Exhibit 10.1

 

BED BATH & BEYOND INC.

 

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2012 INCENTIVE COMPENSATION PLAN

 

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ARTICLE I

 

PURPOSE

 

The purpose of this Bed Bath & Beyond Inc. 2012 Incentive Compensation Plan is
to enhance the profitability and value of the Company for the benefit of its
stockholders by enabling the Company to offer Eligible Employees, Consultants
and Non-Employee Directors stock-based and other incentives, thereby creating a
means to raise the level of equity ownership by such individuals and provide
other incentives in order to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and the Company’s
stockholders.

 

The Plan was originally adopted by the Board on May 13, 2004, as the Bed Bath &
Beyond Inc. 2004 Incentive Compensation Plan, subject to the approval of the
Plan by the stockholders of the Company (which was obtained at the 2004 annual
stockholders’ meeting).  The performance goals under the Plan were reapproved by
the stockholders of the Company at the 2009 annual stockholders’ meeting.  The
Plan is amended, restated and renamed as the Bed Bath & Beyond Inc. 2012
Incentive Compensation Plan, effective upon the date the stockholders of the
Company approve the Plan in accordance with the requirements of the laws of the
State of New York.

 

ARTICLE II

 

DEFINITIONS

 

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

 

2.1                               “Acquisition Event” has the meaning set forth
in Section 4.2(d).

 

2.2                               “Affiliate” means each of the following: (a)
any Subsidiary; (b) any Parent; (c) any corporation, trade or business
(including, without limitation, a partnership or limited liability company) that
is directly or indirectly controlled 50% or more (whether by ownership of stock,
assets or an equivalent ownership interest or voting interest) by the Company or
one of its Affiliates; (d) any corporation, trade or business (including,
without limitation, a partnership or limited liability company) that directly or
indirectly controls 50% or more (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) of the Company; and (e) any
other entity in which the Company or any of its Affiliates has a material equity
interest and that is designated as an “Affiliate” by resolution of the
Committee.

 

2.3                               “Award” means any award under the Plan of any
Option, Stock Appreciation Right, Restricted Stock Award, Performance Award or
Other Stock-Based Award.

 

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

 

2.5                               “Cause” means with respect to a Participant’s
Termination of Employment or Termination of Consultancy, the following: (a) in
the case where there is an employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award that defines
“cause” (or words or a concept of like import), “cause” as defined under such
agreement; provided, however, that with regard to any agreement under which the
definition of “cause” applies only on occurrence of a change in control, such
definition of “cause” shall not apply until a change in control actually takes
place and then only with regard to a termination in connection therewith; or (b)
in the case where there is no employment agreement, consulting agreement, change
in control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award (or where
there is such an agreement but it does not define “cause” (or words or a concept
of like import)), termination due to a Participant’s insubordination,
dishonesty, fraud, incompetence, moral turpitude, willful misconduct, refusal to
perform his or her duties or responsibilities for any reason other than illness
or incapacity or materially unsatisfactory performance of his or her duties for
the Company or an Affiliate, as determined by the Committee in its sole
discretion.  With respect to a Participant’s Termination of Directorship,
“cause” means an act or failure to act that constitutes cause for removal of a
director under applicable New York law.

 

2.6                               “Code” means the Internal Revenue Code of
1986, as amended.  Any reference to any section of the Code shall also be a
reference to any successor provision and any Treasury Regulation promulgated
thereunder.

 

2.7                               “Committee” means:  (a) with respect to the
application of the Plan to Eligible Employees and Consultants, the Compensation
Committee of the Board appointed from time to time by the Board (or another
committee or committees of the Board appointed for the purposes of administering
the Plan); and (b) with respect to the application of the Plan to Non-Employee
Directors, the Board.  In the event that more than one Committee is appointed by
the Board, the Board shall specify with respect to each Committee the group of
Persons with respect to which such Committee shall have the power to grant
Awards.  In the event that more than one Committee is appointed by the Board,
then each reference in the Plan to “the Committee” shall be deemed a reference
to each such Committee (subject to the last sentence of this paragraph);
provided, however, that each such Committee may exercise only the power and
authority granted to “the Committee” by the Plan with respect to those Persons
to which it has the power to grant Awards as specified in the resolution of the
Board appointing such Committee.  Each Committee shall be comprised of two or
more Directors.  Each Committee shall consist of two or more non-employee
directors, each of whom is intended to be a “non-employee director” as defined
in Rule 16b-3 promulgated under Section 16(b) of the Exchange Act, an “outside
director” as defined under Section 162(m) of the Code, an “independent director”
as defined and to the extent required under the rules and regulations of the
Nasdaq Stock Market or such other applicable securities exchange upon which the
Common Stock is then listed or any national securities exchange system upon
whose system the Common Stock is then quoted, and, as may be applicable,
“independent” as provided pursuant to rules promulgated by the Securities and
Exchange Commission under The Dodd-Frank Wall Street Reform and Consumer
Protection Act; provided, however, that to the extent allowed by applicable law,
the foregoing shall not

 

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apply to any Committee that does not have the power to grant Awards to executive
officers or Directors of the Company or otherwise make any decisions with
respect to the timing or the pricing of any Awards granted to such executive
officers and Directors.  If for any reason such Committee does not meet the
requirements of Rule 16b-3 or Section 162(m) of the Code, such noncompliance
with the requirements of Rule 16b-3 or Section 162(m) of the Code, as
applicable, shall not affect the validity of Awards, grants, interpretations or
other actions of the Committee.  In the event that more than one Committee is
appointed by the Board, the power to amend the Plan granted by Article XI hereof
may be exercised only by a Committee comprised solely of “non-employee
directors” within the meaning of Rule 16(b)-3 under the Exchange Act or by a
majority or the entire Board.

 

2.8                               “Common Stock” means the Common Stock, $0.01
par value per share, of the Company.

 

2.9                               “Company” means Bed Bath & Beyond Inc., a New
York corporation, and its successors by operation of law.

 

2.10                        “Consultant” means any individual who (either
directly or through his or her employer) is an advisor or consultant to, or
subject to Section 5.2, a prospective advisor or consultant to, the Company or
an Affiliate.

 

2.11                        “Director” means a member of the Board of Directors
of the Company (or any successor to the Company).

 

2.12                        “Disability” shall mean, unless otherwise determined
by the Committee at grant, a Participant’s “disability” (or term of like import)
as such term is defined in the long-term disability plan of the Company
applicable to such Participant or, in the absence of such a definition, the
inability of a Participant to perform the major duties of his or her occupation
for at least 90 days in any 180-day period because of sickness or injury. 
Notwithstanding the foregoing, for Awards under the Plan that provide for
payments that are triggered upon a Disability and that constitute “non-qualified
deferred compensation” pursuant to Section 409A of the Code, Disability shall
mean that a Participant is disabled under Section 409A(a)(2)(C)(i) of the Code.

 

2.13                        “Effective Date” means the effective date of the
Plan as defined in Article XIV.

 

2.14                        “Eligible Employee” means each employee of, or
subject to Section 5.2, each prospective employee of, the Company or an
Affiliate.  Notwithstanding the foregoing, with respect to the grant of
Incentive Stock Options, Eligible Employees shall mean each employee of the
Company, its Subsidiaries or its Parents, if any, other than a prospective
employee, who are eligible pursuant to Article V to be granted Incentive Stock
Options under the Plan.

 

2.15                        “Exchange Act” means the Securities Exchange Act of
1934, as amended.  Any references to any section of the Exchange Act shall also
be a reference to any successor provision.

 

2.16                        “Fair Market Value” means, for purposes of the Plan,
unless otherwise required by any applicable provision of the Code or any
regulations issued thereunder, as of any date and

 

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except as provided below, the average of the high and low sales prices reported
for the Common Stock on the applicable date: (a) as reported on the principal
national securities exchange in the United States on which it is then traded; or
(b) if not traded on any such national securities exchange, as quoted on an
automated quotation system sponsored by the Financial Industry Regulatory
Authority.  For purposes of the grant of any Award, the applicable date shall be
the date on which the Award is granted, or if the Common Stock shall not have
been reported or quoted on such date, on the first day prior thereto on which
the Common Stock was reported or quoted.  For purposes of the exercise of any
Award, the applicable date shall be the date a notice of exercise is received by
the Committee or, if not a day on which the applicable market is open, the next
day that it is open.

 

2.17                        “Family Member” means “family member” as defined in
Section A.1.(a)(5) of the general instructions of Form S-8.

 

2.18                        “Good Reason” means, with respect to a Participant’s
Termination of Employment, the following: (a) in the case where there is an
employment agreement, change in control agreement or similar agreement in effect
between the Company or an Affiliate and the Participant at the time of the grant
of the Award that defines “good reason” (or words or a concept of like import),
a termination due to good reason (or words or a concept of like import), as
defined in such agreement at the time of the grant of the Award; provided,
however, that with regard to any agreement under which the definition of “good
reason” applies only on occurrence of a change in control, such definition of
“good reason” shall not apply until a change in control actually takes place and
then only with regard to a termination thereafter; or (b) if such an agreement
does not exist or if “good reason” is not defined in any such agreement, as
defined in the Award agreement, if at all.

 

2.19                        Incentive Stock Option” means any Option awarded to
an Eligible Employee under the Plan intended to be and designated as an
“Incentive Stock Option” within the meaning of Section 422 of the Code.

 

2.20                        “Non-Employee Director” means a Director of the
Company who is not an active employee of the Company or an Affiliate.

 

2.21                        “Non-Tandem Stock Appreciation Right” shall mean the
right to receive an amount in cash and/or stock equal to the difference between
(x) the Fair Market Value of a share of Common Stock on the date such right is
exercised, and (y) the aggregate exercise price of such right, otherwise than on
surrender of an Option.

 

2.22                        “Option” means any option to purchase shares of
Common Stock granted to Eligible Employees, Non-Employee Directors or
Consultants pursuant to Article VI.

 

2.23                        “Other Stock-Based Award” means an Award under
Article X of the Plan that is valued in whole or in part by reference to, or is
payable in or otherwise based on, Common Stock.

 

2.24                        “Parent” means any parent corporation of the Company
within the meaning of Section 424(e) of the Code.

 

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2.25                        “Participant” means an Eligible Employee,
Non-Employee Director or Consultant to whom an Award has been granted pursuant
to the Plan.

 

2.26                        “Performance Award” means an Award made pursuant to
Article IX of the Plan of the right to receive Common Stock or cash at the end
of a specified Performance Period.

 

2.27                        “Performance Period” has the meaning set forth in
Section 9.1.

 

2.28                        “Person” means any individual, corporation,
partnership, limited liability company, firm, joint venture, association,
joint-stock company, trust, incorporated organization, governmental or
regulatory or other entity.

 

2.29                        “Plan” means this Bed Bath & Beyond Inc. 2012
Incentive Compensation Plan, as amended from time to time.

 

2.30                        “Prior Plan” means any of the following:  the Bed
Bath and Beyond Inc. 1996 Stock Option Plan, the Bed Bath and Beyond Inc. 1998
Stock Option Plan, the Bed Bath and Beyond Inc. 2000 Stock Option Plan, and the
Bed Bath and Beyond Inc. 2001 Stock Option Plan, in each case as amended (if at
all) through the Effective Date.

 

2.31                        “Reference Stock Option” has the meaning set forth
in Section 7.1.

 

2.32                        “Restricted Stock Award” means an Award of shares of
Common Stock, or the right to receive shares of Common Stock in the future,
subject to the restrictions under Article VIII.

 

2.33                        “Restriction Period” has the meaning set forth in
Subsection 8.3(a) with respect to Restricted Stock Awards.

 

2.34                        “Retirement” means a Termination of Employment or
Termination of Consultancy other than for Cause or due to death or Disability at
or after age 65 or such earlier date as may be determined by the Committee at
the time of grant.  With respect to a Participant’s Termination of Directorship,
Retirement means the failure to stand for reelection or the failure to be
reelected on or after a Participant has attained age 65.

 

2.35                        “Rule 16b-3” means Rule 16b-3 under Section 16(b) of
the Exchange Act as then in effect or any successor provision.

 

2.36                        “Section 162(m) of the Code” means the exception for
performance-based compensation under Section 162(m) of the Code and any Treasury
regulations thereunder.

 

2.37                        “Securities Act” means the Securities Act of 1933,
as amended, and all rules and regulations promulgated thereunder.  Any reference
to any section of the Securities Act shall also be a reference to any successor
provision.

 

2.38                        “Stock Appreciation Right” shall mean the right
pursuant to an Award granted under Article VII.

 

2.39                        “Subsidiary” means any subsidiary corporation of the
Company within the

 

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meaning of Section 424(f) of the Code.

 

2.40                        “Substitute Awards” mean Awards granted or shares of
Common Stock issued by the Company in assumption of, or in substitution or
exchange for, awards previously granted, by a company acquired by the Company or
an Affiliate or with which the Company or an Affiliate combines.

 

2.41                        “Tandem Stock Appreciation Right” means the right to
surrender to the Company all (or a portion) of an Option in exchange for an
amount in cash and/or stock equal to the difference between (i) the Fair Market
Value, on the date such Option (or such portion thereof) is surrendered, of the
Common Stock covered by such Option (or such portion thereof), and (ii) the
aggregate exercise price of such Option (or such portion thereof).

 

2.42                        “Ten Percent Shareholder” means a person owning
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company, its Subsidiaries or its Parents, if any.

 

2.43                        “Termination” means a Termination of Consultancy,
Termination of Directorship or Termination of Employment, as applicable.

 

2.44                        “Termination of Consultancy” means: (a) that the
Consultant is no longer acting as a consultant to the Company or an Affiliate;
or (b) when an entity retaining a Participant as a Consultant ceases to be an
Affiliate, unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate at the time the entity ceases to
be an Affiliate.  In the event that a Consultant becomes an Eligible Employee or
a Non-Employee Director upon the termination of his or her consultancy, unless
otherwise determined by the Committee, in its sole discretion, no Termination of
Consultancy shall be deemed to occur until such time as such Consultant is no
longer any of a Consultant, an Eligible Employee or a Non-Employee Director. 
Notwithstanding the foregoing, the Committee may otherwise define Termination of
Consultancy in the Award agreement or, if no rights of a Participant are
reduced, may otherwise define Termination of Consultancy thereafter.

 

2.45                        “Termination of Directorship” means that the
Non-Employee Director has ceased to be a Director of the Company; except that if
a Non-Employee Director becomes an Eligible Employee or a Consultant upon the
termination of his or her directorship, his or her ceasing to be a Director of
the Company shall not be treated as a Termination of Directorship unless and
until the Participant has a Termination of Employment or Termination of
Consultancy, as the case may be.

 

2.46                        “Termination of Employment” means: (a) a termination
of employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its Affiliates; or
(b) when an entity employing a Participant ceases to be an Affiliate, unless the
Participant otherwise is, or thereupon becomes, employed by the Company or
another Affiliate at the time the entity ceases to be an Affiliate.  In the
event that an Eligible Employee becomes a Consultant or a Non-Employee Director
upon the termination of his or her employment, unless otherwise determined by
the Committee, in its sole discretion, no Termination of Employment shall be
deemed to occur until such time as such Eligible Employee is no longer any of an
Eligible Employee, a Consultant or a Non-Employee Director.

 

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Notwithstanding the foregoing, the Committee may otherwise define Termination of
Employment in the Award agreement or, if no rights of a Participant are reduced,
may otherwise define Termination of Employment thereafter.

 

2.47                        “Transfer” means: (a) when used as a noun, any
direct or indirect transfer, sale, assignment, pledge, hypothecation,
encumbrance or other disposition (including the issuance of equity in a Person),
whether for value or no value and whether voluntary or involuntary (including by
operation of law), and (b) when used as a verb, to directly or indirectly
transfer, sell, assign, pledge, encumber, charge, hypothecate or otherwise
dispose of (including by the issuance of equity in a Person) whether for value
or for no value and whether voluntarily or involuntarily (including by operation
of law).  “Transferred” and “Transferable” shall have a correlative meaning.

 

2.48                        “409A Covered Award” has the meaning set forth in
Section 13.13(b).

 

ARTICLE III

 

ADMINISTRATION

 

3.1                               The Committee.  The Plan shall be administered
and interpreted by the Committee.  Notwithstanding anything herein to the
contrary, the Board shall have authority for administration and interpretation
of the Plan with respect to Non-Employee Directors and all references herein to
the authority of the Committee as applied to Non-Employee Directors shall be
deemed to refer to the Board.

 

3.2                               Grants of Awards.  The Committee shall have
full authority to grant, pursuant to the terms of the Plan, to Eligible
Employees, Consultants and Non-Employee Directors: (i) Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock Awards, (iv) Performance Awards, and
(v) Other Stock-Based Awards.  Without limiting the generality of the foregoing,
the Committee shall have the authority:

 

(a)                                 to select the Eligible Employees,
Consultants and Non-Employee Directors to whom Awards may from time to time be
granted hereunder, provided that no award may be made to any Non-Employee
Director unless all similarly situated Non-Employee Directors have the right to
receive the same award on the same terms;

 

(b)                                 to determine whether and to what extent
Awards, or any combination thereof, are to be granted hereunder to one or more
Eligible Employees, Consultants or Non-Employee Directors;

 

(c)                                  to determine the number of shares of Common
Stock (if any) to be covered by an Award granted hereunder;

 

(d)                                 to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Award granted hereunder
(including, but not limited to, the exercise or purchase price (if any), any
restriction or limitation, any vesting schedule or acceleration thereof, or any
forfeiture restrictions or waiver thereof, regarding any Award and the shares of
Common Stock relating thereto, based on such factors, if any, as the Committee
shall determine, in its sole discretion);

 

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(e)                                  to determine whether, to what extent and
under what circumstances grants of Options and other Awards under the Plan are
to operate on a tandem basis and/or in conjunction with or apart from other
awards made by the Company outside of the Plan;

 

(f)                                   to determine whether and under what
circumstances an Option may be settled in cash, Common Stock and/or restricted
stock under Section 6.2(d);

 

(g)                                  to determine whether, to what extent and
under what circumstances Common Stock and other amounts payable with respect to
an Award under the Plan shall be deferred either automatically or at the
election of the Participant, provided, however, that any amounts so deferred
shall be structured in a manner intended to comply with Section 409A of the
Code;

 

(h)                                 to determine whether to require a
Participant, as a condition of the granting of any Award, to not sell or
otherwise dispose of shares acquired pursuant to the exercise of an Award for a
period of time as determined by the Committee, in its sole discretion, following
the date of the acquisition of such Award;

 

(i)                                     to modify, extend or renew an Award,
subject to Sections 6.2(j) and 11.1 herein;

 

(j)                                    to determine whether an Option is an
Incentive Stock Option;

 

(k)                                 solely to the extent permitted by applicable
law, to determine whether, to what extent and under what circumstances to
provide loans (which shall be on a recourse basis and shall bear interest at the
rate the Committee shall provide) to Participants in order to purchase shares of
Common Stock under the Plan;

 

(l)                                     to determine at grant that an Option
shall cease to be exercisable or an Award shall be forfeited, or that proceeds
or profits applicable to an Award shall be returned to the Company, in the event
the Participant engages in detrimental activity with respect to the Company or
its Affiliates (as such term is defined by the Committee in the Award agreement)
and, to interpret such definition and to approve waivers with regard thereto;
and

 

(m)                             to determine whether or not an Award is intended
to comply with Section 162(m) of the Code.

 

3.3                               Guidelines.  Subject to Article XI hereof, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan and perform
all acts, including the delegation of its responsibilities (to the extent
permitted by applicable law and applicable stock exchange rules), as it shall,
from time to time, deem advisable; to construe and interpret the terms and
provisions of the Plan and any Award issued under the Plan (and any agreements
relating thereto); and to otherwise supervise the administration of the Plan. 
The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any agreement relating thereto in the manner and
to the extent it shall deem necessary to effectuate the purpose and intent of
the Plan.  Notwithstanding the foregoing, no action of the Committee under this
Section 3.3 shall reduce the rights of any Participant without the Participant’s
consent.  To the extent applicable, the Plan is intended to comply with the
applicable requirements of Rule 16b-3 and Section 162(m) of the Code, and the
Plan shall be limited, construed and interpreted in a manner so as to comply

 

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therewith.

 

Without limiting the generality of the foregoing, the Committee may adopt
special guidelines, provisions and procedures applicable to Awards granted to
persons who are residing in or employed in, or subject to, the taxes or laws of,
any domestic or foreign jurisdictions to comply with, or to accommodate
differences in, applicable laws, regulations, or accounting, listing or other
rules with respect to such domestic or foreign jurisdictions.

 

3.4                               Decisions Final.  Any decision, interpretation
or other action made or taken in good faith by or at the direction of the
Company, the Board or the Committee (or any of its members) arising out of or in
connection with the Plan shall be within the absolute discretion of all and each
of them, as the case may be, and shall be final, binding and conclusive on the
Company and all employees and Participants and their respective heirs,
executors, administrators, successors and assigns.

 

3.5                               Procedures.  The Board may designate one of
the members of the Committee as chairman and the Committee shall hold meetings,
subject to the By-Laws of the Company, at such times and places as it shall deem
advisable, including, without limitation, by telephone conference or written
consent to the extent permitted by applicable law.  A majority of the Committee
members shall constitute a quorum.  All determinations of the Committee shall be
made by a majority of its members.  Any decision or determination reduced to
writing and signed by all the Committee members in accordance with the By-Laws
of the Company shall be fully effective as if it had been made by a vote at a
meeting duly called and held.  The Committee shall make such rules and
regulations for the conduct of its business as it shall deem advisable.

 

3.6                               Designation of Consultants/Liability.

 

(a)                                 The Committee may designate employees of the
Company and professional advisors to assist the Committee in the administration
of the Plan and (to the extent permitted by applicable law and applicable
exchange rules) may grant authority to officers to grant Awards and/or execute
agreements or other documents on behalf of the Committee.

 

(b)                                 The Committee may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of the
Plan and may rely upon any opinion received from any such counsel or consultant
and any computation received from any such consultant or agent.  Expenses
incurred by the Committee or the Board in the engagement of any such counsel,
consultant or agent shall be paid by the Company.  The Committee, its members
and any person designated pursuant to sub-section (a) above shall not be liable
for any action or determination made in good faith with respect to the Plan.  To
the maximum extent permitted by applicable law, no officer of the Company or
member or former member of the Committee or of the Board shall be liable for any
action or determination made in good faith with respect to the Plan or any Award
granted under it.

 

3.7                               Indemnification.  To the maximum extent
permitted by applicable law and the Certificate of Incorporation and By-Laws of
the Company and to the extent not covered by insurance directly insuring such
person, each officer and member or former member of the Committee or the Board
shall be indemnified and held harmless by the Company against any

 

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cost or expense (including reasonable fees of counsel reasonably acceptable to
the Committee) or liability (including any sum paid in settlement of a claim
with the approval of the Committee), and advanced amounts necessary to pay the
foregoing at the earliest time and to the fullest extent permitted, arising out
of any act or omission to act in connection with the administration of the Plan,
except to the extent arising out of such officer’s, member’s or former member’s
own fraud or bad faith.  Such indemnification shall be in addition to any rights
of indemnification the employees, officers, Directors or members or former
officers, Directors or members may have under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or any Affiliate or any
agreement of indemnification.  Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under the Plan.

 

ARTICLE IV

 

SHARE LIMITATION

 

4.1                               Shares.

 

(a)                                 Aggregate Limitation.  The following
provisions apply in determining the aggregate number of shares of Common Stock
available under the Plan.

 

(i)                                     The aggregate number of shares of Common
Stock that may be issued or used for reference purposes or with respect to which
Awards may be granted under the Plan shall not exceed a total of 43,200,868,
which represents an increase of 14,300,000 shares of Common Stock, plus
19,000,000 shares of Common Stock (representing the shares of Common Stock
reserved under the Plan prior to the amendment and restatement of the Plan as
provided herein and as approved by the Company’s stockholders at its 2004 annual
meeting), plus 9,900,868 shares of Common Stock available for grant under the
Prior Plans (in each case, subject to any increase or decrease pursuant to
Section 4.2), which may be either authorized and unissued Common Stock or Common
Stock held in or acquired for the treasury of the Company or both.  Any shares
of Common Stock that are subject to Awards of Options or Stock Appreciation
Rights shall be counted against this limit as one share for every share
granted.  Any shares of Common Stock that are subject to Awards other than
Options or Stock Appreciation Rights shall be counted against this limit as 2.20
shares for every share granted.

 

(ii)                                  If any Option or Stock Appreciation Right
granted under the Plan or any stock option granted under a Prior Plan expires,
terminates or is canceled for any reason without having been exercised in full,
the number of shares of Common Stock underlying such unexercised Award or Prior
Plan option shall again be available for the purpose of Awards under the Plan. 
If any Restricted Stock Awards, Performance Awards, or Other Stock-Based Awards
denominated in shares of Common Stock awarded under the Plan to a Participant
are forfeited for any reason, the number of forfeited shares of Common Stock
shall again be available for the purposes of Awards under the Plan.  If a Stock
Appreciation Right is granted in tandem with an Option, such grant shall apply
only once against the maximum number of shares of Common Stock that may be
issued under the Plan.

 

10

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Shares of Common Stock underlying Awards (or Prior Plan options) that may be
settled solely in cash shall not be deemed to use shares that may be issued
under the Plan.

 

(iii)          If Common Stock has been delivered or exchanged as full or
partial payment to the Company for payment of purchase price of an Award under
the Plan other than an Option or Stock Appreciation Right, or for payment of
withholding taxes with respect to an Award under the Plan other than an Option
or Stock Appreciation Right, the number of shares of Common Stock delivered or
exchanged as payment of purchase price or for withholding shall again be
available for the purposes of Awards under the Plan.  Notwithstanding the
foregoing, the number of shares of Common Stock available for the purpose of
Awards under this Plan shall be reduced by (i) the total number of Options or
Stock Appreciation Rights exercised, regardless of whether any of the shares of
Common Stock underlying such Awards are not actually issued to the Participant
as the result of a net settlement, and (ii) any shares of Common Stock used to
pay any exercise price or tax withholding obligation with respect to any Option
or Stock Appreciation Right.  In addition, the Company may not use the cash
proceeds it receives from Option exercises to repurchase shares of Common Stock
on the open market for reuse under this Plan.

 

(iv)          Any shares of Common Stock that again become available for grant
pursuant to this Section 4.1(a) shall be added back as one share if such share
were subject to an Option or Stock Appreciation Right granted under the Plan or
an option granted under a Prior Plan, and for Awards granted on or after the
Effective Date, as 2.20 shares if such shares were subject to an Award other
than an Option or a Stock Appreciation Right granted under the Plan and, for
Awards granted prior to the Effective Date, 1.80 shares if such shares were
subject to an Award other than an Option or a Stock Appreciation Right granted
under the Plan.

 

(v)           From and after the date of the Company’s 2004 annual stockholders’
meeting at which the Company’s stockholders approved the Plan (as in effect
prior to the amendment and restatement of the Plan as provided herein), the
Company shall make no new grants of options under the Prior Plans and the shares
available under the Prior Plans shall be made available for grants under the
Plan.

 

(b)           Individual Employee Limitations.  The following provisions apply
in determining the Awards that may be granted to an individual during a fiscal
year of the Company.

 

(i)            The maximum number of shares of Common Stock subject to Options
and/or Stock Appreciation Rights that may be granted under the Plan during any
fiscal year of the Company to an Eligible Employee shall be, in the aggregate,
1,000,000 shares (subject to any increase or decrease pursuant to Section 4.2). 
The maximum number of shares of Common Stock subject to Restricted Stock Awards
and/or Other Stock-Based Awards that are subject to the attainment of specified
performance goals that may be granted under the Plan during any fiscal year of
the Company to an Eligible Employee shall be, in the aggregate, 750,000 shares
(subject to any increase or decrease pursuant to Section 4.2).  The

 

11

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maximum number of shares of Common Stock subject to Performance Awards
denominated in shares of Common Stock that may be granted to an Eligible
Employee under the Plan attributable to any year of a Performance Period shall
be 750,000 shares (subject to any increase or decrease pursuant to
Section 4.2).  If a Stock Appreciation Right is granted in tandem with an Option
it shall apply against the Eligible Employee’s individual share limitation
applicable to Stock Appreciation Rights and Options.

 

(ii)           The maximum payment that may be made to an Eligible Employee
under Performance Awards granted under the Plan and denominated in dollars
attributable to any year of a Performance Period shall be $5,000,000.

 

(iii)          Notwithstanding the foregoing, to the extent that shares of
Common Stock or amounts for which Awards are permitted to be granted to an
Eligible Employee pursuant to Section 4.1(b) during a fiscal year of the Company
or Performance Period, as the case may be, are not covered by an Award in the
Company’s fiscal year or Performance Period, as the case may be, such shares of
Common Stock or amounts shall be available for grant or issuance to such
Eligible Employee in any subsequent fiscal year or years during the term of the
Plan.

 

(c)           Substitute Awards.  Substitute Awards shall not reduce the shares
of Common Stock authorized for grant under the Plan pursuant to Section 4.1(a)
or authorized for grant to an Eligible Employee in any fiscal year of the
Company pursuant to Section 4.1(b).  Additionally, in the event that a company
acquired by the Company or an Affiliate, or with which the Company or an
Affiliate combines, has shares available under a pre-existing plan approved by
stockholders and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms of such
pre-existing plan (as adjusted, to the extent appropriate, using the exchange
ratio or other adjustment or valuation ratio or formula used in such acquisition
or combination to determine the consideration payable to the holders of common
stock of the entities party to such acquisition or combination) may be used for
Awards under the Plan and shall not reduce the shares of Common Stock authorized
for grant under the Plan; provided that Awards using such available shares shall
not be made after the date awards or grants could have been made under the terms
of the pre-existing plan, absent the acquisition or combination, and shall be
made only to individuals who were not Eligible Employees, Consultants or
Non-Employee Directors prior to such acquisition or combination.

 

4.2          Changes.

 

(a)           The existence of the Plan and the Awards granted hereunder shall
not affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize (i) any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its
business, (ii) any merger or consolidation of the Company or any Affiliate,
(iii) any issuance of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of
the Company or any Affiliate, (v) any sale or transfer of all or part of the
assets or business of the Company or any Affiliate or (vi) any other corporate
act or proceeding.

 

(b)           Subject to the provisions of Section 4.2(d), in the event of any
such change in the

 

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capital structure or business of the Company by reason of any stock split,
reverse stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger, consolidation, spin-off, reorganization, partial or
complete liquidation, issuance of rights or warrants to purchase any Common
Stock or securities convertible into Common Stock, any sale or transfer of all
or part of the Company’s assets or business, any special cash dividend or any
other corporate transaction or event having an effect similar to any of the
foregoing and effected without receipt of consideration by the Company and the
Committee determines in good faith that an adjustment is necessary or
appropriate under the Plan to prevent substantial dilution or enlargement of the
rights granted to, or available for, Participants under the Plan, then the
aggregate number and kind of shares that thereafter may be issued under the
Plan, the number and kind of shares or other property (including cash) to be
issued upon exercise of an outstanding Award or under other Awards granted under
the Plan and the purchase price thereof shall be appropriately adjusted
consistent with such change in such manner as the Committee may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, Participants under the Plan, and any such adjustment determined
by the Committee in good faith shall be final, binding and conclusive on the
Company and all Participants and employees and their respective heirs,
executors, administrators, successors and assigns.  In connection with any event
described in this paragraph, the Committee may provide, in its sole discretion,
for the cancellation of any outstanding Awards and payment in cash or other
property in exchange therefor.  In furtherance of this Section 4.2(b), each
outstanding Award shall be adjusted as provided herein in the event of an
“equity restructuring” within the meaning of FASB ASC Topic 718.  Except as
provided in this Section 4.2 or in the applicable Award agreement, a Participant
shall have no rights by reason of any issuance by the Company of any class or
securities convertible into stock of any class, any subdivision or consolidation
of shares of stock of any class, the payment of any stock dividend, any other
increase or decrease in the number of shares of stock of any class, any sale or
transfer of all or part of the Company’s assets or business or any other change
affecting the Company’s capital structure or business.

 

(c)           Unless otherwise determined by the Committee, fractional shares of
Common Stock resulting from any adjustment in Awards pursuant to Section 4.2(a)
or (b) shall be aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions that are less than one-half and rounding-up for
fractions that are equal to or greater than one-half.  Notice of any adjustment
shall be given by the Committee to each Participant whose Award has been
adjusted and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan.

 

(d)           In the event of (x) a merger or consolidation in which the Company
is not the surviving entity, (y) any transaction that results in the acquisition
of substantially all of the Company’s outstanding Common Stock by a single
person or entity or by a group of persons and/or entities acting in concert, or
(z) the sale or transfer of all or substantially all of the Company’s assets
(all of the foregoing being referred to as an “Acquisition Event”), then the
Committee, in its sole discretion, may terminate all vested and unvested Awards
that are outstanding as of the date of Acquisition Event by delivering notice of
termination to each Participant at least 20 days prior to the date of the
Acquisition Event, in which case, during the period from the date on which such
notice of termination is delivered to the date of the Acquisition Event, each
such Participant shall have the right to exercise in full all of his or her
vested and unvested Awards that are then outstanding (without regard to any
limitations on

 

13

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vesting or exercisability otherwise contained in the Award agreements), but any
such exercise shall be contingent on the consummation of the Acquisition Event,
and, provided that, if the Acquisition Event does not occur within a specified
period after giving such notice for any reason whatsoever, the notice and
exercise pursuant thereto shall be null and void.

 

If an Acquisition Event occurs but the Committee does not terminate the
outstanding Awards pursuant to this Section 4.2(d), then the provisions of
Section 4.2(b) shall apply.

 

4.3          Minimum Purchase Price.  Notwithstanding any provision of the Plan
to the contrary, if authorized but previously unissued shares of Common Stock
are issued under the Plan, such shares shall not be issued for a consideration
that is less than as permitted under applicable law.

 

ARTICLE V

 

ELIGIBILITY

 

5.1          General Eligibility.  All Eligible Employees, Consultants and
Non-Employee Directors are eligible to be granted Awards.  Eligibility for the
grant of Awards and actual participation in the Plan shall be determined by the
Committee in its sole discretion.  Notwithstanding anything herein to the
contrary, no Option under which a Participant may receive Common Stock may be
granted under the Plan to an Eligible Employee, Consultant or Non-Employee
Director if such stock does not constitute “service recipient stock” for
purposes of Section 409A of the Code with respect to such Eligible Employee,
Consultant or Non-Employee Director, unless such Option is structured in a
manner intended to comply with, or be exempt from, Section 409A of the Code.

 

5.2          Incentive Stock Options.  Only employees of the Company or its
Subsidiaries, other than prospective employees, shall be eligible for grants of
Incentive Stock Options under the Plan.  Eligibility for the grant of an
Incentive Stock Option and actual participation in the Plan shall be determined
by the Committee in its sole discretion.

 

5.3          General Requirement.  The vesting and exercise of Awards granted to
a prospective employee or consultant shall be conditioned upon such individual
actually becoming an employee of or consultant to the Company or an Affiliate
within a reasonable time thereafter, as determined by the Committee.

 

ARTICLE VI

 

STOCK OPTIONS

 

6.1          Options.  Options may be granted alone or in addition to other
Awards granted under the Plan.  The Committee shall have the authority to grant
any Eligible Employee, Consultant or Non-Employee Director one or more Options. 
Each Option granted under the Plan shall be one of two types: (i) an Incentive
Stock Option intended to satisfy the requirements of Section 422 of the Code; or
(ii) a non-qualified Option, not intended to be an Incentive Stock Option within
the meaning of Section 422 of the Code.

 

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6.2          Terms of Options.  Options granted under the 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 the Plan, as
the Committee shall deem desirable:

 

(a)           Exercise Price.  The exercise price per share of Common Stock
subject to an Option shall be determined by the Committee at the time of grant,
provided that the per-share exercise price of any Option shall not be less than
100% of the Fair Market Value of the Common Stock at the time of grant;
provided, however, that if an Incentive Stock Option is granted to a Ten Percent
Shareholder, the per share exercise price of any such Option shall be no less
than 110% of the Fair Market Value of the Common Stock at the time of grant.

 

(b)           Option Term.  The term of each Option shall be fixed by the
Committee, provided that no Option shall be exercisable more than eight
(8) years after the date the Option is granted; and provided further that the
term of an Incentive Stock Option granted to a Ten Percent Shareholder shall not
exceed five (5) years after the date the Option is granted.

 

(c)           Exercisability.  Unless the Committee determines otherwise at
grant or as otherwise provided herein, 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.  Notwithstanding the foregoing, if the Committee provides,
in its discretion, that any Option is exercisable subject to certain limitations
(including, without limitation, that such Option is exercisable only in
installments or within certain time periods), the Committee may waive such
limitations on the exercisability at any time at or after grant in whole or in
part (including, without limitation, waiver of the installment exercise
provisions or acceleration of the time at which such Option may be exercised),
based on such factors, if any, as the Committee shall determine, in its sole
discretion.  Notwithstanding anything herein to the contrary, the schedule
according to which any Option shall vest shall be no less than (i) one year, if
the vesting terms and conditions are based (in whole or in part) on the
attainment of one or more objective performance goals, including, to the extent
the Committee so determines, from among those set forth in Exhibit A and (ii)
three years, if the vesting terms and conditions are based solely on the
continued performance of services by the Participant (with no more than one
third of the shares of Common Stock subject thereto vesting on each of the first
three anniversaries of the date of grant); provided, that, subject to the terms
of the Plan, the Committee shall be authorized (at the time of grant or
thereafter) to provide for the acceleration of vesting in the event of a change
in control or a Participant’s retirement (including, without limitation,
Retirement), death or Disability; and provided further, that, subject to the
limitations set forth in Section 4.1(a)(i), Options with respect to up to 5% of
the total number of shares of Common Stock reserved for Awards under the Plan
may be granted that are not subject to the foregoing limitations.

 

(d)           Method of Exercise.  Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, to the extent
vested, 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 of Common Stock to be purchased.  Such notice shall be
accompanied by payment in full of the purchase price (or arrangements
satisfactory to the Committee made for such payment) as follows: (i) in cash or
by check, bank draft or money order payable to the order of the Company; (ii)
solely to the extent permitted by applicable law, if the Common Stock is traded
on a national securities exchange or quoted on a national quotation system
sponsored by the Financial Industry Regulatory Authority, and the Committee

 

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authorizes, through a procedure whereby the Participant delivers irrevocable
instructions to a broker reasonably acceptable to the Committee to deliver
promptly to the Company an amount equal to the purchase price; or (iii) on such
other terms and conditions as may be acceptable to the Committee (including,
without limitation, the relinquishment of Options or by payment in full or in
part in the form of Common Stock (including by attestation) owned by the
Participant for such period, or acquired in such manner, as to avoid an
incremental charge, for accounting purposes, against the Company’s earnings as
reported in the Company’s financial statements (and for which the Participant
has good title free and clear of any liens and encumbrances) based on the Fair
Market Value of the Common Stock on the payment date as determined by the
Committee).  No shares of Common Stock shall be issued until payment therefor,
as provided herein, has been made or provided for.

 

(e)           Termination by Death, Disability or Retirement.  Unless otherwise
(x) provided in a written agreement between the Company and the Participant or
(y) determined by the Committee at grant or (if no rights of the Participant are
reduced) thereafter, if a Participant’s Termination is by reason of death,
Disability or Retirement, all Options that are held by such Participant that are
vested and exercisable at the time of the Participant’s Termination may be
exercised by the Participant (or, in the case of death, by the legal
representative of the Participant’s estate) at any time within a period of one
year from the date of such Termination, but in no event beyond the expiration of
the stated term of such Options; provided, however, that in the case of
Retirement, if the Participant dies within such exercise period, all unexercised
Options held by such Participant shall thereafter be exercisable, to the extent
to which they were exercisable at the time of death, for a period of one year
from the date of such death, but in no event beyond the expiration of the stated
term of such Options.

 

(f)            Involuntary Termination Without Cause or for Good Reason.  Unless
otherwise (x) provided in a written agreement between the Company and the
Participant or (y) determined by the Committee at grant, or (if no rights of the
Participant are reduced) thereafter, if a Participant’s Termination is by
involuntary termination without Cause or, to the extent applicable, Good Reason,
all Options that are held by such Participant that are vested and exercisable at
the time of the Participant’s Termination may be exercised by the Participant at
any time within a period of 90 days from the date of such Termination, but in no
event beyond the expiration of the stated term of such Options.

 

(g)           Voluntary Termination.  Unless otherwise (x) provided in a written
agreement between the Company and the Participant or (y) determined by the
Committee at grant or (if no rights of the Participant are reduced) thereafter,
if a Participant’s Termination is voluntary (other than a voluntary termination
described in subsection (h) (ii) below or covered by (f) above), all Options
held by such Participant that are vested and exercisable at the time of the
Participant’s Termination may be exercised by the Participant at any time within
a period of 90 days from the date of such Termination, but in no event beyond
the expiration of the stated term of such Options.

 

(h)           Termination for Cause.  Unless otherwise (x) provided in a written
agreement between the Company and the Participant or (y) determined by the
Committee at grant or (if no rights of the Participant are reduced) thereafter,
if a Participant’s Termination (i) is for Cause or (ii) is a voluntary
Termination after the occurrence of an event that would be grounds for a
Termination for Cause, all Options held by such Participant, whether or not
vested, shall

 

16

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thereupon terminate and expire as of the date of such Termination.

 

(i)            Unvested Options.  Unless otherwise (x) provided in a written
agreement between the Company and the Participant or (y) determined by the
Committee at grant or (if no rights of the Participant are reduced) thereafter,
Options that are not vested as of the date of a Participant’s Termination for
any reason shall terminate and expire as of the date of such Termination.

 

(j)            Form, Modification, Extension and Renewal of Options.  Subject to
the terms and conditions and within the limitations of the Plan, Options shall
be evidenced by such form of agreement or grant as is approved by the Committee,
and the Committee may (i) modify, extend or renew outstanding Options granted
under the Plan (provided that the rights of a Participant are not reduced
without his or her consent), and (ii) accept the surrender of outstanding
Options (up to the extent not theretofore exercised) and authorize the granting
of new Options in substitution therefor (to the extent not theretofore
exercised).  Notwithstanding the foregoing, an outstanding Option may not be
modified to reduce the exercise price thereof nor may a new Option at a lower
price be substituted for a surrendered Option (other than adjustments or
substitutions in accordance with Section 4.2), unless such action is approved by
the stockholders of the Company.

 

(k)           Early Exercise.  The Committee may provide that an Option include
a provision whereby the Participant may elect at any time before the
Participant’s Termination to exercise the Option as to any part or all of the
shares of Common Stock subject to the Option prior to the full vesting of the
Option and such shares shall be subject to the provisions of Article VIII and
treated as restricted stock.  Any unvested shares of Common Stock so purchased
may be subject to a repurchase option in favor of the Company or to any other
restriction the Committee determines to be appropriate.

 

(l)            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 an Eligible Employee during any calendar year under the Plan
and/or any other stock option plan of the Company, any Subsidiary or any Parent
exceeds $100,000, such Options shall be treated as non-qualified stock options.
In addition, if an Eligible Employee does not remain employed by the Company or
any Subsidiary at all times from the time an Incentive Stock Option is granted
until three (3) months prior to the date of exercise thereof (or such other
period as required by applicable law), such Option shall be treated as a
non-qualified stock option. Should any provision of the Plan not be necessary in
order for the 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 stockholders of the
Company.

 

(m)          Other Terms and Conditions.  Options may contain such other
provisions, which shall not be inconsistent with any of the terms of the Plan,
as the Committee shall deem appropriate.

 

17

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ARTICLE VII

 

STOCK APPRECIATION RIGHTS

 

7.1          Tandem Stock Appreciation Rights.  Tandem Stock Appreciation Rights
shall be granted in conjunction with all or part of any Option (a “Reference
Stock Option”) granted under the Plan.  Each Tandem Stock Appreciation Right may
be granted either at or after the time of the grant of its Reference Stock
Option.

 

7.2          Terms and Conditions of Tandem Stock Appreciation Rights.  Tandem
Stock Appreciation Rights granted hereunder shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Committee, and the following:

 

(a)           Exercise Price.  The exercise price per share of Common Stock
subject to a Tandem Stock Appreciation Right shall be the exercise price of the
Reference Stock Option as determined in accordance with Section 6.2(a).

 

(b)           Term.  A Tandem Stock Appreciation Right or applicable portion
thereof granted with respect to a Reference Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the Reference Stock
Option, except that, unless otherwise determined by the Committee, in its sole
discretion, at the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by the Reference Stock
Option shall not be reduced until and then only to the extent the exercise or
termination of the Reference Stock Option causes the number of shares covered by
the Tandem Stock Appreciation Right to exceed the number of shares remaining
available and unexercised under the Reference Stock Option.

 

(c)           Exercisability.  Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Reference
Stock Options to which they relate shall be exercisable in accordance with the
provisions of Article VI, and shall be subject to the provisions of
Section 6.2(c).

 

(d)           Method of Exercise.  A Tandem Stock Appreciation Right may be
exercised by the Participant by surrendering the applicable portion of the
Reference Stock Option.  Upon such exercise and surrender, the Participant shall
be entitled to receive an amount determined in the manner prescribed in this
Section 7.2.  Options that have been so surrendered, in whole or in part, shall
no longer be exercisable to the extent the related Tandem Stock Appreciation
Rights have been exercised.

 

(e)           Payment.  Upon the exercise of a Tandem Stock Appreciation Right,
a Participant shall be entitled to receive up to, but no more than, an amount in
cash and/or Common Stock (as chosen by the Committee in its sole discretion at
the time of grant) equal in value to the excess of the Fair Market Value of one
share of Common Stock over the Option exercise price per share specified in the
Reference Stock Option agreement multiplied by the number of shares in respect
of which the Tandem Stock Appreciation Right shall have been exercised.

 

(f)            Deemed Exercise of Reference Stock Option.  Upon the exercise of
a Tandem

 

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Stock Appreciation Right for Common Stock, the Reference Stock Option (or part
thereof, based on the value of the Common Stock issued on exercise) to which
such Stock Appreciation Right is related shall be deemed to have been exercised
for purposes of the limitation set forth in Article IV of the Plan on the number
of shares of Common Stock to be issued under the Plan.

 

7.3          Non-Tandem Stock Appreciation Rights.  Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Options granted
under the Plan.

 

7.4          Terms and Conditions of Non-Tandem Stock Appreciation Rights. 
Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of the Plan, as shall
be determined from time to time by the Committee, and the following:

 

(a)           Exercise Price.  The exercise price per share of Common Stock
subject to a Non-Tandem Stock Appreciation Right shall be determined by the
Committee at the time of grant, provided that the per share exercise price of a
Non-Tandem Stock Appreciation Right shall not be less than 100% of the Fair
Market Value of the Common Stock at the time of grant.

 

(b)           Term.  The term of each Non-Tandem Stock Appreciation Right shall
be fixed by the Committee, but shall not exceed eight (8) years after the date
the right is granted.

 

(c)           Exercisability.  Unless the Committee determines otherwise at
grant or as otherwise provided herein, Non-Tandem Stock Appreciation Rights
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at grant.  If the Committee
provides, in its discretion, that any such right is exercisable subject to
certain limitations (including, without limitation, that it is exercisable only
in installments or within certain time periods), the Committee may waive such
limitations on the exercisability at any time at or after grant in whole or in
part (including, without limitation, waiver of the installment exercise
provisions or acceleration of the time at which such right may be exercised),
based on such factors, if any, as the Committee shall determine, in its sole
discretion.  Notwithstanding anything herein to the contrary, the schedule
according to which any Non-Tandem Stock Appreciation Right shall vest shall be
no less than (i) one year, if the vesting terms and conditions are based (in
whole or in part) on the attainment of one or more objective performance goals,
including, to the extent the Committee so determines, from among those set forth
in Exhibit A and (ii) three years, if the vesting terms and conditions are based
solely on the continued performance of services by the Participant (with no more
than one third of the shares of Common Stock subject thereto vesting on each of
the first three anniversaries of the date of grant); provided, that, subject to
the terms of the Plan, the Committee shall be authorized (at the time of grant
or thereafter) to provide for the acceleration of vesting in the event of a
change in control or a Participant’s retirement (including, without limitation,
Retirement), death or Disability; and provided further, that, subject to the
limitations set forth in Section 4.1(a), Options with respect to up to 5% of the
total number of shares of Common Stock reserved for Awards under the Plan may be
granted that are not subject to the foregoing limitations.

 

(d)           Method of Exercise.  Subject to the installment, exercise and
waiting period provisions that apply under subsection (b) above, Non-Tandem
Stock Appreciation Rights may be exercised in whole or in part at any time in
accordance with the applicable Award agreement, by giving written notice of
exercise to the Company specifying the number of Non-Tandem

 

19

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Stock Appreciation Rights to be exercised.

 

(e)           Payment.  Upon the exercise of a Non-Tandem Stock Appreciation
Right, a Participant shall be entitled to receive, for each right exercised, an
amount in cash and/or Common Stock (as chosen by the Committee in its sole
discretion at the time of grant) no greater than the excess of the Fair Market
Value of one share of Common Stock on the date the right is exercised over the
Fair Market Value of one share of Common Stock on the date the right was awarded
to the Participant.

 

ARTICLE VIII

 

RESTRICTED STOCK AWARDS

 

8.1          Restricted Stock Awards.  Restricted Stock Awards may be issued
either alone or in addition to other Awards granted under the Plan.  The
Committee shall determine the Eligible Employees, Consultants and Non-Employee
Directors, to whom, and the time or times at which, grants of Restricted Stock
Awards shall be made, the number of shares to be awarded, the price (if any) to
be paid by the Participant (subject to Section 8.2), 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.

 

8.2          Awards and Certificates.  Eligible Employees, Consultants and
Non-Employee Directors selected to receive a Restricted Stock Award shall not
have any rights with respect to such Award, unless and until such Participant
has delivered a fully executed copy of the agreement evidencing the Award to the
Company or has otherwise complied with the applicable terms and conditions of
such Award (including, without limitation, procedures or provisions regarding
the deemed acceptance of such Award).  Further, such Award shall be subject to
the following conditions:

 

(a)           Purchase Price.  Unless (x) otherwise provided by the Committee or
(y) prohibited by applicable law, the purchase price of a Restricted Stock Award
shall be zero.  If required by law or the Committee otherwise determines that a
Restricted Stock Award shall have a purchase price, such purchase price shall
not be less than par value.

 

(b)           Acceptance.  Restricted Stock Awards must be accepted within a
period of 60 days (or such shorter period as the Committee may specify at grant)
after the grant date, by executing an Award agreement or otherwise accepting
such Award and by paying the price (if any) the Committee has designated
thereunder.

 

8.3          Restrictions and Conditions.  Restricted Stock Awards awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:

 

(a)           Restriction Period.

 

(i)            The Participant shall not be permitted to Transfer a Restricted
Stock Award awarded under the Plan during the period or periods set by the
Committee (the “Restriction Period”) commencing on the date of such Award, as
set forth in the Award agreement and such agreement shall set forth a vesting
schedule and any

 

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events that would accelerate vesting of the Restricted Stock Award.  Subject to
the limitations provided in Section 8.3(a)(i), the Committee in its sole
discretion may (A) provide for the lapse of restrictions in whole or in part,
(B) accelerate the vesting of all or any part of any Restricted Stock Award
and/or (C) waive the deferral limitations for all or any part of any such
Award.  Notwithstanding any other provision of the Plan to the contrary, the
Restriction Period with respect to any Restricted Stock Award shall be no less
than (x) one year, if the lapsing of restrictions is based (in whole or in part)
on the attainment of one or more objective performance goals, including, to the
extent the Committee so determines, from among those set forth in Exhibit A and
(y) three years, if the lapsing of restrictions is based solely on the continued
performance of services by the Participant (with restrictions as to no more than
one third of the shares of Common Stock subject thereto lapsing on each of the
first three anniversaries of the date of grant); provided, that, subject to the
terms of the Plan, the Committee shall be authorized (at the time of grant or
thereafter) to provide for the earlier lapsing of restrictions in the event of a
change in control or a Participant’s retirement (including, without limitation,
Retirement), death or Disability; and provided further, that, subject to the
limitations set forth in Section 4.1(a), Restricted Stock Awards with respect to
up to 5% of the total number of shares of Common Stock reserved for Awards under
the Plan may be granted that are not subject to the foregoing limitations.

 

(ii)                                  Objective Performance Goals, Formulas or
Standards.  If the grant of a Restricted Stock Award or the lapse of
restrictions is based on the attainment of performance goals, the Committee
shall establish the objective performance goals, including, to the extent the
Committee so determines, from among those set forth in Exhibit A hereto, and the
applicable vesting percentage of the Restricted Stock Award applicable to each
Participant or class of Participants in writing prior to the beginning of the
applicable fiscal year or at such later date as otherwise determined by the
Committee and while the outcome of the performance goals are substantially
uncertain.

 

(b)                                 Rights as a Stockholder; Dividends.  Except
as provided in this subsection (b) and except as otherwise determined by the
Committee, with respect to a Restricted Stock Award, the Participant shall have
all of the rights of a holder of shares of Common Stock of the Company
including, without limitation, the right to receive any dividends, the right to
vote such shares and, subject to and conditioned upon the full vesting of shares
of Common Stock, the right to tender such shares.  The payment of dividends on
any Restricted Stock Award shall be deferred until, and conditioned upon, the
expiration of the applicable Restriction Period.

 

(c)                                  Termination.  Unless otherwise (x) provided
in a written agreement between the Company and the Participant or (y) determined
by the Committee at grant or (if no rights of the Participant are reduced)
thereafter, subject to the applicable provisions of the Award agreement and the
Plan, upon a Participant’s Termination for any reason during the relevant
Restriction Period, all Restricted Stock Awards still subject to restriction
will vest or be forfeited in accordance with the terms and conditions
established by the Committee at grant or thereafter.

 

(d)                                 Lapse of Restrictions.  If and when the
Restriction Period expires without a prior

 

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forfeiture of the Restricted Stock Award, certificates for shares attributable
to such Award shall be delivered to the Participant (or, if certificates were
previously issued, replacement certificates shall be delivered upon return of
the previously issued certificates).  All legends shall be removed from said
certificates at the time of delivery to the Participant, except as otherwise
required by applicable law or other limitations imposed by the Committee. 
Notwithstanding the foregoing, actual certificates shall not be issued to the
extent that book entry recordkeeping is used.

 

ARTICLE IX

 

PERFORMANCE AWARDS

 

9.1                               Performance Awards.  Performance Awards may be
awarded either alone or in addition to other Awards granted under the Plan.  The
Committee shall determine the Eligible Employees, Consultants and Non-Employee
Directors, to whom, and the time or times at which, Performance Awards shall be
awarded, the number of Performance Awards to be awarded to any person, the
duration of the period (the “Performance Period”) during which, and the
conditions under which, a Participant’s right to Performance Awards will be
vested, the ability of Participants to defer receipt of Performance Awards, and
the other terms and conditions of the Award in addition to those set forth in
Section 9.2.  Unless the Committee determines otherwise at grant, the minimum
Performance Period shall be one year.

 

The Committee shall condition the right to payment or vesting of any Performance
Award upon the attainment of objective performance goals established pursuant to
Section 9.2(b) below.

 

9.2                               Terms and Conditions.  Performance Awards
awarded pursuant to this Article IX shall be subject to the following terms and
conditions:

 

(a)                                 Earning or Vesting of Performance Award.  At
the expiration of the applicable Performance Period, the Committee shall
determine the extent to which the performance goals established pursuant to
Section 9.2(b) are achieved and the percentage of each Performance Award that
has been earned or vested.

 

(b)                                 Objective Performance Goals, Formulas or
Standards.  The Committee shall establish the objective performance goals,
including, to the extent the Committee so determines, from among those set forth
in Exhibit A hereto, for the earning of Performance Awards based on a
Performance Period applicable to each Participant or class of Participants in
writing prior to the beginning of the applicable Performance Period or, to the
extent such Award is intended to comply with Section 162(m) of the Code, at such
later date as permitted thereunder and while the outcome of the performance
goals are substantially uncertain.

 

(c)                                  Dividends.  Amounts equal to any dividends
declared during the Performance Period with respect to the number of shares of
Common Stock covered by a Performance Award will not be paid to the Participant
during the Performance Period.

 

(d)                                 Payment.  Following the Committee’s
determination, shares of Common Stock and/or cash, as determined by the
Committee in its sole discretion at the time of grant, shall be

 

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delivered to the Eligible Employee, Consultant or Non-Employee Director, or his
legal representative, in an amount equal to such individual’s earned or vested
Performance Award.  Notwithstanding the foregoing, the Committee may, in its
sole discretion and, to the extent Section 162(m) of the Code is applicable, in
accordance therewith, (i) award a number of shares of Common Stock or an amount
of cash less than the earned Performance Award and/or (ii) subject the payment
of all or part of any Performance Award to additional vesting, forfeiture and
deferral conditions.

 

(e)                                  Termination.  Subject to the applicable
provisions of the Award agreement and the Plan, upon a Participant’s Termination
for any reason during the Performance Period for a Performance Award, such
Performance Award will vest or be forfeited in accordance with the terms and
conditions established by the Committee at grant or, if no rights of the
Participant are reduced, thereafter.

 

(f)                                   Accelerated Vesting.  Upon (x) a change in
control, (y) a Participant’s without Cause or Good Reason termination or
termination by reason of death, Disability or Retirement, or (z) if required
pursuant to an agreement in existence prior to the date of grant to which the
Participant is a party, the Committee, in its sole discretion, may accelerate
the vesting of all or any part of any Performance Award or waive the deferral
limitations for all or any part of such Award.

 

ARTICLE X

 

OTHER STOCK-BASED AWARDS

 

10.1                        Other Awards.  Subject to the share limitations set
forth in Section 4.1(a), the Committee is authorized to grant to Eligible
Employees, Consultants and Non-Employee Directors Other Stock-Based Awards that
are payable in, valued in whole or in part by reference to, or otherwise based
on or related to, shares of Common Stock, including, but not limited to, (a)
shares of Common Stock awarded purely as a bonus in lieu of cash and not subject
to any restrictions or conditions, (b) shares of Common Stock in payment of the
amounts due under an incentive or performance plan sponsored or maintained by
the Company or an Affiliate, (c) stock equivalent units, (d) restricted stock
units, and (e) Awards valued by reference to book value of shares of Common
Stock.  To the extent permitted by law, the Committee may, in its sole
discretion, permit Eligible Employees and/or Non-Employee Directors to defer all
or a portion of their cash compensation in the form of Other Stock-Based Awards
granted under the Plan, subject to the terms and conditions of any deferred
compensation arrangement established by the Company, which shall be structured
in a manner intended to comply with Section 409A of the Code.  Other Stock-Based
Awards may be granted either alone or in addition to or in tandem with other
Awards granted under the Plan.

 

Subject to the provisions of the Plan, the Committee shall have authority to
determine the Eligible Employees, Consultants and Non-Employee Directors, 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 condition the grant or vesting of Other Stock-Based Awards
upon the attainment of specified performance goals, including, to the extent the
Committee so

 

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determines, from among those set forth on Exhibit A hereto, as the Committee may
determine, in its sole discretion, including to comply with the requirements of
Section 162(m) of the Code.  If the grant or vesting of an Other Stock-Based
Award is based on the attainment of performance criteria, the Committee shall,
in its sole discretion, establish the objective performance criteria and the
applicable vesting percentage of the Other Stock-Based Award applicable to each
Participant or class of Participants in writing prior to the beginning of the
applicable performance period or at such later date while the outcome of the
performance goals are substantially uncertain as otherwise determined by the
Committee in its sole discretion and that is permitted under Section 162(m) of
the Code with regard to an Other Stock-Based Award that is intended to comply
with Section 162(m) of the Code.  With regard to an Other Stock-Based Award that
is intended to comply with Section 162(m) of the Code, (A) to the extent any
provision would create impermissible discretion under Section 162(m) of the Code
or otherwise violate Section 162(m) of the Code, such provision shall be of no
force or effect and (B) the applicable performance criteria shall be based on
one or more of the performance goals set forth in Exhibit A hereto.

 

10.2                        Terms and Conditions.  Other Stock-Based Awards made
pursuant to this Article X shall be subject to the following terms and
conditions:

 

(a)                                 Dividends.  The recipient of an Award under
this Article X shall not 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, except that the Committee may determine, in
its sole discretion, at grant or, if no rights of the Participant are reduced,
thereafter, to provide for the payment of dividends or dividend equivalents on
the Award solely on or following the vesting of the Award.

 

(b)                                 Vesting.  Any Award under this Article X and
any Common Stock covered by any such Award shall vest or be forfeited to the
extent so provided in the Award agreement, as determined by the Committee, in
its sole discretion.  Notwithstanding any other provision of the Plan to the
contrary, the schedule according to which any Award under this Article X shall
vest shall be no less than (i) one year, if the vesting terms and conditions are
based (in whole or in part) on the attainment of one or more objective
performance goals, including, to the extent the Committee so determines, from
among those set forth in Exhibit A and (ii) three years, if the vesting terms
and conditions are based solely on the continued performance of services by the
Participant (with no more than one third of the shares of Common Stock subject
thereto vesting on each of the first three anniversaries of the date of grant);
provided, that, subject to the terms of the Plan, the Committee shall be
authorized (at the time of grant or thereafter) to provide for the acceleration
of vesting in the event of a change in control or a Participant’s retirement
(including, without limitation, Retirement), death or Disability; and provided
further, that, subject to the limitations set forth in Section 4.1(a), Awards
under this Article X with respect to up to 5% of the total number of shares of
Common Stock reserved for Awards under the Plan may be granted that are not
subject to the foregoing limitations.

 

(c)                                  Price.  Common Stock issued on a bonus
basis under this Article X may be issued for no cash consideration.  However, in
no event will an option to purchase shares of Common Stock under the Plan be
granted with a per-share purchase price as of the date of grant of less than
Fair Market Value.

 

24

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ARTICLE XI

 

TERMINATION OR AMENDMENT OF PLAN/NON-TRANSFERABILITY OF AWARDS

 

11.1                        Termination or Amendment.  Notwithstanding any other
provision of the Plan, the Board (or a duly authorized Committee thereof) may at
any time, and from time to time, amend, in whole or in part, any or all of the
provisions of the Plan (including any amendment deemed necessary to ensure that
the Company may comply with any regulatory requirement referred to in Article
XIII), or suspend or terminate it entirely, retroactively or otherwise;
provided, however, that, except (x) to correct obvious drafting errors or as
otherwise required by law or applicable accounting rules, or (y) as specifically
provided herein, the rights of a Participant with respect to Awards granted
prior to such amendment, suspension or termination, may not be reduced without
the consent of such Participant and, provided, further, without the approval of
the holders of the Company’s Common Stock entitled to vote in accordance with
applicable law, no amendment may be made that would (i) increase the aggregate
number of shares of Common Stock that may be issued under the Plan under Section
4.1(a) (except by operation of Section 4.2); (ii) increase the maximum
individual limitations for a fiscal year or year of a Performance Period under
Section 4.1(b) (except by operation of Section 4.2); (iii) change the
classification of individuals eligible to receive Awards under the Plan; (iv)
extend the maximum option period under Section 6.2; (v) alter the performance
goals as set forth in Exhibit A; or (vi) require stockholder approval in order
for the Plan to continue to comply with the applicable provisions of Section
162(m) of the Code or, to the extent applicable to Incentive Stock Options,
Section 422 of the Code.  In no event may the Plan be amended without the
approval of the stockholders of the Company in accordance with the applicable
laws of the State of New York to increase the aggregate number of shares of
Common Stock that may be issued under the Plan, decrease the minimum exercise
price of any Award, amend the terms of outstanding Awards to reduce the exercise
price of outstanding Options or Stock Appreciation Rights or to cancel
outstanding Options or Stock Appreciation Rights (where prior to the reduction
or cancellation the exercise price equals or exceeds the fair market value of
the shares of Common Stock underlying such Awards) in exchange for cash, other
Awards or Options or Stock Appreciation Rights with an exercise price that is
less than the exercise price of the original Options or Stock Appreciation
Rights, or to make any other amendment that would require stockholder approval
under the rules of any securities exchange or system on which the Company’s
securities are listed or traded at the request of the Company.  The Committee
may amend the terms of any Award theretofore granted, prospectively or
retroactively, but, subject to Article IV above, except (x) to correct obvious
drafting errors or as otherwise required by law or applicable accounting rules,
or (y) as specifically provided herein, no such amendment or other action by the
Committee shall reduce the rights of any holder without the holder’s consent.

 

11.2                        Non-Transferability of Awards.  Except as the
Committee may permit, in its sole discretion, at the time of grant or
thereafter, no Award shall be Transferable by the Participant (including,
without limitation to, a Family Member) otherwise than by will or by the laws of
descent and distribution, and all Awards shall be exercisable, during the
Participant’s lifetime, only by the Participant.  Any attempt to Transfer any
Award or benefit not otherwise permitted by the Committee in accordance with the
foregoing sentence shall be void, and any such benefit shall not in any manner
be liable for or subject to the debts, contracts, liabilities,

 

25

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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. 
An Option that is Transferred pursuant to the preceding sentence (i) may not be
subsequently Transferred otherwise than by will or by the laws of descent and
distribution, except as may otherwise be permitted by the Committee and (ii)
remains subject to the terms of the Plan and the applicable Award agreement. 
Any shares of Common Stock acquired by a permissible transferee shall continue
to be subject to the terms of the Plan and the applicable Award agreement.

 

ARTICLE XII

 

UNFUNDED PLAN

 

12.1                        Unfunded Status of Plan.  The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation.  With
respect to any payments as to which a Participant has a fixed and vested
interest but that are 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 unsecured creditor of the Company.

 

ARTICLE XIII

 

GENERAL PROVISIONS

 

13.1                        Legend and Custody.  The Committee may require each
person receiving shares of Common Stock pursuant to an 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 the Plan, the certificates for such shares
may include any legend that 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 stop transfer orders and other restrictions as the Committee may
deem advisable under (a) the rules, regulations and other requirements of the
Securities and Exchange Commission, (b) any stock exchange upon which the Common
Stock is then listed or any national securities exchange system upon whose
system the Common Stock is then quoted, or (c) applicable law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.

 

If stock certificates are issued in respect of an Award, the Committee may
require that any stock certificates evidencing such Award be held in custody by
the Company until the Award has vested or the restrictions thereon have lapsed,
and that, as a condition of any grant of such an Award, the Participant shall
have delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.

 

13.2                        Other Plans.  Nothing contained in the Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder 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/Directorship/Consultancy. 
Neither the Plan nor the grant of any Option or other Award hereunder shall give
any Participant or other employee, Consultant or Non-Employee Director any right
with respect to continuance of employment, consultancy or directorship by the
Company or any Affiliate, nor shall they be a limitation in any way on the right
of the Company or any Affiliate by which an employee is employed or a Consultant
or Non-Employee Director is retained to terminate his or her employment,
consultancy or directorship at any time.

 

13.4                        Withholding of Taxes.  The Company shall have the
right to deduct from any payment to be made pursuant to the 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.  Upon the vesting
of a Restricted Stock Award (or other Award that is taxable upon vesting), or
upon making an election under Section 83(b) of the Code, a Participant shall pay
all required withholding to the Company.  The minimum statutorily required
withholding obligation with regard to any Participant may be satisfied, subject
to the consent of the Committee, by reducing the number of shares of Common
Stock otherwise deliverable or by delivering shares of Common Stock already
owned.  Unless otherwise determined by the Committee, any fraction of a share of
Common Stock required to satisfy such tax obligations shall be rounded up to the
nearest whole share of Common Stock and subject to withholding.

 

13.5                        Listing and Other Conditions.

 

(a)                                 Unless otherwise determined by the
Committee, as long as the Common Stock is listed on a national securities
exchange or system sponsored by a national securities association, the issuance
of any shares of Common Stock pursuant to an Award shall be conditioned upon
such shares being listed on such exchange or system.  The Company 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 be unlawful or result in the imposition of
excise taxes on the Company 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 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 or will not result in the imposition of
excise taxes on the Company.

 

(c)                                  Upon termination of any period of
suspension under this Section 13.5, any Award affected by such suspension that
shall not then have expired or terminated shall be reinstated as to all shares
available before such suspension and as to shares that would otherwise have
become available during the period of such suspension, but no such suspension
shall extend the term of any Award.

 

(d)                                 A Participant shall be required to supply
the Company with any certificates,

 

27

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representations and information that the Company requests, and otherwise to
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval as the Company deems necessary or
appropriate.

 

13.6                        Governing Law.  The Plan and actions taken in
connection herewith shall be governed and construed in accordance with the laws
of the State of New York (regardless of the law that might otherwise govern
under applicable New York principles of conflict of laws).

 

13.7                        Construction.  Wherever any words are used in the
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.

 

13.8                        Other Benefits.  No Award granted or paid out under
the Plan shall be deemed compensation for purposes of computing benefits under
any retirement plan of the Company or its Affiliates 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.

 

13.9                        Costs.  The Company shall bear all expenses
associated with administering the Plan, including expenses of issuing Common
Stock pursuant to any Awards hereunder.

 

13.10                 No Right to Same Benefits.  The provisions of 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.

 

13.11                 Death/Disability.  The Committee may in its discretion
require the transferee of a Participant to supply it with written notice of the
Participant’s death or Disability and to supply it with a copy of the will (in
the case of the Participant’s death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award.  The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.

 

13.12                 Section 16(b) of the Exchange Act.  All elections and
transactions under the Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock are intended to comply with any applicable
exemptive condition under Rule 16b-3.  The Committee may establish and adopt
written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of business
thereunder.

 

13.13                 Section 409A of the Code.

 

(a)                                 Although the Company does not guarantee the
particular tax treatment of an Award granted under the Plan, Awards made under
the Plan are intended to comply with, or be exempt from, the applicable
requirements of Section 409A of the Code and the Plan and any Award agreement
hereunder shall be limited, construed and interpreted in accordance with such
intent.  In no event whatsoever shall the Company or any of its Affiliates be
liable for any additional tax, interest or penalties that may be imposed on a
Participant by Section 409A of the

 

28

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Code or any damages for failing to comply with Section 409A of the Code.

 

(b)                                 Notwithstanding anything in the Plan or in
an Award to the contrary, the following provisions shall apply to any Award
granted under the Plan that constitutes “non-qualified deferred compensation”
pursuant to Section 409A of the Code (a “409A Covered Award”):

 

(i)                                     A termination of employment shall not be
deemed to have occurred for purposes of any provision of a 409A Covered Award
providing for payment upon or following a termination of the Participant’s
employment unless such termination is also a “Separation from Service” within
the meaning of Code Section 409A and, for purposes of any such provision of the
409A Covered Award, references to a “termination,” “termination of employment”
or like terms shall mean Separation from Service. Notwithstanding any provision
to the contrary in the Plan or the Award, if the Participant is deemed on the
date of the Participant’s Termination to be a “specified employee” within the
meaning of that term under Section 409A(a)(2)(B) of the Code and using the
identification methodology selected by the Company from time to time, or if
none, the default methodology set forth in Code Section 409A, then with regard
to any such payment under a 409A Covered Award, to the extent required to be
delayed in compliance with Section 409A(a)(2)(B) of the Code, such payment shall
not be made prior to the earlier of (i) the expiration of the six (6)-month
period measured from the date of the Participant’s Separation from Service, and
(ii) the date of the Participant’s death. All payments delayed pursuant to this
Section 13.13(b)(i) shall be paid to the Participant on the first day of the
seventh month following the date of the Participant’s Separation from Service
or, if earlier, on the date of the Participant’s death.

 

(ii)                                  Whenever a payment under a 409A Covered
Award specifies a payment period with reference to a number of days, the actual
date of payment within the specified period shall be within the sole discretion
of the Company.

 

13.14                 Successor and Assigns.  The Plan shall be binding on all
successors and permitted assigns of a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate.

 

13.15                 Severability of Provisions.  If any provision of the Plan
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and the Plan shall be construed
and enforced as if such provisions had not been included.

 

13.16                 Payments to Minors, Etc.  Any benefit payable to or for
the benefit of a minor, an incompetent person or other person incapable of
receipt thereof shall be deemed paid when paid to such person’s guardian or to
the party providing or reasonably appearing to provide for the care of such
person, and such payment shall fully discharge the Committee, the Board, the
Company, its Affiliates and their employees, agents and representatives with
respect thereto.

 

13.17                 Headings and Captions.  The headings and captions herein
are provided for reference and convenience only, shall not be considered part of
the Plan, and shall not be

 

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employed in the construction of the Plan.

 

13.18                 Electronic Communications.  Notwithstanding anything else
herein to the contrary, any Award agreement, notice of exercise of an Option or
Stock Appreciation Right, or other document or notice required or permitted by
this Plan that is required to be delivered in writing may, to the extent
determined by the Committee, be delivered and accepted electronically. 
Signatures may also be electronic if permitted by the Committee.  The term
“written agreement” as used in the Plan shall include any document that is
delivered and/or accepted electronically.

 

ARTICLE XIV

 

EFFECTIVE DATE OF PLAN

 

The Plan, as amended and restated, shall become effective upon the date the
stockholders of the Company approve the Plan in accordance with the requirements
of the laws of the State of New York.  If the Plan is not so approved by the
stockholders, all provisions of the Bed Bath & Beyond 2004 Incentive
Compensation Plan shall remain effective and the Plan, as amended and restated
herein, shall be void ab initio.

 

ARTICLE XV

 

TERM OF PLAN

 

No Award shall be granted pursuant to the Plan on or after the tenth anniversary
of the earlier of the date the Board adopts the Plan or the date of stockholder
approval, but Awards granted prior to such tenth anniversary may extend beyond
that date; provided that no Award (other than Options and Stock Appreciation
Rights) that is intended to be “performance-based” under Section 162(m) of the
Code shall be granted on or after the first meeting of the Company’s
stockholders that occurs in the fifth year following the year of stockholder
approval of the Plan unless the Performance Goals set forth on Exhibit A are
re-approved (or other designated performance goals are approved) by the
stockholders of the Company.  In the event that any such Award is granted, the
Award shall be a valid Award but it shall not qualify for the “performance-based
compensation” exception under Section 162(m) of the Code unless it is granted
subject to the approval of, and is approved by, the stockholders at the first
stockholder meeting following such grant.

 

ARTICLE XVI

 

NAME OF PLAN

 

The Plan shall be known as “Bed Bath & Beyond Inc. 2012 Incentive Compensation
Plan.”

 

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EXHIBIT A

 

PERFORMANCE GOALS

 

Performance goals established for purposes of the vesting of performance-based
Restricted Stock Awards, Performance Awards and/or Other Stock-Based Awards
intended to comply with Section 162(m) of the Code shall be based on one or more
of the following performance goals (“Performance Goals”): (i) the attainment of
certain target levels of, or a specified increase in, enterprise value or value
creation targets of the Company (or any subsidiary, division or other
operational unit of the Company); (ii) the attainment of certain target levels
of, or a percentage increase in after-tax or pre-tax profits of the Company,
including without limitation that attributable to continuing and/or other
operations of the Company (or in either case a subsidiary, division, or other
operational unit of the Company); (iii) the attainment of certain target levels
of, or a specified increase in, operational cash flow or economic value added of
the Company (or a subsidiary, division, or other operational unit of the
Company); (iv) the attainment of a certain target level of, or a specified
increase in, gross or operating margins of the Company (or a subsidiary,
division, or other operational unit of the Company); (v) the attainment of a
certain level of reduction of, or other specified objectives with regard to
limiting the level of increase in all or a portion of, the Company’s bank debt
or other long-term or short-term public or private debt or other similar
financial obligations of the Company, which may be calculated net of cash
balances and/or other offsets and adjustments as may be established by the
Committee; (vi) the attainment of a specified percentage increase in earnings
per share or earnings per share from continuing operations of the Company (or a
subsidiary, division or other operational unit of the Company); (vii) the
attainment of certain target levels of, or a specified percentage increase in,
net sales, revenues, net income or earnings before income tax or other
exclusions of the Company (or a subsidiary, division, or other operational unit
of the Company); (viii) the attainment of certain target levels of, or a
specified increase in, return on capital employed or return on invested capital
of the Company (or any subsidiary, division or other operational unit of the
Company); (ix) the attainment of certain target levels of, or a percentage
increase in, after-tax or pre-tax return on stockholder equity of the Company
(or any subsidiary, division or other operational unit of the Company); (x) the
attainment of certain target levels in the fair market value of the shares of
the Company’s Common Stock; (xi) the growth in the value of an investment in the
Company’s Common Stock assuming the reinvestment of dividends; or (xii) a
transaction that results in the sale of stock or assets of the Company.  To the
extent permitted under Section 162(m) of the Code, unless the Committee
otherwise determines, in its sole discretion, the Committee shall disregard and
exclude the impact of the following items, events, occurrences or circumstances:
(i) restructurings, discontinued operations, disposal of a business,
extraordinary items, and other unusual or non-recurring charges, events or
circumstances, (ii) an event either not directly related to the operations of
the Company (or a subsidiary, division or other operational unit of the Company)
or not within the reasonable control of the Company’s management, (iii) the
operations of any business acquired by the Company (or a subsidiary, division or
other operational unit of the Company), or (iv) a change in accounting standards
required by generally accepted accounting principles.  To the extent permitted
under Section 162(m) of the Code, the Committee may also adjust the Performance
Goals to reflect other items, events, occurrences or circumstances or disregard
or exclude the impact of such items, events, occurrences or circumstances.

 

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In addition, such Performance Goals may be based upon the attainment of
specified levels of Company (or subsidiary, division or other operational unit
of the Company) performance under one or more of the measures described above
relative to the performance of other corporations.  The Committee may: (i)
designate additional business criteria on which the performance goals may be
based or (ii) adjust, modify or amend the aforementioned business criteria.

 

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