Exhibit 10.1

 

The Toro Company

Amended and Restated 2010

Equity and Incentive Plan

(Effective March 17, 2015;

Amended and Restated December 6, 2016)

 

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Contents

 

Article 1. Establishment, Purpose and Duration

1

Article 2. Definitions

1

Article 3. Administration

7

Article 4. Shares Subject to This Plan and Maximum Awards

9

Article 5. Eligibility and Participation

11

Article 6. Stock Options

11

Article 7. Stock Appreciation Rights

12

Article 8. Restricted Stock and Restricted Stock Units

13

Article 9. Performance Units and Performance Shares

15

Article 10. Annual Performance Awards

17

Article 11. Nonemployee Director Awards

18

Article 12. Other Cash-Based Awards and Other Stock-Based Awards

19

Article 13. Termination of Service

20

Article 14. Transferability of Awards and Shares

24

Article 15. Performance Measures

24

Article 16. Dividend Equivalents

27

Article 17. Beneficiary Designation

28

Article 18. Rights of Participants

29

Article 19. Change of Control

29

Article 20. Amendment and Termination

30

Article 21. Withholding

31

Article 22. Successors

32

Article 23. General Provisions

32

 

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The Toro Company

Amended and Restated 2010 Equity and Incentive Plan

 

Article 1.  Establishment, Purpose and Duration

 

1.1                               Establishment.  The Toro Company, a Delaware
corporation (the “Company”), has established an incentive compensation plan
known as The Toro Company 2010 Equity and Incentive Plan, as set forth in this
document (as amended and restated, this “Plan”).  This Plan provides for the
grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance Shares,
Performance Units, Annual Performance Awards, Nonemployee Director Awards, Other
Cash-Based Awards and Other Stock-Based Awards, each as defined below in
Article 2.  The original version of this Plan initially became effective upon
its approval by the shareholders of the Company on March 16, 2010 (the “Initial
Effective Date”) and has been subsequently amended by the Committee, as defined
below in Article 2, on September 20, 2011, September 17, 2013 and September 16,
2014 pursuant to Section 20.1.  The amended and restated Plan was approved by
the Committee and became effective upon approval by the shareholders of the
Company at the Company’s 2015 Annual Meeting of Shareholders held on March 17,
2015 (the “Effective Date”) and has been subsequently amended by the Committee,
as defined below in Article 2, on September 15, 2015 and September 20, 2016 and
amended and restated on December 6, 2016 pursuant to Section 20.1 and shall
remain in effect as provided in Section 1.3.

 

1.2                               Purpose of This Plan.  The purpose of this
Plan is to provide a means whereby Employees, Directors and Third-Party Service
Providers, each as defined below in Article 2, develop a sense of proprietorship
and personal involvement in the development and financial success of the
Company, and to encourage them to devote their best efforts to the business of
the Company, thereby advancing the interests of the Company and its
shareholders.  A further purpose of this Plan is to provide a means through
which the Company may attract able individuals to become Employees or serve as
Directors or Third-Party Service Providers and to provide a means whereby those
individuals for whom the responsibilities of the successful administration and
management of the Company are of importance can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company.

 

1.3                               Duration of This Plan.  Unless sooner
terminated as provided herein, this Plan shall terminate ten (10) years from the
Effective Date.  After this Plan is terminated, no Awards (as defined below in
Article 2) may be granted but Awards previously granted shall remain outstanding
in accordance with their applicable terms and conditions and this Plan’s terms
and conditions.

 

Article 2.  Definitions

 

Whenever used in this Plan, the following terms shall have the meanings set
forth below, and when the meaning is intended, the initial letter of the word
shall be capitalized.

 

2.1                               “Affiliate” shall mean a corporation or other
entity (including a partnership or a limited liability company) that is
controlled by, controlling, or under common control with, the Company, and is
designated as an Affiliate for purposes of this Plan by the Committee.

 

2.2                               “Annual Award Limit” or “Annual Award Limits”
have the meaning set forth in Section 4.3.

 

2.3                               “Adverse Action” means any Participant, during
or within one year after the termination of employment or other service with the
Company, an Affiliate or a Subsidiary, (a) being employed or retained by or
rendering services to any organization that, directly or indirectly, competes
with or becomes competitive with the Company or such Affiliate or Subsidiary, or
rendering such services that

 

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are prejudicial or in conflict with the interests of the Company, an Affiliate
or a Subsidiary, as reasonably determined by the Committee, or (b) violating any
confidentiality agreement or agreement governing the ownership or assignment of
intellectual property rights with the Company, as reasonably determined by the
Committee, or (c) engaging in any other misconduct or significant act reasonably
determined by the Committee to be injurious, detrimental or prejudicial to any
interest of the Company, an Affiliate or a Subsidiary.

 

2.4                               “Annual Performance Award” has the meaning set
forth in Section 10.1.

 

2.5                               “Award” means, individually or collectively, a
grant under this Plan of Nonqualified Stock Options, Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units, Annual Performance Awards, Nonemployee Director
Awards, Other Cash-Based Awards or Other Stock-Based Awards, in each case
subject to the terms of this Plan.

 

2.6                               “Award Agreement” means either:  (a) a written
or electronic agreement entered into by the Company and a Participant setting
forth the terms and provisions applicable to an Award granted under this Plan,
including any amendment or modification thereof, or (b) a written or electronic
statement issued by the Company to a Participant describing the terms and
provisions of such Award, including any amendment or modification thereof.  The
Committee may provide for the use of electronic, Internet, or other non-paper
Award Agreements, and the use of electronic, Internet, or other non-paper means
for the acceptance thereof and actions thereunder by a Participant.

 

2.7                               “Beneficial Owner” or “Beneficial Ownership”
shall have the meaning ascribed to such terms in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act.

 

2.8                               “Board” or “Board of Directors” means the
Board of Directors of the Company.

 

2.9                               “Business Combination” has the meaning set
forth in Section 2.10(c).

 

2.10                        “Change of Control” means any of the following
events:

 

(a)                                 The acquisition by any Person of Beneficial
Ownership of twenty percent (20%) or more of either (i) the then-outstanding
Shares of the Company (the “Outstanding Company Common Stock”) or (ii) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change of
Control:  (i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (iv) any acquisition by any corporation pursuant to a
transaction that complies with clauses (i), (ii) and (iii) of subsection (c) of
this Section 2.10; or

 

(b)                                 Individuals who, as of the Effective Date,
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a Director subsequent to the Effective Date whose election,
or nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the Directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of Directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

 

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(c)                                  Consummation of a reorganization, merger or
consolidation of the Company or sale or other disposition of all or
substantially all of the assets of the Company or the acquisition by the Company
of assets or stock of another entity (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or substantially all of the
individuals and entities who were the Beneficial Owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of, respectively, the then-outstanding
Shares and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including a
corporation which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such Business
Combination, or the combined voting power of the then-outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or

 

(d)                                 Approval by the shareholders of the Company
of a complete liquidation or dissolution of the Company.

 

2.11                        “Code” means the U.S. Internal Revenue Code of 1986,
as amended from time to time.  For purposes of this Plan, references to sections
of the Code shall be deemed to include references to any applicable regulations
thereunder and any successor or similar provision.

 

2.12                        “Committee” means the Compensation and Human
Resources Committee of the Board or a subcommittee thereof, or any other
committee comprised solely of directors designated by the Board to administer
this Plan who are (a) “non-employee directors” within the meaning of Rule 16b-3
under the Exchange Act, (b) “independent directors” (as defined in the rules of
The New York Stock Exchange) and (c) “outside directors” within the meaning of
Code Section 162(m).  The members of the Committee shall be appointed from time
to time by and shall serve at the discretion of the Board.  If the Committee
does not exist or cannot function for any reason, the Board may take any action
under this Plan that would otherwise be the responsibility of the Committee.

 

2.13                        “Company” means The Toro Company, a Delaware
corporation, and any successor thereto as provided in Article 22 herein.

 

2.14                        “Covered Employee” means any Employee who is or may
become a “Covered Employee,” as defined in Code Section 162(m), and who is
designated, either as an individual Employee or class of Employees, by the
Committee within the shorter of:  (a) ninety (90) days after the beginning of
any Performance Period, or (b) twenty-five percent (25%) of any Performance
Period has elapsed, as a “Covered Employee” under this Plan for such applicable
Performance Period.

 

2.15                        “Director” means any individual who is a member of
the Board of Directors of the Company.

 

2.16                        “Disability” means the disability of the Participant
such as would entitle the Participant to receive disability income benefits
pursuant to the long-term disability plan of the Company, Affiliate or

 

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Subsidiary then covering the Participant or, if no such plan exists or is
applicable to the Participant, the permanent and total disability of the
Participant within the meaning of Code Section 22(e)(3).

 

2.17                        “Dividend Equivalents” has the meaning set forth in
Section 3.2(i).

 

2.18                        “Effective Date” has the meaning set forth in
Section 1.1.

 

2.19                        “Employee” means any individual performing services
for the Company, an Affiliate, or a Subsidiary and designated as an employee of
the Company, an Affiliate, or a Subsidiary on the payroll records thereof.  An
Employee shall not include any individual during any period he or she is
classified or treated by the Company, Affiliate, or Subsidiary as an independent
contractor, a consultant, or any employee of an employment, consulting, or
temporary agency or any other entity other than the Company, Affiliate, or
Subsidiary, without regard to whether such individual is subsequently determined
to have been, or is subsequently retroactively reclassified as a common-law
employee of the Company, Affiliate, or Subsidiary during such period.  An
individual shall not cease to be an Employee in the case of:  (a) any leave of
absence approved by the Company, or (b) transfers between locations of the
Company or between the Company, any Affiliates, or any Subsidiaries.  For
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract.  If reemployment upon expiration of a leave of absence approved by the
Company, an Affiliate or a Subsidiary, as applicable, is not so guaranteed, then
three (3) months following the ninety-first (91st) day of such leave, any
Incentive Stock Option held by a Participant shall cease to be treated as an
Incentive Stock Option and shall be treated for tax purposes as a Nonqualified
Stock Option.  Neither service as a Director nor payment of a Director’s fee by
the Company shall be sufficient to constitute “employment” by the Company.

 

2.20                        “Exchange Act” means the Securities Exchange Act of
1934, as amended from time to time, or any successor act thereto.

 

2.21                        “Extraordinary Items” means (a) extraordinary,
unusual or nonrecurring items of gain or loss; (b) gains or losses on the
disposition of a business; (c) changes in tax or accounting regulations or laws;
or (d) the effect of a merger or acquisition, all of which must be identified in
the audited financial statements, including footnotes, or Management Discussion
and Analysis section of the Company’s Annual Report on Form 10-K.

 

2.22                        “Fair Market Value” or “FMV” means, with respect to
a Share, as of any date:  (a) the closing sale price of a Share at the end of
the regular trading session, as reported by The New York Stock Exchange, The
NASDAQ Stock Market, The American Stock Exchange or any national exchange on
which the Shares are then listed or quoted (or, if no Shares were traded on such
date, as of the next preceding date on which there was such a trade); or (b) if
the Shares are not so listed, admitted to unlisted trading privileges, or
reported on any national exchange, the closing sale price as of such date at the
end of the regular trading session, as reported by OTC Bulletin Board or the
Pink Sheets LLC, or other comparable service (or, if no Shares were traded or
quoted on such date, as of the next preceding date on which there was such a
trade or quote); or (c) if Shares are not so listed or reported, such price as
the Committee determines in good faith, and consistent with the definition of
“fair market value” under Code Section 409A.

 

2.23                        “Full-Value Award” means an Award other than in the
form of an ISO, NQSO or SAR, and which is settled by the issuance of Shares.

 

2.24                        “Grant Date” means the date an Award is granted to a
Participant pursuant to this Plan.

 

2.25                        “Grant Price” means the price established at the
time of grant of an SAR pursuant to Article 7, used to determine whether there
is any payment due upon exercise of the SAR.

 

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2.26                        “Incentive Stock Option” or “ISO” means an Option to
purchase Shares granted pursuant to Article 6 to an Employee and that is
designated as an Incentive Stock Option that is intended to meet the
requirements of Code Section 422 or any successor provision.

 

2.27                        “Incumbent Board” has the meaning set forth in
Section 2.10(b).

 

2.28                        “Initial Effective Date” has the meaning set forth
in Section 1.1.

 

2.29                        “Insider” shall mean an individual who is, on the
relevant date, an officer or Director of the Company, or a more than ten percent
(10%) Beneficial Owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, as determined by the
Board in accordance with Section 16 of the Exchange Act.

 

2.30                        “Maximum Payout” has the meaning set forth in
Section 10.3.

 

2.31                        “Nonemployee Director” means a Director who is not
an Employee.

 

2.32                        “Nonemployee Director Award” means any NQSO, SAR or
Full-Value Award granted, whether singly, in combination, or in tandem, to a
Participant who is a Nonemployee Director pursuant to such applicable terms,
conditions and limitations as the Board or Committee may establish in accordance
with this Plan, including any Nonemployee Director Option or Nonemployee
Director Shares granted pursuant to Article 11.

 

2.33                        “Nonemployee Director Option” has the meaning set
forth in Section 11.2(a).

 

2.34                        “Nonemployee Director Shares” has the meaning set
forth in Section 11.1.

 

2.35                        “Nonqualified Stock Option” or “NQSO” means an
Option that is not intended to meet the requirements of Code Section 422, or
that otherwise does not meet such requirements, including an NQSO granted
pursuant to Article 6 and a Nonemployee Director Option granted pursuant to
Article 11.

 

2.36                        “Officer Delegated Awards” has the meaning set forth
in Section 3.3.

 

2.37                        “Outstanding Company Common Stock” has the meaning
set forth in Section 2.10(a).

 

2.38                        “Option” means (a) an Incentive Stock Option or a
Nonqualified Stock Option, granted pursuant to Article 6 or (b) a Nonemployee
Director Option, granted pursuant to Article 11.

 

2.39                        “Option Price” means the price at which a Share may
be purchased by a Participant pursuant to an Option.

 

2.40                        “Other Cash-Based Award” means an Award, denominated
and paid in cash, not otherwise described by the terms of this Plan, granted
pursuant to Article 12.

 

2.41                        “Other Stock-Based Award” means an equity-based or
equity-related Award not otherwise described by the terms of this Plan, granted
pursuant to Article 12.

 

2.42                        “Participant” means any eligible individual as set
forth in Article 5 to whom an Award is granted.

 

2.43                        “Participation Factor” has the meaning set forth in
Section 10.2.

 

2.44                        “Performance-Based Compensation” means compensation
under an Award that is intended to satisfy the requirements of Code
Section 162(m) for certain performance-based compensation paid to Covered
Employees.  Notwithstanding the foregoing, nothing in this Plan shall be

 

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construed to mean that an Award which does not satisfy the requirements for
performance-based compensation under Code Section 162(m) does not constitute
performance-based compensation for other purposes, including Code Section 409A.

 

2.45                        “Performance Goals” mean with respect to any
applicable Award, one or more targets, goals or levels of attainment required to
be achieved in terms of the specified Performance Measures during the specified
Performance Period, as set forth in the related Award Agreement.

 

2.46                        “Performance Measures” mean: (a) with respect to any
Award intended to qualify as Performance-Based Compensation, any one or more of
the measures described in Article 15 on which the Performance Goals are based
and which are approved by the Company’s shareholders pursuant to this Plan in
order to qualify Awards as Performance-Based Compensation; and (b) with respect
to any other Award, such performance measures as determined by the Committee in
its sole discretion and set forth in the applicable Award Agreement for purposes
of determining the applicable Performance Goal.

 

2.47                        “Performance Measure Element” has the meaning set
forth in Section 15.1.

 

2.48                        “Performance Period” means the period of time, as
determined by the Committee, during which the Performance Goals must be met in
order to determine the degree of payout or vesting with respect to an Award.

 

2.49                        “Performance Share” means an Award under Article 9
herein and subject to the terms of this Plan, denominated in Shares, the value
of which at the time it is payable is determined as a function of the extent to
which corresponding Performance Goals have been achieved.

 

2.50                        “Performance Unit” means an Award under Article 9
herein and subject to the terms of this Plan, denominated in units, the value of
which at the time it is payable is determined as a function of the extent to
which corresponding Performance Goals have been achieved.

 

2.51                        “Period of Restriction” means the period when
Restricted Stock or Restricted Stock Units are subject to a substantial risk of
forfeiture (based on the passage of time, the achievement of Performance Goals,
or upon the occurrence of other events as determined by the Committee, in its
discretion), as provided in Article 8.

 

2.52                        “Person” shall have the meaning ascribed to such
term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.53                        “Plan” means The Toro Company 2010 Equity and
Incentive Plan, as amended and restated from time to time in accordance with
Article 20.

 

2.54                        “Plan Year” means the Company’s fiscal year which
begins November 1 and ends October 31.

 

2.55                        “Prior Plans” mean The Toro Company 2000 Stock
Option Plan, The Toro Company Performance Share Plan, The Toro Company 2000
Directors Stock Plan and The Toro Company Annual Management Incentive Plan II.

 

2.56                        “Restricted Stock” means an Award granted to a
Participant pursuant to Article 8.

 

2.57                        “Restricted Stock Unit” means an Award granted to a
Participant pursuant to Article 8, except no Shares are actually awarded to the
Participant on the Grant Date.

 

2.58                        “Retirement” shall have the meaning established by
the Committee from time to time or, if no such meaning is established, shall
mean termination of employment with the Company or any

 

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Affiliate or Subsidiary at or after age 55 and with a number of years of service
that, when added together with the Participant’s age, equals at least 65.

 

2.59                        “Scale Back” has the meaning set forth in
Section 9.6.

 

2.60                        “Share” means a share of common stock of the
Company, par value $1.00 per share.

 

2.61                        “Share Payment” has the meaning set forth in
Section 21.2.

 

2.62                        “Stock Appreciation Right” or “SAR” means an Award,
designated as an SAR, pursuant to the terms of Article 7 herein.

 

2.63                        “Stock-Based Award” means any equity-based or
equity-related Award made pursuant to the Plan, including Options, SARs,
Restricted Stock, Restricted Stock Units, Performance Shares, Nonemployee
Directors Awards and Other Stock-Based Awards.

 

2.64                        “Subsidiary” means any corporation or other entity,
whether domestic or foreign, in which the Company has or obtains, directly or
indirectly, an interest of more than fifty percent (50%) by reason of stock
ownership or otherwise.

 

2.65                        “Supplemental Division Performance Goals” has the
meaning set forth in Section 10.4.

 

2.66                        “Target Payout” has the meaning set forth in
Section 10.2.

 

2.67                        “Tax Laws” has the meaning set forth in
Section 23.18.

 

2.68                        “Third-Party Service Provider” means any consultant,
agent, advisor or independent contractor who renders services to the Company, a
Subsidiary or an Affiliate that:  (a) are not in connection with the offer and
sale of the Company’s securities in a capital raising transaction, and (b) do
not directly or indirectly promote or maintain a market for the Company’s
securities.

 

Article 3.  Administration

 

3.1                               General.  The Committee shall be responsible
for administering this Plan, subject to this Article 3 and the other provisions
of this Plan.  The Committee may employ attorneys, consultants, accountants,
agents and other individuals, any of whom may be an Employee, and the Committee,
the Company and its officers and Directors shall be entitled to rely upon the
advice, opinions or valuations of any such individuals.  All actions taken, and
all interpretations and determinations made, by the Committee shall be final and
binding upon the Participants, the Company, any Affiliate or any Subsidiary and
all other interested individuals.

 

3.2                               Authority of the Committee.  Subject to any
express limitations set forth in this Plan, the Committee shall have full and
exclusive discretionary power and authority to take such actions as it deems
necessary and advisable with respect to the administration of this Plan
including the following:

 

(a)                                 To determine from time to time which of the
persons eligible under this Plan shall be granted Awards, when and how each
Award shall be granted, what type or combination of types of Awards shall be
granted, the provisions of each Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive Shares
pursuant to an Award, and the number of Shares subject to an Award;

 

(b)                                 To construe and interpret this Plan and
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration.  The Committee, in the exercise of this
power, may correct any defect, omission or inconsistency in this Plan or in an
Award

 

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Agreement, in a manner and to the extent it shall deem necessary or expedient to
make this Plan fully effective;

 

(c)                                  To approve forms of Award Agreements for
use under this Plan;

 

(d)                                 To determine Fair Market Value of a Share in
accordance with Section 2.22 of this Plan;

 

(e)                                  To amend this Plan or any Award Agreement
as provided in this Plan;

 

(f)                                   To adopt subplans or special provisions
applicable to stock awards regulated by the laws of a jurisdiction other than,
and outside of, the United States.  Such subplans or special provisions may take
precedence over other provisions of this Plan, but unless otherwise superseded
by the terms of such subplans or special provisions, the provisions of this Plan
shall govern;

 

(g)                                  To authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an Award
previously granted by the Committee;

 

(h)                                 To determine whether Awards will be settled
in Shares, cash or in any combination thereof;

 

(i)                                     Subject to Article 16 and any other
provision of this Plan, to determine whether Awards will be adjusted for
dividend equivalents, with “Dividend Equivalents” meaning a credit, made at the
discretion of the Committee, to the account of a Participant in an amount equal
to the cash dividends paid on one Share for each Share represented by an Award
held by such Participant, which Dividend Equivalents may be subject to the same
conditions and restrictions as the Awards to which they attach and may be
settled in the form of cash, Shares, or in any combination of both or;

 

(j)                                    To impose such restrictions, conditions
or limitations as it determines appropriate as to the timing and manner of any
resales by a Participant or other subsequent transfers by the Participant of any
Shares, including:  (i) restrictions under an insider trading policy, and
(ii) restrictions as to the use of a specified brokerage firm for such resales
or other transfers.

 

3.3                               Delegation.  The Committee may delegate to one
or more of its members or to one or more officers of the Company or any
Subsidiary or Affiliate or to one or more agents or advisors such administrative
duties or powers as it may deem advisable, and the Committee or any individuals
to whom it has delegated duties or powers as aforesaid may employ one or more
individuals to render advice with respect to any responsibility the Committee or
such individuals may have under this Plan.  The Committee may, by resolution,
authorize one or more Directors of the Company to do one or both of the
following on the same basis as can the Committee:  (a) designate Employees to be
recipients of Awards pursuant to this Plan; and (b) determine the size of any
such Awards; provided, however, that (x) the Committee shall not delegate such
responsibilities to any such Director(s) for any Awards granted to an Employee
who is considered an Insider or a Covered Employee; (y) the resolution providing
such authorization shall set forth the type of Awards and total number of each
type of Awards such Director(s) may grant; and (z) the Director(s) shall comply
with any provisions of the Company’s bylaws applicable to committees of the
Board.  The Committee also may, by resolution, authorize one or more officers of
the Company to do one or both of the following on the same basis as can the
Committee:  (A) designate Employees to be recipients of (i) Options pursuant to
Article 6, (ii) SARs pursuant to Article 7, or (iii) any Award granted pursuant
to this Plan denominated and paid in cash (collectively, “Officer Delegated
Awards”); and (B) determine the size of any such Officer Delegated Awards;
provided, however, that (x) the Committee shall not delegate such
responsibilities to any such officer(s) for any Officer Delegated Awards granted
to an Employee who is considered an Insider or a Covered Employee; and (y) the

 

8

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resolution providing such authorization shall set forth the type of Awards and
total number of each type of Awards such officer(s) may grant.

 

Article 4.  Shares Subject to This Plan and Maximum Awards

 

4.1                               Number of Shares Authorized and Available for
Awards.  Subject to adjustment as provided in Section 4.4 of this Plan, the
number of Shares authorized and available for Awards under this Plan shall be
determined in accordance with the following provisions:

 

(a)                                 The maximum number of Shares available for
issuance under this Plan shall be 11,600,000 shares, plus the number of Shares
subject to Awards outstanding under the Prior Plans as of the Initial Effective
Date but only to the extent that such outstanding Awards are forfeited, expire
or otherwise terminate without the issuance of such Shares.

 

(b)                                 No more than 3,900,000 of the Shares
authorized for issuance under this Plan may be issued pursuant to Full-Value
Awards.

 

(c)                                  The maximum number of Shares that may be
issued pursuant to ISOs under this Plan shall be 11,600,000.

 

4.2                               Share Usage.  Shares covered by an Award shall
be counted as used only to the extent they are actually issued; provided,
however, the full number of Shares subject to an SAR granted that are settled by
the issuance of Shares shall be counted against the Shares authorized for
issuance under this Plan, regardless of the number of Shares actually issued
upon settlement of such SAR.  Furthermore, any Shares tendered or withheld to
satisfy tax withholding obligations on Awards issued under this Plan, any Shares
tendered or withheld to pay the Option Price or exercise price of Awards under
this Plan and any Shares not issued or delivered as a result of the “net
exercise” of an outstanding Option pursuant to Section 6.6 shall be counted
against the Shares authorized for issuance under this Plan.  Any Shares
repurchased by the Company on the open market using the proceeds from the
exercise of an Award shall not increase the number of Shares available for
future grant of Awards.  Any Shares related to Awards under this Plan or under
Prior Plans that terminate by expiration, forfeiture, cancellation or otherwise
without the issuance of the Shares or are settled in cash in lieu of Shares, or
are exchanged with the Committee’s permission, prior to the issuance of Shares,
shall be available again for grant under this Plan.  The Shares available for
issuance under this Plan may be authorized and unissued Shares or treasury
Shares.

 

4.3                               Annual Award Limits.  The following limits
(each an “Annual Award Limit” and, collectively, “Annual Award Limits”), as
adjusted pursuant to Sections 4.4 and 20.2, shall apply to grants of Awards,
unless in the case of the Annual Award Limits in (a) through (g) below, the
Committee specifically determines at the time of grant that the Award to any
Employee is not intended to qualify as Performance-Based Compensation under this
Plan:

 

(a)                                 Options and SARs:  The maximum aggregate
number of Shares subject to Options and SARs granted to any one Participant in
any one Plan Year shall be 500,000.

 

(b)                                 Restricted Stock and Restricted Stock
Units:  The maximum aggregate number of Shares subject to Restricted Stock and
Restricted Stock Units granted to any one Participant in any one Plan Year shall
be 500,000.

 

(c)                                  Performance Units:  The maximum aggregate
amount awarded or credited with respect to Performance Units to any one
Participant in any one Plan Year may not exceed $10,000,000, determined as of
the date of payout.

 

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(d)                                 Performance Shares:  The maximum aggregate
number of Performance Shares that a Participant may receive in any one Plan Year
shall be 500,000 Shares, determined as of the date of payout.

 

(e)                                  Annual Performance Awards:  The maximum
aggregate amount awarded or credited with respect to Annual Performance Awards
to any one Participant in any one Plan Year may not exceed $5,000,000,
determined as of the date of payout.

 

(f)                                   Other Cash-Based Awards:  The maximum
aggregate amount awarded or credited with respect to Other Cash-Based Awards to
any one Participant in any one Plan Year may not exceed $5,000,000, determined
as of the date of payout.

 

(g)                                  Other Stock-Based Awards:  The maximum
aggregate amount awarded or credited with respect to Other Stock-Based Awards to
any one Participant in any one Plan Year may not exceed 500,000 Shares,
determined as of the date of payout.

 

(h)                                 Nonemployee Director Awards:   The maximum
aggregate number of Shares subject to Nonemployee Director Awards to any one
Nonemployee Director in any one Plan Year may not exceed 40,000 Shares;
provided, that such limit shall not apply to any election of a Nonemployee
Director to receive Shares in lieu of all or a portion of any annual Board,
chair and other retainers and any meeting fees otherwise payable in cash.

 

4.4                               Adjustments in Authorized Shares.  Adjustment
in authorized Shares available for issuance under this Plan or under an
outstanding Award and adjustments in Annual Award Limits shall be subject to the
following provisions:

 

(a)                                 Except to the extent that Section 19.1
applies, in the event of any corporate event or transaction (including a change
in the Shares of the Company or the capitalization of the Company) such as a
merger, consolidation, reorganization, recapitalization, separation, partial or
complete liquidation, stock dividend, stock split, reverse stock split, split
up, spin-off or other distribution of stock or property of the Company,
combination of Shares, exchange of Shares, dividend in-kind or other like change
in capital structure or distribution (other than normal cash dividends) to
shareholders of the Company or any similar corporate event or transaction, the
Committee, in order to prevent dilution or enlargement of Participants’ rights
under this Plan, will substitute or adjust, as applicable, the number and kind
of Shares that may be issued under this Plan or under particular forms of
Awards, the number and kind of Shares subject to outstanding Awards, the Option
Price or Grant Price applicable to outstanding Awards, the Annual Award Limits
and other value determinations applicable to outstanding Awards, provided that
the Committee, in its sole discretion, shall determine the methodology or manner
of making such substitution or adjustment.

 

(b)                                 The Committee, in its sole discretion, may
also make appropriate adjustments in the terms of any Awards under this Plan to
reflect such changes or distributions and to modify any other terms of
outstanding Awards, including modifications of Performance Goals and changes in
the length of Performance Periods.

 

(c)                                  The determination of the Committee as to
the foregoing adjustments, if any, shall be conclusive and binding on
Participants under this Plan.

 

(d)                                 Subject to the provisions of Article 20 and
notwithstanding anything else herein to the contrary, without affecting the
number of Shares reserved or available hereunder, the Committee may authorize
the issuance or assumption of benefits under this Plan in connection with any
merger, consolidation, acquisition of property or stock or reorganization upon
such terms and conditions as it may deem appropriate, subject to

 

10

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compliance with the rules under Code Sections 409A, 422 and 424, as and where
applicable.

 

Article 5.  Eligibility and Participation

 

5.1                               Eligibility.  Individuals eligible to
participate in this Plan include all Employees, Directors and Third-Party
Service Providers.

 

5.2                               Actual Participation.  Subject to the
provisions of this Plan, the Committee may, from time to time, select from all
eligible individuals, those individuals to whom Awards shall be granted and
shall determine, in its sole discretion, the nature of any and all terms
permissible by law and the amount of each Award.

 

Article 6.  Stock Options

 

6.1                               Grant of Options.  Subject to the terms and
provisions of this Plan (including Section 20.6), Options may be granted to
Participants pursuant to this Article 6 in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee, in
its sole discretion.  Options may be granted to a Participant for services
provided to an Affiliate only if, with respect to such Participant, the
underlying Shares constitute “service recipient stock” within the meaning of
Treas. Reg. Section 1.409A-1(b)(5)(iii).  ISOs may be granted solely to eligible
Employees of the Company or certain Subsidiaries (as permitted under Code
Sections 422 and 424).  To the extent that any ISO (or portion thereof) granted
under this Plan ceases for any reason to qualify as an “incentive stock option”
for purposes of Code Section 422, such ISO (or portion thereof) will continue to
be outstanding for purposes of this Plan but will thereafter be deemed to be an
NQSO.

 

6.2                               Award Agreement.  Each Option granted pursuant
to this Article 6 shall be evidenced by an Award Agreement that shall specify
the Option Price, the maximum duration of the Option, the number of Shares to
which the Option pertains, the conditions upon which an Option shall become
vested and exercisable, and such other provisions as the Committee shall
determine which are not inconsistent with the terms of this Plan.  The Award
Agreement also shall specify whether the Option is intended to be an ISO or an
NQSO.

 

6.3                               Option Price.  The Option Price for each grant
of an Option pursuant to this Article 6 shall be determined by the Committee in
its sole discretion and shall be specified in the Award Agreement; provided,
however, the Option Price must be at least equal to one hundred percent (100%)
of the FMV of a Share as of the Option’s Grant Date.

 

6.4                               Term of Options.  Each Option granted to a
Participant pursuant to this Article 6 shall expire at such time as the
Committee shall determine at the time of grant; provided, however, no Option
shall be exercisable later than the tenth (10th) anniversary of its Grant Date,
subject to any extension permitted by the Committee in accordance with
Section 23.8 for Nonqualified Stock Options granted to Participants outside the
United States.

 

6.5                               Exercise of Options.  Options granted pursuant
to this Article 6 shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance approve
(subject, in each case, to Section 20.6), which terms and restrictions need not
be the same for each grant or for each Participant.  The Award Agreement for any
Option granted pursuant to this Article 6 that becomes exercisable solely based
on the continued service of the Participant shall provide that such Option shall
become exercisable no more rapidly than ratably over a three-year period after
the Grant Date of the Option, except (a) in connection with the death,
Disability or Retirement of the Participant or a Change of Control; or (b) for
any Option granted to a Participant who within six months of the Grant Date is
first appointed or elected as an officer, hired as an Employee, elected as a
Director or retained as a Third-Party Service Provider.  Notwithstanding the
foregoing, if the exercise of an Option that is exercisable in accordance with
its terms is prevented by the provisions of Sections 23.4, 23.5, 23.6

 

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or 23.7 below, the Option will remain exercisable until thirty (30) days after
the date such exercise first would no longer be prevented by such provisions,
but in any event no later than the expiration date of such Option.

 

6.6                               Payment.  Options granted under this Plan
shall be exercised by the delivery of a notice of exercise to the Company or an
agent designated by the Company in a form specified or accepted by the Committee
or by complying with any alternative procedures which may be authorized by the
Committee, setting forth the number of Shares with respect to which the Option
is to be exercised, and accompanied by full payment of the aggregate Option
Price for the Shares.  A condition of the issuance of the Shares as to which an
Option shall be exercised shall be the payment of the Option Price.  The Option
Price of any exercised Option shall be payable to the Company in accordance with
one of the following methods:

 

(a)                                 In cash or its equivalent as determined by
the Committee in its sole discretion;

 

(b)                                 By tendering (either by actual delivery or
attestation) previously acquired Shares having an aggregate Fair Market Value at
the time of exercise equal to the Option Price;

 

(c)                                  By a cashless (broker-assisted) exercise;

 

(d)                                 By a “net exercise” of the Option (as
further described below);

 

(e)                                  By any combination of (a), (b), (c) and
(d); or

 

(f)                                   Any other method approved or accepted by
the Committee in its sole discretion.

 

In the case of a “net exercise” of an Option, the Company will not require a
payment of the Option Price of the Option from the Participant but will reduce
the number of Shares issued upon the exercise by the largest number of whole
Shares that has a Fair Market Value on the exercise date that does not exceed
the aggregate Option Price for the Shares exercised under this method.  Shares
will no longer be outstanding under an Option (and will therefore not thereafter
be exercisable) following the exercise of such Option to the extent of
(i) Shares used to pay the Option Price of an Option under the “net exercise,”
(ii) Shares actually delivered to the Participant as a result of such exercise,
and (iii) any Shares withheld for purposes of tax withholding pursuant to
Article 21 of this Plan.

 

Subject to any governing rules or regulations, as soon as practicable after
receipt of written notification of exercise and full payment (including
satisfaction of any applicable tax withholding), the Company shall deliver to or
for the benefit of the Participant that number of Shares purchased under the
Option(s) by means of one or more of the following, each in the Company’s sole
discretion: (i) by delivering to the Participant evidence of book entry Shares
credited to the account of the Participant; (ii) by depositing such Shares for
the benefit of the Participant with any broker with which the Participant has an
account relationship or the Company has engaged to provide such services for the
Plan; or (iii) by delivering such Shares to the Participant in certificate
form.  Unless otherwise determined by the Committee, all payments under all of
the methods indicated above shall be paid in United States dollars or Shares, as
applicable.

 

Article 7.  Stock Appreciation Rights

 

7.1                               Grant of SARs.  Subject to the terms and
conditions of this Plan, SARs may be granted to Participants at any time and
from time to time as shall be determined by the Committee.  Subject to the terms
and conditions of this Plan (including Section 20.6), the Committee shall have
complete discretion in determining the number of SARs granted to each
Participant and, consistent with the provisions of this Plan, in determining the
terms and conditions pertaining to such SARs.  SARs may be granted to a
Participant for services provided to an Affiliate only if, with respect to such
Participant, the underlying Shares constitute “service recipient stock” within
the meaning of Treas.  Reg.  Section 1.409A-1(b)(5)(iii).

 

12

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7.2                               Award Agreement.  Each SAR granted pursuant to
this Article 7 shall be evidenced by an Award Agreement that shall specify the
Grant Price, the term of the SAR, and such other provisions as the Committee
shall determine.

 

7.3                               Grant Price.  The Grant Price for each grant
of an SAR shall be determined by the Committee and shall be specified in the
Award Agreement; provided, however, the Grant Price must be at least equal to
one hundred percent (100%) of the FMV of a Share as of the Grant Date.

 

7.4                               Term of SAR.  The term of an SAR granted under
this Plan shall be determined by the Committee, in its sole discretion, and
except as determined otherwise by the Committee and specified in the Award
Agreement, no SAR shall be exercisable later than the tenth (10th) anniversary
of its Grant Date, subject to any extension permitted by the Committee in
accordance with Section 23.8 for SARs granted to Participants outside the United
States.

 

7.5                               Exercise of SARs.  SARs may be exercised by
giving notice in the same manner as that used for Options, as set forth in
Section 6.6 of this Plan, subject to any terms and conditions the Committee, in
its sole discretion, imposes (subject, in each case, to Section 20.6).  The
Award Agreement for any SAR that becomes exercisable solely based on the
continued service of the Participant shall provide that such SAR shall become
exercisable no more rapidly than ratably over a three-year period after the
Grant Date of the SAR, except (a) in connection with the death, Disability or
Retirement of the Participant or a Change of Control; or (b) for any SAR granted
to a Participant who within six months of the Grant Date is first appointed or
elected as an officer, hired as an Employee, elected as a Director or retained
as a Third-Party Service Provider.  Notwithstanding the foregoing, if the
exercise of an SAR that is exercisable in accordance with its terms is prevented
by the provisions of Sections 23.4, 23.5, 23.6 or 23.7 below, the SAR will
remain exercisable until thirty (30) days after the date such exercise first
would no longer be prevented by such provisions, but in any event no later than
the expiration date of such SAR.

 

7.6                               Settlement of SARs.  Upon the exercise of an
SAR, a Participant shall be entitled to receive payment from the Company in an
amount determined by multiplying:

 

(a)                                 The excess of the Fair Market Value of a
Share on the date of exercise over the Grant Price; by

 

(b)                                 The number of Shares with respect to which
the SAR is exercised.

 

7.7                               Form of Payment.  Payment, if any, with
respect to an SAR settled in accordance with Section 7.6 of this Plan shall be
made in accordance with the terms of the applicable Award Agreement, in cash,
Shares or a combination thereof, as the Committee determines.

 

7.8                               Other Restrictions.  The Committee shall
impose such other conditions or restrictions on any Shares received upon
exercise of an SAR granted pursuant to this Plan as it may deem advisable or
desirable.  These restrictions may include a requirement that the Participant
hold the Shares received upon exercise of an SAR for a specified period of time.

 

Article 8.  Restricted Stock and Restricted Stock Units

 

8.1                               Grant of Restricted Stock or Restricted Stock
Units.  Subject to the terms and provisions of this Plan, the Committee, at any
time and from time to time, may grant Shares of Restricted Stock or Restricted
Stock Units to Participants in such amounts as the Committee shall determine. 
Restricted Stock Units shall be similar to Restricted Stock except that no
Shares are actually awarded to the Participant on the Grant Date.

 

8.2                               Award Agreement.  Each Restricted Stock or
Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall
specify the Period(s) of Restriction, the number of Shares of

 

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Restricted Stock or the number of Restricted Stock Units granted, and such other
provisions as the Committee shall determine (subject, in each case, to
Section 20.6).

 

8.3                               Conditions and Restrictions.  The Committee
shall impose such conditions or restrictions on any Shares of Restricted Stock
or Restricted Stock Units granted pursuant to this Plan as it may deem advisable
including a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock or each Restricted Stock Unit, restrictions based
upon the achievement of specific Performance Goals, time-based restrictions on
vesting following the attainment of the Performance Goals, time-based
restrictions, restrictions under applicable laws or under the requirements of
any stock exchange or market upon which such Shares are listed or traded or
holding requirements or sale restrictions placed on the Shares by the Company
upon vesting of such Restricted Stock or Restricted Stock Units.  If an Award of
Restricted Stock or Restricted Stock Units vests solely based on the continued
service of the Participant, the Award Agreement shall provide that such Award
shall vest no more rapidly than ratably over a three-year period after the Grant
Date of the Award, except (a) in connection with the death, Disability or
Retirement of the Participant or a Change of Control; or (b) for any such Award
granted to a Participant who within six months of the Grant Date is first
appointed or elected as an officer, hired as an Employee, elected as a Director
or retained as a Third-Party Service Provider.

 

8.4                               Restricted Stock Transfer Restrictions; Lapse
of Restrictions on Restricted Stock and Restricted Stock Units.

 

(a)                                 Unless otherwise determined by the
Committee, until such time as all conditions or restrictions applicable to
Shares of Restricted Stock have been satisfied or lapse, (i) all certificates
representing Shares of Restricted Stock, together with duly endorsed stock
powers in blank, will be held in custody by the Company or its transfer agent,
(ii) any uncertificated Shares of Restricted Stock will be held at the Company’s
transfer agent in book entry form in the name of the Participant or (iii) such
Shares of Restricted Stock will be held for the benefit of the Participant in
nominee name by the broker engaged by the Company to provide such services for
the Plan, in each case with appropriate restrictions relating to the transfer of
such Shares of Restricted Stock.  Except as otherwise provided in this Article 8
and subject to Section 14.2, Shares of Restricted Stock covered by each
Restricted Stock Award shall become freely transferable by the Participant after
all conditions and restrictions applicable to such Shares have been satisfied or
lapse (including satisfaction of any applicable tax withholding obligations).

 

(b)                                 Restricted Stock Units shall be paid in
cash, Shares or a combination of cash and Shares as the Committee, in its sole
discretion, shall determine, and as provided in the Award Agreement, except that
if a Participant has properly elected to defer income that may be attributable
to a Restricted Stock Unit under a Company deferred compensation plan, common
stock units will be credited to the Participant’s account under such plan and
paid out in accordance with the terms of such plan. Any Shares issued under such
deferred compensation plan that relate to the deferral of Restricted Stock Units
granted under this Plan (including without limitation any Dividend Equivalents
paid in Shares) will be deemed to be issued under this Plan.  Upon the
satisfactions, lapse or waiver of all conditions or restrictions applicable to
Restricted Stock Units evidencing the right to receive Shares, such Shares shall
be issued and delivered to the Participant holder of the Restricted Stock Units
or the broker engaged by the Company to provide services for the Plan for the
benefit of the Participant holder of the Restricted Stock Units.

 

8.5                               Certificate Legend.  In addition to any
legends placed on certificates or restrictions on uncertificated shares issued
in book entry form pursuant to Section 8.3, each certificate representing Shares
of Restricted Stock granted pursuant to this Plan may bear a legend such as the
following (and any uncertificated Shares of Restricted Stock issued in book
entry form in the name of the Participant or held for the benefit of the
Participant in nominee name by the broker engaged by the Company to provide such
services for the Plan will be subject to restrictions set forth in the following
legend) or as otherwise determined by the Committee in its sole discretion:

 

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“The sale or transfer of shares of stock represented by this certificate,
whether voluntary, involuntary or by operation of law, is subject to certain
restrictions on transfer as set forth in The Toro Company 2010 Equity and
Incentive Plan, as may be amended from time to time (the “Plan”), and in the
associated award agreement.  A copy of the Plan and such award agreement may be
obtained from The Toro Company.”

 

8.6                               Voting Rights.  Unless otherwise determined by
the Committee and set forth in a Participant’s Award Agreement, to the extent
permitted or required by law, as determined by the Committee, Participants
holding Shares of Restricted Stock granted hereunder shall be granted the right
to exercise full voting rights with respect to those Shares during the Period of
Restriction.  A Participant shall have no voting rights with respect to any
Restricted Stock Units granted hereunder.

 

8.7                               Dividend Rights.

 

(a)                                 Unless otherwise determined by the Committee
and set forth in a Participant’s Award Agreement, to the extent permitted or
required by law, as determined by the Committee, Participants holding Shares of
Restricted Stock granted hereunder shall have the same dividend rights as the
Company’s other shareholders; provided, however, that any dividends as to Shares
of Restricted Stock that are subject to vesting requirements will be subject to
forfeiture and termination to the same extent as the Shares of Restricted Stock
to which such dividends relate and the Award Agreement may require that any cash
dividends be reinvested in additional Shares of Restricted Stock subject to the
same conditions and restrictions as the Shares of Restricted Stock with respect
to which the dividends were paid. In no event shall dividends with respect to
Shares of Restricted Stock that are subject to performance-based vesting be paid
or distributed until the performance-based vesting provisions of such Restricted
Stock lapse.

 

(b)                                 Unless otherwise determined by the Committee
and set forth in a Participant’s Award Agreement, to the extent permitted or
required by law, as determined by the Committee, prior to settlement or
forfeiture, any Restricted Stock Units awarded under the Plan may, at the
Committee’s discretion, carry with it a right to Dividend Equivalents.  Such
right entitles the Participant to be credited with any amount equal to all cash
dividends paid on one Share while the Restricted Stock Unit is outstanding. 
Dividend Equivalents may be converted into additional Restricted Stock Units and
may (and will, to the extent required below) be made subject to the same
conditions and restrictions as the Restricted Stock Units to which they attach. 
Settlement of Dividend Equivalents may be made in the form of cash, in the form
of Shares, or in a combination of both.  Dividend Equivalents as to Restricted
Stock Units will be subject to forfeiture and termination to the same extent as
the corresponding Restricted Stock Units as to which the Dividend Equivalents
relate.  In no event shall Participants holding performance-based Restricted
Stock Units receive any Dividend Equivalents on such Restricted Stock Units
until the performance-based vesting provisions of such Restricted Stock Units
lapse.

 

8.8                               Section 83(b) Election for Restricted Stock
Award.  If a Participant makes an election pursuant to Code Section 83(b) with
respect to an Award of Restricted Stock, the Participant must file, within
thirty (30) days following the Grant Date, a copy of such election with the
Company and with the Internal Revenue Service, in accordance with the
regulations under Code Section 83.  The Committee may provide in the Award
Agreement that the Award of Restricted Stock is conditioned upon the
Participant’s making or refraining from making an election with respect to the
Award under Code Section 83(b).

 

Article 9.  Performance Units and Performance Shares

 

9.1                               Grant of Performance Units and Performance
Shares.  Subject to the terms and provisions of this Plan (including
Section 20.6), the Committee, at any time and from time to time, may

 

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grant Performance Units or Performance Shares to Participants in such amounts
and upon such terms as the Committee shall determine.

 

9.2                               Award Agreement.  The terms and conditions of
any grant of any Performance Units or Performance Shares shall be set forth in
an Award Agreement.

 

9.3                               Value of Performance Units and Performance
Shares.  Each Performance Unit shall have an initial value that is established
by the Committee at the time of grant.  Each Performance Share shall have an
initial value equal to the Fair Market Value of a Share on the Grant Date.  The
Committee shall set Performance Goals in its discretion which, depending on the
extent to which they are met, will determine the value or number of Performance
Units or Performance Shares that will be paid out to the Participant.  The
Performance Period set forth in any Award Agreement for any Performance Shares
shall be at least one year, except in connection with the death or Disability of
the Participant or a Change of Control.

 

9.4                               Earning of Performance Units and Performance
Shares.  Subject to the terms of this Plan, after the applicable Performance
Period has ended, the holder of Performance Units or Performance Shares shall be
entitled to receive payout on the value and number of Performance Units or
Performance Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding Performance
Goals have been achieved.

 

9.5                               Reassignment.  If prior to the end of a
Performance Period, but after the conclusion of one year of the Performance
Period, a Participant holding Performance Units or Performance Shares is
reassigned to a position with the Company or any Affiliate or Subsidiary, and
that position is not eligible to participate in such an Award, but the
Participant does not terminate employment or service with the Company or any
Affiliate or Subsidiary, as the case may be, the Committee may, in its sole
discretion: (a) cause Shares to be delivered or payment made with respect to the
Participant’s Award in accordance with Section 9.7, but only if otherwise earned
for the entire Performance Period or (b) cause Shares to be delivered or payment
made with respect to the Participant’s Award in accordance with Section 9.7, but
only if otherwise earned for the entire Performance Period and only with respect
to the portion of the applicable Performance Period completed at the date of
such reassignment, with proration based on the number of months or years such
Participant served in the prior position during the Performance Period.

 

9.6                               Committee Discretion to Scale Back Awards.  At
any time during a Performance Period of more than one fiscal year, the Committee
may, in its discretion, cancel a portion of an Award of Performance Shares or
Performance Units prior to the conclusion of the Performance Period (a “Scale
Back”), provided that:

 

(a)                                 the Award has not yet vested;

 

(b)                                 based on financial information contained in
the financial statements or similar internal reports of the Company or any
Affiliate or Subsidiary, as the case may be, the Committee determines that the
Performance Goals for the Performance Period cannot be achieved at the maximum
levels established at the time of grant;

 

(c)                                  Awards shall be Scaled Back in proportion
to the estimated short fall in achievement of Performance Goals from maximum
levels;

 

(d)                                 all Awards for the same Performance Period
are Scaled Back by the same percentage;

 

(e)                                  once an Award is Scaled Back, it may not
again be increased to add or recover Performance Shares or Performance Units
that were canceled; and

 

(f)                                   Performance Shares or Performance Units
canceled in a Scale Back shall again be available to the Committee for grant of
new Awards of Performance Shares or

 

16

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Performance Units for any future Performance Period.  This provision shall not
be used in any manner that could have the effect of repricing a previous Award
of Performance Shares or Performance Units.

 

9.7                               Form and Timing of Payment of Performance
Units or Performance Shares.  Payment of earned Performance Units or Performance
Shares shall be as determined by the Committee and as evidenced in the Award
Agreement.  Subject to the terms of this Plan, the Committee, in its sole
discretion, may pay earned Performance Units or Performance Shares in the form
of cash or in Shares (or in a combination thereof) equal to the value of the
earned Performance Units or Performance Shares at the close of the applicable
Performance Period or as soon as practicable after the end of the Performance
Period, except that if a Participant has properly elected to defer income that
may be attributable to Performance Shares or Performance Units under a Company
deferred compensation plan, common stock units will be credited to the
Participant’s account under such deferred compensation plan and paid in
accordance with the terms of such plan. Any Shares issued under such deferred
compensation plan that relate to the deferral of Performance Shares or
Performance Units granted under this Plan (including without limitation any
Dividend Equivalents paid in Shares) will be deemed to be issued under this
Plan.  Any Shares issued in payment of earned Performance Units or Performance
Shares may be granted subject to any restrictions deemed appropriate by the
Committee.  The determination of the Committee with respect to the form of
payout of such Awards shall be set forth in the Award Agreement pertaining to
the grant of the Award.

 

9.8                               Dividend Rights.  Participants holding
Performance Units or Performance Shares granted hereunder shall not receive any
cash dividends or Dividend Equivalents based on the dividends declared on Shares
that are subject to such Performance Units or Performance Shares during the
period between the date that such Performance Units or Performance Shares are
granted and the date such Performance Units or Performance Shares are settled.

 

Article 10.  Annual Performance Awards

 

10.1                        Grant of Annual Performance Awards.  Subject to the
terms and conditions of this Plan, the Committee, at any time and from time to
time, may grant to Participants Awards denominated in cash in such amounts and
upon such terms as the Committee may determine, based on the achievement of
specified Performance Goals for annual periods or other time periods as
determined by the Committee (“Annual Performance Awards”).

 

10.2                        Target Payout.  The target amount that may be paid
with respect to an Annual Performance Award (the “Target Payout”) shall be
determined by the Committee pursuant to Section 15.2 and shall be based on a
percentage of a Participant’s actual fiscal year annual base earnings at the
time of grant (“Participation Factor”), within the range established by the
Committee for each Participant and subject to adjustment as provided in the next
sentence of this Section 10.2.  The Chief Executive Officer may approve
modifications to the foregoing Participation Factors for any Participant who is
not a Covered Employee, if such modification is based on level of
responsibility.  The Committee may establish curves, matrices or other
measurements for prorating the amount of payouts for achievement of Performance
Goals at less or greater than the Target Payout.

 

10.3                        Maximum Payout. The Committee may also establish a
maximum potential payout amount (the “Maximum Payout”) with respect to an Annual
Performance Award of up to 200% of the Target Payout in the event Performance
Goals are exceeded by an amount established by the Committee at the time
Performance Goals are established.  The Committee may establish curves, matrices
or other measurements for prorating the amount of payouts for achievement of
Performance Goals at greater than the Target Payout but less than the Maximum
Payout.

 

10.4                        Division Payout.  At the time an Annual Performance
Award is made, the Committee may establish supplemental division-specific
Performance Measures (“Supplemental Division Performance Goals”) and may provide
that achievement of a Supplemental Division Performance Goal at or above an
established target level shall be required in order to earn a Target Payout or
Maximum

 

17

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Payout.  The Committee shall also have the discretion to reduce by an amount up
to 20% the amount that would otherwise be paid under the division payout formula
to a division officer or general manager based on the Committee’s evaluation of
the quality of division performance.

 

10.5                        Strategic Performance Measure Payout.  At the time
an Annual Performance Award is made, the Committee may increase the Target
Payout and the Maximum Payout (as either may be prorated in accordance with
Sections 10.2 and 10.3) by up to 20% but to not more than 200% of the Target
Payout, for selected Participants (“Strategic Performance Participants”), to
reflect individual strategic performance measures (“SPM Performance Goals”)
established at that time by the Committee.  The Committee shall have the
discretion to reduce by an amount up to 20% the amount that would otherwise be
paid under the payout formula to a Strategic Performance Participant based on
the Committee’s evaluation of the individual’s achievement of the SPM
Performance Goal.

 

10.6                        Payment.  Payment of any earned Annual Performance
Awards will be made as soon as possible after the Committee has determined the
extent to which the applicable Performance Goals have been achieved and not
later than the last day of the short term deferral period determined in
accordance with Treas. Reg. Sec. 1.409A-1(b)(4), except to the extent that a
Participant has properly elected to defer income that may be attributable to an
Annual Performance Award under a Company deferred compensation plan or
arrangement.

 

Article 11.  Nonemployee Director Awards

 

11.1                        Nonemployee Director Shares.  On the first business
day of each fiscal year, the Company shall issue to each person who is then a
Nonemployee Director Shares in an amount equal to $60,000 (or such other amount
as may be determined by the Committee from time to time, which Committee shall
consist solely of directors who are “independent directors” (as defined in the
rules of the New York Stock Exchange)) divided by the three-month fair market
value of one Share, rounded down to the greatest number of whole Shares
(“Nonemployee Director Shares”), subject to adjustment as provided in
Section 4.4(a).  “Three-month fair market value” for the purpose of this
Section 11.1 shall be the average of the closing sale prices of one Share at the
end of the regular trading session for each of the trading days in the three
calendar months immediately prior to the date of issue of the Nonemployee
Director Shares, as reported by The New York Stock Exchange.

 

11.2                        Nonemployee Director Options.

 

(a)                                 Annual Grant.  Subject to the terms and
conditions of this Section 11.2, on the first business day of each fiscal year,
the Company shall grant to each person who is then a Nonemployee Director, a
Nonqualified Stock Option to purchase Shares (a “Nonemployee Director Option”). 
Each Nonemployee Director Option shall have a grant date fair value of $55,000
(or such other amount as may be determined by the Committee from time to time,
which Committee shall consist solely of directors who are “independent
directors” (as defined in the rules of the New York Stock Exchange)), determined
using a standard Black-Scholes, binomial or monte carlo valuation formula, based
on assumptions consistent with those used to value option grants disclosed under
Schedule 14A under the Exchange Act or successor requirements, for the business
day prior to the Grant Date.

 

(b)                                 Option Price.  The Option Price for each
grant of a Nonemployee Director Option shall be one hundred percent (100%) of
the FMV of a Share as of the Option’s Grant Date.

 

(c)                                  Vesting; Term.  Except as provided in
Articles 13 and 19, Nonemployee Director Options shall vest and become
exercisable in three equal installments on each of the first, second and third
anniversaries following the Grant Date, and shall remain exercisable for a term
of ten (10) years after the Grant Date.

 

18

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(d)                                 Exercise and Payment of Exercise Price. 
Nonemployee Director Options may be exercised by giving notice and paying the
Option Price pursuant to Section 6.6 of this Plan.

 

11.3                        Share Proration.  If, on any date on which
Nonemployee Director Shares are to be issued pursuant to Section 11.1 or
Nonemployee Director Options are to be granted pursuant to Section 11.2, the
number of Shares is insufficient for the issuance of the entire number of
Nonemployee Director Shares to be issued or for the grant of the entire number
of Nonemployee Director Options, as calculated in accordance with Section 11.1
or Section 11.2, respectively, then the number of Nonemployee Director Shares to
be issued and Nonemployee Director Options to be granted to each Nonemployee
Director entitled to receive Nonemployee Director Shares or Nonemployee Director
Options on such date shall be such Nonemployee Director’s proportionate share of
the available number of such Shares and Options (rounded down to the greatest
number of whole Shares), provided that if a sufficient number of Shares is
available to issue all of the Nonemployee Director Shares, then the entire
number of Nonemployee Director Shares shall be issued first and the number of
Shares to be subjected to Nonemployee Director Options shall be prorated in
accordance with this section.

 

11.4                        Shares in Lieu of Retainers and Other Director
Fees.  A Nonemployee Director shall have the right to elect to receive Shares in
lieu of any annual Board, chair and other retainers and any meeting fees
otherwise payable in cash.  The election to receive Shares shall be made prior
to the date retainers and fees are otherwise scheduled to be paid but not later
than May 31 of the calendar year for which the retainers and fees are to be paid
or such earlier date as set by the Committee.  Retainers and fees that are
earned after the date a Nonemployee Director makes an election shall be reserved
through the rest of the calendar year and Shares shall be issued in December of
that year.  The number of Shares to be issued shall be determined by dividing
the dollar amount of reserved retainers and fees by the Fair Market Value of one
Share on the date that the Shares are issued.

 

11.5                        Award Agreement.  The terms and conditions of any
grant of any Award to a Nonemployee Director shall be set forth in an Award
Agreement.

 

11.6                        Other Awards to Nonemployee Directors.  The
Committee (which shall consist solely of directors who are “independent
directors” (as defined in the rules of the New York Stock Exchange)) may grant
to Nonemployee Directors other types of Awards pursuant to such terms and
conditions as the Board or Committee may prescribe and set forth in an
applicable subplan or Award Agreement, subject to the Nonemployee Director
Awards limit in Section 4.3(h) and the other terms and provisions of this Plan.

 

11.7                        Deferral of Award Payment. The Committee (which
shall consist solely of directors who are “independent directors” (as defined in
the rules of the New York Stock Exchange)) may permit a Nonemployee Director the
opportunity to defer the grant or payment of an Award pursuant to such terms and
conditions as the Committee may prescribe and set forth in any applicable
subplan or Award Agreement.  If a Nonemployee Director has properly elected to
defer income that may be attributable to any Awards granted to Nonemployee
Directors under this Plan or Shares received by Nonemployee Directors under
Section 11.4 of this Plan under a Company deferred compensation plan, common
stock units will be credited to the Nonemployee Director’s account under such
deferred compensation plan and paid out in accordance with the terms of such
deferred compensation plan. Any Shares issued under such deferred compensation
plan that relate to the deferral of Awards granted to Nonemployee Directors
under this Plan or Shares received by Nonemployee Directors under Section 11.4
of this Plan (including without limitation accumulated Dividend Equivalents paid
in Shares) will be deemed to be issued under this Plan.

 

Article 12.  Other Cash-Based Awards and Other Stock-Based Awards

 

12.1                        Other Cash-Based Awards.  Subject to the terms and
provisions of this Plan, the Committee, at any time and from time to time, may
grant Other Cash-Based Awards to Participants in such amounts and upon such
terms as the Committee may determine.

 

19

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12.2                        Other Stock-Based Awards.  Subject to the terms and
provisions of this Plan (including Section 20.6), the Committee, at any time and
from time to time, may grant Other Stock-Based Awards not otherwise described by
the terms of this Plan (including the grant or offer for sale of unrestricted
Shares) in such amounts and subject to such terms and conditions as the
Committee shall determine.  Without limiting the generality of the foregoing,
such Awards may (a) involve the transfer of actual Shares to Participants,
either at the time of grant or thereafter, or payment in cash or otherwise of
amounts based on the value of Shares; (b) include Awards designed to comply with
or take advantage of the applicable local laws of jurisdictions other than the
United States; and (c) be in the form of deferred common stock units, including
those accumulated as a result of Dividend Equivalents paid in Shares on common
stock units credited to a Participant’s account under a Company deferred
compensation plan and paid out in accordance with the terms of such deferred
compensation plan.

 

12.3                        Value of Other Cash-Based Awards and Other
Stock-Based Awards.  Each Other Cash-Based Award shall specify a payment amount
or payment range as determined by the Committee.  Each Other Stock-Based Award
shall be expressed in terms of Shares or units based on Shares, as determined by
the Committee.  The Committee may establish Performance Goals in its discretion
for any Other Cash-Based Award or any Other Stock-Based Award.  If the Committee
exercises its discretion to establish Performance Goals for any such Awards, the
number or value of Other Cash-Based Awards or Other Stock-Based Awards that will
be paid out to the Participant will depend on the extent to which the
Performance Goals are met.

 

12.4                        Payment of Other Cash-Based Awards and Other
Stock-Based Awards.  Payment, if any, with respect to an Other Cash-Based Award
or an Other Stock-Based Award shall be made in accordance with the terms of the
Award, in cash for any Other Cash-Based Award and in cash or Shares for any
Other Stock-Based Award, as the Committee determines; except that if a
Participant has properly elected to defer income that may be attributable to an
Other Cash-Based Award or an Other Stock-Based Award under a Company deferred
compensation plan, common stock units will be credited to the Participant’s
account under such plan and paid out in accordance with the terms of such plan.

 

Article 13.  Termination of Service

 

The following provisions shall apply upon termination of a Participant’s
employment or other service with the Company or any Affiliate or Subsidiary, as
the case may be, except to the extent that the Committee provides otherwise in
an Award Agreement evidencing an Award at the time of grant or determines
otherwise pursuant to Section 13.4 of this Plan (and such provisions and
determinations need not be uniform among all Awards granted pursuant to this
Plan) or the terms of another agreement between the Company and the Participant
or a plan or policy of the Company applicable to the Participant specifically
provides otherwise.

 

13.1                        Effect of Termination Due to Death or Disability. 
Subject to Section 13.6 of this Plan, in the event a Participant’s employment or
other service with the Company or any Affiliate or Subsidiary, as the case may
be, is terminated by reason of death or Disability:

 

(a)                                 All outstanding Options (including
Nonemployee Director Options) and SARs held by the Participant as of the
effective date of such termination shall become immediately exercisable in full
and will remain exercisable for a period of one year after such termination (but
in no event after the expiration date of any such Option or SAR);

 

(b)                                 All outstanding Shares of Restricted Stock
held by the Participant as of the effective date of such termination that have
not vested as of the date of such termination shall be terminated and forfeited;

 

(c)                                  All outstanding but unpaid Restricted Stock
Units, Performance Shares, Performance Units, Other Cash-Based Awards and Other
Stock-Based Awards held by the Participant as of the effective date of such
termination shall be terminated and forfeited; provided, however, that with
respect to any Performance Shares or Performance Units, if a

 

20

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Participant’s employment or other service with the Company or any Affiliate or
Subsidiary, as the case may be, is terminated by reason of death or Disability
prior to the end of the Performance Period of such Award, but after the
conclusion of not less than one year of the Performance Period, the Committee
may, in its sole discretion, cause Shares to be delivered or payment made
(except to the extent that a Participant has properly elected to defer income
that may be attributable to Performance Shares or Performance Units under a
Company deferred compensation plan or arrangement) with respect to the
Participant’s Award, but only if otherwise earned for the entire Performance
Period and only with respect to the portion of the applicable Performance Period
completed at the date of such event, with proration based on the number of
months or years that the Participant was employed or performed services during
the Performance Period. The Committee shall consider the provisions of
Section 13.6 of this Plan and shall have the discretion to consider any other
fact or circumstance in making its decision as to whether to deliver such
Shares, including whether the Participant again becomes employed; and

 

(d)                                 If the effective date of such termination is
before the date payment is made in settlement of an Annual Performance Award or
would have been made had there not been a deferral election in place, the Annual
Performance Award will be terminated and forfeited; provided, however, that the
Committee may, in its sole discretion, cause payment to be made with respect to
such Annual Performance Award and in accordance with Section 10.6 and the
payment terms thereof, but only if otherwise earned for the entire Performance
Period and only with respect to the portion of the Performance Period completed
as of the date of such death or Disability.

 

13.2                        Effect of Termination Due to Retirement.  Subject to
Section 13.6 of this Plan, in the event a Participant’s employment or other
service with the Company or any Affiliate or Subsidiary, as the case may be, is
terminated by reason of Retirement (except with respect to Nonemployee
Directors):

 

(a)                                 All outstanding Options (other than
Nonemployee Director Options) and SARs held by the Participant as of the
effective date of such Retirement shall remain outstanding and exercisable and
shall continue to vest and become exercisable in accordance with their terms for
a period of four years after the date of such Retirement (but in no event shall
be exercisable after the expiration date of any such Option or SAR);

 

(b)                                 All outstanding Shares of Restricted Stock
held by the Participant as of the effective date of such Retirement that have
not vested as of the date of such Retirement shall be terminated and forfeited;

 

(c)                                  All outstanding but unpaid Restricted Stock
Units, Performance Shares, Performance Units, Other Cash-Based Awards and Other
Stock-Based Awards held by the Participant as of the effective date of such
Retirement shall be terminated and forfeited; provided, however, that with
respect to any Performance Shares or Performance Units, if a Participant’s
employment or other service with the Company or any Affiliate or Subsidiary, as
the case may be, is terminated by reason of Retirement prior to the end of the
Performance Period of such Award, but after the conclusion of not less than the
one year of the Performance Period, the Committee may, in its sole discretion,
cause Shares to be delivered or payment made (except to the extent that a
Participant has properly elected to defer income that may be attributable to
Performance Shares or Performance Units under a Company deferred compensation
plan or arrangement) with respect to the Participant’s Award, but only if
otherwise earned for the entire Performance Period and only with respect to the
portion of the applicable Performance Period completed at the date of such
event, with proration based on the number of months or years that the
Participant was employed or performed services during the Performance Period. 
The Committee shall consider the provisions of Section 13.6 of this Plan and
shall have the

 

21

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discretion to consider any other fact or circumstance in making its decision as
to whether to deliver such Shares, including whether the Participant again
becomes employed; and

 

(d)                                 If the effective date of such Retirement is
before the date payment is made in settlement of an Annual Performance Award or
would have been made had there not been a deferral election in place, the Annual
Performance Award will be terminated and forfeited; provided, however, that the
Committee may, in its sole discretion, cause payment to be made with respect to
such Annual Performance Award and in accordance with Section 10.6 and the
payment terms thereof, but only if otherwise earned for the entire Performance
Period and only with respect to the portion of the Performance Period completed
as of the date of such Retirement.

 

13.3                        Effect of Termination for Reasons Other than Death,
Disability or Retirement.  Subject to Section 13.6 of this Plan, in the event a
Participant’s employment or other service with the Company or any Affiliate or
Subsidiary, as the case may be, is terminated for any reason other than death,
Disability or Retirement (except with respect to Nonemployee Directors):

 

(a)                                 All outstanding Options (other than
Nonemployee Director Options) and SARs held by the Participant as of the
effective date of such termination shall, to the extent exercisable as of the
date of such termination, remain exercisable in full for a period of three
months after the date of such termination (but in no event after the expiration
date of any such Option or SAR), and Options and SARs not exercisable as of the
date of such termination shall be forfeited and terminate;

 

(b)                                 All outstanding Shares of Restricted Stock
held by the Participant as of the effective date of such termination that have
not vested as of the date of such termination shall be terminated and forfeited;

 

(c)                                  All outstanding but unpaid Restricted Stock
Units, Performance Shares, Performance Units, Other Cash-Based Awards and Other
Stock-Based Awards held by the Participant as of the effective date of such
termination shall be terminated and forfeited;

 

(d)                                 If the effective date of such termination is
before the date payment is made in settlement of an Annual Performance Award or
would have been made had there not been a deferral election in place, then any
such Annual Performance Award held by a Participant shall be terminated and
forfeited; and

 

(e)                                  If a Nonemployee Director has served as a
member of the Board for ten full fiscal years or longer and terminates service
on the Board for any reason other than death or Disability, (i) outstanding
unvested Nonemployee Director Options shall remain outstanding and continue to
vest in accordance with their terms, and (ii) the Nonemployee Director may
exercise all such vested outstanding Nonemployee Director Options for up to four
years after the date of termination, but not later than the date the Nonemployee
Director Option expires.  If a Nonemployee Director has served as a member of
the Board for less than ten years and terminates service on the Board for any
reason other than death or Disability, (x) all unvested Nonemployee Director
Options shall expire and be canceled and (y) the Nonemployee Director may
exercise any vested outstanding Nonemployee Director Options for up to three
months after the date of termination, but not later than the date the
Nonemployee Director Option expires.

 

13.4                        Modification of Rights Upon Termination. 
Notwithstanding the other provisions of this Article 13, upon a Participant’s
termination of employment or other service with the Company or any Affiliate or
Subsidiary, as the case may be, the Committee may, in its sole discretion (which
may be exercised at any time on or after the Grant Date, including following
such termination) cause Options or SARs (or any part thereof) held by such
Participant as of the effective date of such termination to terminate, become or
continue to become exercisable or remain exercisable following such termination
of

 

22

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employment or service, and Restricted Stock, Restricted Stock Units, Performance
Shares, Performance Units, Annual Performance Awards, Nonemployee Director
Awards, Other Cash-Based Awards and Other Stock-Based Awards held by such
Participant as of the effective date of such termination to terminate, vest or
become free of restrictions and conditions to payment, as the case may be,
following such termination of employment or service, in each case in the manner
determined by the Committee; provided, however, that (a) the Committee may not
take any action not permitted pursuant to Section 15.3 or Section 20.5, (b) the
Committee taking any such action relating to Nonemployee Director Awards shall
consist solely of “independent directors” (as defined in the rules of the New
York Stock Exchange), and (c) any such action by the Committee adversely
affecting any outstanding Award will not be effective without the consent of the
affected Participant (subject to the right of the Committee to take whatever
action it deems appropriate under Sections 4.4 or 13.6 or Articles 19 and 20 of
this Plan).

 

13.5                        Determination of Termination of Employment or Other
Service.  Unless the Committee otherwise determines in its sole discretion, a
Participant’s employment or other service will, for purposes of this Plan, be
deemed to have terminated on the date recorded on the personnel or other records
of the Company or the Affiliate or Subsidiary for which the Participant provides
employment or other service, as determined by the Committee in its sole
discretion based upon such records; provided, however, that if distribution of
an Award subject to Code Section 409A is triggered by a termination of a
Participant’s employment or other service, such termination must also constitute
a “separation from service” within the meaning of Code Section 409A.

 

13.6                        Additional Forfeiture Events.

 

(a)                                 Actions Constituting Adverse Action. 
Notwithstanding anything in this Plan to the contrary and in addition to the
other rights of the Committee under this Plan, including this Section 13.6, if a
Participant is determined by the Committee, acting in its sole reasonable
discretion, to have taken any action that would constitute an Adverse Action,
(i) all rights of the Participant under this Plan and any agreements evidencing
an Award then held by the Participant shall terminate and be forfeited without
notice of any kind, and (ii) the Committee in its sole discretion may require
the Participant to surrender and return to the Company all or any Shares
received, or to disgorge all or any profits or any other economic value (however
defined by the Committee) made or realized by the Participant, during the period
beginning one year prior to the Participant’s termination of employment or other
service with the Company, an Affiliate or a Subsidiary, in connection with any
Awards or any Shares issued upon the exercise or vesting of any Awards.  The
Company may defer the exercise of any Option or SAR, the issuance of share
certificates or removal of restrictions on uncertificated shares issued in book
entry form upon the vesting of any Restricted Stock or the issuance of Shares or
payment upon vesting of any Restricted Stock Unit, Performance Share,
Performance Unit or Other Stock-Based Awards for a period of up to ninety (90)
days in order for the Committee to make any determination as to the existence of
an Adverse Action.  Unless otherwise provided by the Committee in an applicable
Award Agreement, this Section 13.6(a) shall not apply to any Participant
following a Change of Control.

 

(b)                                 Forfeiture or “Clawback” of Awards under
Applicable Law or Company Policy.  If the Company is required to prepare an
accounting restatement due to the material noncompliance of the Company, as a
result of misconduct, with any financial reporting requirement under the
securities laws, then any Participant who is one of the individuals subject to
automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall
reimburse the Company for the amount of any Award received by such individual
under this Plan during the 12-month period following the first public issuance
or filing with the Securities and Exchange Commission, as the case may be, of
the financial document embodying such financial reporting requirement.  In
addition, the Company shall seek to recover any Award made as required by the
provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act or
any other clawback, forfeiture or recoupment provision required by applicable
law or under the requirements of any stock exchange or

 

23

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market upon which such Shares are then listed or traded.  Awards under the Plan
also shall be subject to any compensation “clawback,” forfeiture or recoupment
policy that the Committee may adopt from time to time that is applicable by its
terms to the Participant.

 

Article 14.  Transferability of Awards and Shares

 

14.1                        Transferability of Awards.  Except as determined by
the Committee in its sole discretion, and on and subject to such terms and
conditions as it shall deem appropriate:  (a) during a Participant’s lifetime,
his or her Awards shall be exercisable only by the Participant; (b) Awards shall
not be transferable other than by will or the laws of descent and distribution
or, subject to the consent of the Committee, pursuant to a domestic relations
order entered into by a court of competent jurisdiction; (c) no Awards shall be
subject, in whole or in part, to attachment, execution or levy of any kind; and
(d) any purported transfer in violation of this Section 14.1 shall be null and
void.  The Committee may establish such procedures as it deems appropriate for a
Participant to designate a beneficiary to whom any amounts payable or Shares
deliverable in the event of, or following, the Participant’s death may be
provided.

 

14.2                        Restrictions on Share Transferability.  The
Committee may impose such restrictions on any Shares acquired by a Participant
under this Plan as it may deem advisable, including minimum holding period
requirements, restrictions under applicable federal securities laws, under the
requirements of any stock exchange or market upon which such Shares are then
listed or traded, or under any blue sky or state securities laws applicable to
such Shares.

 

Article 15.  Performance Measures

 

15.1                        Performance Measures.  The Performance Goals upon
which the payment or vesting of an Award to a Covered Employee that is intended
to qualify as Performance-Based Compensation shall be limited to one or more
specified objective Performance Measures that are based on the following
Performance Measure elements (each, a “Performance Measure Element”):

 

(a)                                 Sales and Revenue Measure Elements:

 

(i)                                     Gross Revenue

(ii)                                  Sales Allowances

(iii)                               Net Revenue

(iv)                              Invoiced Revenue

(v)                                 Collected Revenue

(vi)                              Revenues from New Products

(vii)                           Bad Debts

 

(b)                                 Expense Measure Elements:

 

(i)                                     Direct Material Costs

(ii)                                  Direct Labor Costs

(iii)                               Indirect Labor Costs

(iv)                              Direct Manufacturing Costs

(v)                                 Indirect Manufacturing Costs

(vi)                              Cost of Goods Sold

(vii)                           Sales, General and Administrative Expenses

(viii)                        Operating Expenses

(ix)                              Non-cash Expenses

(x)                                 Tax Expense

(xi)                              Non-operating Expenses

(xii)                           Total Expenses

 

(c)                                  Profitability and Productivity Measure
Elements:

 

(i)                                     Gross Margin

(ii)                                  Net Operating Income

 

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(iii)                               EBITDA (earnings before interest, taxes,
depreciation and amortization)

(iv)                              EBIT (earnings before interest and taxes)

(v)                                 Net Operating Income After Taxes (NOPAT)

(vi)                              Net Income

(vii)                           Net Cash Flow

(viii)                        Net Cash Flow from Operations

 

(d)                                 Asset Utilization and Effectiveness Measure
Elements:

 

(i)                                     Cash

(ii)                                  Excess Cash

(iii)                               Accounts Receivable

(iv)                              Inventory (WIP or Finished Goods)

(v)                                 Current Assets

(vi)                              Working Capital

(vii)                           Total Capital

(viii)                        Fixed Assets

(ix)                              Total Assets

(x)                                 Standard Hours

(xi)                              Plant Utilization

(xii)                           Purchase Price Variance

(xiii)                        Manufacturing Overhead Variance

 

(e)                                  Debt and Equity Measures:

 

(i)                                     Accounts Payable

(ii)                                  Current Accrued Liabilities

(iii)                               Total Current Liabilities

(iv)                              Total Debt

(v)                                 Debt Principal Payments

(vi)                              Net Current Borrowings

(vii)                           Total Long-term Debt

(viii)                        Credit Rating

(ix)                              Retained Earnings

(x)                                 Total Preferred Equity

(xi)                              Total Common Equity

(xii)                           Total Equity

 

(f)                                   Shareholder and Return Measure Elements:

 

(i)                                     Earnings per Share (diluted and fully
diluted)

(ii)                                  Stock Price

(iii)                               Dividends

(iv)                              Shares Repurchased

(v)                                 Total Return to Shareholders

(vi)                              Debt Coverage Ratios

(vii)                           Return on Assets

(viii)                        Return on Equity

(ix)                              Return on Invested Capital

(x)                                 Economic Profit (for example, economic value
added)

 

(g)                                  Customer and Market Measure Elements:

 

(i)                                     Dealer/Channel Size/Scope

(ii)                                  Dealer/Channel Performance/Effectiveness

(iii)                               Order Fill Rate

(iv)                              Customer Satisfaction

(v)                                 Customer Service/Care

(vi)                              Brand Awareness and Perception

(vii)                           Market Share

 

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(viii)                        Warranty Rates

(ix)                              Channel Inventory

 

(h)                                 Organizational and Employee Measure
Elements:

 

(i)                                     Headcount

(ii)                                  Employee Performance

(iii)                               Employee Productivity

(iv)                              Standard Hours

(v)                                 Employee Engagement/Satisfaction

(vi)                              Employee Turnover

(vii)                           Employee Diversity

 

(i)                                     Safety Measures:

 

(i)                                     Recordable Incident Rates (TRIR)

(ii)                                  Recordable Cases

(iii)                               Recordable Lost Work Days Rate (LWD)

(iv)                              Recordable Severity Rate

(v)                                 Workers Compensation Expense

 

(j)                                    Quality Measures:

 

(i)                                     PPM (parts per million)

(ii)                                  DPMO (defects per million opportunities)

(iii)                               Defects (weighted by category)

(iv)                              Scrap Expense

(v)                                 Rework Expense

(vi)                              Product Holds

(vii)                           Product Hold Inventory Dollars

(viii)                        Shipping Errors

(ix)                              Engineering Change Orders

 

(k)                                 Other Manufacturing Measures:

 

(i)                                     Total Purchases

(ii)                                  Total Manufacturing Output

(iii)                               Total Labor Costs

(iv)                              Total Labor Hours

 

Any Performance Measure Element can be a Performance Measure.  In addition, any
of the Performance Measure Element(s) can be used in an algebraic formula (e.g.,
averaged over a period, combined into a ratio, compared to a budget or standard,
compared to previous periods and/or other formulaic combinations) based on the
Performance Measure Elements to create a Performance Measure.  Any Performance
Measure(s) may be used to measure the performance of the Company, Subsidiary or
Affiliate as a whole or any division or business unit of the Company, product or
product group, region or territory, Subsidiary or Affiliate, or any combination
thereof, as the Committee may deem appropriate.  Any Performance Measure(s) can
be compared to the performance of a group of comparator companies, or published
or special index that the Committee, in its sole discretion, deems appropriate,
or the Company may select any Performance Measure(s) above as compared to
various stock market indices.  Subject to the terms and conditions of this Plan
(including Section 20.5), the Committee also has the authority to provide for
accelerated vesting of any Award based on the achievement of Performance Goals
pursuant to any Performance Measure(s) specified in this Article 15.

 

15.2                        Establishment of Performance Goals.  Any Award to a
Covered Employee that is intended to qualify as Performance-Based Compensation
shall be granted, and Performance Goals for such an Award shall be established,
by the Committee in writing not later than ninety (90) days after the
commencement of the Performance Period to which the Performance Goals relate, or
such other period

 

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required under Code Section 162(m); provided that the outcome is substantially
uncertain at the time the Committee establishes the Performance Goal; and
provided further that in no event will a Performance Goal be considered to be
preestablished if it is established after 25% of the Performance Period (as
scheduled in good faith at the time the Performance Goal is established) has
elapsed.

 

15.3                        Certification of Payment.  Before any payment is
made in connection with any Award to a Covered Employee that is intended to
qualify as Performance-Based Compensation, the Committee must certify in
writing, as reflected in the minutes, that the Performance Goals established
with respect to such Award have been achieved.

 

15.4                        Evaluation of Performance.  The Committee may
provide in any such Award including Performance Goals that any evaluation of
performance may include or exclude any of the following events that occurs
during a Performance Period:  (a) items related to a change in accounting or
measurement principles; (b) items relating to financing activities; (c) expenses
for restructuring or productivity initiatives; (d) other non-operating items;
(e) items related to acquisitions; (f) items attributable to the business
operations of any entity acquired by the Company during the Performance Period;
(g) items related to the disposal of a business or segment of a business;
(h) items related to discontinued operations that do not qualify as a segment of
a business under applicable accounting standards; (i) items attributable to any
stock dividend, stock split, combination or exchange of stock occurring during
the Performance Period; (j) any other items of significant income or expense
which are determined to be appropriate adjustments; (k) items relating to
unusual or extraordinary corporate transactions, events or developments,
(l) items related to amortization of acquired intangible assets; (m) items that
are outside the scope of the Company’s core, on-going business activities;
(n) items related to acquired in-process research and development; (o) items
relating to changes in tax laws; (p) items relating to major licensing or
partnership arrangements; (q) items relating to asset impairment charges;
(r) items relating to gains or losses for litigation, arbitration and
contractual settlements; (s) foreign exchange gains and losses; or (t) items
relating to any other unusual or nonrecurring events or changes in applicable
laws, accounting principles or business conditions.  To the extent such
inclusions or exclusions affect Awards to Covered Employees, they shall be
prescribed in a form that meets the requirements of Code Section 162(m) for
deductibility.

 

15.5                        Adjustment of Performance-Based Compensation. 
Awards that are intended to qualify as Performance-Based Compensation may not be
adjusted upward.  The Committee shall retain the discretion to adjust such
Awards downward, either on a formula or discretionary basis or any combination,
as the Committee determines.

 

15.6                        Committee Discretion.  In the event that applicable
tax or securities laws change to permit Committee discretion to alter the
governing Performance Measures without obtaining shareholder approval of such
changes, the Committee shall have sole discretion to make such changes without
obtaining shareholder approval.  In addition, in the event that the Committee
determines that it is advisable to grant Awards that shall not qualify as
Performance-Based Compensation, the Committee may make such grants without
satisfying the requirements of Code Section 162(m) and base vesting on
Performance Measures other than those set forth in Section 15.1.

 

Article 16.  Dividend Equivalents

 

Subject to the provisions of this Plan and any Award Agreement, any Participant
selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on Shares that are subject to any Award (including any
deferred Award), to be credited as of dividend payment dates, during the period
between the date the Award is granted and the date the Award is exercised,
vests, settles, is paid or expires, as determined by the Committee.  Such
Dividend Equivalents shall be converted to cash or additional Shares by such
formula and at such time and subject to such limitations as may be determined by
the Committee and the Committee may provide that such amounts (if any) shall be
deemed to have been reinvested in additional Shares or otherwise reinvested. 
Notwithstanding the foregoing, the Committee may not grant Dividend Equivalents
based on the dividends declared on Shares

 

27

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that are subject to an Option or SAR Award and further, no dividend or Dividend
Equivalents shall be paid out with respect to any unvested performance Awards.

 

Article 17.  Beneficiary Designation

 

Each Participant under this Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under this Plan is to be paid in case of the Participant’s death before
the Participant receives any or all of such benefit.  Each such designation
shall revoke all prior designations by the same Participant, shall be in a form
prescribed by the Committee, and will be effective only when filed by the
Participant in writing with the Company during the Participant’s lifetime.  In
the absence of any such beneficiary designation, benefits remaining unpaid or
rights remaining unexercised at the Participant’s death shall be paid to or
exercised by the Participant’s executor, administrator or legal representative.

 

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Article 18.  Rights of Participants

 

18.1                        Employment.  Nothing in this Plan or an Award
Agreement shall:  (a) interfere with or limit in any way the right of the
Company, its Affiliates or its Subsidiaries to terminate any Participant’s
employment or service on the Board or to the Company or an Affiliate or
Subsidiary at any time or for any reason not prohibited by law, or (b) confer
upon any Participant any right to continue his employment or service as a
Director or Third-Party Service Provider for any specified period of time. 
Neither an Award nor any benefits arising under this Plan shall constitute an
employment contract with the Company or any Affiliate or Subsidiary and,
accordingly, subject to Articles 3 and 20, this Plan and the benefits hereunder
may be terminated at any time in the sole and exclusive discretion of the
Committee without giving rise to any liability on the part of the Company, its
Affiliates or its Subsidiaries.

 

18.2                        Participation.  No individual shall have the right
to be selected to receive an Award under this Plan or, having been so selected,
to be selected to receive a future Award.

 

18.3                        Rights as a Shareholder.  Except as otherwise
provided herein, a Participant shall have none of the rights of a shareholder
with respect to Shares covered by any Award until the Participant becomes the
record holder of such Shares.

 

Article 19.  Change of Control

 

19.1                        Effect of Change of Control.  Without limiting the
authority of the Committee pursuant to Sections 3.2 and 4.4 of this Plan, if a
Change of Control occurs then, unless otherwise determined by the Committee or
the Board in writing at or after the making of an Award, but prior to the
occurrence of such Change of Control:  (a) all Options and SARs granted
hereunder shall become immediately exercisable and shall remain exercisable
throughout their entire term; (b) all restrictions and vesting requirements
applicable to any Award based solely on the continued service of the Participant
shall terminate; and (c) all Awards the vesting or payment of which are based on
Performance Goals shall vest as though such Performance Goals were fully
achieved and shall become immediately payable; provided, however, that no Award
that provides for a deferral of compensation within the meaning of Code
Section 409A shall be cashed out upon the occurrence of a Change of Control
unless the event or circumstances constituting the Change of Control also
constitute a “change in the ownership” of the Company, a “change in the
effective control” of the Company or a “change in the ownership of a substantial
portion of the assets” of the Company, in each case as determined under Code
Section 409A.  The treatment of any other Awards in the event of a Change of
Control shall be as determined by the Committee in connection with the grant
thereof, as reflected in the applicable Award Agreement.

 

19.2                        Alternative Treatment of Stock-Based Awards.  In
connection with a Change of Control, the Committee in its sole discretion,
either in an Award Agreement at the time of grant of a Stock-Based Award or at
any time after the grant of such an Award, may determine that any or all
outstanding Stock-Based Awards granted under this Plan, whether or not
exercisable or vested, as the case may be, will be canceled and terminated and
that in connection with such cancellation and termination the holder of such
Stock-Based Award will receive for each Share subject to such Award a cash
payment (or the delivery of shares of stock, other securities or a combination
of cash, stock and securities with a fair market value (as determined by the
Committee in good faith) equivalent to such cash payment) equal to the
difference, if any, between the consideration received by shareholders of the
Company in respect of a Share in connection with such Change of Control and the
purchase price per share, if any, under the Award, multiplied by the number of
Shares subject to such Award (or in which such Award is denominated); provided
that if such product is zero ($0) or less or to the extent that the Award is not
then exercisable, the Award may be canceled and terminated without payment
therefor.  If any portion of the consideration pursuant to a Change of Control
may be received by holders of Shares on a contingent or delayed basis, the
Committee may, in its sole discretion, determine the fair market value per share
of such consideration as of the time of the Change of Control on the basis of
the Committee’s good faith estimate of the present value of the probable future
payment of such consideration.  Notwithstanding the foregoing, any Shares issued
pursuant to a Stock-Based Award that immediately prior to the effectiveness of
the Change of Control are subject to no further restrictions pursuant to this
Plan or an

 

29

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Award Agreement (other than pursuant to the securities laws) shall be deemed to
be outstanding Shares and receive the same consideration as other outstanding
Shares in connection with the Change of Control.

 

19.3                        Limitation on Change of Control Payments. 
Notwithstanding anything in Section 19.1 or 19.2 of this Plan to the contrary,
if, with respect to a Participant, the acceleration of the vesting of a Award as
provided in Section 19.1 of this Plan or the payment of cash in exchange for all
or part of a Stock-Based Award as provided in Section 19.2 of this Plan (which
acceleration or payment could be deemed a “payment” within the meaning of Code
Section 280G(b)(2)), together with any other “payments” that such Participant
has the right to receive from the Company or any corporation that is a member of
an “affiliated group” (as defined in Code Section 1504(a) without regard to Code
Section 1504(b)) of which the Company is a member, would constitute a “parachute
payment” (as defined in Code Section 280G(b)(2)), then the “payments” to such
Participant pursuant to Section 19.1 or 19.2 of this Plan will be reduced (or
acceleration of vesting eliminated) to the largest amount as will result in no
portion of such “payments” being subject to the excise tax imposed by Code
Section 4999; provided, that such reduction shall be made only if the aggregate
amount of the payments after such reduction exceeds the difference between
(a) the amount of such payments absent such reduction minus (b) the aggregate
amount of the excise tax imposed under Code Section 4999 attributable to any
such excess parachute payments; and provided further that such payments will be
reduced (or acceleration of vesting eliminated) in the following order: 
(i) options with an exercise price above fair market value that have a positive
value for purposes of Code Section 280G, (ii) pro rata among Awards that
constitute deferred compensation under Code Section 409A, and (iii) finally,
among the Awards that are not subject to Code Section 409A.  Notwithstanding the
foregoing sentence, if a Participant is subject to a separate agreement with the
Company or an Affiliate or Subsidiary that expressly addresses the potential
application of Code Sections 280G or 4999 (including that “payments” under such
agreement or otherwise will be reduced, that the Participant will have the
discretion to determine which “payments” will be reduced, that such “payments”
will not be reduced or that such “payments” will be “grossed up” for tax
purposes), then this Section 19.3 shall not apply and any “payments” to a
Participant pursuant to Section 19.1 or 19.2 of this Plan will be treated as
“payments” arising under such separate agreement; provided such separate
agreement may not modify the time or form of payments under any Award that
constitutes deferred compensation under Code Section 409A if the modification
would cause such Award to become subject to the adverse tax consequences
specified in Code Section 409A.

 

Article 20.  Amendment and Termination

 

20.1                        Amendment and Termination of this Plan and Award
Agreements.

 

(a)                                 Subject to subparagraphs (b) and (c) of this
Section 20.1 and Sections 20.3, 20.5, 20.6 and 23.13 of this Plan, the Board may
at any time terminate this Plan or an outstanding Award Agreement and the
Committee may, at any time and from time to time, amend this Plan or an
outstanding Award Agreement.

 

(b)                                 The terms of an outstanding Award may not be
amended to reduce the exercise price of outstanding Options or to reduce the
Grant Price of outstanding SARs or cancel outstanding Options or SARs in
exchange for cash, other Awards or Options or SARs with an exercise price or
Grant Price, as applicable, that is less than the exercise price of the
cancelled Options or the Grant Price of the cancelled SARs without shareholder
approval, except in connection with one of the events described in Section 4.4.

 

(c)                                  Notwithstanding the foregoing, no amendment
of this Plan shall be made without shareholder approval (i) to increase the
maximum number of Shares which may be issued pursuant to the Plan; (ii) to
increase any limitation set forth in the Plan on the number of Shares which may
be issued or the aggregate value of Awards which may be made, in respect of any
type of Award to any single Participant during any specified period; (iii) to
change the class of individuals eligible to participate in the Plan; (iv) to
reduce the minimum Option Price or the minimum SAR Grant Price as set forth in

 

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Sections 6.3 and 7.3; (v) to reduce the minimum vesting period, Period of
Restriction or Performance Period requirements applicable to Awards under the
Plan to Participants who are Employees; or (vi) if shareholder approval is
otherwise required pursuant to rules promulgated by any stock exchange or
quotation system on which Shares are listed or quoted or by applicable U.S.
state corporate laws or regulations, applicable U.S. federal laws or
regulations, and the applicable laws of any foreign country or jurisdiction
where Awards are, or will be, granted under this Plan.

 

20.2                        Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events.  Subject to Section 15.5, the Committee may
amend or modify the vesting criteria (including any Performance Goals,
Performance Measures or Performance Periods) of any outstanding Awards based in
whole or in part on the financial performance of the Company (or any Subsidiary
or division, business unit or other sub-unit thereof) in recognition of unusual
or nonrecurring events (including the events described in Sections 4.4 or 15.4)
affecting the Company or the financial statements of the Company or of changes
in applicable laws, regulations or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent unintended
dilution or enlargement of the benefits or potential benefits intended to be
made available under this Plan.  The determination of the Committee as to the
foregoing adjustments, if any, shall be conclusive and binding on Participants
under this Plan.  By accepting an Award under this Plan, a Participant agrees to
any adjustment to the Award made pursuant to this Section 20.2 without further
consideration or action.

 

20.3                        Awards Previously Granted.  Notwithstanding any
other provision of this Plan to the contrary, other than Sections 20.2, 20.4 or
23.13, no termination or amendment of this Plan or an Award Agreement shall
adversely affect in any material way any Award previously granted under this
Plan, without the written consent of the Participant holding such Award.

 

20.4                        Amendment to Conform to Law.  Notwithstanding any
other provision of this Plan to the contrary, the Committee may amend this Plan
or an Award Agreement, to take effect retroactively or otherwise, as deemed
necessary or advisable for the purpose of conforming this Plan or an Award
Agreement to any present or future law relating to plans of this or similar
nature, and to the administrative regulations and rulings promulgated
thereunder.  By accepting an Award under this Plan, a Participant agrees to any
amendment made pursuant to this Section 20.4 to any Award granted under this
Plan without further consideration or action.

 

20.5                        Waiver, Lapse or Acceleration of Exercisability or
Vesting.  Notwithstanding any other provision of this Plan to the contrary, the
Committee shall not have the authority to waive, lapse or accelerate the
exercisability or vesting of any Award held by any Participant who is an
Employee, except (a) in connection with the death, Disability or Retirement of
the Participant or a Change in Control or (b) to the extent that the number of
Shares covered by such waived, lapsed or accelerated Award (together with the
number of Shares covered by all other Awards, the exercisability or vesting of
which previously have been waived, lapsed or accelerated by the Committee under
this Plan) do not exceed five percent (5%) of the total number of Shares
authorized for Awards under this Plan.

 

20.6                        Nonemployee Director Awards.  Notwithstanding any
other provision of this Plan to the contrary, no action may be taken with
respect to any Nonemployee Director Award other than by the Committee (which
shall consist solely of “independent directors” (as defined in the rules of the
New York Stock Exchange)).

 

Article 21.  Withholding

 

21.1                        Tax Withholding.  Subject to Section 21.2 of this
Plan, the Company or any plan administrator of the Plan, as applicable, shall
have the power and the right to deduct or withhold, or require a Participant to
remit to the Company, the statutory amount reasonably determined by the Company
or any plan administrator of the Plan, as applicable, to be required to satisfy
federal, state and local taxes, domestic or foreign, required by law or
regulation to be withheld with respect to any taxable

 

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event arising as a result of this Plan, including such amounts as may be
calculated based on maximum applicable rates.

 

21.2                        Share Withholding.  With respect to withholding
required upon the exercise of Options or SARs, upon the lapse of restrictions on
Restricted Stock and Restricted Stock Units, or upon the achievement of
Performance Goals related to Performance Shares, or any other taxable event
arising as a result of a Stock-Based Award granted hereunder (collectively and
individually referred to as a “Share Payment”), Participants may elect, subject
to the approval of the Committee, to satisfy the withholding requirement, in
whole or in part, by having the Company or any plan administrator, as
applicable, withhold from the Share Payment a number of Shares having a Fair
Market Value up to an amount of withholding based on the maximum statutory tax
rates in the Participant’s applicable tax jurisdictions (unless a lesser amount
of withholding is required to avoid the classification of an Award as a
liability on the Company’s consolidated balance sheet or other adverse
accounting treatment), calculated on the date the withholding is to be
determined .  All such elections shall be irrevocable, made in writing and
signed by the Participant (including pursuant to electronic mail communications
from the Participant to the email address established by the Company), and shall
be subject to any restrictions or limitations that the Committee, in its sole
discretion, deems appropriate.

 

Article 22.  Successors

 

All obligations of the Company under this Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
or assets of the Company.

 

Article 23.  General Provisions

 

23.1                        Legend.  Any certificates for Shares may include any
legend, and any uncertificated Shares issued in book entry form or Shares
deposited with any broker with which the Company has engaged to provide services
for the Plan on behalf of a Participant may be made subject to any restriction,
that the Committee deems appropriate to reflect any restrictions on transfer of
such Shares.

 

23.2                        Usage.  In this Plan, except where otherwise
indicated by clear contrary intention, (a) any masculine term used herein also
shall include the feminine, (b) the plural shall include the singular, and the
singular shall include the plural, (c) “including” (and with correlative meaning
“include”) means including without limiting the generality of any description
preceding such term, and (d) “or” is used in the inclusive sense of “and/or”.

 

23.3                        Severability.  In the event any provision of this
Plan shall be held illegal or invalid for any reason, the illegality or
invalidity shall not affect the remaining parts of this Plan, and this Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included.

 

23.4                        Requirements of Law.  The granting of Awards and the
issuance of Shares under this Plan shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.

 

23.5                        Delivery of Title.  The Company shall have no
obligation to issue or deliver evidence of title for Shares issued under this
Plan prior to:

 

(a)                                 Obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable; and

 

(b)                                 Completion of any registration or other
qualification of the Shares under any applicable federal, state, provincial,
local, foreign or other law or ruling of any governmental body that the Company
determines to be necessary or advisable.

 

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23.6                        Inability to Obtain Authority.  The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.

 

23.7                        Investment Representations.  The Committee may
require any individual receiving Shares pursuant to an Award under this Plan to
represent and warrant in writing that the individual is acquiring the Shares for
investment and without any present intention to sell or distribute such Shares.

 

23.8                        Employees Based Outside of the United States. 
Notwithstanding any provision of this Plan to the contrary, in order to comply
with the laws in other countries in which the Company, its Affiliates or its
Subsidiaries operate or have Employees, Directors or Third-Party Service
Providers, the Committee, in its sole discretion, shall have the power and
authority to:

 

(a)                                 Determine which Affiliates and Subsidiaries
shall be covered by this Plan;

 

(b)                                 Determine which Employees, Directors or
Third-Party Service Providers outside the United States are eligible to
participate in this Plan;

 

(c)                                  Modify the terms and conditions of any
Award granted to Employees, Directors or Third-Party Service Providers outside
the United States to comply with applicable foreign laws;

 

(d)                                 Establish subplans and modify exercise
procedures and other terms and procedures, to the extent such actions may be
necessary or advisable.  Any subplans and modifications to Plan terms and
procedures established under this Section 23.8 by the Committee shall be
attached to this Plan document as appendices;

 

(e)                                  Take any action, before or after an Award
is made, that it deems advisable to obtain approval or comply with any necessary
local government regulatory exemptions or approvals; and

 

(f)                                   Provide for a longer term for Nonqualified
Stock Options and SARs granted to Participants outside the United States to
accommodate regulations in non-U.S.  jurisdictions that require a minimum
exercise or vesting period following a participant’s death.

 

Notwithstanding the above, the Committee may not take any actions hereunder, and
no Awards shall be granted, that would violate applicable law.  The Committee
will have no authority, however, to take action pursuant to this Section 23.8 of
this Plan:  (i) to reserve shares or grant Awards in excess of the limitations
provided in Section 4.1 of this Plan; (ii) in violation of Section 20.1(b) of
this Plan; (iii) to grant Options or Stock Appreciation Rights having an
exercise price in violation of Section 6.3 or 7.3 of this Plan, as the case may
be; or (iv) for which shareholder approval would then be required pursuant to
Code Section 422 or the rules of the New York Stock Exchange (or other
applicable exchange or market on which the Company’s Shares may be traded or
quoted).

 

23.9                        Uncertificated Shares.  To the extent that this Plan
provides for the issuance of certificates to reflect the transfer of Shares, the
transfer of such Shares may be effected on a noncertificated or book entry basis
or in nominee name, to the extent not prohibited by applicable law or the
rules of any stock exchange.

 

23.10                 Unfunded Plan.  Participants shall have no right, title or
interest whatsoever in or to any investments that the Company, its Subsidiaries
or its Affiliates may make to aid it in meeting its obligations under this
Plan.  Nothing contained in this Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company

 

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and any Participant, beneficiary, legal representative, or any other
individual.  To the extent that any individual acquires a right to receive
payments from the Company or any Affiliate or Subsidiary under this Plan, such
right shall be no greater than the right of an unsecured general creditor of the
Company or the Subsidiary or Affiliate, as the case may be.  All payments to be
made hereunder shall be paid from the general funds of the Company, or the
Subsidiary or Affiliate, as the case may be and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such amounts except as expressly set forth in this Plan.

 

23.11                 Fractional Shares.  The Company may issue or deliver
fractional Shares pursuant to this Plan or any Award.  If the Committee in its
discretion decides not to issue or deliver fractional shares, then the Committee
shall determine whether cash, Awards or other property shall be issued or paid
in lieu of fractional Shares or whether such fractional Shares or any rights
thereto shall be forfeited or otherwise eliminated.

 

23.12                 Retirement and Welfare Plans.  Neither Awards made under
this Plan nor Shares or cash paid pursuant to such Awards may be included as
“compensation” for purposes of computing the benefits payable to any Participant
under the Company’s or any Subsidiary’s or Affiliate’s retirement plans (both
qualified and nonqualified) or welfare benefit plans unless such other plan
expressly provides that such compensation shall be taken into account in
computing a Participant’s benefit.

 

23.13                 Deferred Compensation.

 

(a)                                 The Committee may grant Awards under this
Plan that provide for the deferral of compensation within the meaning of Code
Section 409A. If an Award is not by its terms exempt from the requirements of
Code Section 409A, then the applicable Award Agreement shall contain terms and
conditions necessary to avoid the adverse tax consequences specified in Code
Section 409A. It is intended that such Awards comply with the requirements of
Code Section 409A so that amounts deferred thereunder are not includible in
income and are not subject to an additional tax of twenty percent (20%) at the
time the deferred amounts are no longer subject to a substantial risk of
forfeiture.

 

(b)                                 Notwithstanding any provision of this Plan
or Award Agreement to the contrary, if one or more of the payments or benefits
to be received by a Participant pursuant to an Award would constitute deferred
compensation subject to Code Section 409A and would cause the Participant to
incur any penalty tax or interest under Code Section 409A or any regulations or
Treasury guidance promulgated thereunder, the Committee may unilaterally reform
this Plan and any Award Agreement to comply with the requirements of Code
Section 409A and to the extent practicable maintain the original intent of this
Plan and Award Agreement.  By accepting an Award under this Plan, a Participant
agrees to any amendments to the Award made pursuant to this
Section 23.13(b) without further consideration or action.

 

(c)                                  With respect to an Award that constitutes a
deferral of compensation subject to Code Section 409A: (i) if any amount is
payable under such Award upon a termination of service, a termination of service
will be treated as having occurred only at such time the Participant has
experienced a “separation from service” as such term is defined for purposes of
Code Section 409A; (ii) if any amount is payable under such Award upon a
Disability, a Disability will be treated as having occurred only at such time
the Participant has experienced a “disability” as such term is defined for
purposes of Code Section 409A; (iii) if any amount is payable under such Award
on account of the occurrence of a Change of Control, a Change of Control will be
treated as having occurred only at such time a “change in the ownership or
effective control of the corporation or in the ownership of a substantial
portion of the assets of the corporation”  as such terms are defined for
purposes of Code Section 409A, and (iv) if any amount becomes payable under such
Award on account of a Participant’s separation from service at such time as the
Participant is a “specified employee” within the meaning of Code Section 409A,
then no

 

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payment shall be made, except as permitted under Code Section 409A, prior to the
first business day after the earlier of (y) the date that is six months after
the date of the Participant’s separation from service or (z) the Participant’s
death.

 

23.14                 Nonexclusivity of this Plan.  The adoption of this Plan
shall not be construed as creating any limitations on the power of the Board or
Committee to adopt such other compensation arrangements as it may deem desirable
for any Participant.

 

23.15                 No Constraint on Corporate Action.  Nothing in this Plan
shall be construed to:  (a) limit, impair or otherwise affect the Company’s or a
Subsidiary’s or an Affiliate’s right or power to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, or to merge or consolidate or dissolve, liquidate, sell or transfer
all or any part of its business or assets; or (b) limit the right or power of
the Company or a Subsidiary or an Affiliate to take any action which such entity
deems to be necessary or appropriate.

 

23.16                 Governing Law.  This Plan and each Award Agreement shall
be governed by the laws of the State of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Plan to the substantive law of another jurisdiction. 
Unless otherwise provided in the Award Agreement, recipients of an Award under
this Plan are deemed to submit to the exclusive jurisdiction and venue of the
federal or state courts of Delaware to resolve any and all issues that may arise
out of or relate to this Plan or any related Award Agreement.

 

23.17                 Delivery and Execution of Electronic Documents.  To the
extent permitted by applicable law, the Company may:  (a) deliver by email or
other electronic means (including posting on a Web site maintained by the
Company or by a third party under contract with the Company) all documents
relating to this Plan or any Award thereunder (including prospectuses required
by the Securities and Exchange Commission) and all other documents that the
Company is required to deliver to its security holders (including annual reports
and proxy statements), and (b) permit Participants to electronically execute
applicable Plan documents (including Award Agreements and notices of Option
exercises) in a manner prescribed by the Committee.

 

23.18                 No Representations or Warranties Regarding Tax Effect. 
Notwithstanding any provision of this Plan to the contrary, the Company, its
Affiliates and Subsidiaries, the Board and the Committee neither represent nor
warrant the tax treatment under any federal, state, provincial, local,  foreign
or other laws and regulations thereunder (individually and collectively referred
to as the “Tax Laws”) of any Award granted or any amounts paid to any
Participant under this Plan including when and to what extent such Awards or
amounts may be subject to tax, penalties and interest under the Tax Laws.

 

23.19                 Indemnification.  Subject to any limitations and
requirements of Delaware law, each individual who is or shall have been a member
of the Board, or a Committee appointed by the Board, or an officer or Employee
of the Company to whom authority was delegated in accordance with Article 3 and
acting in good faith, shall be indemnified and held harmless by the Company
against and from any loss, cost, liability or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any
claim, action, suit or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
this Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in
satisfaction of any judgment in any such action, suit or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his/her own behalf, unless such loss, cost, liability or expense is
a result of his/her own willful misconduct or except as expressly provided by
statute.  The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such individuals may be entitled under
the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.

 

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