Exhibit 10.4

 

ARKANSAS BEST CORPORATION

2005 OWNERSHIP INCENTIVE PLAN

 

1.     Purpose

 

The purpose of the Arkansas Best Corporation 2005 Ownership Incentive Plan (the
“Plan”) is to advance the interests of the Arkansas Best Corporation (the
“Company”) by stimulating the efforts of employees, officers and directors, in
each case who are selected to be participants, by heightening the desire of such
persons to continue in working toward and contributing to the success and
progress of the Company. The Plan supersedes the Company’s 2002 Stock Option
Plan and Nonqualified Stock Option Plan with respect to future awards, and
provides for the grant of Incentive and Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock and Restricted Stock Units, any of which
may be performance-based, and for Performance Award Units, which may be paid in
cash or stock or a combination thereof, as determined by the Committee.

 

2.     Definitions

 

As used in the Plan, the following terms will have the meanings set forth below:

 

(a)   “Award” means an Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Stock Unit or Performance Award
Unit granted to a Participant pursuant to the provisions of the Plan, any of
which the Committee may structure to qualify in whole or in part as
“performance-based compensation” under Section 162(m) of the Code.

 

(b)   “Award Agreement” means a written agreement or other instrument as
approved from time to time by the Committee implementing the grant of each
Award. An Agreement may be in the form of an agreement to be executed by both
the Participant and the Company (or an authorized representative of the Company)
or certificates, notices or similar instruments as approved by the Committee.

 

(c)   “Board” means the Board of Directors of the Company.

 

(d)   “Change in Control” means, unless the Committee or the Board provides
otherwise, the occurrence of any of the following events:

 

(i)       The acquisition by any individual, entity or group (within the meaning
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either
(i) the then outstanding Shares (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 (i), the following acquisitions will not constitute a Change
in Control: (A) any acquisition directly from the Company, (B) any acquisition
by the Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (D) any acquisition by any corporation pursuant to a transaction
that constitutes a Merger of Equals as defined in subsection (iii) of this
Section 2(d).

 

(ii)      In any 12-month period, the individuals who, as of the beginning of
the 12-month period, constitute the Board (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board of Directors; 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 will 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 of Directors.

 

(iii)     Consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its subsidiaries (each, a “Business Combination”), in each case, unless such
Business Combination constitutes a Merger of Equals. A Business Combination will
constitute a “Merger of Equals” if, following such Business Combination, (A) all
or substantially all of the individuals and entities that 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

 

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indirectly, more than 50% of, respectively, the then outstanding shares of
common stock 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,
without limitation, 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) (the “Resulting Corporation”) 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, (B) no Person (excluding the Resulting
Corporation and its affiliates or any employee benefit plan (or related trust)
of the Resulting Corporation and its affiliates) beneficially owns, directly or
indirectly, 35% or more of, respectively, the then-outstanding shares of common
stock of the Resulting Corporation or the combined voting power of the then
outstanding voting securities of the Resulting Corporation except to the extent
that such ownership existed with respect to the Company prior to the Business
Combination, and (C) at least a majority of the members of the board of
directors of the Resulting Corporation (the “Resulting Board”) were members of
the Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board of Directors, providing for such Business Combination;
or

 

(iv)     The sale or other disposition of all or substantially all of the assets
of the Company to any Person, other than a transfer to (A) any corporation or
other Person of which a majority of its voting power or its voting equity
securities or equity interest is owned, directly or indirectly, by the Company
or (B) any corporation pursuant to a transaction that constitutes a Merger of
Equals as defined in subsection (iii) of this Section 2(d).

 

(v)      A complete liquidation or dissolution of the Company.

 

Notwithstanding anything herein to the contrary, in no event shall amounts in
respect of Awards that, as determined by the Committee in its sole discretion,
provide for the deferral of compensation, be distributed upon a Change in
Control prior to the occurrence of either a “change in the ownership or
effective control” of the Company or in the “ownership of a substantial portion
of the assets” of the Company within the meanings ascribed to such terms in
Treasury Department regulations or other guidance issued under Section 409A of
the Code.”

 

(e)   “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and the rulings and regulations issued thereunder.

 

(f)    “Committee” has the meaning set forth in Section 3.

 

(g)   “Company” means Arkansas Best Corporation, a Delaware corporation.

 

(h)   “Director” means each member of the Board who is not an officer or
employee of the Company or any Subsidiary.

 

(i)    “Fair Market Value” on a date means the closing price per Share on such
date as quoted on the National Association of Securities Dealers Automated
Quotation System or such other market in which such prices are regularly quoted,
unless the Committee provides otherwise.

 

(j)    “Incentive Stock Option” means a stock option that is intended to qualify
as an “incentive stock option” within the meaning of Section 422 of the Code.

 

(k)   “Nonqualified Stock Option” means a stock option that does not qualify as
an “incentive stock option” within the meaning of Section 422 of the Code.

 

(l)    “Option” means an Incentive Stock Option and/or a Nonqualified Stock
Option granted pursuant to Section 7.

 

(m)  “Participant” means any individual described in Section 4 to whom the
Committee grants or has granted Awards and any authorized transferee of such
individual.

 

(n)   “Performance Award Unit” means a bonus opportunity awarded under
Section 10 pursuant to which a Participant may become entitled to receive an
amount based on satisfaction of performance criteria specified in the Award
Agreement.

 

(o)   “Plan” means Arkansas Best Corporation 2005 Ownership Incentive Plan as
set forth herein and as amended from time to time.

 

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(p)   “Prior Plans” mean the 2002 Arkansas Best Corporation Stock Option Plan,
the Arkansas Best Corporation Nonqualified Stock Option Plan and the 1992
Arkansas Best Corporation Stock Option Plan.

 

(q)   “Qualifying Performance Criteria” has the meaning set forth in
Section 14(b).

 

(r)    “Restricted Stock” means Shares granted pursuant to Section 9.

 

(s)   “Restricted Stock Unit” means an Award granted to a Participant pursuant
to Section 9 pursuant to which Shares or cash in lieu thereof may be issued in
the future.

 

(t)    “Retirement” means, unless the Committee specifies otherwise in an Award
Agreement, (i) with respect to Participants other than Directors, retirement
from active employment with the Company and its Subsidiaries (A) at or after age
55 and with at least ten (10) years of service with the Company and its
Subsidiaries or (B) at or after age 65, or (ii) with respect to Directors,
retirement from service on the Board at or after age 65 with at least 5 years of
Board service.

 

(u)   “Shares” means shares of the Company’s common stock, par value $.01,
subject to adjustment as provided in Section 13.

 

(v)   “Stock Appreciation Right” means a right granted pursuant to Section 8
that entitles the Participant to receive, in cash, Shares or a combination
thereof, an amount equal to or otherwise based on the excess of (i) the Fair
Market Value of a specified number of Shares when exercised, over (ii) the
exercise price of the right, as established by the Committee when granted.

 

(w)  “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company where each of the corporations
in the unbroken chain other than the last corporation owns stock possessing at
least 50 percent or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and if specifically
determined by the Committee in the context other than with respect to Incentive
Stock Options, may include an entity in which the Company has a significant
ownership interest or that the Company directly or indirectly controls.

 

3.     Administration

 

(a)   Administration of the Plan. The Compensation Committee of the Board or
another committee of two or more directors as established by the Board will
administer the Plan (the “Committee”). Any power of the Committee may also be
exercised by the Board of Directors, except to the extent that the grant or
exercise of such authority would cause any Award or transaction to become
subject to (or lose an exemption under) the short-swing profit recovery
provisions of Section 16 of the Exchange Act or disqualify an Award intended to
qualify for treatment as performance-based compensation under Section 162(m) of
the Code. To the extent that any permitted action taken by the Board conflicts
with action taken by the Committee, the Board action will control.

 

(b)   Delegation of Authority by the Committee. The Committee may delegate to a
subcommittee (a “Subcommittee”) composed of one or more officers of the Company
(who may but need not be members of the Board) the ability to grant Awards and
take the same actions as the Committee described in Section 3(c) or elsewhere in
the Plan with respect to Participants who are not executive officers; provided,
however, that the resolution authorizing the Subcommittee must specify the total
number of Shares that may be subject to Awards granted by the Subcommittee
pursuant to the delegated authority. Any Award granted by the Subcommittee will
be subject to the form of Award Agreement approved in advance by the Committee.
No officer who is a member of the Subcommittee may be granted Awards under the
authority delegated to the Subcommittee. Any action by any Subcommittee within
the scope of such delegation will be treated for all purposes as if taken by the
Committee and references in this Plan to the Committee will include any such
Subcommittee. The Committee may also delegate the administration of the Plan to
one or more officers of the Company (each a “Plan Administrator”), and the Plan
Administrator(s) may have the authority to execute and distribute Award
Agreements or other documents evidencing or relating to Awards, maintain records
relating to the grant, vesting, exercise, forfeiture or expiration of Awards,
process or oversee the issuance of Shares upon the exercise, vesting and/or
settlement of an Award, interpret and administer the terms of Award Agreements
and to take such other actions as may be necessary or appropriate for the
administration of the Plan and of Awards under the Plan, subject to the
Committee’s ultimate authority to administer and interpret the Plan.

 

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(c)   Powers of Committee. Subject to the express provisions of this Plan, the
Committee will be authorized and empowered to do all things that it determines
to be necessary or appropriate in connection with the administration of this
Plan, including, without limitation: (i) to prescribe, amend and rescind
rules and regulations relating to this Plan and to define terms not otherwise
defined herein; (ii) to determine which persons are eligible under Section 4 to
be granted Awards and the timing of Awards, if any, to be granted to such
eligible persons; (iii) to grant Awards to Participants and determine the terms
and conditions of Awards, including the number of Shares subject to Awards and
the exercise or purchase price of such Shares and the circumstances under which
Awards become exercisable or vested or are forfeited or expire, which terms may
but need not be conditioned upon the passage of time, continued employment, the
satisfaction of performance criteria, the occurrence of certain events
(including events which the Board or the Committee determine constitute a Change
in Control), or other factors; (iv) to establish and certify the extent of
satisfaction of any performance goals or other conditions applicable to the
grant, issuance, exercisability, vesting and/or ability to retain any Award;
(v) to prescribe and amend the terms of Award Agreements or other documents
relating to Awards made under this Plan (which may be different) and the terms
of or form of any document or notice the Participants are required to deliver to
the Company; (vi) to determine whether, and the extent to which, adjustments are
required pursuant to Section 13; (vii) to interpret and construe this Plan, any
rules and regulations under this Plan and the terms and conditions of any Award
granted hereunder, and to make exceptions to any such provisions in good faith
and for the benefit of the Company; and (viii) to make all other determinations
deemed necessary or advisable for the administration of this Plan.

 

(d)   Determinations by the Committee. All decisions, determinations and
interpretations by the Committee related to the Plan, any rules and regulations
under the Plan and the terms and conditions of or operation of any Award granted
hereunder, will be final and binding on all Participants, beneficiaries, heirs,
assigns or other persons holding or claiming rights under the Plan or any Award.
The Committee will consider those factors as it deems relevant, in its sole and
absolute discretion, to making any decisions, determinations and interpretations
including, without limitation, the recommendations or advice of any officer or
other employee of the Company and such attorneys, consultants and accountants as
it may select.

 

(e)   Subsidiary Awards. In the case of a grant of an Award to any Participant
employed by a Subsidiary, the Company may implement such a grant, if the
Committee so directs, by issuing any subject shares to the Subsidiary, for such
lawful consideration as the Committee may determine, upon the condition or
understanding that the Subsidiary will transfer the shares to the Participant in
accordance with the terms of the Award specified by the Committee pursuant to
the provisions of the Plan. Notwithstanding any other provision hereof, the
Subsidiary may issue the Award by and in its name and the Award will be deemed
granted on the date determined by the Committee.

 

4.     Eligibility

 

The Committee may select any Director or person who is a current or prospective
officer or employee of the Company or of any Subsidiary for the grant of Awards.
Options intending to qualify as Incentive Stock Options may only be granted to
employees of the Company or any Subsidiary within the meaning of the Code. For
purposes of this Plan, the Committee will determine the Chairman of the Board’s
status as an employee.

 

5.     Effective Date and Termination of Plan

 

The Company’s Board adopted this Plan as of February 24, 2005. The Plan will
become effective (the “Effective Date”) when the Company’s stockholders approve
it. The Plan will remain available for the grant of Awards until the tenth
(10th) anniversary of the Effective Date. Notwithstanding the foregoing, the
Board may terminate the Plan at any time. Termination of the Plan will not
affect the rights and obligations of the Participants and the Company arising
under Awards previously granted and then in effect.

 

6.     Shares Subject to the Plan and to Awards

 

(a)   Aggregate Limits. The maximum aggregate number of Shares issuable pursuant
to all Awards is 1,500,000, plus any shares subject to outstanding awards under
the Prior Plans as of the Effective Date that become available pursuant to
Section 6(b). The aggregate number of Shares available for grant under this Plan
and the number of Shares subject to outstanding Awards will be subject to
adjustment as provided in Section 13. The Shares issued pursuant to Awards
granted under this Plan may be authorized and unissued shares or shares that the
Company reacquired, including shares purchased in the open market.

 

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(b)   Issuance of Shares. For purposes of Section 6(a), the aggregate number of
Shares issued under this Plan at any time equals only the number of Shares
actually issued upon exercise or settlement of an Award. Shares (i) subject to
Awards that are canceled, expired, forfeited or settled in cash and (ii) that
are delivered or deemed delivered to the Company in payment or satisfaction of
the exercise price or tax withholding obligation of an Award will again be
available for issuance pursuant to Awards granted under the Plan. In addition,
shares subject to awards made under any of the Prior Plans (i) that do not
result in the issuance of Shares as a result of the awards having been canceled,
expired, forfeited or settled in cash or (ii) that are delivered or deemed
delivered to the Company in payment or satisfaction of the exercise price or tax
withholding obligations of an award under a Prior Plan will be available for
issuance pursuant to Awards granted under this Plan.

 

(c)   Tax Code Limits. The maximum aggregate number of Shares issuable under all
Awards granted under this Plan during any calendar year to any one Participant
is 100,000, which number will be calculated and adjusted pursuant to Section 13
only to the extent that such calculation or adjustment will not affect the
status of any Award intended to qualify as “performance based compensation”
under Section 162(m) of the Code. The maximum aggregate number of Shares that
may be issued pursuant to the exercise of Incentive Stock Options granted under
this Plan is 1,500,000, which number will be calculated and adjusted pursuant to
Section 13 only to the extent that such calculation or adjustment will not
affect the status of any option intended to qualify as an Incentive Stock Option
under Section 422 of the Code. For that portion of a Performance Award Unit
granted under this Plan in any calendar year to any Participant that is
denominated in dollars (as opposed to Shares) and is intended to satisfy the
requirements for “performance based compensation” under Section 162(m) of the
Code, the maximum amount payable for the performance period is $2 million times
the number of years in the performance period.

 

7.     Options

 

(a)   Option Awards. The Committee may grant Options to Participants at any time
prior to the termination of the Plan. No Participant will have any rights as a
stockholder with respect to any Shares subject to Options until said Shares have
been issued. Each Option will be evidenced by an Award Agreement. Options
granted pursuant to the Plan may be different but each Option must contain and
be subject to the terms and conditions set forth below.

 

(b)   Price. The Committee will establish the exercise price per Share of each
Option, which, in no event will the purchase price be less than the Fair Market
Value of a Share on the date of grant; provided, however, that the exercise
price per Share with respect to an Option that is granted in connection with a
merger or other acquisition as a substitute or replacement award for options
held by optionees of the acquired entity may be less than 100% of the Fair
Market Value on the date such Option is granted if based on a formula set forth
in the terms of the options held by such optionees or in the terms of the
agreement providing for such merger or other acquisition. The exercise price of
any Option may be paid in cash or, to the extent allowed by the Committee, an
irrevocable commitment by a broker to pay over such amount from a sale of the
Shares issuable under an Option, the delivery of previously owned Shares,
withholding of Shares deliverable upon exercise or a combination thereof.

 

(c)   No Repricing. Other than in connection with a change in the Company’s
capitalization (as described in Section 13) the exercise price of an Option may
not be reduced without shareholder approval (including canceling previously
awarded Options and regranting them with a lower exercise price).

 

(d)   Provisions Applicable to Options. In no event may any Option become
exercisable sooner than one (1) year after the date of grant except to the
extent provided by the Committee in the event of the Participant’s death,
disability or Retirement or a Change in Control. Unless provided otherwise in
the applicable Award Agreement, the vesting period and/or exercisability of an
Option will be adjusted by the Committee during or to reflect the effects of any
period during which the Participant is on an approved leave of absence or is
employed on a less than full-time basis. Each Option will expire within a period
of not more than ten (10) years from the date of grant.

 

(e)   Incentive Stock Options. Notwithstanding anything to the contrary in this
Section 7, in the case of the grant of an Option intending to qualify as an
Incentive Stock Option: (i) if the Participant owns stock possessing more than
10 percent of the combined voting power of all classes of stock of the Company
(a “10% Shareholder”), the purchase price of the Option must be at least 110
percent of the Fair Market Value of a Share on the date of grant and the Option
must expire within a period of not more than five (5) years from the date of
grant, and

 

(ii) termination of employment will occur when the person to whom an Award was
granted ceases to be an

 

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employee (as determined in accordance with Section 3401(c) of the Code and the
regulations promulgated thereunder) of the Company and its Subsidiaries.
Notwithstanding anything in this Section 7 to the contrary, options designated
as Incentive Stock Options will be ineligible for treatment under the Code as
Incentive Stock Options (and will be deemed to be Nonqualified Stock Options) to
the extent that (i) the aggregate Fair Market Value of Shares (determined as of
the time of grant) with respect to which such Options are exercisable for the
first time by the Participant during any calendar year (under all plans of the
Company and any Subsidiary) exceeds $100,000, taking Options into account in the
order in which they were granted, or (ii) such Options otherwise remain
exercisable but are not exercised within three (3) months after termination of
employment (or such other period of time provided in Section 422 of the Code).

 

8.     Stock Appreciation Rights

 

Stock Appreciation Rights may be granted to Participants either in tandem with
or as a component of other Awards granted under the Plan (“tandem SARs”) or not
in conjunction with other Awards (“freestanding SARs”) and may, but need not,
relate to a specific Option granted under Section 7. The provisions of Stock
Appreciation Rights do not need to be the same with respect to each grant or
each recipient. Any Stock Appreciation Right granted in tandem with an Option
may be granted at the same time such Option is granted or at any time thereafter
before exercise or expiration of such Option. All Stock Appreciation Rights
under the Plan will be granted subject to the same terms and conditions
applicable to Options as set forth in Section 7; provided, however, that Stock
Appreciation Rights granted in tandem with a previously granted Option will have
the terms and conditions of such Option. Subject to the provisions of Section 7,
the Committee may impose such other conditions or restrictions on any Stock
Appreciation Right as it deems appropriate. Stock Appreciation Rights may be
settled in Shares, cash or a combination of both. Other than in connection with
a change in the Company’s capitalization (as described in Section 13), the
exercise price of a Stock Appreciation Right may not be reduced without
stockholder approval (including canceling previously awarded Stock Appreciation
Rights and regranting them with a lower exercise price). Each Stock Appreciation
Right will be evidenced by an Award Agreement.

 

9.     Restricted Stock and Restricted Stock Units

 

(a)   Restricted Stock and Restricted Stock Unit Awards. Restricted Stock and
Restricted Stock Units may be granted at any time before the termination of the
Plan to Participants selected by the Committee. Restricted Stock is an award or
issuance of Shares the grant, issuance, retention, vesting and/or
transferability of which is subject during specified periods of time to such
conditions (including continued employment or performance conditions) and terms
as the Committee deems appropriate. Restricted Stock Units are Awards
denominated in units of Shares under which the issuance of Shares is subject to
such conditions (including continued employment or performance conditions) and
terms, as the Committee deems appropriate. Each grant of Restricted Stock and
Restricted Stock Units will be evidenced by an Award Agreement. Unless the
Committee determines otherwise, each Restricted Stock Unit will be equal to one
Share. To the extent determined by the Committee, Restricted Stock and
Restricted Stock Units may be satisfied or settled in Shares, cash or a
combination thereof. Restricted Stock and Restricted Stock Units granted
pursuant to the Plan do not need to be identical, but each grant of Restricted
Stock and Restricted Stock Units must contain and be subject to the terms and
conditions set forth herein.

 

(b)   Contents of Award Agreement. Each Award Agreement will contain provisions
regarding (i) the number of Shares or Restricted Stock Units subject to such
Award or a formula for determining such number, (ii) the purchase price of the
Shares, if any, and the means of payment, (iii) the performance criteria, if
any, and level of achievement versus these criteria that will determine the
number of Restricted Stock or Restricted Stock Units granted, issued, retainable
and/or vested, (iv) such terms and conditions on the grant, issuance, vesting
and/or forfeiture of the Restricted Stock or Restricted Stock Units as may be
determined by the Committee, (v) the term of the performance period, if any, as
to which performance will be measured for determining the number of such
Restricted Stock or Restricted Stock Units, (vi) restrictions on the
transferability of the Restricted Stock or Restricted Stock Units, and
(vii) such further terms and conditions in each case not inconsistent with this
Plan as may be determined by the Committee. Shares issued under a Restricted
Stock or Restricted Stock Unit Award may be issued in the name of the
Participant and held by the Participant or held by the Company, in each case as
the Committee may provide.

 

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(c)   Vesting and Performance Criteria. The grant, issuance, retention, vesting
and/or settlement of shares of Restricted Stock and Restricted Stock Units will
occur when and in such installments as the Committee determines or under
criteria the Committee establishes, which may include Qualifying Performance
Criteria. The grant, issuance, retention, vesting and/or settlement of Shares
under any such Award that is based on performance criteria and level of
achievement versus such criteria will be subject to a performance period of not
less than one (1) year, and the grant, issuance, retention, vesting and/or
settlement of Shares under any Restricted Stock or Restricted Stock Unit Award
that is based upon continued employment or the passage of time may not vest or
be settled in full over a period of less than three (3) years, except that the
Committee may provide for the satisfaction and/or lapse of all conditions under
any such Award in the event of the Participant’s death, disability, Retirement
or in connection with a Change in Control, and the Committee may provide that
any such restriction or limitation will not apply in the case of a Restricted
Stock or Restricted Stock Unit Award that is issued in payment or settlement of
compensation that has been earned by the Participant. Notwithstanding anything
in this Plan to the contrary, the performance criteria for any Restricted Stock
or Restricted Stock Unit that is intended to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code will be a
measure based on one or more Qualifying Performance Criteria selected by the
Committee and specified when the Restricted Stock or Restricted Stock Unit is
granted.

 

(d)   Discretionary Adjustments and Limits. Subject to the limits imposed under
Section 162(m) of the Code for Awards that are intended to qualify as
“performance based compensation,” notwithstanding the satisfaction of any
performance goals, the Committee, to the extent specified in the Award
Agreement, may reduce the number of Shares granted, issued, retainable and/or
vested under an Award of Restricted Stock or Restricted Stock Units on account
of either financial performance or personal performance evaluations on the basis
of such further considerations as the Committee will determine.

 

(e)   Voting Rights. Unless otherwise determined by the Committee, Participants
holding shares of Restricted Stock granted under this Plan may exercise full
voting rights with respect to those shares during the period of restriction.
Participants will have no voting rights with respect to Shares underlying
Restricted Stock Units unless and until such shares are reflected as issued and
outstanding shares on the Company’s stock ledger.

 

(f)    Dividends and Distributions. Participants in whose name Restricted Stock
is granted will be entitled to receive all dividends and other distributions
paid with respect to those shares, unless determined otherwise by the Committee.
The Committee will determine whether any such dividends or distributions will be
automatically reinvested in additional Shares of Restricted Stock and subject to
the same restrictions on transferability as the Restricted Stock with respect to
which they were distributed or whether such dividends or distributions will be
paid in cash. Shares underlying Restricted Stock Units will be entitled to
dividends or dividend equivalents only to the extent provided by the Committee.

 

10.  Performance Award Units

 

(a)   General. Each Performance Award Unit Award will confer upon the
Participant the opportunity to earn a future payment tied to the level of
achievement with respect to the performance criteria established for a
performance period established by the Committee. Unless otherwise stated in an
Award Agreement, the performance period shall be a period of at least one
(1) year.

 

(b)   Award Agreement. The terms of any Performance Award Unit will be set forth
in an Award Agreement. Each Award Agreement evidencing a Performance Award Unit
will contain provisions about (i) the target and maximum amount payable to the
Participant as a Performance Award Unit, (ii) the performance criteria and level
of achievement versus these criteria that will determine the amount of such
payment, (iii) the term of the performance period as to which performance will
be measured for determining the amount of any payment, (iv) the timing of any
payment earned by virtue of performance, (v) restrictions on the alienation or
transfer of the Performance Award Unit before actual payment, (vi) forfeiture
provisions and (vii) such further terms and conditions, in each case consistent
with this Plan as the Committee may periodically determine.

 

(c)   Performance Criteria. The Committee will establish the performance
criteria and level of achievement versus these criteria that will determine the
target and maximum amount payable under a Performance Award Unit, which criteria
may be based on financial performance and/or personal performance evaluations.
The Committee may specify the percentage of the target Performance Award Unit
that is intended to satisfy the requirements for “performance-based
compensation” under Section 162(m) of the Code. Notwithstanding anything to the
contrary herein, the performance criteria for any portion of a Performance Award
Unit that is intended by the Committee to satisfy the requirements for
“performance-based compensation” under Section 162(m) of the Code will be a
measure

 

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based on the Qualifying Performance Criteria the Committee selects and specifies
when the Performance Award Unit is granted.

 

(d)   Timing and Form of Payment. The Committee will determine the timing of
payment of any Performance Award Unit. Payment of the amount due under a
Performance Award Unit may be made in cash or in Shares, as determined by the
Committee.

 

(e)   Discretionary Adjustments. Notwithstanding satisfaction of any performance
goals, the Committee may, to the extent specified in the Award Agreement, reduce
the amount paid under a Performance Award Unit on account of either financial
performance or personal performance evaluations on the basis of such further
considerations as the Committee will determine.

 

11.  Deferral of Gains

 

The Committee may, in an Award Agreement or otherwise, provide for the deferred
delivery of Shares upon settlement, vesting or other events with respect to
Restricted Stock or Restricted Stock Units, or in payment or satisfaction of a
Performance Award Unit. Notwithstanding anything herein to the contrary, in no
event will any deferral of the delivery of Shares or any other payment with
respect to any Award be allowed if the Committee determines, in its sole
discretion, that the deferral would result in the imposition of the additional
tax under Section 409A(1)(B) of the Code.

 

12.  Conditions and Restrictions Upon Securities Subject to Awards

 

The Committee may provide that the Shares issued upon exercise of an Option or
Stock Appreciation Right or otherwise subject to or issued under an Award will
be subject to such further agreements, restrictions, conditions or limitations
as the Committee in its discretion may specify before the exercise of such
Option or Stock Appreciation Right or the grant, vesting or settlement of such
Award, including, without limitation, conditions on vesting or transferability,
forfeiture or repurchase provisions and method of payment for the shares issued
upon exercise, vesting or settlement of such Award (including the actual or
constructive surrender of Shares already owned by the Participant) or payment of
taxes arising in connection with an Award. Without limiting the foregoing, such
restrictions may address the timing and manner of any resales by the Participant
or other subsequent transfers by the Participant of any Shares issued under an
Award, including, without limitation, (i) restrictions under an insider trading
policy or pursuant to applicable law, (ii) restrictions designed to delay and/or
coordinate the timing and manner of sales by Participant and holders of other
Company equity compensation arrangements, and (iii) restrictions as to the use
of a specified brokerage firm for such resales or other transfers.

 

13.  Adjustment of and Changes in the Stock

 

(a)   In the event that the number of Shares increases or decreases through a
reorganization, reclassification, combination of shares, stock split, reverse
stock split, spin-off, dividend (other than regular, quarterly cash dividends),
or otherwise, then the Committee may appropriately adjust each Share that has
been authorized for issuance under the Plan, whether such Share is then
currently subject to or may become subject to an Award under the Plan, as well
as the per share limits set forth in Section 6 to reflect such increase or
decrease, unless the Company provides otherwise under the terms of such
transaction. The Committee may also adjust the terms of any outstanding Award as
to price, number of Shares subject to such Award and other terms to reflect the
foregoing events.

 

(b)   In the event of any other change in the number or kind of outstanding
Shares, or any stock or other securities into which such Shares have been
changed, or for which Shares have been exchanged, whether by reason of a Change
in Control, other merger, consolidation or otherwise, then the Committee will,
in its sole discretion, determine the appropriate adjustment, if any, to be
effected. In addition, in the event of a change described in this paragraph, the
Committee may accelerate the time or times at which any Award may be exercised
and may provide for cancellation of such accelerated Awards that are not
exercised within a time prescribed by the Committee in its sole discretion.
Notwithstanding anything to the contrary herein, any adjustment to Options
granted pursuant to this Plan intended to qualify as Incentive Stock Options
must comply with the requirements, provisions and restrictions of the Code.

 

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(c)   No right to purchase fractional shares will result from any adjustment in
Awards pursuant to this Section 13. In case of any such adjustment, the shares
subject to the Award will be rounded down to the nearest whole share. The
Company will give notice of any adjustment made to each Participant, and such
adjustment (whether or not notice is given) will be effective and binding for
all purposes of the Plan.

 

14.  Qualifying Performance-Based Compensation

 

(a)   General. The Committee may specify a percentage of an Award that is
intended to satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code, provided that the performance criteria for any
portion of an Award that is intended by the Committee to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the
Code will be a measure based on one or more Qualifying Performance Criteria
selected by the Committee and specified at the time the Award is granted. The
Committee will certify the extent to which any Qualifying Performance Criteria
has been satisfied, and the amount payable as a result thereof, prior to
payment, settlement or vesting of any Award that is intended to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the
Code. Notwithstanding satisfaction of any performance goals, the number of
Shares issued or the amount paid under an Award intended by the Committee to
satisfy the requirements for “performance-based compensation” under
Section 162(m) of the Code may, to the extent specified in the Award Agreement,
be reduced by the Committee on the basis of such further considerations as the
Committee in its sole discretion determines.

 

(b)   Qualifying Performance Criteria. For purposes of this Plan, the term
“Qualifying Performance Criteria” will mean any of the following performance
criteria, either individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit or Subsidiary, either
individually, alternatively or in any combination, and measured either
quarterly, annually or cumulatively over a period of years, on an absolute basis
or relative to a pre-established target, to previous years’ results or to a
designated comparison group, in each case as the Committee specifies: pretax
income, net income, earnings per share, revenues, expenses, return on assets,
return on equity, return on capital employed, return on investment, net profit
margin, operating profit margin, operating cash flow, total shareholder return,
capitalization, liquidity, results of customer surveys and safety or
productivity improvement. To the extent consistent with Section 162(m) of the
Code, the Committee may appropriately adjust any performance evaluation under a
Qualifying Performance Criteria to exclude any of the following events that
occurs during a performance period: (i) asset write-downs, (ii) litigation,
claims, judgments or settlements, (iii) the effect of changes in tax law or
other such laws or regulations affecting reported results, (iv) accruals for
reorganization and restructuring programs,(v) any extraordinary, unusual or
non-recurring items as described in Accounting Principles Board Opinion (“APB”)
No. 30, (vi) any change in accounting principle as defined in APB No. 20,
(vii) any loss from a discontinued operation as described in Financial
Accounting Standards No. 144 and (viii) any amounts accrued by the Company or
its Subsidiaries pursuant to management bonus plans or cash profit sharing plans
and related employer payroll taxes for the fiscal year.

 

15.  Transferability

 

Unless the Committee specifies otherwise, each Award may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated by a
Participant other than (i) by will or the laws of descent and distribution,
(ii) pursuant to a domestic relations order or (iii) to any “family member” of
the Participant (as such term is defined in Section 1(a)(5) of the General
Instructions to Form S-8 under the Securities Act), to trusts solely for the
benefit of such family members and to partnerships in which such family members
and/or trusts are the only partners; provided that following any such transfer
or assignment the Award will remain subject to substantially the same terms
applicable to the Award while held by the Participant, as modified as the
Committee shall determine appropriate, and the transferee shall execute an
agreement agreeing to be bound by such terms. Notwithstanding the foregoing,
Clauses (ii) and (iii) immediately above shall not be available with respect to
Incentive Stock Options. Each Option or Stock Appreciation Right will be
exercisable during the Participant’s lifetime only by the Participant, the
Participant’s guardian or legal representative or an individual or an authorized
transferee of the Option or Stock Appreciation Right.

 

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16.  Suspension or Termination of Awards

 

Except as otherwise provided by the Committee, if at any time (including after a
notice of exercise has been delivered or an Award has vested) the Chief
Executive Officer or any other person designated by the Committee (each such
person, an “Authorized Officer”) reasonably believes that a Participant may have
committed an Act of Misconduct as described in this Section 16, the Authorized
Officer, Committee or Board of Directors may suspend the Participant’s rights to
exercise any Option, to vest in an Award, and/or to receive payment for or
receive Shares in settlement of an Award pending a determination of whether an
Act of Misconduct has been committed.

 

If the Committee or an Authorized Officer determines a Participant has committed
an act of embezzlement, fraud, dishonesty, nonpayment of any obligation owed to
the Company or any Subsidiary, breach of fiduciary duty, violation of Company
ethics policy or code of conduct, deliberate disregard of Company or Subsidiary
rules, or if a Participant makes an unauthorized disclosure of any Company or
Subsidiary trade secret or confidential information, solicits any employee or
service provider to leave the employ or cease providing services to the Company
or any Subsidiary, breaches any intellectual property or assignment of
inventions covenant, engages in any conduct constituting unfair competition,
breaches any non-competition agreement, induces any Company or Subsidiary
customer to breach a contract with the Company or any Subsidiary or to cease
doing business with the Company or any Subsidiary, or induces any principal for
whom the Company or any Subsidiary acts as agent to terminate such agency
relationship (any of the foregoing acts, an “Act of Misconduct”), then except as
otherwise provided by the Committee, (i) neither the Participant nor his or her
estate nor transferee will be entitled to exercise any Option or Stock
Appreciation Right whatsoever, vest in or have the restrictions on an Incentive
Award lapse, or otherwise receive payment or Shares under any Award and (ii) the
Participant will forfeit all outstanding Awards. In making such determination,
the Committee or an Authorized Officer shall give the Participant an opportunity
to appear and present evidence on his or her behalf at a hearing before the
Committee or an opportunity to submit written comments, documents, information
and arguments to be considered by the Committee. Any dispute by a Participant or
other person as to the determination of the Committee must be resolved pursuant
to Section 23.

 

17.  Compliance with Laws and Regulations

 

The grant, issuance, vesting, exercise and settlement of Awards under this Plan,
and the obligation of the Company to sell, issue or deliver shares of such
Awards, will be subject to all applicable foreign, federal, state and local
laws, rules and regulations, stock exchange rules and regulations, and to such
approvals by any governmental or regulatory agency as may be required. The
Company will not be required to register in a Participant’s name or deliver any
shares before the completion of any registration or qualification of such shares
under any foreign, federal, state or local law or any ruling or regulation of
any government body, which the Committee will determine to be necessary or
advisable. To the extent the Company is unable to or the Committee deems it
infeasible 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, the Company and its Subsidiaries will
be relieved of any liability with respect to the failure to issue or sell such
shares absent such requisite authority. No Option will be exercisable and no
shares will be issued and/or transferable under any other Award unless a
registration statement with respect to the shares underlying such Stock Option
or other Award is effective and current or the Company has determined that such
registration is unnecessary. In the event that the Committee determines that the
Company is prohibited from issuing shares in respect of an Award pursuant to the
preceding sentence, the Committee may, in its sole discretion, provide for a
cash payment to the holder of the Award in settlement thereof in lieu of the
issuance of shares under the Award.

 

If an Award is granted to or held by a Participant employed or providing
services outside the United States, the Committee may, in its sole discretion,
modify the provisions of the Plan or of such Award as they pertain to such
individual to comply with applicable foreign law or to recognize differences in
local law, currency or tax policy. The Committee may also impose conditions on
the grant, issuance, exercise, vesting, settlement or retention of Awards to
comply with such foreign law and/or to minimize the Company’s obligations with
respect to tax equalization for Participants employed outside their home
country.

 

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18.  Withholding

 

To the extent required by applicable federal, state, local or foreign law, a
Participant must satisfy, in a manner satisfactory to the Company, any
withholding tax obligations that arise by reason of an Option exercise,
disposition of shares issued under an Incentive Stock Option, the vesting of or
settlement of Shares or deferred units under an Award, an election pursuant to
Section 83(b) of the Code or otherwise with respect to an Award. The Company and
its Subsidiaries will not be required to issue Shares, make any payment or to
recognize the transfer or disposition of shares until the Participant satisfies
such obligations. The Committee may permit these obligations to be satisfied by
having the Company withhold a portion of the Shares that otherwise would be
issued to the Participant upon exercise of the Option or the vesting or
settlement of an Award, or by tendering shares previously acquired.

 

19.  Amendment of the Plan or Awards

 

The Board may amend, alter or discontinue this Plan and the Committee may amend,
or alter any agreement or other document evidencing an Award made under this
Plan but, except as provided pursuant to the provisions of Section 13, no such
amendment will, without the approval of the stockholders of the Company:

 

(a)   increase the maximum number of shares for which Awards may be granted
under this Plan;

 

(b)   reduce the price at which Options may be granted below the price provided
for in Section 7(b);

 

(c)   reduce the exercise price of outstanding Options;

 

(d)   extend the term of this Plan;

 

(e)   change the class of persons eligible to be Participants;

 

(f)    otherwise amend the Plan in any manner requiring stockholder approval by
law or under the NASDAQ National Market listing requirements; or

 

(g)   increase the individual maximum limits in Section 6(c).

 

No amendment or alteration to the Plan or an Award or Award Agreement will be
made which would impair the rights of the holder of an Award, without such
holder’s consent, provided that no such consent will be required if the
Committee determines in its sole discretion and before the date of any Change in
Control that such amendment or alteration either is required or advisable in
order for the Company, the Plan or the Award to satisfy any law or regulation.

 

20.  No Liability of Company

 

The Company and any Subsidiary or affiliate which is in existence or hereafter
comes into existence will not be liable to a Participant or any other person as
to: (i) the non-issuance or sale of Shares as to which the Company has been
unable to obtain from any regulatory body having jurisdiction the authority
deemed by the Company’s counsel to be necessary to the lawful issuance and sale
of any shares hereunder; and (ii) any tax consequence expected, but not
realized, by any Participant or other person due to the receipt, exercise or
settlement of any Award granted hereunder.

 

21.  Non-Exclusivity of Plan

 

Neither the adoption of this Plan by the Board nor the submission of this Plan
to the stockholders of the Company for approval will be construed as creating
any limitations on the power of the Board or the Committee to adopt such other
incentive arrangements as either may deem desirable, including, without
limitation, the granting of restricted stock or stock options otherwise than
under this Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

22.  Governing Law

 

This Plan and any agreements or other documents hereunder will be interpreted
and construed in accordance with the laws of the State of Delaware and
applicable federal law. Any reference in this Plan or in the agreement or other

 

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document evidencing any Awards to a provision of law or to a rule or regulation
will be deemed to include any successor law, rule or regulation of similar
effect or applicability.

 

23.  Arbitration of Disputes

 

If a Participant or other holder of an Award or person claiming a right under an
Award or the Plan wishes to challenge any action of the Committee, a
subcommittee or the Plan Administrator, the person may do so only by submitting
to binding arbitration with respect to such decision. The review by the
arbitrator will be limited to determining whether the Participant or other Award
holder has proven that the Committee’s decision was arbitrary or capricious.
This arbitration will be the sole and exclusive review permitted of the
Committee’s decision. Participants, Award holders and persons claiming rights
under an Award or the Plan explicitly waive any right to judicial review.

 

Notice of demand for arbitration will be made in writing to the Committee within
thirty (30) days after the applicable decision by the Committee. The arbitrator
will be selected by mutual agreement of the Committee and the Participant. If
the Committee and the Participant are unable to agree on an arbitrator, the
arbitrator will be selected by the American Arbitration Association. The
arbitrator, no matter how selected, must be neutral within the meaning of the
Commercial Rules of Dispute Resolution of the American Arbitration Association.
The arbitrator will administer and conduct the arbitration pursuant to the
Commercial Rules of Dispute Resolution of the American Arbitration Association.
Each side will bear its own fees and expenses, including its own attorney’s
fees, and each side will bear one half of the arbitrator’s fees and expenses;
provided, however, that the arbitrator will have the discretion to award the
prevailing party its fees and expenses. The arbitrator will have no authority to
award exemplary, punitive, special, indirect, consequential, or other
extracontractual damages. The decision of the arbitrator on the
issue(s) presented for arbitration will be final and conclusive and any court of
competent jurisdiction may enforce it.

 

24.  No Right to Employment, Reelection or Continued Service

 

Nothing in this Plan or an Award Agreement will interfere with or limit in any
way the right of the Company, its Subsidiaries and/or its affiliates to
terminate any Participant’s employment, service on the Board or service for the
Company at any time or for any reason not prohibited by law, nor confer upon any
Participant any right to continue his or her employment or service for any
specified period of time. Neither an Award nor any benefits arising under this
Plan will constitute an employment contract with the Company, any Subsidiary
and/or its affiliates. This Plan and the benefits hereunder may be terminated at
any time in the sole and exclusive discretion of the Board without giving rise
to any liability on the part of the Company, its Subsidiaries and/or its
affiliates.

 

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