Exhibit 10.18
 

AMENDED AND RESTATED
VALIDUS HOLDINGS, LTD.
2005 LONG TERM INCENTIVE PLAN

1.  
Purposes.

 
The purposes of the Amended and Restated 2005 Long Term Incentive Plan are to
advance the interests of Validus Holdings, Ltd. and its shareholders by
providing a means to attract, retain, and motivate employees, consultants and
directors of Validus Holdings, Ltd., its subsidiaries and affiliates, to provide
for competitive compensation opportunities, to encourage long term service, to
recognize individual contributions and reward achievement of performance goals,
and to promote the creation of long term value for shareholders by aligning the
interests of such persons with those of shareholders.
 
2.  
Definitions.

 
For purposes of the Plan, the following terms shall be defined as set forth
below:
 
(a)  “Affiliate” means any entity other than the Company and its Subsidiaries
that is designated by the Board or the Committee as a participating employer
under the Plan; provided, however, that the Company directly or indirectly owns
at least 20% of the combined voting power of all classes of stock of such entity
or at least 20% of the ownership interests in such entity.
 
(b)  “Award” means any Option, SAR, Restricted Share, Restricted Share Unit,
Performance Share, Performance Unit, Dividend Equivalent, or Other Share-Based
Award granted to an Eligible Person under the Plan.
 
(c)  “Award Agreement” means any written agreement, contract, or other
instrument or document evidencing an Award.
 
(d)  “Beneficiary” means the person, persons, trust or trusts which have been
designated by an Eligible Person in his or her most recent written beneficiary
designation filed with the Company to receive the benefits specified under this
Plan upon the death of the Eligible Person, or, if there is no designated
Beneficiary or surviving designated Beneficiary, then the person, persons, trust
or trusts entitled by will or the laws of descent and distribution to receive
such benefits.
 
(e)  “Board” means the Board of Directors of the Company.
 

 
 

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(f)  “Change in Control” means consummation of (i) a sale of all or
substantially all of the consolidated assets of the Company and its Subsidiaries
to a person who is not either a member of, or an affiliate of a member of, the
Initial Investor Group (as defined below); or (ii) a sale by the Company, one or
more members of the Initial Investor Group or any of their respective affiliates
resulting in more than 50% of the voting stock of the Company (“Voting Shares”)
being held by a person or group (as such terms are used in the Exchange Act)
that does not include any member of the Initial Investor Group or any of their
respective affiliates; or (iii) a merger or consolidation of the Company into
another person as a result of which a person or group acquires more than 50% of
the Voting Shares of the Company that does not include any member of, or an
affiliate of a member of, the Initial Investor Group; provided, however, that a
Change in Control shall occur if and only if after any such event listed in
(i)-(iii) above the Initial Investor Group is unable to elect a majority of the
board of directors (or other governing body equivalent thereto) of the entity
that purchased the assets in the case of an event described in (i) above, the
Company in the case of an event described in (ii) above, or the resulting entity
in the case of an event described in (iii) above, as the case may be.  The
“Initial Investor Group” shall mean (i) Aquiline Financial Services Fund L.P.,
and (ii) the other Investors under Subscription Agreements with the Company
dated December 9, 2005.
 
(g)  “Code” means the Internal Revenue Code of 1986, as amended from time to
time.  References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
 
(h)  “Committee” means the Compensation Committee of the Board, or such other
Board committee (which may include the entire Board) as may be designated by the
Board to administer the Plan.
 
(i)  “Company” means Validus Holdings, Ltd., a corporation organized under the
laws of Bermuda, or any successor corporation.
 
(j)  “Director” means a member of the Board who is not an employee of the
Company, a Subsidiary or an Affiliate.
 
(k)  “Dividend Equivalent” means a right, granted under Section 5(g), to receive
cash, Shares, or other property equal in value to dividends paid with respect to
a specified number of Shares.  Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award, and may be paid
currently or on a deferred basis.
 
(l)  “Effective Date” has the meaning set forth in Section 7(k) below.
 
(m)  “Eligible Person” means (i) an employee or consultant of the Company, a
Subsidiary or an Affiliate, including any director who is an employee, or (ii) a
Director.
 

 
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(n)  “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time.  References to any provision of the Exchange Act shall be deemed
to include successor provisions thereto and regulations thereunder.
 
(o)  “Fair Market Value” means, with respect to Shares or other property on a
day, the fair market value of such Shares or other property determined by such
methods or procedures as shall be established from time to time by the
Committee.  If the Shares are listed on any established stock exchange or a
national market system, unless otherwise determined by the Committee in good
faith, the Fair Market Value of Shares on a day shall mean the closing price per
Share on the day (or, if the Shares were not traded on that day, the next
preceding day that the Shares were traded) on the principal exchange or market
system on which the Shares are traded, as such prices are officially quoted on
such exchange.
 
(p)  “ISO” means any Option intended to be and designated as an incentive stock
option within the meaning of Section 422 of the Code.
 
(q)  “NQSO” means any Option that is not an ISO.
 
(r)  “Offering” has the meaning set forth in the Offering Memorandum relating to
Company equity dated October 13, 2005, as supplemented.
 
(s)  “Option” means a right, granted under Section 5(b), to purchase Shares.
 
(t)  “Other Share-Based Award” means a right, granted under Section 5(h), that
relates to or is valued by reference to Shares.
 
(u)  “Participant” means an Eligible Person who has been granted an Award under
the Plan.
 
(v)  “Performance Share” means a performance share granted under Section 5(f).
 
(w)  “Performance Unit” means a performance unit granted under Section 5(f).
 
(x)  “Plan” means this Amended and Restated 2005 Long Term Incentive Plan.
 
(y)  “Restricted Shares” means an Award of Shares under Section 5(d) that may be
subject to certain restrictions and to a risk of forfeiture.
 
(z)  “Restricted Share Unit” means a right, granted under Section 5(e), to
receive Shares or cash at the end of a specified deferral period.
 

 
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(aa)  “Rule 16b-3” means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
 
(bb)  “SAR” or “Share Appreciation Right” means the right, granted under Section
5(c), to be paid an amount measured by the difference between the exercise price
of the right and the Fair Market Value of Shares on the date of exercise of the
right, with payment to be made in cash, Shares, or property as specified in the
Award or determined by the Committee.
 
(cc)  “Shares” means common shares, $0.10 par value per share, of the Company,
and such other securities as may be substituted for Shares pursuant to
Section 4(b) hereof.
 
(dd)  “Subsidiary” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if each of the corporations
(other than the last corporation in the unbroken chain) owns shares possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in the chain.
 
(ee)  “Termination of Service” means, unless otherwise defined in an applicable
Award Agreement, the termination of the Participant’s employment, consulting
services or directorship with the Company, its Subsidiaries and its Affiliates,
as the case may be.  A Participant employed by a Subsidiary of the Company or
one of its Affiliates shall also be deemed to incur a Termination of Service if
the Subsidiary of the Company or Affiliate ceases to be such a Subsidiary or an
Affiliate, as the case may be, and the Participant does not immediately
thereafter become an employee or director of, or a consultant to, the Company,
another Subsidiary of the Company or an Affiliate.  Temporary absences from
employment because of illness, vacation or leave of absence and transfers among
the Company and its Subsidiaries and Affiliates shall not be considered a
Termination of Service.  If the Participant has a written employment agreement
with the Company, a Subsidiary or Affiliate that defines “Date of Termination”,
unless otherwise determined by the Committee, the Participant shall be treated
as having terminated employment for purposes of this Plan on the Date of
Termination.
 
3.  
Administration.

 
(a)  Authority of the Committee.  The Plan shall be administered by the
Committee, and the Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:
 
(i)  to select Eligible Persons to whom Awards may be granted;
 

 
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(ii)  to designate Affiliates;
 
(iii)  to determine the type or types of Awards to be granted to each Eligible
Person;
 
(iv)  to determine the type and number of Awards to be granted, the number of
Shares to which an Award may relate, the terms and conditions of any Award
granted under the Plan (including, but not limited to, any exercise price, grant
price, or purchase price, any restriction or condition, any schedule for lapse
of restrictions or conditions relating to transferability or forfeiture,
exercisability, or settlement of an Award, and waiver or accelerations thereof,
and waivers of performance conditions relating to an Award, based in each case
on such considerations as the Committee shall determine), and all other matters
to be determined in connection with an Award;
 
(v)  to determine whether, to what extent, and under what circumstances an Award
may be settled, or the exercise price of an Award may be paid, in cash, Shares,
other Awards, or other property, or an Award may be canceled, forfeited,
exchanged, or surrendered;
 
(vi)  to determine whether, to what extent, and under what circumstances cash,
Shares, other Awards, or other property payable with respect to an Award will be
deferred either automatically, at the election of the Committee, or at the
election of the Eligible Person;
 
(vii)  to prescribe the form of each Award Agreement, which need not be
identical for each Eligible Person;
 
(viii)  to adopt, amend, suspend, waive, and rescind such rules and regulations
and appoint such agents as the Committee may deem necessary or advisable to
administer the Plan;
 
(ix)  to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any Award,
rules and regulations, Award Agreement, or other instrument hereunder;
 
(x)  to accelerate the exercisability or vesting of all or any portion of any
Award or to extend the period during which an Award is exercisable;
 
(xi)  to determine whether uncertificated Shares may be used in satisfying
Awards and otherwise in connection with the Plan; and
 

 
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(xii)  to make all other decisions and determinations as may be required under
the terms of the Plan or as the Committee may deem necessary or advisable for
the administration of the Plan.
 
(b)  Manner of Exercise of Committee Authority.  The Committee shall have sole
discretion in exercising its authority under the Plan.  Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, Subsidiaries, Affiliates, Eligible Persons,
any person claiming any rights under the Plan from or through any Eligible
Person, and shareholders.  The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed
as limiting any power or authority of the Committee.   The Committee may
delegate to other members of the Board or officers or managers of the Company or
any Subsidiary or Affiliate the authority, subject to such terms as the
Committee shall determine, to perform administrative functions and, with respect
to Awards granted to persons not subject to Section 16 of the Exchange Act, to
perform such other functions as the Committee may determine, to the extent
permitted under Rule 16b-3 (if applicable) and applicable law.
 
(c)  Limitation of Liability.  Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or other employee of the Company or any Subsidiary or
Affiliate, the Company’s independent certified public accountants, or other
professional retained by the Company to assist in the administration of the
Plan.  No member of the Committee, and no officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.
 
(d)  No Option or SAR Repricing Without Shareholder Approval.  Except as
provided in the first sentence of Section 4(b) hereof relating to certain
antidilution adjustments, unless the approval of shareholders of the Company is
obtained, Options and SARs issued under the Plan shall not be amended to lower
their exercise price, Options and SARs issued under the Plan will not be
exchanged for other Options or SARs with lower exercise prices, and no other
action shall be taken with respect to Options or SARs that would be treated as a
repricing under the rules of the principal stock exchange on which the Shares
are listed.
 
(e)  Limitation on Committee’s Authority under 409A.  Anything in this Plan to
the contrary notwithstanding, the Committee’s authority to modify outstanding
Awards shall be limited to the extent necessary so that the existence of such
authority does not (i) cause an Award that is not otherwise deferred
compensation subject to Section 409A of the Code to become deferred compensation
subject to Section 409A of the Code or (ii) cause an
 

 
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Award that is otherwise deferred compensation subject to Section 409A of the
Code to fail to meet the requirements prescribed by Section 409A of the Code.
 
4.  
Shares Subject to the Plan.

 
(a)  Subject to adjustment as provided in Section 4(b) hereof, (i) the total
number of Shares reserved for issuance in connection with Awards under the Plan
shall be 13,076,459 (13,330,541, if the over-allotment option in respect of the
Company’s initial public offering is exercised in full by the underwriters and,
if the over-allotment option is exercised in part, then the applicable pro rata
number between such numbers, based upon the percentage so exercised), and (ii)
the total number of Shares which may be issued under ISOs granted under the Plan
shall be 8,571,428.  No Award may be granted if the number of Shares to which
such Award relates, when added to the number of Shares previously issued under
the Plan, exceeds the number of Shares reserved for issuance under the Plan in
clause (i) of the preceding sentence.  If any Awards are forfeited, canceled,
terminated, exchanged or surrendered or such Award is settled in cash or
otherwise terminates without a distribution of Shares to the Participant, any
Shares counted against the number of Shares reserved and available under the
Plan with respect to such Award shall, to the extent of any such forfeiture,
settlement, termination, cancellation, exchange or surrender, again be available
for Awards under the Plan.  Upon the exercise of any Award granted in tandem
with any other Awards, such related Awards shall be canceled to the extent of
the number of Shares as to which the Award is exercised.
 
(b)  In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, extraordinary
distribution, or other similar corporate transaction or event, affects the
Shares such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Eligible Persons under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems appropriate and, in
such manner as it may deem equitable, (i) adjust any or all of (x) the number
and kind of shares which may thereafter be issued under the Plan, (y) the number
and kind of shares, other securities or other consideration issued or issuable
in respect of outstanding Awards, and (z) the exercise price, grant price, or
purchase price relating to any Award or (ii) provide for a distribution of cash
or property in respect of any Award; provided, however, in each case that, with
respect to ISOs, such adjustment shall be made in accordance with Section 424(a)
of the Code, unless the Committee determines otherwise; providedfurther,
however, that no adjustment shall be made pursuant to this Section 4 that causes
any Award to be treated as deferred compensation pursuant to Section 409A of the
Code.  If an extraordinary cash dividend is declared and paid on Shares after
the grant of an Option or SAR and before the exercise of the Option or SAR,
unless otherwise expressly provided in an applicable Award Agreement, the holder
of the Option or SAR will have a right to receive an amount equal to the amount
of the
 

 
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dividend per Share times the number of Shares subject to the Option or SAR;
provided , however, that, unless otherwise determined by the Committee, no
amount will be paid in respect of an Option or SAR unless and until the Option
or SAR (or the portion thereof on which the amount is paid) has vested, and it
is intended that the dividend right will otherwise be structured to comply with
Section 409A of the Code, to the extent applicable.  In addition, the Committee
is authorized to make adjustments in the terms and conditions of, and the
criteria and performance objectives, if any, included in, Awards in recognition
of unusual or non-recurring events (including, without limitation, events
described in the preceding sentence) affecting the Company or any Subsidiary or
Affiliate or the financial statements of the Company or any Subsidiary or
Affiliate, or in response to changes in applicable laws, regulations, or
accounting principles.
 
(c)  In the event that the Company is a party to a merger or consolidation or a
Change in Control shall occur, outstanding Awards shall be subject to the
agreement of merger or consolidation or other applicable transaction
agreement.  Such agreement, without the Participants’ consent, may provide for:
(i) continuation or assumption of such outstanding Awards under the Plan by the
Company (if it is the surviving corporation) or by the surviving corporation or
its parent; (ii) substitution by the surviving corporation or its parent of
awards with substantially the same terms for such outstanding Awards (and, if
the Company is not a publicly traded entity, substitution of shares with equity
of the surviving corporation or its parent with substantially the same terms as
the outstanding Shares); (iii) acceleration of the vesting of or right to
exercise such outstanding Awards immediately prior to or as of the date of the
merger or consolidation or Change in Control, and the expiration of such
outstanding Awards to the extent not timely exercised by the date of the merger,
consolidation, Change in Control or other date thereafter designated by the
Board; or (iv) cancellation of all or any portion of the outstanding Awards by a
cash payment of the excess, if any, of the Fair Market Value of the shares
subject to such outstanding Awards or portion thereof being canceled over the
aggregate exercise price, if any, with respect to such Awards or portion thereof
being canceled.
 
(d)  Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares including Shares
acquired by purchase in the open market or in private transactions.
 
5.  
Specific Terms of Awards.

 
(a)  General.  Awards may be granted on the terms and conditions set forth in
this Section 5.  In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 7(d)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine,
 

 
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including terms regarding forfeiture of Awards or continued exercisability of
Awards in the event of Termination of Service by the Eligible Person.
 
(b)  Options.  The Committee is authorized to grant Options, which may be NQSOs
or ISOs, to Eligible Persons on the following terms and conditions:
 
(i)  Exercise Price.  The exercise price per Share purchasable under an Option
shall be determined by the Committee; provided, however, that the exercise price
per Share shall not be less than the Fair Market Value per Share on the date of
grant.
 
(ii)  Option Term.  The term of each Option shall be determined by the
Committee; provided, however, that such term shall not be longer than ten years
from the date of grant of the Option.
 
(iii)  Time and Method of Exercise.  The Committee shall determine at the date
of grant or thereafter the time or times at which an Option may be exercised in
whole or in part (including, without limitation, upon achievement of performance
criteria if deemed appropriate by the Committee), the methods by which such
exercise price may be paid or deemed to be paid (including, without limitation,
broker-assisted exercise arrangements), the form of such payment (including,
without limitation, cash, Shares, notes or other property), and the methods by
which Shares will be delivered or deemed to be delivered to Eligible Persons.
 
(iv)  Early Exercise.  The Committee may provide at the time of grant or any
time thereafter, in its sole discretion, that any Option shall be exercisable
with respect to Shares that otherwise would not then be exercisable, provided
that, in connection with such exercise, the Participant enters into a form of
Restricted Share agreement approved by the Committee with respect to the Shares
received on exercise.
 
(v)  ISOs.  The terms of any ISO granted under the Plan shall comply in all
respects with the provisions of Section 422 of the Code, including but not
limited to the requirement that the ISO shall be granted within ten years from
the earlier of the date of adoption or shareholder approval of the Plan.  ISOs
may only be granted to employees of the Company or a Subsidiary.
 
(c)  SARs.  The Committee is authorized to grant SARs (Share Appreciation
Rights) to Eligible Persons on the following terms and conditions:
 
(i)  Right to Payment.  A SAR shall confer on the Eligible Person to whom it is
granted a right to receive with respect to each Share subject thereto, upon
exercise thereof, the excess of (1) the Fair Market Value of one Share on the
date of exercise over (2) the exercise price per Share of the SAR, as determined
by the Committee as
 

 
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of the date of grant of the SAR (which shall not be less than the Fair Market
Value per Share on the date of grant.
 
(ii)  Other Terms.  The Committee shall determine, at the time of grant, the
time or times at which a SAR may be exercised in whole or in part (which shall
not be more than ten years after the date of grant of the SAR), the method of
exercise, method of settlement, form of consideration payable in settlement,
method by which Shares will be delivered or deemed to be delivered to Eligible
Persons, whether or not a SAR shall be in tandem with any other Award, and any
other terms and conditions of any SAR.  Unless the Committee determines
otherwise, a SAR (1) granted in tandem with an NQSO may be granted at the time
of grant of the related NQSO or at any time thereafter and (2) granted in tandem
with an ISO may only be granted at the time of grant of the related ISO.
 
(d)  Restricted Shares.  The Committee is authorized to grant Restricted Shares
to Eligible Persons on the following terms and conditions:
 
(i)  Issuance and Restrictions.  Restricted Shares shall be subject to such
restrictions on transferability and other restrictions, if any, as the Committee
may impose at the date of grant or thereafter, which restrictions may lapse
separately or in combination at such times, under such circumstances (including,
without limitation, upon achievement of performance criteria if deemed
appropriate by the Committee), in such installments, or otherwise, as the
Committee may determine.  Except to the extent restricted under the Award
Agreement relating to the Restricted Shares, an Eligible Person granted
Restricted Shares shall have all of the rights of a shareholder including,
without limitation, the right to vote Restricted Shares and the right to receive
dividends thereon.
 
(ii)  Forfeiture.  Except as otherwise determined by the Committee, at the date
of grant or thereafter, upon Termination of Service during the applicable
restriction period, Restricted Shares and any accrued but unpaid dividends or
Dividend Equivalents that are at that time subject to restrictions shall be
forfeited; provided, however, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Restricted Shares will be
waived in whole or in part in the event of Termination of Service resulting from
specified causes, and the Committee may in other cases waive in whole or in part
the forfeiture of Restricted Shares.
 
(iii)  Certificates for Shares.  Restricted Shares granted under the Plan may be
evidenced in such manner as the Committee shall determine.  If certificates
representing Restricted Shares are registered in the name of the Eligible
Person, such certificates shall bear an appropriate legend referring to the
terms, conditions, and restrict-
 

 
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tions applicable to such Restricted Shares, and, unless otherwise determined by
the Committee, the Company shall retain physical possession of the certificate
and the Participant shall deliver a stock power to the Company, endorsed in
blank, relating to the Restricted Shares.
 
(iv)  Dividends.  Dividends paid on Restricted Shares shall be either paid at
the dividend payment date, or deferred for payment to such date, and subject to
such conditions, as determined by the Committee, in cash or in restricted or
unrestricted Shares having a Fair Market Value equal to the amount of such
dividends.  Unless otherwise determined by the Committee, Shares distributed in
connection with a Share split or dividend in Shares, and other property
distributed as a dividend, shall be subject to restrictions and a risk of
forfeiture to the same extent as the Restricted Shares with respect to which
such Shares or other property has been distributed.
 
(v)  Early Exercise Options.  The Committee shall award Restricted Shares to a
Participant upon the Participant’s early exercise of an Option under Section
5(b)(iv) hereof.  Unless otherwise determined by the Committee, the lapse of
restrictions with respect to such Restricted Shares shall occur on the same
schedule as the exercisability of the Option for which the Restricted Shares
were exercised.
 
(e)  Restricted Share Units.  The Committee is authorized to grant Restricted
Share Units to Eligible Persons, subject to the following terms and conditions:
 
(i)  Award and Restrictions.  Delivery of Shares or cash, as the case may be,
will occur upon expiration of the deferral period specified for Restricted Share
Units by the Committee (or, if permitted by the Committee, as elected by the
Eligible Person).  In addition, Restricted Share Units shall be subject to such
restrictions as the Committee may impose, if any (including, without limitation,
the achievement of performance criteria if deemed appropriate by the Committee),
at the date of grant or thereafter, which restrictions may lapse at the
expiration of the deferral period or at earlier or later specified times,
separately or in combination, in installments or otherwise, as the Committee may
determine.
 
(ii)  Forfeiture.  Except as otherwise determined by the Committee at the date
of grant or thereafter, upon Termination of Service during the applicable
deferral period or portion thereof to which forfeiture conditions apply (as
provided in the Award Agreement evidencing the Restricted Share Units), or upon
failure to satisfy any other conditions precedent to the delivery of Shares or
cash to which such Restricted Share Units relate, all Restricted Share Units
that are at that time subject to deferral or restriction shall be forfeited;
provided, however, that the Committee may provide, by rule or regulation or in
any Award Agreement, or may determine in any individual case, that restrictions
or forfeiture conditions relating to Restricted Share Units
 

 
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will be waived in whole or in part in the event of Termination of Service
resulting from specified causes, and the Committee may in other cases waive in
whole or in part the forfeiture of Restricted Share Units.
 
(iii)  Dividend Equivalents.  Unless otherwise determined by the Committee at
the date of grant, Dividend Equivalents on the specified number of Shares
covered by a Restricted Share Unit shall be either (A) paid with respect to such
Restricted Share Unit at the dividend payment date in cash or in restricted or
unrestricted Shares having a Fair Market Value equal to the amount of such
dividends, or (B) deferred with respect to such Restricted Share Unit and the
amount or value thereof automatically deemed reinvested in additional Restricted
Share Units or other Awards, as the Committee shall determine or permit the
Participant to elect.
 
(f)  Performance Shares and Performance Units.  The Committee is authorized to
grant Performance Shares or Performance Units or both to Eligible Persons on the
following terms and conditions:
 
(i)  Performance Period.  The Committee shall determine a performance period
(the “Performance Period”) of one or more years or other periods and shall
determine the performance objectives for grants of Performance Shares and
Performance Units.  Performance objectives may vary from Eligible Person to
Eligible Person and shall be based upon the performance criteria as the
Committee may deem appropriate.  The performance objectives may be determined by
reference to the performance of the Company, or of a Subsidiary or Affiliate, or
of a division or unit of any of the foregoing.  Performance Periods may overlap
and Eligible Persons may participate simultaneously with respect to Performance
Shares and Performance Units for which different Performance Periods are
prescribed.
 
(ii)  Award Value.  At the beginning of a Performance Period, the Committee
shall determine for each Eligible Person or group of Eligible Persons with
respect to that Performance Period the range of number of Shares, if any, in the
case of Performance Shares, and the range of dollar values, if any, in the case
of Performance Units, which may be fixed or may vary in accordance with such
performance or other criteria specified by the Committee, which shall be paid to
an Eligible Person as an Award if the relevant measure of Company performance
for the Performance Period is met.
 
(iii)  Significant Events.  If during the course of a Performance Period there
shall occur significant events as determined by the Committee which the
Committee expects to have a substantial effect on a performance objective during
such period, the Committee may revise such objective.
 

 
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(iv)  Forfeiture.  Except as otherwise determined by the Committee, at the date
of grant or thereafter, upon Termination of Service during the applicable
Performance Period, Performance Shares and Performance Units for which the
Performance Period was prescribed shall be forfeited; provided, however, that
the Committee may provide, by rule or regulation or in any Award Agreement, or
may determine in an individual case, that restrictions or forfeiture conditions
relating to Performance Shares and Performance Units will be waived in whole or
in part in the event of Terminations of Service resulting from specified causes,
and the Committee may in other cases waive in whole or in part the forfeiture of
Performance Shares and Performance Units.
 
(v)  Payment.  Each Performance Share or Performance Unit may be paid in whole
Shares, or cash, or a combination of Shares and cash either as a lump sum
payment or in installments, all as the Committee shall determine, at the time of
grant of the Performance Share or Performance Unit or otherwise, commencing as
soon as practicable after the end of the relevant Performance Period.
 
(g)  Dividend Equivalents.  The Committee is authorized to grant Dividend
Equivalents to Eligible Persons.  The Committee may provide, at the date of
grant or thereafter, that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Shares, or
other investment vehicles as the Committee may specify; provided, however, that,
unless otherwise determined by the Committee, Dividend Equivalents (other than
freestanding Dividend Equivalents) shall be subject to all conditions and
restrictions of any underlying Awards to which they relate.
 
(h)  Other Share-Based Awards.  The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Persons such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Shares, as deemed by the Committee to
be consistent with the purposes of the Plan, including, without limitation,
unrestricted shares awarded purely as a “bonus” and not subject to any
restrictions or conditions, other rights convertible or exchangeable into
Shares, purchase rights for Shares, Awards with value and payment contingent
upon performance of the Company or any other factors designated by the
Committee, and Awards valued by reference to the performance of specified
Subsidiaries or Affiliates.  The Committee shall determine the terms and
conditions of such Awards at date of grant or thereafter.  Shares delivered
pursuant to an Award in the nature of a purchase right granted under this
Section 5(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Shares,
notes or other property, as the Committee shall determine.  Cash awards, as an
element of or supplement to any other Award under the Plan, shall also be
authorized pursuant to this Section 5(h).
 

 
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6.  
Certain Provisions Applicable to Awards.

 
(a)  Stand-Alone, Additional, Tandem and Substitute Awards.  Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible
Persons either alone or in addition to, in tandem with, or in exchange or
substitution for, any other Award granted under the Plan or any award granted
under any other plan or agreement of the Company, any Subsidiary or Affiliate,
or any business entity to be acquired by the Company or a Subsidiary or
Affiliate, or any other right of an Eligible Person to receive payment from the
Company or any Subsidiary or Affiliate.  Awards may be granted in addition to or
in tandem with such other Awards or awards, and may be granted either as of the
same time as, or a different time from, the grant of such other Awards or
awards.  Subject to the provisions of Section 3(d) hereof prohibiting Option and
SAR repricing without shareholder approval, the per Share exercise price of any
Option, or grant price of any SAR, which is granted in connection with the
substitution of awards granted under any other plan or agreement of the Company
or any Subsidiary or Affiliate, or any business entity to be acquired by the
Company or any Subsidiary or Affiliate, shall be determined by the Committee, in
its discretion.
 
(b)  Term of Awards.  The term of each Award granted to an Eligible Person shall
be for such period as may be determined by the Committee; provided, however,
that in no event shall the term of any Option or SAR exceed a period of ten
years from the date of its grant (or, in the case of ISOs, such shorter period
as may be applicable under Section 422 of the Code).
 
(c)  Form of Payment Under Awards.  Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Shares, notes or other property, and may be
made in a single payment or transfer, in installments, or on a deferred
basis.  The Committee may make rules relating to installment or deferred
payments with respect to Awards, including the rate of interest to be credited
with respect to such payments, and the Committee may require deferral of payment
under an Award if, in the sole judgment of the Committee, it may be necessary in
order to avoid nondeductibility of the payment under Section 162(m) of the Code.
 
(d)  Nontransferability.  Unless otherwise set forth by the Committee in an
Award Agreement, Awards shall not be transferable by an Eligible Person except
by will or the laws of descent and distribution (except pursuant to a
Beneficiary designation) and shall be exercisable during the lifetime of an
Eligible Person only by such Eligible Person or his guardian or legal
representative.  An Eligible Person’s rights under the Plan may not be pledged,
mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to
claims of the Eligible Person’s creditors.
 

 
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(e)  Noncompetition.  The Committee may, by way of the Award Agreements or
otherwise, establish such other terms, conditions, restrictions and/or
limitations, if any, of any Award, provided they are not inconsistent with the
Plan, including, without limitation, the requirement that the Participant not
engage in competition with, solicit customers or employees of, or disclose or
use confidential information of the Company or its Affiliates.
 
7.  
General Provisions.

 
(a)  Compliance with Legal and Trading Requirements.  The Plan, the granting and
exercising of Awards thereunder, and the other obligations of the Company under
the Plan and any Award Agreement, shall be subject to all applicable federal,
state and foreign laws, rules and regulations, and to such approvals by any
stock exchange, regulatory or governmental agency as may be required.  The
Company, in its discretion, may postpone the issuance or delivery of Shares
under any Award until completion of such stock exchange or market system listing
or registration or qualification of such Shares or any required action under any
state, federal or foreign law, rule or regulation as the Company may consider
appropriate, and may require any Participant to make such representations and
furnish such information as it may consider appropriate in connection with the
issuance or delivery of Shares in compliance with applicable laws, rules and
regulations.  No provisions of the Plan shall be interpreted or construed to
obligate the Company to register any Shares under federal, state or foreign
law.  The Shares issued under the Plan may be subject to such other restrictions
on transfer as determined by the Committee.
 
(b)  No Right to Continued Employment or Service.  Neither the Plan nor any
action taken thereunder shall be construed as giving any employee, consultant or
director the right to be retained in the employ or service of the Company or any
of its Subsidiaries or Affiliates, nor shall it interfere in any way with the
right of the Company or any of its Subsidiaries or Affiliates to terminate any
employee’s, consultant’s or director’s employment or service at any time.
 
(c)  Taxes.  The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Person, amounts of withholding and other taxes due in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Eligible Persons to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award.  This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Person’s tax obligations;
provided, however, that the amount of tax withholding to be satisfied by
withholding Shares shall be limited to the minimum amount of taxes, including
employment taxes, required to be withheld under applicable Federal, state and
local law.
 

 
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(d)  Changes to the Plan and Awards.  The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee’s authority to grant Awards
under the Plan without the consent of shareholders of the Company or
Participants, except that any such amendment or alteration shall be subject to
the approval of the Company’s shareholders (i) to the extent such shareholder
approval is required under the rules of any stock exchange or automated
quotation system on which the Shares may then be listed or quoted, or (ii) as it
applies to ISOs, to the extent such shareholder approval is required under
Section 422 of the Code; provided, however, that, without the consent of an
affected Participant, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may materially and adversely affect the rights of such
Participant under any Award theretofore granted to him or her.  The Committee
may waive any conditions or rights under, amend any terms of, or amend, alter,
suspend, discontinue or terminate, any Award theretofore granted, prospectively
or retrospectively; provided, however, that, without the consent of a
Participant, no amendment, alteration, suspension, discontinuation or
termination of any Award may materially and adversely affect the rights of such
Participant under any Award theretofore granted to him or her.
 
(e)  No Rights to Awards; No Shareholder Rights.  No Eligible Person or employee
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons and employees.  No
Award shall confer on any Eligible Person any of the rights of a shareholder of
the Company unless and until Shares are duly issued or transferred to the
Eligible Person in accordance with the terms of the Award.
 
(f)  Unfunded Status of Awards.  The Plan is intended to constitute an
“unfunded” plan for incentive compensation.  With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award shall give any such Participant any rights that are greater than those
of a general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company’s obligations under the Plan to deliver cash, Shares, other Awards, or
other property pursuant to any Award, which trusts or other arrangements shall
be consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.
 
(g)  Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board
nor its submission to the shareholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of options and
 

 
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other awards otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
 
(h)  Not Compensation for Benefit Plans.  No Award payable under this Plan shall
be deemed salary or compensation for the purpose of computing benefits under any
benefit plan or other arrangement of the Company for the benefit of its
employees, consultants or directors unless the Company shall determine
otherwise.
 
(i)  No Fractional Shares.  No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award.  The Committee shall determine whether cash,
other Awards, or other property shall be issued or paid in lieu of such
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
 
(j)  Governing Law.  The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of New York, without giving effect to
principles of conflict of laws thereof.
 
(k)  Effective Date; Plan Termination.  This Amendment and Restatement of the
Plan shall become effective as of January 1, 2007 (the “Effective Date”),
subject to approval by the shareholders of the Company.  The Plan shall
terminate as to future awards on the date which is ten (10) years after the
Effective Date.
 
(l)  Section 409A .   It is intended that the Plan and Awards issued thereunder
will comply with Section 409A of the Code (and any regulations and guidelines
issued thereunder) to the extent the Awards are subject thereto, and the Plan
and such Awards shall be interpreted on a basis consistent with such
intent.  The Plan and any Award Agreements issued thereunder may be amended in
any respect deemed by the Board or the Committee to be necessary in order to
preserve compliance with Section 409A of the Code.
 
(m)  Titles and Headings.  The titles and headings of the sections in the Plan
are for convenience of reference only.  In the event of any conflict, the text
of the Plan, rather than such titles or headings, shall control.
 

 
 
 
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