan made without the
Participant’s written consent may adversely affect any right of a Participant
with respect to an outstanding Award unless such amendment is necessary to
comply with applicable law. The Plan may not be amended in any manner adverse to
the interests of Participants during a Potential Change in Control Period or the
two-year period following a Change in Control, unless such amendment is
necessary to comply with applicable law.

6.2 Termination. The Plan shall terminate upon the tenth anniversary of the
Effective Date or, if earlier, upon the adoption of a resolution of the Board
terminating the Plan.

No Awards shall be granted under the Plan after it has terminated. The
termination of the Plan, however, shall not alter or impair any of the rights or
obligations of any Participant without such Participant’s written consent under
any Award previously granted under the Plan. After the termination of the Plan,
any previously granted Awards shall remain in effect and shall continue to be
governed by the terms of the Plan and the applicable Award Agreement.

ARTICLE VII
GENERAL PROVISIONS

7.1 Nontransferability of Awards. No Award under the Plan shall be subject in
any manner to alienation, anticipation, sale, assignment, pledge, encumbrance or
transfer, and no other persons shall otherwise acquire any rights therein,
except as provided below.

(a) Any Award may be transferred by will or by the applicable laws of descent or
distribution.

(b) The Committee may provide in the applicable Award Agreement that all or any
part of an Award (other than an Incentive Stock Option) may, subject to the
prior written consent of the Committee, be transferred to one or more of the
following classes of donees: a family member; a trust for the benefit of a
family member; a limited partnership whose partners are solely family members;
or any other legal entity set up for the benefit of family members. For purposes
of this Section 7.1(b), a family member means a Participant and/or the
Participant’s spouse, children, grandchildren, parents, grandparents, siblings,
nieces, nephews and grandnieces and grandnephews, including adopted, in-laws and
step family members.

 
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(c) Except as otherwise provided in the applicable Award Agreement, any
Nonqualified Stock Option or Stock Appreciation Right transferred by a
Participant pursuant to Section 7.1(b) may be exercised by the transferee only
to the extent that the Award would have been exercisable by the Participant had
no transfer occurred. Any transferred Award shall be subject to all of the same
terms and conditions as provided in the Plan and in the applicable Award
Agreement. The Participant or the Participant’s estate shall remain liable for
any withholding tax that may be imposed by any federal, state or local tax
authority, and the transfer of Shares upon exercise of the Award shall be
conditioned on the payment of any withholding tax. The Committee may, in its
discretion, disallow all or a part of any transfer of an Award pursuant to
Section 7.1(b) unless and until the Participant makes arrangements satisfactory
to the Committee for the payment of any withholding tax. The Participant must
immediately notify the Committee, in the form and manner required by the
Committee, of any proposed transfer of an Award pursuant to Section 7.1(b). No
transfer shall be effective until the Committee consents to the transfer in
writing.

(d) Unless otherwise restricted by Company policy for Reporting Persons,
Restricted Stock may be freely transferred after the restrictions lapse or are
satisfied and the Shares are delivered; provided, however, that Restricted Stock
awarded to an affiliate of the Company may be transferred only pursuant to Rule
144 under the 1933 Act, or pursuant to an effective registration for resale
under the 1933 Act. For purposes of this Section 7.1(d), “affiliate” shall have
the meaning assigned to that term under Rule 144.

(e) In no event may a Participant transfer an Incentive Stock Option other than
by will or the applicable laws of descent and distribution.

7.2 Withholding of Taxes.

(a) Stock Options and Stock Appreciation Rights. Subject to Section 7.2(d), as a
condition to the delivery of Shares pursuant to the exercise of a Stock Option
or Stock Appreciation Right, the Committee may require that the Participant, at
the time of exercise, pay to the Company by cash, certified check, bank draft,
wire transfer or postal or express money order an amount sufficient to satisfy
any applicable tax withholding obligations, as calculated at the applicable
minimum statutory rate. The Committee may also, in its discretion, accept
payment of tax withholding obligations through any of the Exercise Price payment
methods described in Section 4.3(d).

(b) Other Awards Payable in Shares. Subject to Section 7.2(d), the Company shall
satisfy a Participant’s tax withholding obligations, calculated at the
applicable minimum statutory rate, arising in connection with the release of
restrictions on Restricted Stock Units, Restricted Stock, Performance Awards
payable in Shares, and Other Stock-Based Awards by withholding Shares that would
otherwise be available for delivery. The Company may also allow the Participant
to satisfy the Participant’s tax withholding obligations by payment to the
Company in cash or by certified check, bank draft, wire transfer, or postal or
express money order.

 
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(c) Cash Awards. The Company shall satisfy a Participant’s tax withholding
obligation arising in connection with the payment of any Award in cash by
withholding cash from such payment.

(d) Withholding Amount. The Committee, in consideration of applicable accounting
standards, has full discretion to either (i) allow Participants to elect, or
(ii) otherwise direct as a general rule, to have the Company withhold Shares for
taxes at an amount greater than the applicable minimum statutory amount.

7.3 Forfeiture Provisions. The Committee may, in its discretion, provide in an
Award Agreement that an Award granted thereunder shall be canceled if the
Participant, without the consent of the Company, while employed by or providing
services to the Company or any Affiliate or after termination of such employment
or service, (a) violates a non-competition, non-solicitation or non-disclosure
covenant or agreement, (b) otherwise engages in activity that is in conflict
with or adverse to the interest of the Company or any Affiliate, including fraud
or conduct contributing to any financial restatements or irregularities, as
determined by the Committee in its sole discretion or (c) to the extent
applicable to the Participant, otherwise violates any policy adopted by the
Company or any Affiliate relating to the recovery of compensation granted, paid,
delivered, awarded or otherwise provided to any Participant by the Company or
any Affiliate as such policy is in effect on the date of grant of the applicable
Award or, to the extent necessary to address the requirements of applicable law
(including Section 954 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, as codified in Section 10D of the Exchange Act, Section
304 of the Sarbanes-Oxley Act of 2002 or any other applicable law), as may be
amended from time to time. The Committee may also provide in an Award Agreement
that (i) a Participant will forfeit any gain realized on the vesting or exercise
of such Award if the Participant engages in any activity referred to in the
preceding sentence, or (ii) a Participant must repay the gain to the Company
realized under a previously paid Performance Award if a financial restatement
reduces the amount that would have been earned under such Award. Notwithstanding
the foregoing, none of the non-disclosure restrictions in this Section 7.3 or in
any Award Agreement shall, or shall be interpreted to, impair the Participant
from exercising any legally protected whistleblower rights (including under Rule
21F under the Exchange Act).

7.4 Code Section 83(b) Elections. The Company, the Affiliates, and the Committee
have no responsibility for a Participant’s election, attempt to elect or failure
to elect to include the value of an Award of Restricted Stock or other Award
subject to Section 83 of the Code in the Participant’s gross income for the year
of grant pursuant to Section 83(b) of the Code. Any Participant who makes an
election pursuant to Section 83(b) of the Code shall promptly provide the
Committee with a copy of the election form.

7.5 No Implied Rights. The establishment and operation of the Plan, including
the eligibility of a Participant to participate in the Plan, shall not be
construed as conferring any legal or other right upon any Participant for the
continuation of service through the end of any vesting period, Performance
Cycle, or other period. The Company and the Affiliates expressly reserve the
right, which may be exercised at any time and in the Company’s or an Affiliate’s
sole discretion, to discharge any individual or treat him or her without regard
to the effect that discharge might have upon him or her as a Participant in the
Plan. There is no obligation for uniformity of treatment of Participants or
holders or beneficiaries of Awards. The terms and conditions of Awards and the
 
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Committee’s determinations and interpretations with respect thereto need not be
the same with respect to each Participant and may be made selectively among
Participants, whether or not such Participants are similarly situated.
 
7.6 No Obligation to Exercise Awards; No Right to Notice of Expiration Date. The
grant of a Stock Option or Stock Appreciation Right shall impose no obligation
upon the Participant to exercise the Award. The Company, the Affiliates, and the
Committee have no obligation to inform a Participant of the date on which a
Stock Option or Stock Appreciation Right lapses except in the Award Agreement.

7.7 No Rights as Stockholders. A Participant granted an Award under the Plan
shall have no rights as a stockholder of the Company with respect to the Award
unless and until certificates for the Shares underlying the Award are registered
in the Participant’s name and delivered to the Participant. The right of any
Participant to receive an Award by virtue of participation in the Plan shall be
no greater than the right of any unsecured general creditor of the Company.

7.8 Indemnification of Committee. The Company shall indemnify, to the fullest
extent permitted by law, each person made or threatened to be made a party to
any civil or criminal action or proceeding by reason of the fact that the
person, or the executor or administrator of the person’s estate, is or was a
member of the Committee or a delegate of the Committee.

7.9 No Required Segregation of Assets. Neither the Company nor any Affiliate
shall be required to segregate any assets that may at any time be represented by
Awards granted pursuant to the Plan.

7.10 Nature of Payments. All Awards made pursuant to the Plan are in
consideration of services for the Company or an Affiliate. Any gain realized
pursuant to Awards under the Plan constitutes a special incentive payment to the
Participant and shall not be taken into account as compensation for purposes of
any other employee benefit plan of the Company or any Affiliate, except as the
employee benefit plan otherwise provides. The adoption of the Plan shall have no
effect on Awards made or to be made under any other benefit plan covering an
employee of the Company or an Affiliate or any predecessor or successor of the
Company or an Affiliate.

7.11 Awards in Foreign Countries. The Committee has the authority to grant
Awards to Employees who are foreign nationals or employed outside the United
States on any different terms and conditions than those specified in the Plan
that the Committee, in its discretion, believes to be necessary or desirable to
accommodate differences in applicable law, tax policy, or custom, while
furthering the purposes of the Plan. The Committee may also approve any
supplements to the Plan or alternative versions of the Plan as it believes to be
necessary or appropriate for these purposes without altering the terms of the
Plan in effect for other Participants; provided, however, that the Committee may
not make any supplemental or alternative version that (a) increases limitations
contained in Section 4.3(e), Section 4.7 and Section 4.8, (b) increases the
number of Shares available under the Plan, as set forth in Section 5.1; (c)
causes the Plan to cease to satisfy any conditions under Rule 16b-3 under the
Exchange Act or (d) otherwise contains terms that would require approval by the
stockholders of the Company under the rules of the New York Stock Exchange.
 
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7.12 Securities Matters.

(a) The Company shall be under no obligation to effect the registration pursuant
to the 1933 Act of any Shares to be issued hereunder or to effect similar
compliance under any state laws. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any certificates evidencing Shares pursuant to the Plan unless and until the
Company is advised by its counsel that the issuance and delivery of such
certificates is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities exchange on which
Shares are traded. The Committee may require, as a condition to the issuance and
delivery of certificates evidencing Shares pursuant to the terms hereof, that
the recipient of such Shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee
deems necessary or desirable.

(b) The exercise of any Award granted hereunder shall only be effective at such
time as counsel to the Company shall have determined that the issuance and
delivery of Shares pursuant to such exercise is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
any securities exchange on which Shares are traded. The Company may, in its sole
discretion, defer the effectiveness of an exercise of an Award hereunder or the
issuance or transfer of Shares pursuant to any Award pending or to ensure
compliance under federal or state securities laws. The Company shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Award or the issuance or transfer of Shares pursuant to any
Award. During the period that the effectiveness of the exercise of an Award has
been deferred, the Participant may, by written notice, withdraw such exercise
and obtain the refund of any amount paid with respect thereto.

7.13 Governing Law; Severability. The Plan and all determinations made and
actions taken under the Plan shall be governed by the internal substantive laws,
and not the choice of law rules, of the State of Delaware and construed
accordingly, to the extent not superseded by applicable U.S. federal law. If any
provision of the Plan is held unlawful or otherwise invalid or unenforceable in
whole or in part, the unlawfulness, invalidity or unenforceability shall not
affect any other parts of the Plan, which shall remain in full force and effect.

7.14 Section 409A of the Code. With respect to Awards subject to Section 409A of
the Code, this Plan is intended to comply with the requirements of such Section,
and the provisions hereof shall be interpreted in a manner that satisfies the
requirements of such Section, and the Plan shall be operated accordingly. If any
provision of this Plan or any term or condition of any Award would otherwise
frustrate or conflict with this intent, the provision, term or condition shall
be interpreted and deemed amended so as to avoid this conflict. Any reservation
of rights or discretion by the Company or the Committee hereunder affecting the
timing of payment of any Award subject to Section 409A of the Code shall only be
as broad as is permitted by Section 409A of the Code.

7.15 Payments to Specified Employees. Notwithstanding anything herein or in any
Award Agreement to the contrary, if a Participant is a “specified employee”
(within the meaning of Section 409A(2)(B) of the Code) as of the date of such
Participant’s separation from service (as determined
 
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pursuant to Section 409A of the Code), any Awards subject to Section 409A of the
Code payable to such Participant as a result of his or her separation from
service, shall be paid on the first business day following the six-month
anniversary of the date of the separation from service, or, if earlier, the date
of the Participant’s death.

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