Exhibit 10.1

 

SCIENTIFIC GAMES CORPORATION

 

2003 Incentive Compensation Plan

As Amended and Restated

 

1.                                       Purpose. The purpose of this 2003
Incentive Compensation Plan, as amended and restated (the “Plan”), is to assist
Scientific Games Corporation, a Delaware corporation (the “Company”), and its
subsidiaries in attracting, retaining, motivating and rewarding executives,
directors, employees, and other persons who provide services to the Company
and/or its subsidiaries, to provide for equitable and competitive compensation
opportunities, to encourage long-term service, to recognize individual
contributions and reward achievement of Company goals, and promote the creation
of long-term value for stockholders by closely aligning the interests of
participants with those of stockholders. The Plan authorizes stock-based and
cash-based performance incentives for participants, to encourage such persons to
expend their maximum efforts in the creation of stockholder value. The Plan is
also intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Internal Revenue Code to the extent
deemed appropriate by the Committee which administers the Plan.

 

2.                                       Definitions. For purposes of the Plan,
the following terms shall be defined as set forth below, in addition to such
terms defined in Section 1 hereof:

 

(a)                                  “Annual Incentive Award” means a type of
Performance Award granted to a Participant under Section 7(c) representing a
conditional right to receive cash, Stock or other Awards or payments, as
determined by the Committee, based on performance in a performance period of one
fiscal year or a portion thereof.

 

(b)                                 “Annual Limit” means a Participant’s annual
limit on each type of Award authorized under the Plan, as specified in
Section 5(b).

 

(c)                                  “Award” means any award of an Option, SAR
(including Limited SAR), Restricted Stock, Deferred Stock, Stock granted as a
bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based Award,
or Performance Award (including an Annual Incentive Award) together with any
other right or interest granted to a Participant under the Plan.

 

(d)                                 “Beneficiary” means the person, persons,
trust, or trusts which have been designated by a Participant in his or her most
recent written beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant’s death to the extent
permitted under Section 10(b) hereof. If, upon a Participant’s death, there is
no designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means person, persons, trust, or trusts entitled by will or the laws
of descent and distribution to receive such benefits.

 

(e)                                  “Beneficial Owner” shall have the meaning
ascribed to such term in Rule 13d-3 under the Exchange Act and any successor to
such Rule.

 

(f)                                    “Board” means the Company’s Board of
Directors.

 

(g)                                 “Change in Control” means Change in Control
as defined with related terms in Section 9 of the Plan.

 

(h)                                 “Change in Control Price” means the amount
calculated in accordance with Section 9(c) of the Plan.

 

(i)                                     “Code” means the Internal Revenue Code
of 1986, as amended from time to time, including regulations thereunder and
successor provisions and regulations, proposed regulations and other applicable
guidance or pronouncement of the Department of the Treasury and Internal Revenue
Service.

 

1

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

 

(j)                                     “Committee” means the Compensation
Committee of the Board of Directors, the composition and governance of which is
established in the Committee’s Charter as approved from time to time by the
Board and other corporate governance documents of the Company. No action of the
Committee shall be void or deemed to be without authority due to the failure of
any member, at the time the action was taken, to meet any qualification standard
set forth in the Committee Charter or this Plan.

 

(k)                                  “Covered Employee” means a person
designated by the Committee as likely to be a “covered employee,” as defined
under Code Section 162(m), with respect to a specified fiscal year or other
performance period.

 

(l)                                     “Deferred Stock” means a conditional
right, granted to a Participant under Section 6(e) hereof, to receive Stock, at
the end of a specified deferral period.

 

(m)                               “Dividend Equivalent” means a conditional
right, granted to a Participant under Section 6(g), to receive cash, Stock,
other Awards, or other property equal in value to dividends paid with respect to
a specified number of shares of Stock.

 

(n)                                 “Effective Date” means June 23, 2003.

 

(o)                                 “Eligible Person” means each executive
officer and other officer or full-time employee of the Company or of any
subsidiary, including each such person who may also be a director of the
Company, each non-employee director of the Company, each other person who
provides substantial services to the Company and/or its subsidiaries and who is
designated as eligible by the Committee, and any person who has been offered
employment by the Company or a subsidiary or affiliate, provided that such
prospective employee may not receive any payment or exercise any right relating
to an Award until such person has commenced employment with the Company or a
subsidiary. An employee on leave of absence may be considered as still in the
employ of the Company or a subsidiary for purposes of eligibility for
participation in the Plan.

 

(p)                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended from time to time, including rules thereunder and
successor provisions and rules thereto.

 

(q)                                 “Fair Market Value” means the fair market
value of Stock, Awards, or other property as determined in good faith by the
Committee or under procedures established by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of Stock shall be the average
of the high and low sales prices of Stock on a given date or, if there are no
sales on that date, on the latest previous date on which there were sales,
reported for composite transactions in securities listed on the principal
trading market on which Stock is then listed. Fair Market Value relating to the
exercise price or grant price of any Non-409A Option or SAR shall conform to
requirements under Code Section 409A.

 

(r)                                    “409A Awards” means Awards that
constitute a deferral of compensation under Code Section 409A and regulations
thereunder. “Non-409A Awards” means Awards other than 409A Awards; an Award
granted before January 1, 2005 which is eligible for “grandfathering” under Code
Section 409A (generally such an Award must be vested before January 1, 2005 in
order to be grandfathered) constitutes a Non-409A Award unless the Committee
instead designates it as a 409A Award. Although the Committee retains authority
under the Plan to grant Options, SARs and Restricted Stock on terms that will
qualify those Awards as 409A Awards, Options, SARs, and Restricted Stock will be
Non-409A Awards (with conforming terms, as provided in Section 10(h)) unless
otherwise expressly specified by the Committee.

 

(s)                                  “Incentive Stock Option” or “ISO” means any
Option intended to be and designated as an incentive stock option within the
meaning of Code Section 422 or any successor provision thereto that may be
granted to Eligible Persons who are employees.

 

(t)                                    “Initial Shares” has the meaning ascribed
to such term in Section 4(a) of the Plan.

 

(u)                                 “Limited SAR” means a conditional right
granted to a Participant under Section 6(c) hereof.

 

2

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

 

(v)                                 “Mafco” means each of MacAndrews & Forbes
Holdings Inc., Ronald O. Perelman (or any of his Permitted Transferees) or any
of their respective affiliates.

 

(w)                               “Option” means a conditional right, granted to
a Participant under Section 6(b) hereof, to purchase Stock or other Awards at a
specified price during specified time periods.

 

(x)                                   “Other Stock-Based Awards” means Awards
granted to a Participant under Section 6(h) hereof.

 

(y)                                 “Participant” means a person who has been
granted an Award under the Plan which remains outstanding, including a person
who is no longer an Eligible Person.

 

(z)                                   “Performance Award” means a conditional
right, granted to a Participant under Section 7, to receive cash, Stock or other
Awards or payments, as determined by the Committee, based upon performance
criteria specified by the Committee.

 

(aa)                            “Permitted Transferees” means, with respect to
any person that is a natural person (and any Permitted Transferee of such
person), (a) such person’s immediate family, including his or her spouse,
ex-spouse, children, step-children and their respective lineal descendants and
(b) any trust or other legal entity the beneficiary of which is such person’s
immediate family, including his or her spouse, ex-spouse, children, stepchildren
or their respective lineal descendants and which is controlled by such person.

 

(bb)                          “Preexisting Plan” mean the Company’s 1997
Incentive Compensation Plan, as amended and restated.

 

(cc)                            “Restricted Stock” means Stock granted to a
Participant under Section 6(d) hereof, that is subject to certain restrictions
and to a risk of forfeiture.

 

(dd)                          “Rule 16b-3” means Rule 16b-3, as from time to
time in effect and applicable to the Plan and Participants, promulgated by the
Securities and Exchange Commission under Section 16 of the Exchange Act.

 

(ee)                            “Stock” means the Company’s Class A Common
Stock, $.01 par value, and such other securities as may be substituted (or
resubstituted) for Stock pursuant to Section 10(c) hereof.

 

(ff)                                “Stock Appreciation Rights” or “SAR” means a
conditional right granted to a Participant under Section 6(c) hereof.

 

3.                                       Administration.

 

(a)                                  Authority of the Committee. Except as
otherwise provided below, the Plan shall be administered by the Committee. The
Committee shall have full and final authority, in each case subject to and
consistent with the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number, and other terms and
conditions of, and all other matters relating to, Awards, prescribe Award
agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan
and Award agreements and correct defects, supply omissions, or reconcile
inconsistencies therein, and to make all other decisions and determinations as
the Committee may deem necessary or advisable for the administration of the
Plan. The foregoing notwithstanding, the Board shall perform the functions of
the Committee for purposes of granting Awards under the Plan to non-employee
directors, and may perform any function of the Committee under the Plan for any
other purpose (subject to Nasdaq Listing Rule 5635(c)), including for the
purpose of ensuring that transactions under the Plan by Participants who are
then subject to Section 16 of the Exchange Act in respect of the Company are
exempt under Rule 16b-3. In any case in which the Board is performing a function
of the Committee under the Plan, each reference to the Committee herein shall be
deemed to refer to the Board, except where the context otherwise requires. Any
action of the Committee shall be final, conclusive and binding on all persons,
including the Company, its subsidiaries, Participants, Beneficiaries,
transferees under Section 10(b) hereof, or other persons claiming rights from or
through a Participant, and stockholders.

 

3

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

 

(b)                                 Manner of Exercise of Committee Authority.
The Committee may act through subcommittees, including for purposes of
perfecting exemptions under Rule 16b-3 or qualifying Awards under Code
Section 162(m) as performance-based compensation, in which case the subcommittee
shall be subject to and have authority under the charter applicable to the
Committee, and the acts of the subcommittee shall be deemed to be acts of the
Committee hereunder. The Committee may otherwise act with members of the
Committee abstaining or recusing themselves to ensure compliance with regulatory
requirements or to promote effective governance, as determined by the Committee.
The express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or
authority of the Committee. The Committee may delegate to officers or managers
of the Company or any subsidiary or affiliate, or committees thereof, the
authority, subject to such terms as the Committee shall determine, to perform
such functions, including administrative functions, as the Committee may
determine, to the fullest extent permitted under Section 157 and other
applicable provisions of the Delaware General Corporation Law. The Committee may
appoint agents to assist it in administering the Plan.

 

(c)                                  Limitation of Liability. The Committee and
each member thereof, and any person acting pursuant to authority delegated by
the Committee, shall be entitled, in good faith, to rely or act upon any report
or other information furnished by any executive officer, other officer or
employee of the Company or a subsidiary or affiliate, the Company’s independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee, any person acting pursuant to authority
delegated by the Committee, and any officer or employee of the Company or a
subsidiary or affiliate acting at the direction or on behalf of the Committee or
a delegee shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.

 

4.                                       Shares Available Under the Plan.

 

(a)                                  Number of Shares Available for Delivery.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be 13,500,000 plus the number of shares that, under the
Preexisting Plan, were available at the Effective Date or thereafter have or
will become available. Any shares of Stock delivered under the Plan shall
consist of authorized and unissued shares or treasury shares.

 

(b)                                 Share Counting Rules. Subject to the
provisions of this Section 4(b), the Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards) and make adjustments if the
number of shares of Stock actually delivered differs from the number of shares
previously counted in connection with an Award. Any shares which are
(i) underlying an Option or SAR which is cancelled or terminated without having
been exercised, including due to expiration or forfeiture, (ii) subject to an
Award (other than an Option or SAR) which is cancelled, terminated or forfeited,
(iii) not delivered to a Participant because all or a portion of the Award is
settled in cash, (iv) withheld upon exercise of an Option to satisfy the
exercise price (including the Option shares equal to the number of shares
separately surrendered to pay the exercise price), (v) subject to an SAR but in
excess of the number of shares actually delivered to the Participant upon
exercise of the SAR, or (vi) withheld in connection with an Award to satisfy tax
withholding obligations, shall in each case again be available for Awards under
the Plan. Shares repurchased on the open market with the proceeds from the
exercise of an Option may not again be made available for Awards under the Plan.
For purposes of determining the number of Shares that become available under the
Preexisting Plan, the share counting rules of this Plan shall apply. The payment
of cash dividends and Dividend Equivalents in conjunction with outstanding
Awards shall not be counted against the shares available for Awards under the
Plan. In addition, in the case of any Award granted in substitution for an award
of a company or business acquired by the Company or a subsidiary or affiliate,
shares issued or issuable in connection with such substitute Award shall not be
counted against the number of shares reserved under the Plan, but shall be
available under the Plan by virtue of the Company’s assumption of

 

4

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

 

the plan or arrangement of the acquired company or business. This
Section 4(b) shall apply to the number of shares reserved and available for ISOs
only to the extent consistent with applicable regulations relating to ISOs under
the Code. This Section 4(b) will apply to Awards and awards outstanding, and
transactions and events relating to Awards and awards, on and after June 7,
2011; with regard to transactions and events relating to Awards and awards
before June 7, 2011, the share counting rules in the 2003 Plan as then in effect
applied. Because shares will count against the number reserved in
Section 4(a) upon delivery (or later vesting) and subject to the share counting
rules under this Section 4(b), the Committee may determine that Awards may be
outstanding that relate to more shares than the aggregate remaining available
under the Plan, so long as Awards will not result in delivery and vesting of
shares in excess of the number then available under the Plan.

 

5.                                       Eligibility; Per-Person Award
Limitations.

 

(a)                                  Grants to Eligible Persons. Awards may be
granted under the Plan only to Eligible Persons.

 

(b)                                 Annual Per-Person Award Limitations. In each
calendar year during any part of which the Plan is in effect, an Eligible Person
may be granted Awards under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g),
and 6(h) (including Performance Awards under Section 7 based on Awards
authorized by each referenced subsection) relating to a number of shares of
Stock up to his or her Annual Limit. A Participant’s Annual Limit, in any year
during any part of which the Participant is then eligible under the Plan, shall
equal 1,500,000 shares plus the amount of the Participant’s unused Annual Limit
relating to the same type of Award as of the close of the previous year, subject
to adjustment as provided in Section 10(c). In the case of a cash-denominated
Award for which the limitation set forth in the preceding sentence would not
operate as an effective limitation satisfying Treasury Regulation
§ 1.162-27(e)(4) (including a cash Performance Award under Section 7), an
Eligible Person may not be granted Awards authorizing the earning during any
calendar year of an amount that exceeds the Participant’s Annual Limit, which
for this purpose shall equal $3,000,000 plus the amount of the Participant’s
unused cash Annual Limit as of the close of the previous year (this limitation
is separate and not affected by the number of Awards granted during such
calendar year subject to the limitation in the preceding sentence). For this
purpose, (i) “earning” means satisfying performance conditions so that an amount
becomes payable, without regard to whether it is to be paid currently or on a
deferred basis or continues to be subject to any service requirement or other
non-performance condition, and (ii) a Participant’s Annual Limit is used to the
extent a cash amount or number of shares may be potentially earned or paid under
an Award, regardless of whether such amount or shares are in fact earned or
paid.

 

6.                                       Specific Terms of Awards.

 

(a)                                  General. Awards may be granted on the terms
and conditions set forth in this Section 6. In addition, the Committee may
impose on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Sections 10(e) and 10(h)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee shall retain full power
and discretion to accelerate, waive or modify, at any time, any term or
condition of an Award that is not mandatory under the Plan, subject to
Section 10(h) and the rules thereunder. The Committee shall require the payment
of lawful consideration for an Award to the extent necessary to satisfy the
requirements of the Delaware General Corporation Law, and may otherwise require
payment of consideration for an Award except as limited by the Plan.

 

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

 

(i)                                     Exercise Price. The exercise price per
share of Stock purchasable under an Option shall be determined by the Committee,
provided that such exercise price shall be not less than the Fair Market

 

5

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

 

Value of a share of Stock on the date of grant of such Option except as provided
under Section 8(a) hereof. In addition, in connection with a merger,
consolidation or reorganization of the Company or any of its subsidiaries, the
Committee may grant Options with an exercise price per share less than the
market value of the Common Stock on the date of grant if such Options are
granted in exchange for, or upon conversion of, options to purchase capital
stock of any other entity which is a party to such merger, consolidation or
reorganization, and such Option so granted does not enlarge the aggregate
in-the-money value of the original award at the acquisition date.

 

(ii)                                  Time and Method of Exercise. The Committee
shall determine the term of the Option, subject to Section 8(b), and the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment (subject to
Section 10(h) and (i)), including, without limitation, cash, Stock (including
Stock deliverable upon exercise, if such withholding will not result in
additional accounting expense to the Company), other Awards or awards granted
under other plans of the Company or any subsidiary or affiliate, or other
property (including through broker- assisted “cashless exercise” arrangements,
to the extent permitted by applicable law), and the methods by or forms in which
Stock will be delivered or deemed to be delivered in satisfaction of Options to
Participants (including, to the extent permitted under Code Section 409A,
deferred delivery of shares as mandated by the Committee, with such deferred
shares subject to any vesting, forfeiture or other terms as the Committee may
specify).

 

(iii)                               ISOs. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions of Code Section 422.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to ISOs (including any SAR in tandem therewith) shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be exercised, so as to disqualify either the Plan or any ISO under Code
Section 422, unless the Participant has first consented to the change that will
result in such disqualification. ISOs may be granted only to employees of the
Company or any of its subsidiaries. To the extent that the aggregate Fair Market
Value (determined as of the time the Option is granted) of the Stock with
respect to which ISOs granted under this Plan and all other plans of the Company
and any subsidiary are first exercisable by any employee during any calendar
year shall exceed the maximum limit (currently, $100,000), if any, imposed from
time to time under Code Section 422, such Options shall be treated as Options
that are not ISOs.

 

(c)                                  Stock Appreciation Rights. The Committee is
authorized to grant SARs to Participants on the following terms and conditions:

 

(i)                                     Right to Payment. A SAR shall confer on
the Participant to whom it is granted a right to receive, upon exercise thereof,
the excess of (A) the Fair Market Value of one share of Stock on the date of
exercise (or, in the case of a “Limited SAR,” the Fair Market Value determined
by reference to the Change in Control Price, as defined under
Section 9(c) hereof) over (B) the grant price of the SAR as determined by the
Committee, which grant price shall be not less than the Fair Market Value of a
share of Stock on the date of grant of such SAR.

 

(ii)                                  Other Terms. The Committee shall
determine, at the date of grant or thereafter, the term of each SAR, subject to
Section 8(b), the time or times at which and the circumstances under which an
SAR may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the method of exercise,
method of settlement, form of consideration payable in settlement, method by or
forms in which Stock will be delivered or deemed to be delivered to
Participants, whether or not an SAR shall be in tandem or in combination with
any other Award, whether or not the SAR will be a 409A Award or Non-409A Award,
and any other terms and conditions of any SAR. Limited SARs that may only be
exercised in connection with a Change in Control, termination of service
following a Change in Control, or other event as specified by the

 

6

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

 

Committee may be granted on such terms, not inconsistent with this Section 6(c),
as the Committee may determine. SARs and Limited SARs may be either freestanding
or in tandem with other Awards. The Committee may require that an outstanding
Option be exchanged for an SAR exercisable for Stock having vesting, expiration,
and other terms substantially the same as the Option, so long as such exchange
will not result in additional accounting expense to the Company.

 

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

 

(i)                                     Grant and Restrictions. Restricted Stock
shall be subject to such restrictions on transferability, risk of forfeiture and
other restrictions, if any, as the Committee may impose, which restrictions may
lapse separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service
requirements), in such installments or otherwise, as the Committee may determine
at the date of grant or thereafter. Except to the extent restricted under the
terms of the Plan and any Award agreement relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). During the restricted period applicable
to the Restricted Stock, subject to Section 10(b) below, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined, or otherwise
encumbered by the Participant.

 

(ii)                                  Forfeiture. Except as otherwise determined
by the Committee, upon termination of employment during the applicable
restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; 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 shall 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 Participant, the Committee may require that such certificates bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, and/or that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.

 

(iv)                              Dividends and Splits. As a condition to the
grant of an Award of Restricted Stock, the Committee may require that any cash
dividends paid on a share of Restricted Stock be automatically reinvested in
additional shares of Restricted Stock or applied to the purchase of additional
Awards under the Plan. Unless otherwise determined by the Committee, 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)                                  Deferred Stock. The Committee is authorized
to grant Deferred Stock to Participants, which are rights to receive Stock at
the end of a specified deferral period, subject to the following terms and
conditions:

 

(i)                                     Award and Restrictions. Settlement of an
Award of Deferred Stock shall occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee (or, if permitted by the
Committee, as elected by the Participant). In addition, Deferred Stock shall be
subject to such restrictions (which may include a risk of forfeiture) as the
Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including

 

7

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

 

based on achievement of performance goals and/or future service requirements),
separately or in combination, in installments or otherwise, as the Committee may
determine.

 

(ii)                                  Forfeiture. Except as otherwise determined
by the Committee, upon termination of employment during the applicable deferral
period or portion thereof to which forfeiture conditions apply (as provided in
the Award agreement evidencing the Deferred Stock), all Deferred Stock that is
at that time subject to deferral (other than a deferral at the election of the
Participant) 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 Deferred Stock
shall 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 Deferred Stock. Deferred Stock subject to a risk of forfeiture
may be called “restricted stock units” or otherwise designated by the Committee.

 

(iii)                               Dividend Equivalents. Unless otherwise
determined by the Committee at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of Deferred Stock shall
be either (A) paid with respect to such Deferred Stock at the dividend payment
date in cash or in shares of unrestricted Stock having a Fair Market Value equal
to the amount of such dividends, or (B) deferred with respect to such Deferred
Stock and the amount or value thereof automatically deemed reinvested in
additional Deferred Stock, other Awards or other investment vehicles, as the
Committee shall determine or permit the Participant to elect.

 

(f)                                    Bonus Stock and Awards in Lieu of
Obligations. The Committee is authorized to grant Stock as a bonus, or to grant
Stock or other Awards in lieu of obligations of the Company or a subsidiary or
affiliate to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, subject to such terms as shall be determined
by the Committee.

 

(g)                                 Dividend Equivalents. The Committee is
authorized to grant Dividend Equivalents to a Participant, entitling the
Participant to receive cash, Stock, other Awards, or other property equivalent
to all or a portion of the 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. The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment vehicles, and
subject to restrictions on transferability, risks of forfeiture and such other
terms as the Committee may specify. The foregoing notwithstanding, (i) dividends
and dividend equivalents will not be credited or payable with respect to an
Option or SAR, except that this provision will not limit adjustments authorized
under Section 10(c); and (ii) Dividend Equivalents relating to a Performance
Awards at minimum shall be forfeitable to the extent the related Performance
Award remains forfeitable upon failure to achieve the specified performance
conditions.

 

(h)                                 Other Stock-Based Awards. The Committee is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee to be consistent with the purposes of the Plan,
including, without limitation, convertible or exchangeable debt securities,
other rights convertible or exchangeable into Stock, purchase rights for Stock,
Awards with value and payment contingent upon performance of the Company or any
other factors designated by the Committee, and Awards valued by reference to the
book value of Stock or the value of securities of or the performance of
specified subsidiaries. The Committee shall determine the terms and conditions
of such Awards. Stock delivered pursuant to an Award in the nature of a purchase
right granted under this Section 6(h) shall be purchased for such consideration,
paid for at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine.

 

8

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

 

7.                                      Performance Awards, Including Annual
Incentive Awards

 

(a)                                 Performance Awards Generally. The Committee
is authorized to grant Performance Awards on the terms and conditions specified
in this Section 7. Performance Awards may be denominated as a cash amount,
number of shares of Stock, or specified number of other Awards (or a
combination) which may be earned upon achievement or satisfaction of performance
conditions specified by the Committee. In addition, the Committee may specify
that any other Award shall constitute a Performance Award by conditioning the
right of a Participant to exercise the Award or have it settled, or the timing
thereof, upon achievement or satisfaction of such performance conditions as may
be specified by the Committee. The Committee may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce or increase
the amounts payable under any Award subject to performance conditions, except
(i) as limited under Sections 7(b) and 7(c) in the case of a Performance Award
intended to qualify as “performance-based compensation” under Code Section
162(m); and (ii), in the case of any Performance Award denominated in shares at
the grant date (i.e., an Award classified as equity under Financial Accounting
Standards Board (FASB) Accounting Standards Codification 718 (“FASB ASC Topic
718”)), no discretion to reduce or increase the amounts payable (except as
provided under Section 10(c)) shall be reserved unless such reservation of
discretion is expressly stated by the Committee at the time it acts to authorize
or approve the grant of such Performance Award.

 

(b)                                 Performance Awards Granted to Covered
Employees. If the Committee determines that a Performance Award to be granted to
an Eligible Person who is designated by the Committee as a Covered Employee
should qualify as “performance-based compensation” for purposes of Code Section
162(m), the grant, exercise and/or settlement of such Performance Award shall be
contingent upon achievement of a preestablished performance goal and other terms
set forth in this Section 7(b).

 

(i)                                     Performance Goals Generally. The
performance goal for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent with this
Section 7(b). The performance goal shall be objective and shall otherwise meet
the requirements of Code Section 162(m) and regulations thereunder (including
Treasury Regulation § 1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the Committee
result in the achievement of performance goals being “substantially uncertain.”
The Committee may determine that such Performance Awards shall be granted,
exercised and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise and/or settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or to different
Participants.

 

(ii)                                  Business Criteria. One or more of the
following business criteria for the Company, on a consolidated basis, and/or for
specified subsidiaries or affiliates or other business units or lines of
business or specific products of the Company (on an audited or unaudited basis)
shall be used by the Committee in establishing performance goals for such
Performance Awards: (1) earnings per share (basic or fully diluted); (2)
revenues; (3) earnings, before or after taxes, from operations (generally or
specified operations), before or after interest expense, depreciation,
amortization, incentives, or extraordinary or special items; (4) cash flow, free
cash flow, cash flow return on investment (discounted or otherwise), net cash
provided by operations, or cash flow in excess of cost of capital; (5) return on
net assets, return on assets, return on investment, return on capital, return on
equity; (6) economic value created; (7) operating margin or operating expense;
(8) net income; (9) Stock price or total stockholder return; and (10) strategic
business criteria, consisting of one or more objectives based on meeting
specified market penetration, geographic business expansion goals, new products,
ventures or facilities, cost targets, internal controls, compliance, customer
satisfaction and services, human resources management, supervision of litigation
and information technology, and

 

9

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

 

goals relating to acquisitions or divestitures of subsidiaries, affiliates,
joint ventures or facilities. The targeted level or levels of performance with
respect to such business criteria may be established at such levels and in such
terms as the Committee may determine, in its discretion, including in absolute
terms, as a goal relative to performance in prior periods, or as a goal compared
to the performance of one or more comparable companies or an index covering
multiple companies.

 

(iii)                               Performance Period; Timing for Establishing
Performance Goals; Per-Person Limit. Achievement of performance goals in respect
of such Performance Awards shall be measured over a performance period of up to
one year or more than one year, as specified by the Committee. A performance
goal shall be established not later than the earlier of (A) 90 days after the
beginning of any performance period applicable to such Performance Award or (B)
the time 25% of such performance period has elapsed. In all cases, the maximum
Performance Award of any Participant shall be subject to the limitation set
forth in Section 5(b).

 

(iv)                              Performance Award Pool. The Committee may
establish a Performance Award pool, which shall be an unfunded pool, for
purposes of measuring performance of the Company or a business unit in
connection with Performance Awards. The amount of such Performance Award pool
shall be based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in Section 7(b)(ii) during the given
performance period, as specified by the Committee in accordance with Section
7(b)(i). The Committee may specify the amount of the Performance Award pool as a
percentage of any of such business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria.

 

(v)                                 Settlement of Performance Awards; Other
Terms. Settlement of such Performance Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee. The Committee may,
in its discretion, and subject to Section 7(a) hereof, increase or reduce the
amount of a settlement otherwise to be made in connection with such Performance
Awards, but may not exercise discretion to increase any such amount payable to a
Covered Employee in respect of a Performance Award subject to this Section 7(b)
to the extent that such discretion would increase the amount payable above that
amount designated as potentially payable upon achievement of the performance
goal intended to qualify the Award as “performance-based compensation” under
Code Section 162(m). Any settlement which changes the form of payment from that
originally specified shall be implemented in a manner such that the Performance
Award and other related Awards do not, solely for that reason, fail to qualify
as “performance-based compensation” for purposes of Code Section 162(m). The
Committee shall specify the circumstances in which such Performance Awards shall
be paid or forfeited in the event of termination of employment by the
Participant or other event (including a Change in Control) prior to the end of a
performance period or settlement of such Performance Awards; any resulting
payments need not qualify as performance-based compensation under Section 162(m)
if the authorization of such non-qualifying payments would not otherwise
disqualify the Performance Award apart from the termination or change in
control.

 

(c)                                  Annual Incentive Awards Granted to
Designated Covered Employees. The Committee may grant a Performance Award in the
form of an Annual Incentive Award to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee. Such Annual Incentive Award will
be intended to qualify as “performance-based compensation” for purposes of Code
Section 162(m), and therefore its grant, exercise and/or settlement shall be
contingent upon achievement of preestablished performance goals and shall comply
with the other requirements set forth in Section 7(b).

 

(d)                                 Written Determinations. Determinations by
the Committee as to the establishment of performance goals, the amount
potentially payable in respect of Performance Awards, the level of actual
achievement of the specified performance goals relating to Performance Awards
and the amount of any final Performance Award shall be recorded in writing in
the case of Performance Awards intended to

 

10

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

 

qualify under Section 162(m). Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under Section 162(m),
prior to settlement of each such Award granted to a Covered Employee, that the
performance objective relating to the Performance Award and other material terms
of the Award upon which settlement of the Award was conditioned have been
satisfied.

 

8.                                      Certain Provisions Applicable to Awards.

 

(a)                                 Stand-Alone, Additional, Tandem, and
Substitute Awards. Subject to the restrictions on “repricing” set forth in
Section 10(e), Awards granted under the Plan may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any subsidiary or affiliate, or any business entity to be
acquired by the Company or a subsidiary or affiliate, or any other right of a
Participant to receive payment from the Company or any subsidiary or affiliate;
provided, however, that a 409A Award may not be granted in tandem with a
Non-409A Award. Awards granted in addition to or in tandem with other Awards or
awards may be granted either as of the same time as or a different time from the
grant of such other Awards or awards.

 

(b)                                 Term of Awards. The term of each Award shall
be for such period as may be determined by the Committee; provided that in no
event shall the term of any Option or SAR exceed a period of ten years (or, in
the case of an ISO, such shorter term as may be required under Code Section
422).

 

(c)                                  Form and Timing of Payment under Awards;
Deferrals. Subject to the terms of the Plan (including Sections 10(h) and (i))
and any applicable Award agreement, payments to be made by the Company or a
subsidiary upon the exercise of an Option or other Award or settlement of an
Award may be made in cash, Stock, other Awards, or other property, and may be
made in a single payment or transfer, in installments, or on a deferred basis.
The settlement of any Award may be accelerated in the discretion of the
Committee or upon occurrence of one or more specified events (in addition to a
Change in Control, subject to Sections 10(h) and (i)). Installment or deferred
payments may be required by the Committee (subject to Sections 10(e) and 10(h)
of the Plan, including the consent provisions thereof in the case of any
deferral of an outstanding Award not provided for in the original Award
agreement) or permitted at the election of the Participant on terms and
conditions established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of reasonable interest on
installment or deferred payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment or deferred payments
denominated in Stock. Any payment deferred pursuant to this Section 8(c) shall
represent only an unfunded, unsecured promise by the Company to pay the amount
credited thereto to the Participant in the future. In the case of any 409A Award
that is vested and no longer subject to a risk of forfeiture (within the meaning
of Code Section 83) and deferred at the election of the Participant, such Award
will be distributed to the Participant, upon application of the Participant, if
the Participant has had an unforeseeable emergency within the meaning of Code
Sections 409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), in accordance with Section
409A(a)(2)(B)(ii).

 

(d)                                 Additional Award Forfeiture Provisions. The
Committee may condition a Participant’s right to receive a grant of an Award, to
exercise the Award, to retain Stock acquired in connection with an Award, or to
retain the profit or gain realized by a Participant in connection with an Award,
including cash received upon sale of Stock acquired in connection with an Award,
upon compliance by the Participant with specified conditions relating to
non-competition, confidentiality of information relating to the Company,
non-solicitation of customers, suppliers, and employees of the Company,
cooperation in litigation, non-disparagement of the Company and its officers,
directors and affiliates, and other restrictions upon or covenants of the
Participant, including during specified periods following termination of
employment or service to the Company.

 

(e)                                  Exemptions from Section 16(b) Liability.
With respect to a Participant who is then subject to the reporting requirements
of Section 16(a) of the Exchange Act in respect of the Company, the Committee
shall implement transactions under the Plan and administer the Plan in a manner
that will ensure that each

 

11

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

 

transaction with respect to such a Participant is exempt from liability under
Rule 16b-3 or otherwise not subject to liability under Section 16(b), except
that this provision shall not limit sales by such a Participant, and such a
Participant may elect to engage in other non-exempt transactions under the Plan.
The Committee may authorize the Company to repurchase any Award or shares of
Stock deliverable or delivered in connection with any Award (subject to Section
10(i)) in order to avoid a Participant who is subject to Section 16 of the
Exchange Act incurring liability under Section 16(b). Unless otherwise specified
by the Participant, equity securities or derivative securities acquired under
the Plan which are disposed of by a Participant shall be deemed to be disposed
of in the order acquired by the Participant.

 

(f)                                   Prohibition on Loans. No term of an Award
shall provide for a personal loan to a Participant.

 

9.                                      Change in Control.

 

(a)                                 Effect of “Change in Control.” In the event
of a “Change in Control,” the following provisions shall apply unless otherwise
provided in the Award agreement:

 

(i)                                     Any Award carrying a right to exercise
that was not previously exercisable and vested shall become fully exercisable
and vested as of the time of the Change in Control;

 

(ii)                                  If any optionee holds an Option
immediately prior to a Change in Control that was not previously exercisable and
vested in full throughout the 60-day period preceding the Change in Control, he
shall be entitled to elect, during the 60-day period following the Change in
Control, in lieu of acquiring the shares of Stock covered by the portion of the
Option that was not vested and exercisable within such 60-day period, to
receive, and the Company shall be obligated to pay, in cash the excess of the
Change in Control Price over the exercise price of such Option, multiplied by
the number of shares of Stock covered by such portion of the Option;

 

(iii)                               The restrictions, deferral of settlement,
and forfeiture conditions applicable to any other Award granted under the Plan
shall lapse and such Awards shall be deemed fully vested as of the time of the
Change in Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 10(a) hereof; and

 

(iv)                              With respect to any outstanding Award subject
to achievement of performance goals and conditions under the Plan, such
performance goals and other conditions will be deemed to be met if and to the
extent so provided by the Committee in the Award agreement relating to such
Award.

 

The foregoing notwithstanding, any benefit or right provided under this Section
9 in the case of any non-409A Award shall be limited to those benefits and
rights permitted under Code Section 409A, and any benefit or right provided
under this Section 9 that would result in a distribution of a 409A Award at a
time or in a manner not permitted by Section 409A shall be limited to the extent
necessary so that the distribution is permitted under Section 409A. For this
purpose, the distribution of a 409A Award (i) triggered by a Change in Control
will remain authorized if the Change in Control also constitutes a change in the
ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, within the meaning of Code
Section 409A(a)(2)(A)(v), and (ii) triggered by a termination of employment with
or service to the Company or a subsidiary following a Change in Control by a
specified employee, within the meaning of Code Section 409A(a)(2)(B)(i), will
remain authorized to occur six months after such termination.

 

(b)                                 Definition of “Change in Control.” A “Change
in Control” shall mean the occurrence of any of the following:

 

(i)                                     when any “person” as defined in Section
3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) of the Exchange Act but
excluding the Company and any subsidiary and any employee benefit plan sponsored
or maintained by the Company or any subsidiary (including any trustee of such
plan acting as trustee), directly or indirectly, becomes the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange

 

12

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

 

Act) of securities of the Company representing at least 40% (or such greater
percentage as the Committee may specify in connection with the grant of any
Award) of the combined voting power of the Company’s then-outstanding
securities; provided, however, that a Change in Control shall not be deemed to
have occurred under this Section 9(b)(i) if Mafco, directly or indirectly,
becomes the “beneficial owner” of securities of the Company representing 40% or
more of the combined voting power of the Company’s then-outstanding securities;
or

 

(ii)                                  the occurrence of a transaction requiring
stockholder approval for the acquisition of the Company by an entity other than
the Company or a subsidiary by merger or otherwise or for the purchase by an
entity other than the Company or a subsidiary of substantially all of the assets
of the Company;

 

provided, however, that, for an Award granted before June 7, 2011, unless
otherwise provided in an applicable Award agreement, the definition of Change in
Control that will apply will be that definition in effect at the time of grant
of such Award.

 

(c)                                  Definition of “Change in Control Price.”
The “Change in Control Price” means (i), in the case of an Option or SAR
(including any Limited SAR) granted in 2005 or thereafter, or granted before
2005 but not “grandfathered” under Code Section 409A, the Fair Market Value of a
share on the date of exercise of such Option or SAR; and (ii), in the case of an
Option or SAR “grandfathered” under Code Section 409A, an amount in cash equal
to the higher of (A) the amount of cash and fair market value of property that
is the highest price per share paid (including extraordinary dividends) in any
transaction triggering the Change in Control, or (B) the highest Fair Market
Value per share at any time during the 60-day period preceding the Change in
Control.

 

10.                               General Provisions.

 

(a)                                 Compliance with Legal and Other
Requirements. The Company may, to the extent deemed necessary or advisable by
the Committee and subject to Section 10(h), postpone the issuance or delivery of
Stock or payment of other benefits under any Award until completion of such
registration or qualification of such Stock or other required action under any
federal or state law, rule, or regulation, listing or other required action with
respect to any stock exchange or automated quotation system upon which the Stock
or other securities of the Company are listed or quoted, or compliance with any
other obligation of the Company, as the Committee may consider appropriate, and
may require any Participant to make such representations, furnish such
information and comply with or be subject to such other conditions as it may
consider appropriate in connection with the issuance or delivery of Stock or
payment of other benefits in compliance with applicable laws, rules, and
regulations, listing requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change in Control, the Company shall take
or cause to be taken no action, and shall undertake or permit to arise no legal
or contractual obligation, that results or would result in any postponement of
the issuance or delivery of Stock or payment of benefits under any Award or the
imposition of any other conditions on such issuance, delivery or payment, to the
extent that such postponement or other condition would represent a greater
burden on a Participant than existed on the 90th day preceding the Change in
Control.

 

(b)                                 Limits on Transferability; Beneficiaries. No
Award or other right or interest of a Participant under the Plan shall be
pledged, hypothecated or otherwise encumbered or subject to any lien, obligation
or liability of such Participant to any party, or assigned or transferred by
such Participant otherwise than by will or the laws of descent and distribution
or to a Beneficiary upon the death of a Participant, and such Awards or rights
that may be exercisable shall be exercised during the lifetime of the
Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs and SARs in
tandem therewith) may be transferred for estate planning purposes to one or more
Beneficiaries or other transferees during the lifetime of the Participant, and
may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent such transfers are permitted by the Committee
pursuant to the express terms of an Award agreement (subject to any terms

 

13

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

 

and conditions which the Committee may impose thereon). A Beneficiary,
transferee, or other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and any
Award agreement applicable to such Participant, except as otherwise determined
by the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.

 

(c)                                  Adjustments. In the event that any large
and non-recurring dividend or other distribution (whether in the form of cash or
property other than Stock), recapitalization, forward or reverse split, Stock
dividend, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, liquidation, dissolution or other similar corporate
transaction or event affects the Stock such that an adjustment is determined by
the Committee to be appropriate or, in the case of any outstanding Award,
necessary in order to prevent dilution or enlargement of the rights of the
Participant, then the Committee shall, in such equitable manner as it may
determine, adjust any or all of (A) the number and kind of shares of Stock which
may be delivered in connection with Awards granted thereafter, (B) the number
and kind of shares of Stock by which annual per-person Award limitations are
measured under Section 5(b), (C) the number and kind of shares of Stock subject
to or deliverable in respect of outstanding Awards and (D) the exercise price,
grant price or purchase price relating to any Award or, if deemed appropriate,
the Committee may make provision for a payment of cash or property to the holder
of an outstanding Option (subject to Sections 10(h) and (i)). In furtherance of
the foregoing, a Participant who has a legally binding right to compensation
under an outstanding Award shall have a legal right to an adjustment to such
Award if the Award constitutes a “share-based payment arrangement” and there
occurs an “equity restructuring” as such terms are defined under FASB ASC Topic
718. In addition, the Committee is authorized to make adjustments in the terms
and conditions of, and the criteria included in, Awards (including Performance
Awards and performance goals and any hypothetical funding pool relating thereto)
in recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence, as well as acquisitions and
dispositions of businesses and assets) affecting the Company, any subsidiary or
affiliate or other business unit, or the financial statements of the Company or
any subsidiary or affiliate, or in response to changes in applicable laws,
regulations, accounting principles, tax rates and regulations or business
conditions or in view of the Committee’s assessment of the business strategy of
the Company, any subsidiary or affiliate or business unit thereof, performance
of comparable organizations, economic and business conditions, personal
performance of a Participant, and any other circumstances deemed relevant;
provided that no such adjustment shall be authorized or made if and to the
extent that the existence of such authority (A) would cause Options, SARs, or
Performance Awards granted under Section 7 to Participants designated by the
Committee as Covered Employees and intended to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder to otherwise
fail to qualify as “performance-based compensation” under Code Section 162(m)
and regulations thereunder, or (B) would cause the Committee to be deemed to
have authority to change the targets, within the meaning of Treasury Regulation
§ 1.162-27(e)(4)(vi), under the performance goals relating to Options or SARs
granted to Covered Employees and intended to qualify as “performance- based
compensation” under Code Section 162(m) and regulations thereunder; and provided
further, that adjustments to Non-409A Awards will be made only to the extent
permitted under 409A.

 

(d)                                 Taxes. The Company and any subsidiary 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 payroll or other
payment to a Participant, amounts of withholding and other taxes due or
potentially payable in connection with any Award, and to take such other action
as the Committee may deem advisable to enable the Company and Participants 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 Participant’s tax obligations, either on a
mandatory or elective basis, in the discretion of the Committee, or in
satisfaction of other tax obligations if such withholding will not result in
additional accounting expense to the Company. Other provisions of the Plan
notwithstanding, only the minimum amount of Stock deliverable in

 

14

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

 

connection with an Award necessary to satisfy statutory withholding requirements
will be withheld, unless withholding of any additional amount of Stock will not
result in additional accounting expense to the Company.

 

(e)                                  Changes to the Plan and Awards. The Board
may amend, alter, suspend, discontinue, or terminate the Plan or the Committee’s
authority to grant Awards under the Plan without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company’s stockholders not later than the annual
meeting the record date for which is at or following the date of such Board
action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights
of such Participant under any previously granted and outstanding Award. (For
this purpose, actions that alter the timing of federal income taxation of a
Participant will not be deemed material unless such action results in an income
tax penalty on the Participant.) The Committee may waive any conditions or
rights under, or amend, alter, suspend, discontinue, or terminate any Award
theretofore granted and any Award agreement relating thereto; provided that the
Committee shall have no authority to waive or modify any Award term after the
Award has been granted to the extent the waived or modified term would be
mandatory under the Plan for any Award newly granted at the date of the waiver
or modification; and provided further, that, without the consent of an affected
Participant, no such Committee action may materially and adversely affect the
rights of such Participant under such Award. Without the prior approval of
stockholders, the Committee will not amend or replace previously granted Options
in a transaction that constitutes a “repricing.” For this purpose, a “repricing”
means: (1) amending the terms of an Option or SAR after it is granted to lower
its exercise price, except pursuant to Section 10(c) hereof; (2) any other
action that is treated as a repricing under generally accepted accounting
principles; and (3) repurchasing for cash or canceling an Option or SAR at a
time when its exercise or grant price is equal to or greater than the fair
market value of the underlying Stock, in exchange for another Option, Restricted
Stock, or other equity, unless the cancellation and exchange occurs in
connection with a merger, acquisition, spin-off or other similar corporate
transaction. A cancellation and exchange described in clause (3) of the
preceding sentence will be considered a repricing regardless of whether the
Option, Restricted Stock or other equity is delivered simultaneously with the
cancellation, regardless of whether it is treated as a repricing under generally
accepted accounting principles, and regardless of whether it is voluntary on the
part of the Option holder.

 

(f)                                   Limitation on Rights Conferred under Plan.
Neither the Plan nor any action taken hereunder shall be construed as (i) giving
any Eligible Person or Participant the right to continue as an Eligible Person
or Participant or in the employ or service of the Company or a subsidiary, (ii)
interfering in any way with the right of the Company or a subsidiary to
terminate any Eligible Person’s or Participant’s employment or service at any
time, (iii) giving an Eligible Person or Participant any claim to be granted any
Award under the Plan or to be treated uniformly with other Participants and
employees, or (iv) conferring on a Participant any of the rights of a
stockholder of the Company unless and until the Participant is duly issued or
transferred shares of Stock in accordance with the terms of an Award.

 

(g)                                  Unfunded Status of Awards; Creation of
Trusts. The Plan is intended to constitute an “unfunded” plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant or obligation to deliver Stock pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Participant any rights
that are greater than those of a general creditor of the Company; provided that
the Committee may authorize the creation of trusts and deposit therein cash,
Stock, other Awards or other property, or make other arrangements to meet the
Company’s obligations under the Plan. Such trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Committee otherwise
determines with the consent of each affected Participant. The trustee of such
trusts may be authorized to dispose of trust assets and reinvest the proceeds in
alternative

 

15

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

 

investments, subject to such terms and conditions as the Committee may specify
and in accordance with applicable law.

 

(h)                                 Certain Limitations on Awards to Ensure
Compliance with Section 409A. For purposes of this Plan, references to an Award
term or event (including any authority or right of the Company or a Participant)
being “permitted” under Section 409A mean, for a 409A Award, that the term or
event will not cause the Participant to be liable for payment of interest or a
tax penalty under Section 409A and, for a Non-409A Award, that the term or event
will not cause the Award to be treated as subject to Section 409A. Other
provisions of the Plan notwithstanding, the terms of any 409A Award and any
Non-409A Award, including any authority of the Company and rights of the
Participant with respect to the Award, shall be limited to those terms permitted
under Section 409A, and any terms not permitted under Section 409A shall be
automatically modified and limited to the extent necessary to conform with
Section 409A. For this purpose, other provisions of the Plan notwithstanding,
the Company shall have no authority to accelerate distributions relating to 409A
Awards in excess of the authority permitted under Section 409A, any distribution
subject to Section 409A(a)(2)(A)(i) (separation from service) to a “specified
employee” as defined under Section 409A(a)(2)(B)(i), shall not occur earlier
than the earliest time permitted under Section 409A(a)(2)(B)(i), and any
authorization of payment of cash to settle a Non-409A Award shall apply only to
the extent permitted under Section 409A for such Award. Non-409A Awards that are
“grandfathered” under Section 409A and that, but for such grandfathered status,
would be deemed 409A Awards shall be subject to the terms and conditions of the
Plan as amended and restated as of May 5, 2005 other than Sections 6(b)(ii) and
6(c)(ii), provided that if any provision adopted by amendment to the Plan or an
Award Agreement after October 3, 2004, would constitute a material modification
of a grandfathered Non-409A Award, such provision will not be effective as to
such Award unless so stated by the Committee in writing with specific reference
to this provision of Section 10(h). To further ensure compliance with the
requirements of Code Section 409A, Awards other than grandfathered Awards shall
be subject to the Company’s Section 409A Compliance Rules.

 

(i)                                     Certain Limitations Relating to
Accounting Treatment of Awards. At any time that the Company is accounting for
Awards that constitute “share-based payment arrangements” under FASB ASC Topic
718, the Company intends that, with respect to such Awards, the compensation
measurement date for accounting purposes shall occur at the inception of the
arrangement, unless the Committee specifically determines otherwise. Therefore,
other provisions of the Plan notwithstanding, in order to preserve this
fundamental objective of the Plan, if any authority granted to the Committee
hereunder or any provision of the Plan or an Award agreement would result, under
FASB ASC Topic 718, in an Award inadvertently being classified as a “liability”
or a measurement date other than the date of inception of the arrangement, if
the Committee was not specifically aware of such accounting consequence at the
time such Award was approved, such authority shall be limited and such provision
shall be automatically modified and reformed to the extent necessary to preserve
the accounting treatment of the award intended by the Committee, subject to
Section 10(e) of the Plan. This provision shall cease to be effective if and at
such time as the Company is no longer account for equity compensation under FASB
ASC Topic 718.

 

(j)                                    Nonexclusivity of the Plan. Neither the
adoption of the Plan by the Board nor its submission to the stockholders of the
Company for approval shall be construed as creating any limitations on the power
of the Board or a committee thereof to adopt such other incentive arrangements
as it may deem desirable including incentive arrangements and awards which do
not qualify under Code Section 162(m).

 

(k)                                 Payments in the Event of Forfeitures;
Fractional Shares. Unless otherwise determined by the Committee, in the event of
a forfeiture of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. 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.

 

16

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

 

(l)                                     Awards to Participants Outside the
United States. The Committee may modify the terms of any Award under the Plan
made to or held by a Participant who is then resident or primarily employed
outside of the United States in any manner deemed by the Committee to be
necessary or appropriate in order that such Award shall conform to laws,
regulations, and customs of the country in which the Participant is then
resident or primarily employed, or so that the value and other benefits of the
Award to the Participant, as affected by foreign tax laws and other restrictions
applicable as a result of the Participant’s residence or employment abroad shall
be comparable to the value of such an Award to a Participant who is resident or
primarily employed in the United States. An Award may be modified under this
Section 10(l) in a manner that is inconsistent with the express terms of the
Plan, so long as such modifications will not contravene any applicable law or
regulation or result in actual liability under Section 16(b) for the Participant
whose Award is modified.

 

(m)                             Governing Law. The validity, construction and
effect of the Plan, any rules and regulations under the Plan, and any Award
agreement shall be determined in accordance with the Delaware General
Corporation Law, the contract and other laws of the State of New York without
giving effect to principles of conflicts of laws, and applicable federal law.

 

(n)                                 Preexisting Plan. Upon stockholder approval
of the Plan as of the Effective Date, no further grants of Awards will be made
under the Preexisting Plan.

 

(o)                                 Authorization of Option Exchange. At June 7,
2011, the Company’s stockholders approved the authorization of a
“value-for-value” exchange of certain outstanding Options for Deferred Stock.
Such approval met the requirements of Section 10(e) of the Plan (relating to
“repricing” transactions). Any Option exchange implemented under this
authorization must be commenced prior to the Company’s Annual Meeting of
Stockholders in 2012, and must conform to the terms of the option exchange as
described in the Company’s Proxy Statement dated April 25, 2011 (subject to any
permitted modifications as described in such Proxy Statement).      

 

(p)                                 Plan Effective Date and Termination. The
Plan was adopted by the Board of Directors on April 24, 2003 and became
effective upon its approval by the Company’s stockholders on the Effective Date.
The Plan was amended and restated upon its approval by the Company’s
stockholders on each of June 14, 2005, June 10, 2008, June 17, 2009 and June 7,
2011. Unless earlier terminated by action of the Board of Directors, the Plan
will remain in effect until such time as no Stock remains available for delivery
under the Plan and the Company has no further rights or obligations under the
Plan with respect to outstanding Awards under the Plan; provided, however, that
no new Awards may be granted more then ten years after the date of the latest
approval of the Plan by stockholders of the Company.

 

17

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