EXHIBIT 10.07
KEY EMPLOYEE LONG TERM INCENTIVE PLAN
ARTICLE I
Purpose
     The purpose of this Key Employee Long Term Incentive Plan (the “Plan") is
to enable Kellogg Company (the “Company") to offer key employees of the Company
and Designated Subsidiaries (defined below) performance-based stock incentives
and other equity interests in the Company and other incentive awards, thereby
attracting, retaining and rewarding such key employees, and strengthening the
mutuality of interests between key employees and the Company’s shareholders.
ARTICLE II
Definitions
     For purposes of this Plan, the following terms shall have the following
meanings:
     2.1 “Award” shall mean any award under this Plan of any Stock Option,
Reload Option, Restricted Stock, Performance Shares, Performance Units or Other
Stock-Based Award.
     2.2 “Board” shall mean the Board of Directors of the Company.
     2.3 “Code” shall mean the Internal Revenue Code of 1986, as amended.
     2.4 “Committee” shall mean the Compensation Committee of the Board
consisting of three or more Directors, none of whom shall be eligible to receive
any Award pursuant to this Plan.
     2.5 “Common Stock” means the Common Stock, $0.25 par value per share, of
the Company.
     2.6 “Designated Subsidiary” shall mean one of such subsidiaries of the
Company, 80 percent or more of the voting capital stock of which is owned,
directly or indirectly, by the Company, which is designated from time to time by
the Board.
     2.7 “Disability” shall mean Total Disability as defined in the Company’s
Long Term Disability Plan.
     2.8 “Disinterested Person” shall have the meaning set forth in
Rule 16b-3(d)(3) as promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, or any successor definition adopted by the
Commission.
     2.9 “Fair Market Value” for purposes of this Plan, unless otherwise
required by any applicable provision of the Code or any regulations issued
thereunder, shall mean, with respect to any date, the officially quoted closing
price of the Common Stock on the

 

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New York Stock Exchange—Composite Transactions Tape on such date, provided that
if there shall be no sales of a share of Common Stock reported on such date, the
Fair Market Value of the Common Stock on such date shall be deemed to be the
officially quoted closing price of the Common Stock on such Composite Tape for
the last preceding date on which sales of Common Stock were reported.
     2.10 “Incentive Stock Option” shall mean any Stock Option awarded under
this Plan intended to be and designated as an “Incentive Stock Option” within
the meaning of Section 422 of the Code.
     2.11 “Non-Qualified Stock Option” shall mean any Stock Option awarded under
this Plan that is not an Incentive Stock Option.
     2.12 “Other Stock-Based Award” shall mean an Award under Article 11 of this
Plan that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock.
     2.13 “Participant” shall mean an employee to whom an Award has been made
pursuant to this Plan.
     2.14 “Performance Cycle” shall have the meaning set forth in Section 10.1.
     2.15 “Performance Period” shall have the meaning set forth in Section 9.1.
     2.16 “Performance Share” shall mean an Award made pursuant to Article 9 of
this Plan of the right to receive Common Stock or cash of an equivalent value at
the end of a specified performance period.
     2.17 “Performance Unit” shall mean an Award made pursuant to Article 10 of
this Plan of the right to receive a fixed dollar amount, payable in cash or
Common Stock or a combination of both.
     2.18 “Reload Option” shall have the meaning set forth in Section 6.5.
     2.19 “Restricted Stock” shall mean an Award of shares of Common Stock under
this Plan that is subject to restrictions under Article 7.
     2.20 “Restriction Period” shall have the meaning set forth in Subsection
7.3(a).
     2.21 “Retirement” shall mean termination of employment by an employee who
is at least 55 years of age after at least 5 years of employment by the Company
and/or a Designated Subsidiary.
     2.22 “Stock Option” or “Option” shall mean any option to purchase shares of
Common Stock (including Restricted Stock and Performance Share, if the Committee
so determines) granted pursuant to Article 6.

 

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     2.23 “Termination of employment” shall mean a termination of service for
reasons other than a military or personal leave of absence granted by the
Company.
     2.24 “Withholding Election” shall have the meaning set forth in
Section 13.4.
ARTICLE III
Administration
     3.1 The Committee. The Plan shall be administered and interpreted by the
Committee.
     3.2 Awards. The Committee shall have full authority to grant, pursuant to
the terms of this Plan, to officers and other key employees eligible under
Article 5: (i) Stock Options, (ii) Restricted Stock, (iii) Performance Shares,
(iv) Performance Units, and (v) Other Stock-Based Awards. In particular, the
Committee shall have the authority:
     (a) to select the officers and other key employees of the Company to whom
Stock Options, Restricted Stock, Performance Shares, Performance Units and Other
Stock-Based Awards may from time to time be granted hereunder;
     (b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Restricted Stock, Performance Shares, Performance
Units and Other Stock-Based Awards, or any combination thereof, are to be
granted hereunder to one or more eligible employees; provided, however, that the
maximum number of Incentive Stock Options, Non-Qualified Stock Options,
Restricted Stock, Performance Shares, Performance Units, and Other Stock-Based
Awards that may be granted to any one individual in any fiscal year shall not
exceed, individually or in the aggregate, Awards to purchase or receive more
than one million (1,000,000) shares of common stock;
     (c) to determine the number of shares of Common Stock to be covered by each
such Award granted hereunder;
     (d) to determine the terms and conditions, not inconsistent with the terms
of this Plan, of any Award granted hereunder (including, but not limited to, the
share price, any restriction or limitation, any vesting schedule or acceleration
thereof, or any forfeiture restrictions or waiver thereof, regarding any Stock
Option or other Award and the shares of Common Stock relating thereto, based on
such factors as the Committee shall determine, in its sole discretion);
     (e) to determine whether, to what extent and under what circumstances
grants of Options and other Awards under this Plan are to operate on a tandem
basis and/or in conjunction with or apart from other cash awards made by the
Company outside of this Plan;

 

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     (f) to determine whether and under what circumstances a Stock Option may be
settled in cash, Stock, and/or Restricted Stock under Subsection 6.4(k); and
     (g) to determine whether, to what extent and under what circumstances
Common Stock and other amounts payable with respect to an Award under this Plan
shall be deferred either automatically or at the election of the Participant.
     3.3 Guidelines. Subject to Article 11 hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan as it shall, from time to time, deem advisable; to
interpret the terms and provisions of this Plan and any Award issued under this
Plan (and any agreements relating thereto); and to otherwise supervise the
administration of this Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in this Plan or in any Award granted in
the manner and to the extent it shall deem necessary to carry this Plan into
effect. Notwithstanding the foregoing, no action of the Committee under this
Section 3.3 shall impair the rights of any Participant without the Participant’s
consent.
     3.4 Decisions Final. Any decision, interpretation or other action made or
taken in good faith by the Committee arising out of or in connection with the
Plan shall be final, binding and conclusive on the Company and all employees and
their respective heirs, executors, administrators, successors and assigns.
ARTICLE IV
Share Limitation
     4.1 Shares. The maximum aggregate number of shares of Common Stock which
may be issued under this Plan shall not exceed six million (6,000,000) shares
(subject to any increase or decrease pursuant to Section 4.2) which may be
either authorized and unissued Common Stock or issued Common Stock reacquired by
the Company. If any Option granted under this Plan shall expire, terminate or be
cancelled for any reason without having been exercised in full, the number of
unpurchased shares shall again be available for the purposes of the Plan;
provided, however, that if such expired, terminated or cancelled Option shall
have been issued in conjunction with another Award, none of such unpurchased
shares shall again become available for purposes of this Plan to the extent that
the related Award granted under this Plan is exercised. If an Option is
exercised using Common Stock already owned by the Participant exercising the
Option, the number of shares that shall be treated as issued under the Plan
shall be (i) the number of shares issued minus (ii) the number of shares
exchanged in satisfaction of the Option Price and the number of shares so
exchanged shall be added to the total number of shares of Common Stock available
under the Plan. Further, if any shares of Common Stock granted hereunder are
forfeited or such Award otherwise terminates without the delivery of such shares
upon the lapse of restrictions, the shares subject to such grant, to the extent
of such forfeiture or termination, shall again be available under this Plan.

 

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     4.2 Changes. In the event of any merger, reorganization, consolidation,
recapitalization, dividend (other than a dividend or its equivalent which is
credited to a Plan Participant or a regular cash dividend), Stock split, or
other change in corporate structure affecting the Common Stock, such
substitution or adjustment shall be made in the maximum aggregate number of
shares which may be issued under this Plan, in the number and option price of
shares subject to outstanding Options granted under this Plan, and in the number
of shares subject to other outstanding Awards (including but not limited to
Awards of Restricted Stock, Performance Shares, Performance Units and Other
Stock-Based Awards) granted under this Plan, as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any Award shall always be a whole number.
ARTICLE V
Eligibility
     5.1 Senior officers, senior management, and key employees of the Company
and its Designated Subsidiaries are eligible to be granted Options and other
Awards under this Plan. Eligibility under this Plan shall be determined by the
Committee.
ARTICLE VI
Stock Options
     6.1 Options. Stock Options may be granted alone or in addition to other
Awards granted under this Plan. Each Stock Option granted under this Plan shall
be of one of two types: (i) an Incentive Stock Option or (ii) a Non-Qualified
Stock Option.
     6.2 Grants. The Committee shall have the authority to grant to any
Participant one or more Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options. To the extent that any Stock Option does not
qualify as an Incentive Stock Option (whether because of its provisions or the
time or manner of its exercise or otherwise), such Stock Option or the portion
thereof which does not qualify shall constitute a separate Non-Qualified Stock
Option.
     6.3 Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422.
     6.4 Terms of Options. Options granted under this Plan shall be subject to
the following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:

 

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     (a) Option Price. The option price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee at the time of grant
but shall be not less than 100% of the Fair Market Value of the Common Stock at
grant if the Stock Option is intended to be an Incentive Stock Option and shall
not be less than 85% of the Fair Market Value of the Common Stock at grant if
the Stock Option is intended to be a Non-Qualified Stock Option.
     (b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the Option is granted, and no Non-Qualified Stock Option
shall be exercisable more than ten years and one day after the date the Option
is granted.
     (c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at grant; provided, however, that, except as provided in subsections
(f) and (g) below and Article 3, unless otherwise determined by the Committee
and the Committee may waive such installment exercise provisions at any time at
or after grant in whole or in part, based on such factors as the Committee shall
determine, in its sole discretion.
     (d) Method of Exercise. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Stock Options may be
exercised in whole or in part at any time during the option term, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price in such form as the Committee may accept. If and to the extent determined
by the Committee in its sole discretion at or after grant, payment in full or in
part may also be made in the form of Common Stock duly owned by the Participant
(and for which the Participant has good title free and clear of any liens and
encumbrances) or Restricted Stock, or by reduction in the number of shares
issuable upon such exercise based, in each case, on the Fair Market Value of the
Stock on the last trading date preceding payment as determined by the Committee
(without regard to any forfeiture restrictions applicable to Restricted Stock).
No shares of Stock shall be issued until payment, as provided herein, therefor
has been made. A Participant shall generally have the rights to dividends or
other rights of a shareholder with respect to shares subject to the Option when
the optionee has given written notice of exercise, has paid for such shares as
provided herein, and, if requested, has given the representation described in
Section 14.1. Notwithstanding the foregoing, if payment in full or in part has
been made in the form of Restricted Stock, an equivalent number of shares of
Common Stock issued on exercise of the Option shall be subject to the same
restrictions and conditions, and during the remainder of the Restriction Period,
applicable to the shares of Restricted Stock surrendered therefor.
     (e) Non-Transferability of Options. No Stock Option shall be transferable
by the Participant otherwise than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the
Participant’s lifetime, only by the Participant.

 

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     (f) Termination by Death. Except for Incentive Stock Options subject to
subsection (j) below, if a Participant’s employment by the Company or a
Designated Subsidiary terminates by reason of death, any Stock Option held by
such Participant, unless otherwise determined by the Committee at grant, shall
be fully vested and may thereafter be exercised by the legal representative of
the estate, for a period of one year (or such other period as the Committee may
specify at grant) from the date of such death or until the expiration of the
option term of such Stock Option, whichever period is the shorter.
     (g) Termination by Reason of Disability. Except for Incentive Stock Options
subject to subsection (j) below, if a Participant’s employment by the Company or
a Designated Subsidiary terminates by reason of Disability, any Stock Option
held by such Participant, unless otherwise determined by the Committee at grant,
shall be fully vested and may thereafter be exercised by the Participant for a
period of five years (or such other period as the Committee may specify at
grant) from the date of such termination of employment or until the expiration
of the stated term of such Stock Option, whichever period is the shorter;
provided, however, that, if the Participant dies within such five-year period
(or such other period as the Committee shall specify at grant), any unexercised
Stock Option held by such Participant shall thereafter be exercisable to the
extent to which it was exercisable at the time of death for a period of twelve
months from the date of such death or until the expiration of the option term of
such Stock Option, whichever period is the shorter. In the event of termination
of employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.
     (h) Termination by Reason of Retirement. Except for Incentive Stock Options
subject to subsection (j) below, if a Participant’s employment by the Company or
a Designated Subsidiary terminates by reason of Retirement, any Stock Option
held by such Participant, unless otherwise determined by the Committee at grant,
shall be fully vested and may thereafter be exercised by the Participant for a
period of five years (or such other period as the Committee may specify at
grant) from the date of such termination of employment or the expiration of the
stated term of such Stock Option, whichever period is the shorter; provided,
however, that, if the Participant dies within such five-year period, any
unexercised Stock Option held by such Participant shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death, for
a period of twelve months from the date of such death or until the expiration of
the option term of such Stock Option, whichever period is the shorter. In the
event of termination of employment by reason of Retirement, if an Incentive
Stock Option is exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock Option will thereafter
be treated as a Non-Qualified Stock Option.
     (i) Other Termination. Unless otherwise determined by the Committee at or
after grant, if a Participant’s employment by the Company terminates for any
reason other than death, Disability or Retirement, the Stock Option shall
thereupon terminate, except that such Stock Option may be exercised for the
lesser of three months or the balance of such Stock Option’s term if the
Participant is involuntarily terminated by the Company without cause.

 

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     (j) Incentive Stock Option Limitations. To the extent that the aggregate
Fair Market Value (determined as of the time of grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
the Participant during any calendar year under the Plan and/or any other stock
option plan of the Company or any subsidiary or parent corporation (within the
meaning of Section 425 of the Code) exceeds $100,000, such Options shall be
treated as Options which are not Incentive Stock Options.
     To the extent (if any) permitted under Section 422 of the Code, or the
applicable regulations thereunder or any applicable Internal Revenue Service
pronouncement, if (i) a Participant’s employment with the Company or a
Designated Subsidiary is terminated by reason of death, Disability or Retirement
and (ii) the portion of any Incentive Stock Option that is otherwise exercisable
during the post-termination period specified under subsections (f), (g) or
(h) above, applied without regard to the $100,000 limitation currently contained
in Section 422(d) of the Code, is greater than the portion of such Stock Option
that is immediately exercisable as an “incentive stock option” during such
post-termination period under Section 422, such excess shall be treated as a
Non-Qualified Stock Option.
     Should any of the foregoing provisions not be necessary in order for the
Stock Options to qualify as Incentive Stock Options, or should any additional
provisions be required, the Committee may amend the Plan accordingly, without
the necessity of obtaining the approval of the shareholders of the Company.
     (k) Buyout and Settlement Provisions. The Committee may at any time offer
to buy out an Option previously granted, based on such terms and conditions as
the Committee shall establish and communicate to the Participant at the time
that such offer is made.
     In addition, if the Option agreement so provides at grant or is amended
after grant and prior to exercise to so provide (with the Participant’s
consent), the Committee may require that all or part of the shares to be issued
with respect to the spread value of an exercised Option take the form of
Performance Shares or Restricted Stock, which shall be valued on the date of
exercise on the basis of the Fair Market Value of such Performance Shares or
Restricted Stock determined without regard to the deferral limitations and/or
forfeiture restrictions involved.
     6.5 Reload Options. Without in any way limiting the authority of the
Committee to make grants hereunder, and in order to induce officers and other
key employees to retain ownership of shares in the Company, the Committee shall
have the authority (but not an obligation) to include within any option
agreement a provision entitling the optionee to a further option (a “Reload
Option") in the event the optionee exercises the option evidenced by the option
agreement, in whole or in part, by surrendering other shares of the Company in
accordance with this Plan and the terms and conditions of the option agreement.
Any such Reload Option shall be for a number of shares equal to the number of
surrendered shares, shall become exercisable in the event the purchased shares
are held for a minimum period of time established by the Committee, and shall be
subject to such other terms and conditions as the Committee may determine.

 

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ARTICLE VII
Restricted Stock
     7.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the eligible persons to whom, and the time or times at
which, grants of Restricted Stock will be made, the number of shares to be
awarded, the price (if any) to be paid by the recipient (subject to Section
7.2), the time or times within which such Awards may be subject to forfeiture,
the vesting schedule and rights to acceleration thereof, and all other terms and
conditions of the Awards. The Committee may condition the grant of Restricted
Stock upon the attainment of specified performance goals or such other factors
as the Committee may determine, in its sole discretion.
     The provisions of Restricted Stock awards need not be the same with respect
to each Participant, and such Awards to individual Participants need not be the
same in subsequent years.
     7.2 Awards and Certificates. The prospective Participant selected to
receive a Restricted Stock Award shall not have any rights with respect to such
Award, unless and until such Participant has executed an agreement evidencing
the Award and has delivered a fully executed copy thereof to the Company, and
has otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
     (a) Purchase Price. The purchase price for shares of Restricted Stock shall
be equal to or less than their par value and may be zero.
     (b) Acceptance. Awards of Restricted Stock must be accepted within a period
of 60 days (or such shorter period as the Committee may specify at grant) after
the Award date, by executing a Restricted Stock Award agreement and by paying
whatever price (if any) the Committee has designated hereunder.
     (c) Legend. Each Participant receiving a Restricted Stock Award shall be
issued a stock certificate in respect of such shares of Restricted Stock. Such
certificate shall be registered in the name of such Participant, and shall bear
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
     “The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of Kellogg Company (the

 

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“Company") Key Employee Long Term Incentive Plan and an Agreement entered into
between the registered owner and the Company dated                     . Copies
of such Plan and Agreement are on file in the offices of the Company, One
Kellogg Square, Battle Creek, Michigan 49016-3599”.
     (d) Custody. The Committee may require that the stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
Award, the Participant shall have delivered a duly signed stock power, endorsed
in blank, relating to the Stock covered by such Award.
     7.3 Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Plan shall be subject to the following restrictions and
conditions:
     (a) Restriction Period. Subject to the provisions of this Plan and the
Award agreement, during a period set by the Committee commencing with the date
of such Award (the “Restriction Period"), the Participant shall not be permitted
to sell, transfer, pledge or assign shares of Restricted Stock awarded under
this Plan. Within these limits, the Committee, in its sole discretion, may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions in whole or in part, based on service, performance
and/or such other factors or criteria as the Committee may determine in its sole
discretion.
     (b) Rights as Shareholder. Except as provided in this subsection (b) and
subsection (a) above, the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a holder of shares of Common Stock of the
Company including the right to receive any dividends. The Committee, in its sole
discretion, as determined at the time of Award, may permit or require the
payment of dividends to be deferred.
     (c) Termination of Employment. Subject to the applicable provisions of the
Award agreement and this Article 7, upon termination of a Participant’s
employment with the Company for any reason during the Restriction Period, all
Restricted Shares still subject to restriction will vest or be forfeited in
accordance with the terms and conditions established by the Committee at or
after grant.
     (d) Hardship. In the event of hardship or other special circumstances of a
Participant whose employment with the Company or a Designated Subsidiary is
involuntarily terminated (other than for cause), the Committee may, in its sole
discretion, waive in whole or in part any or all remaining restrictions with
respect to such Participant’s shares of Restricted Stock, based on such factors
as the Committee may deem appropriate.
     (e) Lapse of Restrictions. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to such Restriction
Period, the certificates for such shares shall be delivered to the Participant.
All legends shall be removed from said certificates at the time of delivery to
the Participant.

 

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ARTICLE VIII
Performance Shares
     8.1 Award of Performance Shares. Performance Shares may be awarded either
alone or in addition to other Awards granted under this Plan. The Committee
shall determine the eligible persons to whom and the time or times at which
Performance Shares shall be awarded, the number of Performance Shares to be
awarded to any person, the duration of the period (the “Performance Period")
during which, and the conditions under which, receipt of the Shares will be
deferred, and the other terms and conditions of the Award in addition to those
set forth in Section 8.2.
     The Committee may condition the grant of Performance Shares upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine, in its sole discretion.
     The provisions of Performance Share Awards need not be the same with
respect to each Participant, and such Awards to individual Participants need not
be the same in subsequent years.
     8.2 Terms and Conditions. Performance Shares awarded pursuant to this
Article 8 shall be subject to the following terms and conditions:
     (a) Non-Transferability. Subject to the provisions of this Plan and the
Award agreement referred to in subsection (g) below, Performance Share Awards
may not be sold, assigned, transferred, pledged or otherwise encumbered during
the Performance Period. At the expiration of the Performance Period, share
certificates or cash of an equivalent value (as the Committee may determine in
its sole discretion) shall be delivered to the Participant, or his legal
representative, in a number equal to the shares covered by the Performance Share
Award.
     (b) Dividends. Unless otherwise determined by the Committee at the time of
Award, amounts equal to any dividends declared during the Performance Period
with respect to the number of shares of Common Stock covered by a Performance
Share Award will not be paid to the Participant.
     (c) Termination of Employment. Subject to the provisions of the Award
agreement and this Article 8, upon termination of a Participant’s employment
with the Company for any reason during the Performance Period for a given Award,
the Performance Shares in question will vest or be forfeited in accordance with
the terms and conditions established by the Committee at or after grant.
     (d) Accelerated Vesting. Based on service, performance and/or such other
factors or criteria as the Committee may determine, the Committee may, at or
after grant, accelerate the vesting of all or any part of any Performance Share
Award and/or waive the deferral limitations for all or any part of such Award.

 

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     (e) Hardship. In the event of hardship or other special circumstances of a
Participant whose employment with the Company or a Designated Subsidiary is
involuntarily terminated other than for cause, the Committee may, in its sole
discretion, based on such factors as the Committee may deem appropriate, waive
in whole or in part any or all of the remaining deferral limitations imposed
hereunder with respect to any or all of the Participant’s Performance Shares,
based on such factors as the Committee deems appropriate.
     (f) Agreement. Each Award shall be confirmed by, and subject to the terms
of, a Performance Share agreement executed by the Company and the Participant.
ARTICLE IX
Performance Units
     9.1 Award of Performance Units. Performance Units may be awarded either
alone or in addition to other Awards granted under this Plan. The Committee
shall determine the eligible persons to whom and the time or times at which
Performance Units shall be awarded, the number of Performance Units to be
awarded to any person, the duration of the period (the “Performance Cycle”)
during which, and the conditions under which, a Participant’s right to
Performance Units will be vested, the ability of Participants to defer the
receipt of payment of such Units, and the other terms and conditions of the
Award in addition to those set forth in Section 9.2.
     A Performance Unit shall have a fixed dollar value.
     The Committee may condition the vesting of Performance Units upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine, in its sole discretion.
     The provisions of Performance Unit Awards need not be the same with respect
to each Participant, and such Awards to individual Participants need not be the
same in subsequent years.
     9.2 Terms and Conditions. The Performance Units awarded pursuant to this
Article 10 shall be subject to the following terms and conditions:
     (a) Non-Transferability. Subject to the provisions of this Plan and the
Award agreement referred to in subsection (g) below, Performance Unit Awards may
not be sold, assigned, transferred, pledged or otherwise encumbered.
     (b) Vesting. At the expiration of the Performance Cycle, the Committee
shall determine the extent to which the performance goals have been achieved,
and the percentage of the Performance Units of each Participant that have
vested.

 

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     (c) Payment. Subject to the provisions of this Plan and the Award agreement
referred to in subsection (g) below, the vested Performance Units shall be paid
to the Participant or his legal representative as soon as practicable after the
end of a Performance Cycle. Payment may be made in cash, shares of Common Stock
or a combination of both, as determined by the Committee, in its sole
discretion.
     (d) Termination of Employment. Subject to the provisions of the Award
agreement and this Article 9, upon termination of a Participant’s employment
with the Company for any reason during the Performance Cycle for a given Award,
the Performance Units in question will vest or be forfeited in accordance with
the terms and conditions established by the Committee at or after grant.
     (e) Accelerated Vesting. Based on service, performance and/or such other
factors or criteria as the Committee may determine, the Committee may, at or
after grant, accelerate the vesting of all or any part of any Performance Unit
Award and/or waive the deferral limitations for all or any part of such Award.
     (f) Hardship. In the event of hardship or other special circumstances of a
Participant whose employment with the Company or a Designated Subsidiary is
involuntarily terminated (other than for cause), the Committee may, in its sole
discretion, based on such factors as the Committee may deem appropriate, waive
in whole or in part any or all of the remaining deferral limitations imposed
hereunder with respect to any or all of the Participant’s Performance Units,
based on such factors as the Committee deems appropriate.
     (g) Agreement. Each Award shall be confirmed by, and subject to the terms
of, a Performance Unit agreement executed by the Company and the Participant.
ARTICLE X
Other Stock-Based Awards
     10.1 Other Awards. Other Awards of Common Stock and other Awards that are
valued in whole or in part by reference to, or are payable in or otherwise based
on, Common Stock (“Other Stock-Based Awards”), including, without limitation,
Awards valued by reference to subsidiary performance, may be granted either
alone or in addition to or in tandem with Stock Options, Restricted Stock,
Performance Shares or Performance Units.
     Subject to the provisions of this Plan, the Committee shall have authority
to determine the persons to whom and the time or times at which such Awards
shall be made, the number of shares of Common Stock to be awarded pursuant to
such Awards, and all other conditions of the Awards. The Committee may also
provide for the grant of Common Stock under such Awards upon the completion of a
specified performance period.

 

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     The provisions of Other Stock-Based Awards need not be the same with
respect to each Participant and such Awards to individual Participants need not
be the same in subsequent years.
     10.2 Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article 10 shall be subject to the following terms and conditions:
     (a) Non-Transferability. Subject to the provisions of this Plan and the
Award agreement referred to in subsection (e) below, shares of Common Stock
subject to Awards made under this Article 10 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses.
     (b) Dividends. Unless otherwise determined by the Committee at the time of
Award, subject to the provisions of this Plan and the Award agreement, the
recipient of an Award under this Article 10 shall be entitled to receive,
currently or on a deferred basis, dividends or dividend equivalents with respect
to the number of shares of Common Stock covered by the Award, as determined at
the time of the Award by the Committee, in its sole discretion.
     (c) Vesting. Any Award under this Article 10 and any Common Stock covered
by any such Award shall vest or be forfeited to the extent o provided in the
Award agreement, as determined by the Committee, in its sole discretion.
     (d) Waiver of Limitation. In the event of the Participant’s Retirement,
Disability or death, or in cases of special circumstances, the Committee may, in
its sole discretion, waive in whole or in part any or all of the limitations
imposed hereunder (if any) with respect to any or all of an Award under this
Article 10.
     (e) Agreement. Each Award under this Article 10 shall be confirmed by, and
subject to the terms of, an agreement or other instrument executed by the
Company and the Participant.
     (f) Price. Common Stock issued on a bonus basis under this Article 10 may
be issued for no cash consideration; Common Stock purchased pursuant to a
purchase right awarded under this Article 10 shall be priced as determined by
the Committee.
ARTICLE XI
Termination or Amendment of the Plan
     11.1 Termination or Amendment. The Board may at any time amend, discontinue
or terminate this Plan or any part thereof (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article 13); provided, however, that, unless otherwise required
by law, the rights of a Participant with respect to Options or other Awards
granted prior to such amendment, discontinuance or termination, may not be
impaired without the consent of such

 

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Participant and, provided further, without the approval of the Company’s
stockholders, no amendment may be made which would (i) increase the aggregate
number of shares of Common Stock that may be issued under this Plan (except by
operation of Section 4.2); (ii) change the definition of employees eligible to
receive Stock Awards under this Plan; (iii) decrease the option price of any
Stock Option to less than 100% of the Fair Market Value on the date of grant for
a Stock Option intended to be an Incentive Stock Option or to 85% of the Fair
Market Value on the date of grant for a Stock Option intended to be a
Non-Qualified Stock Option; or (iv) extend the maximum option period under
Section 6.4 of the Plan.
     The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but, subject to Article 4
above, no such amendment or other action by the Committee shall impair the
rights of any holder without the holder’s consent. The Committee may also
substitute new Stock Options for previously granted Stock Options having higher
option exercise prices.
ARTICLE XII
Unfunded Plan
     12.1 Unfunded Status of Plan. This Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company.
ARTICLE XIII
General Provisions
     13.1 Legend. The Committee may require each person purchasing shares
pursuant to a Stock Option or other Award under the Plan to represent to and
agree with the Company in writing that the Participant is acquiring the shares
without a view to distribution thereof. In addition to any legend required by
this Plan, the certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
     All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
     13.2 Other Plans. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

 

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     13.3 No Right to Employment. Neither this Plan nor the grant of any Option
or other Award hereunder shall give any Participant or other employee any right
with respect to continuance of employment by the Company or any subsidiary, nor
shall there be a limitation in any way on the right of the Company or any
subsidiary by which an employee is employed to terminate his employment at any
time.
     13.4 Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld.
     The Committee may permit any such withholding obligation to be satisfied by
reducing the number of shares of Common Stock otherwise deliverable. A person
required to file reports under Section 16(a) of the Securities Act of 1933 with
respect to securities of the Company may elect to have a sufficient number of
shares of Common Stock withheld to fulfill such tax obligations (hereinafter a
“Withholding Election") only if the election complies with the following
conditions: (x) the Withholding Election shall be subject to the disapproval of
the Committee and (y) the Withholding Election is made (i) during the period
beginning on the third business day following the date of release for
publication of the quarterly or annual summary statements of sales and earnings
of the Company and ending on the twelfth business day following such date,
(ii) six months before the Stock Award becomes taxable, or (iii) during any
other period in which a Withholding Election may be made under the provisions of
Rule 16b-3 promulgated pursuant to the Act. Any fraction of a share of Common
Stock required to satisfy such tax obligations shall be disregarded and the
amount due shall be paid instead in cash by the Participant.
     13.5 No Assignment of Benefits. No Option, Award or other benefit payable
under this Plan shall, except as otherwise specifically provided by law, be
subject in any manner to anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, attach, sell, transfer, assign, pledge, encumber or charge any such
benefit shall be void, and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.
     13.6 Listing and Other Conditions.
     (a) As long as the Common Stock is listed the on New York Stock Exchange or
a national securities exchange or system sponsored by a national securities
association, the issue of any shares of Common Stock pursuant to an Option or
other Award shall be conditioned upon such shares being listed on such exchange
or system. The Company

 

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shall have no obligation to issue such shares unless and until such shares are
so listed, and the right to exercise any Option or other Award with respect to
such shares shall be suspended until such listing has been effected.
     (b) If at any time counsel to the Company shall be of the opinion that any
sale or delivery of shares of Common Stock pursuant to an Option or other Award
is or may in the circumstances be unlawful or result in the imposition of excise
taxes under the statutes, rules or regulations of any applicable jurisdiction,
the Company shall have no obligation to make such sale or delivery, or to make
any application or to effect or to maintain any qualification or registration
under the Securities Act of 1933, as amended, or otherwise with respect to
shares of Common Stock or Awards, and the right to exercise any Option or other
Award shall be suspended until, in the opinion of said counsel, such sale or
delivery shall be lawful.
     (c) Upon termination of any period of suspension under this Section 13.6,
any Award affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Option.
     13.7 Governing Law. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the State of
Delaware (regardless of the law that might otherwise govern under applicable
Delaware principles of conflict of laws).
     13.8 Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
     13.9 Liability of Committee. No member of the Board of Directors, no
employee of the Company nor the Committee (nor its members) shall be liable for
any act or action hereunder, whether of omission or commission, by any other
member or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated or, except in circumstances
involving his bad faith, gross negligence or fraud, for anything done or omitted
to be done by himself.
     13.10 Other Benefits. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.
     13.11 Costs. The Company shall bear all expenses incurred in administering
this Plan, including expenses of issuing Common Stock pursuant to any Awards
hereunder.

 

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ARTICLE XIV
Effective Date of Plan
     The Plan shall be effective as of its approval by the Company’s
shareholders.
ARTICLE XV
Term of Plan
     No Stock Option, Restricted Stock, Performance Shares, Performance Unit or
Other Stock-Based Award shall be granted pursuant to the Plan on or after the
tenth anniversary of its approval, but Awards granted prior to such tenth
anniversary may extend beyond that date.