Exhibit 10.2
ALON USA ENERGY, INC.
2005 INCENTIVE COMPENSATION PLAN

 

--------------------------------------------------------------------------------

 

ALON USA ENERGY, INC.
2005 INCENTIVE COMPENSATION PLAN

              SECTION     PAGE   1.  
Purpose
    1     2.  
Term
    1     3.  
Definitions
    1     4.  
Shares Available Under Plan
    5     5.  
Limitations on Awards
    5     6.  
Stock Options
    6     7.  
Appreciation Rights
    7     8.  
Restricted Shares
    9     9.  
Restricted Stock Units
    10     10.  
Performance Shares and Performance Units
    10     11.  
Senior Executive Plan Bonuses
    11     12.  
Awards to Eligible Directors
    12     13.  
Transferability
    13     14.  
Adjustments
    13     15.  
Fractional Shares
    14     16.  
Withholding Taxes
    14     17.  
Administration of the Plan
    14     18.  
Amendments and Other Matters
    15     19.  
Governing Law
    16  

 

--------------------------------------------------------------------------------

 

ALON USA ENERGY, INC.
2005 INCENTIVE COMPENSATION PLAN
          Alon USA Energy, Inc., a Delaware corporation (the “Company”),
establishes the Alon USA Energy, Inc. 2005 Incentive Compensation Plan (the
“Plan”), effective as of July 6, 2005, subject to stockholder approval.

  1.        Purpose. The purpose of the Plan is to attract and retain the best
available talent and encourage the highest level of performance by directors,
executive officers and selected employees, and to provide them incentives to put
forth maximum efforts for the success of the Company’s business, in order to
serve the best interests of the Company and its stockholders.

  2.        Term. The Plan will expire on the tenth anniversary of the date on
which it is approved by the stockholders of the Company. No further Awards will
be made under the Plan on or after such tenth anniversary. Awards that are
outstanding on the date the Plan terminates will remain in effect according to
their terms and the provisions of the Plan.

  3.        Definitions. The following terms, when used in the Plan with initial
capital letters, will have the following meanings:

  (a)        Appreciation Right means a right granted pursuant to Section 7.    
(b)        Award means the award of a Senior Executive Plan Bonus; the grant of
Appreciation Rights, Stock Options, Performance Shares, Performance Units or
Restricted Stock Units; or the grant or sale of Restricted Shares.     (c)  
     Board means the Board of Directors of the Company.     (d)        Code
means the Internal Revenue Code of 1986, as in effect from time to time.     (e)
       Committee means:

  (i)        with respect to any matter arising under the Plan that relates to a
Participant who is subject to Section 16 of the Exchange Act, the Incentive
Compensation Plan Committee appointed by the Board, which committee at all times
will consist of two or more members of the Board, all of whom are intended
(A) to meet all applicable independence requirements of the New York Stock
Exchange or the principal national securities exchange or principal market on or
in which the Common Stock is traded and (B) to qualify as “non-employee
directors” as defined in Rule 16b-3 and as “outside directors” as defined in
regulations adopted under Section 162(m) of the Code, as such terms may be
amended from time to time, provided, however, that the failure of a member of
the Committee to so qualify will not invalidate any Award granted to such
Participant under the Plan;

 

--------------------------------------------------------------------------------

 

  (ii)        with respect to any matter arising under the Plan that relates to
any other Participant, the Compensation Committee of the Board; and     (iii)  
     to the extent the administration of the Plan has been assumed by the Board
pursuant to Section 17, the Board.

  (f)        Common Stock means the common stock, par value $.01 per share, of
the Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Section 14.

  (g)        Date of Grant means the date specified by the Committee on which an
Award will become effective.

  (h)        Deferral Period means the period of time during which Restricted
Stock Units are subject to deferral limitations under Section 9.

  (i)        Eligible Director means a member of the Board who is not (i) an
employee of the Company or any Subsidiary or (ii) an officer, director or
employee of (A) Alon Israel Oil Company or any of its affiliates other than the
Company or any Subsidiary; (B) Africa Israel Investments Ltd. or any of its
affiliates; (C) Bielsol Investments (1987) Ltd. or any of its affiliates; or
(D) Kibbutz Movement or any of its affiliates.

  (j)        Evidence of Award means an agreement, certificate, resolution or
other type or form of writing or other evidence approved by the Committee which
sets forth the terms and conditions of an Award. An Evidence of Award may be in
any electronic medium, may be limited to a notation on the books and records of
the Company and need not be signed by a representative of the Company or a
Participant.

  (k)        Exchange Act means the Securities Exchange Act of 1934, as amended.

  (l)        Grant Price means the price per share of Common Stock at which an
Appreciation Right is granted.

  (m)        Management Objectives means the measurable performance objectives,
if any, established by the Committee for a Performance Period that are to be
achieved with respect to an Award. Management Objectives may be described in
terms of company-wide objectives (i.e., the performance of the Company and all
of its Subsidiaries) or in terms of objectives that are related to the
performance of the individual Participant or of the division, Subsidiary,
department, region or function within the Company or a Subsidiary in which the
Participant receiving the Award is employed or on which the Participant’s
efforts have the most influence. The achievement of the Management Objectives
established by the Committee for any Performance Period will be determined
without regard to any change in accounting standards by the Financial Accounting
Standards Board or any successor entity.

2

--------------------------------------------------------------------------------

 

           The Management Objectives applicable to any Award to a Participant
who is, or is determined by the Committee to be likely to become, a “covered
employee” within the meaning of Section 162(m) of the Code (or any successor
provision) will be limited to specified levels of, growth in, or performance
relative to peer company performance in, one or more of the following
performance measures (excluding the effect of extraordinary or nonrecurring
items unless the Committee specifically includes any such extraordinary or
nonrecurring item at the time such Award is granted):

  (i)        profitability measures;

  (ii)        revenue, sales and same store sales measures;     (iii)  
     business unit performance;     (iv)        leverage measures;     (v)  
     stockholder return;     (vi)        expense management;     (vii)  
     asset and liability measures;     (viii)        individual performance;    
(ix)        supply chain efficiency;     (x)        customer satisfaction;    
(xi)        productivity measures;     (xii)        cash flow measures;    
(xiii)        return measures; and     (xiv)        product development and/or
performance

           If the Committee determines that, as a result of a change in the
business, operations, corporate structure or capital structure of the Company,
or the manner in which the Company conducts its business, or any other events or
circumstances, the Management Objectives are no longer suitable, the Committee
may in its discretion modify such Management Objectives or the related minimum
acceptable level of achievement, in whole or in part, with respect to a
Performance Period as the Committee deems appropriate and equitable.

  (n)        Market Value per Share means, at any date, the closing sale price
of the Common Stock on that date (or, if there are no sales on that date, the
last preceding date on which there was a sale) on the principal national
securities exchange or in the principal market on or in which the Common Stock
is traded.

3

--------------------------------------------------------------------------------

 

  (o)        Option Price means the purchase price per share payable on exercise
of a Stock Option.

  (p)        Participant means a person who is selected by the Committee to
receive an Award under the Plan and who at that time is an executive officer or
other key employee of the Company or any Subsidiary, or who at that time is an
Eligible Director, provided that an Eligible Director shall be a Participant
only for purposes of Awards of Restricted Shares.

  (q)        Performance Share means a bookkeeping entry that records the
equivalent of one share of Common Stock awarded pursuant to Section 10.

  (r)        Performance Period means, with respect to an Award, a period of
time within which the Management Objectives relating to such Award are to be
measured. The Performance Period for a Senior Executive Plan Bonus will be the
fiscal year of the Company, and, unless otherwise expressly provided in the
Plan, the Performance Period for all other Awards will be established by the
Committee at the time of the Award.

  (s)        Performance Unit means a unit equivalent to $1.00 (or such other
value as the Committee determines) granted pursuant to Section 10.

  (t)        Restricted Shares means shares of Common Stock granted or sold
pursuant to Section 8 as to which neither the ownership restrictions nor the
restrictions on transfer have expired.

  (u)        Restricted Stock Units means an Award pursuant to Section 9 of the
right to receive shares of Common Stock at the end of a specified Deferral
Period.

  (v)        Rule 16b-3 means Rule 16b-3 under Section 16 of the Exchange Act as
amended (or any successor rule to the same effect), as in effect from time to
time.

  (w)        Senior Executive Plan Bonus means an Award of annual incentive
compensation made pursuant to and subject to the conditions set forth in
Section 11.

  (x)        Spread means the excess of the Market Value per Share on the date
an Appreciation Right is exercised over (i) the Option Price provided for in the
Stock Option granted in tandem with the Appreciation Right or (ii) if there is
no tandem Stock Option, the Grant Price provided for in the Appreciation Right,
in either case multiplied by the number of shares of Common Stock in respect of
which the Appreciation Right is exercised.

  (y)        Stock Option means the right to purchase shares of Common Stock
upon exercise of an option granted pursuant to Section 6.

  (z)        Subsidiary means (i) any corporation of which at least 50% of the
combined voting power of the then outstanding shares of Voting Stock is owned

4

--------------------------------------------------------------------------------

 

      directly or indirectly by the Company, (ii) any partnership of which at
least 50% of the profits interest or capital interest is owned directly or
indirectly by the Company and (iii) any other entity of which at least 50% of
the total equity interest is owned directly or indirectly by the Company.

  (aa)        Voting Stock means the securities entitled to vote generally in
the election of directors or persons who serve similar functions.

  4.        Shares Available Under Plan. The aggregate number of shares of
Common Stock that may be (i) subject to an Award of Appreciation Rights or Stock
Options or (ii) issued or transferred as Restricted Shares and released from all
restrictions or in payment of Performance Shares, Performance Units, Restricted
Stock Units or Senior Executive Plan Bonuses will not exceed in the aggregate
2,200,000 shares. Such shares may be shares of original issuance or treasury
shares or a combination of the foregoing. The number of shares of Common Stock
available under this Section 4 will be subject to adjustment as provided in
Section 14 and will be further adjusted to include shares that relate to Awards
that expire or are forfeited. The number of shares of Common Stock available
under this Section 4 will not be adjusted to include (i) any shares withheld by,
or tendered to, the Company in payment of the Option Price with respect to a
Stock Option or in satisfaction of the taxes required to be withheld in
connection with any Award granted under the Plan or (ii) any shares subject to
an Appreciation Right that are not transferred to a Participant upon exercise of
the Appreciation Right.

  5.        Limitations on Awards. Awards under the Plan will be subject to the
following limitations:

  (a)        No more than 2,200,000 shares of Common Stock, subject to
adjustment as provided in Section 4, may be subject to an Award of Stock Options
that are intended to qualify as incentive stock options under Section 422 of the
Code.

  (b)        The maximum number of shares of Common Stock that:

  (i)        may be subject to Stock Options or Appreciation Rights granted to a
Participant during any calendar year will not exceed 100,000 shares plus an
additional 100,000 shares with respect to Stock Options or Appreciation Rights
granted a Participant who has not previously been employed by the Company or any
Subsidiary and

  (ii)        may be granted to a Participant during any calendar year as
Performance Shares, Restricted Shares or Restricted Stock Units may not exceed
50,000 shares plus an additional 50,000 shares with respect to Performance
Shares, Restricted Shares or Restricted Stock Units granted a Participant who
has not previously been employed by the Company or any Subsidiary.

           The limitations set forth in this Section 5(b) will apply without
regard to whether the applicable Award is settled in cash or in shares of Common
Stock.

5

--------------------------------------------------------------------------------

 

  (c)        The maximum aggregate cash value of payments to any Participant for
any Performance Period pursuant to an award of Performance Units will not exceed
$1 million.

  (d)        The payment of a Senior Executive Plan Bonus to any Participant
will not exceed $1 million.

  6.        Stock Options. The Committee may from time to time authorize grants
of options to any Participant to purchase shares of Common Stock upon such terms
and conditions as it may determine in accordance with this Section 6. Each
Participant who is a key employee of the Company or any Subsidiary will be
eligible to receive a grant of Stock Options that are intended to qualify as
incentive stock options within the meaning of Section 422 of the Code. Each
grant of Stock Options may utilize any or all of the authorizations, and will be
subject to all of the requirements, contained in the following provisions:

  (a)        Each grant will specify the number of shares of Common Stock to
which it relates.

  (b)        Each grant will specify the Option Price, which will not be less
than 100% of the Market Value per Share on the Date of Grant.

  (c)        Each grant will specify whether the Option Price will be payable
(i) in cash or by check acceptable to the Company, (ii) by the actual or
constructive transfer to the Company of shares of Common Stock owned by the
Participant for at least six months (or, with the consent of the Committee, for
less than six months) having an aggregate Market Value per Share at the date of
exercise equal to the aggregate Option Price, (iii) with the consent of the
Committee, by authorizing the Company to withhold a number of shares of Common
Stock otherwise issuable to the Participant having an aggregate Market Value per
Share on the date of exercise equal to the aggregate Option Price or (iv) by a
combination of such methods of payment; provided, however, that the payment
methods described in clauses (ii) and (iii) will not be available at any time
that the Company is prohibited from purchasing or acquiring such shares of
Common Stock.

  (d)        To the extent permitted by law, any grant may provide for deferred
payment of the Option Price from the proceeds of sale through a bank or broker
of some or all of the shares to which such exercise relates.

  (e)        Successive grants may be made to the same Participant whether or
not any Stock Options or other Awards previously granted to such Participant
remain unexercised or outstanding.

  (f)        Each grant will specify the required period or periods of
continuous service by the Participant with the Company or any Subsidiary that
are necessary before the Stock Options or installments thereof will become
exercisable.

6

--------------------------------------------------------------------------------

 

  (g)        Any grant may specify the Management Objectives that must be
achieved as a condition to the exercise of the Stock Options.

  (h)        Any grant may provide for the earlier exercise of the Stock Options
in the event of a change in control or other similar transaction or event.

  (i)        Stock Options may be (i) options which are intended to qualify
under particular provisions of the Code, (ii) options which are not intended to
so qualify or (iii) combinations of the foregoing.

  (j)        On or after the Date of Grant, the Committee may provide for the
payment to the Participant of dividend equivalents thereon in cash or Common
Stock on a current, deferred or contingent basis.

  (k)        The Committee will have the right to substitute Appreciation Rights
for outstanding Options granted to one or more Participants, provided the terms
and the economic benefit of the substituted Appreciation Rights are at least
equivalent to the terms and economic benefit of such Options, as determined by
the Committee in its discretion.

  (l)        Any grant may provide for the effect on the Stock Options or any
shares of Common Stock issued, or other payment made, with respect to the Stock
Options of any conduct of the Participant determined by the Committee to be
injurious, detrimental or prejudicial to any significant interest of the Company
or any Subsidiary.

  (m)        Each grant will be evidenced by an Evidence of Award, which may
contain such terms and provisions, consistent with the Plan, as the Committee
may approve, including without limitation provisions relating to the
Participant’s termination of employment or other termination of service by
reason of retirement, death, disability or otherwise.

  7.        Appreciation Rights. The Committee may also from time to time
authorize grants to any Participant of Appreciation Rights upon such terms and
conditions as it may determine in accordance with this Section 7. Appreciation
Rights may be granted in tandem with Stock Options or separate and apart from a
grant of Stock Options. An Appreciation Right will be a right of the Participant
to receive from the Company upon exercise an amount which will be determined by
the Committee at the Date of Grant and will be expressed as a percentage of the
Spread (not exceeding 100%) at the time of exercise. An Appreciation Right
granted in tandem with a Stock Option may be exercised only by surrender of the
related Stock Option. Each grant of an Appreciation Right may utilize any or all
of the authorizations, and will be subject to all of the requirements, contained
in the following provisions:

  (a)        Each grant will state whether it is made in tandem with Stock
Options and, if not made in tandem with any Stock Options, will specify the
number of shares of Common Stock in respect of which it is made.

7

--------------------------------------------------------------------------------

 

  (b)        Each grant made in tandem with Stock Options will specify the
Option Price and each grant not made in tandem with Stock Options will specify
the Grant Price, which in either case will not be less than 100% of the Market
Value per Share on the Date of Grant.

  (c)        Any grant may provide that the amount payable on exercise of an
Appreciation Right may be paid (i) in cash, (ii) in shares of Common Stock
having an aggregate Market Value per Share equal to the Spread (or the
designated percentage of the Spread) or (iii) in a combination thereof, as
determined by the Committee in its discretion.

  (d)        Any grant may specify that the amount payable to the Participant on
exercise of an Appreciation Right may not exceed a maximum amount specified by
the Committee at the Date of Grant.

  (e)        Successive grants may be made to the same Participant whether or
not any Appreciation Rights or other Awards previously granted to such
Participant remain unexercised or outstanding.

  (f)        Each grant will specify the required period or periods of
continuous service by the Participant with the Company or any Subsidiary that
are necessary before the Appreciation Rights or installments thereof will become
exercisable, and will provide that no Appreciation Rights may be exercised
except at a time when the Spread is positive and, with respect to any grant made
in tandem with Stock Options, when the related Stock Options are also
exercisable.

  (g)        Any grant may specify the Management Objectives that must be
achieved as a condition to the exercise of the Appreciation Rights.

  (h)        Any grant may provide for the earlier exercise of the Appreciation
Rights in the event of a change in control or other similar transaction or
event.

  (i)        On or after the Date of Grant, the Committee may provide for the
payment to the Participant of dividend equivalents thereon in cash or Common
Stock on a current, deferred or contingent basis.

  (j)        Any grant may provide for the effect on the Appreciation Rights or
any shares of Common Stock issued, or other payment made, with respect to the
Appreciation Rights of any conduct of the Participant determined by the
Committee to be injurious, detrimental or prejudicial to any significant
interest of the Company or any Subsidiary.

  (k)        Each grant will be evidenced by an Evidence of Award, which may
contain such terms and provisions, consistent with the Plan, as the Committee
may approve, including without limitation provisions relating to the
Participant’s termination of employment or other termination of service by
reason of retirement, death, disability or otherwise.

8

--------------------------------------------------------------------------------

 

  8.        Restricted Shares. The Committee may also from time to time
authorize grants or sales to any Participant of Restricted Shares upon such
terms and conditions as it may determine in accordance with this Section 8. Each
grant or sale will constitute an immediate transfer of the ownership of shares
of Common Stock to the Participant in consideration of the performance of
services, entitling such Participant to voting and other ownership rights, but
subject to the restrictions set forth in this Section 8. Each such grant or sale
may utilize any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:

  (a)       Each grant or sale may be made without additional consideration or
in consideration of a payment by the Participant that is less than the Market
Value per Share at the Date of Grant, except as may otherwise be required by the
Delaware General Corporation Law.     (b)       Each grant or sale may limit the
Participant’s dividend rights during the period in which the shares of
Restricted Shares are subject to any such restrictions.     (c)       Each grant
or sale will provide that the Restricted Shares will be subject, for a period to
be determined by the Committee at the Date of Grant, to one or more
restrictions, including without limitation a restriction that constitutes a
“substantial risk of forfeiture” within the meaning of Section 83 of the Code
and the regulations of the Internal Revenue Service under such section.     (d)
      Any grant or sale may specify the Management Objectives that, if achieved,
will result in the termination or early termination of the restrictions
applicable to the shares.     (e)       Any grant or sale may provide for the
early termination of any such restrictions in the event of a change in control
or other similar transaction or event.     (f)       Each grant or sale will
provide that during the period for which such restriction or restrictions are to
continue, the transferability of the Restricted Shares will be prohibited or
restricted in a manner and to the extent prescribed by the Committee at the Date
of Grant (which restrictions may include without limitation rights of repurchase
or first refusal in favor of the Company or provisions subjecting the Restricted
Shares to continuing restrictions in the hands of any transferee).     (g)  
    Any grant or sale may provide for the effect on the Restricted Shares or any
shares of Common Stock issued free of restrictions, or other payment made, with
respect to the Restricted Shares of any conduct of the Participant determined by
the Committee to be injurious, detrimental or prejudicial to any significant
interest of the Company or any Subsidiary.     (h)       Each grant or sale will
be evidenced by an Evidence of Award, which may contain such terms and
provisions, consistent with the Plan, as the Committee

9

--------------------------------------------------------------------------------

 

      may approve, including without limitation provisions relating to the
Participant’s termination of employment or other termination of service by
reason of retirement, death, disability or otherwise.

  9.        Restricted Stock Units. The Committee may also from time to time
authorize grants or sales to any Participant of Restricted Stock Units upon such
terms and conditions as it may determine in accordance with this Section 9. Each
grant or sale will constitute the agreement by the Company to issue or transfer
shares of Common Stock to the Participant in the future in consideration of the
performance of services, subject to the fulfillment during the Deferral Period
of such conditions as the Committee may specify. Each such grant or sale may
utilize any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:

  (a)       Each grant or sale may be made without additional consideration from
the Participant or in consideration of a payment by the Participant that is less
than the Market Value per Share on the Date of Grant, except as may otherwise be
required by the Delaware General Corporation Law.     (b)       Each grant or
sale will provide that the Restricted Stock Units will be subject to a Deferral
Period, which will be fixed by the Committee on the Date of Grant, and any grant
or sale may provide for the earlier termination of such period in the event of a
change in control or other similar transaction or event.     (c)       During
the Deferral Period, the Participant will not have any right to transfer any
rights under the Restricted Stock Units, will not have any rights of ownership
in the Restricted Stock Units and will not have any right to vote the Restricted
Stock Units, but the Committee may on or after the Date of Grant authorize the
payment of dividend equivalents on such shares in cash or Common Stock on a
current, deferred or contingent basis.     (d)       Any grant or sale may
provide for the effect on the Restricted Stock Units or any shares of Common
Stock issued free of restrictions, or other payment made, with respect to the
Restricted Stock Units of any conduct of the Participant determined by the
Committee to be injurious, detrimental or prejudicial to any significant
interest of the Company or any Subsidiary.     (e)       Each grant or sale will
be evidenced by an Evidence of Award, which will contain such terms and
provisions as the Committee may determine consistent with the Plan, including
without limitation provisions relating to the Participant’s termination of
employment or other termination of service by reason of retirement, death,
disability or otherwise.

  10.        Performance Shares and Performance Units. The Committee may also
from time to time authorize grants to any Participant of Performance Shares and
Performance Units, which will become payable upon achievement of specified
Management Objectives, upon such terms and conditions as it may determine in

10

--------------------------------------------------------------------------------

 

      accordance with this Section 10. Each such grant may utilize any or all of
the authorizations, and will be subject to all of the requirements, contained in
the following provisions:     (a)       Each grant will specify the number of
Performance Shares or Performance Units to which it relates.     (b)       The
Performance Period with respect to each Performance Share and Performance Unit
will be determined by the Committee at the time of grant.     (c)       Each
grant will specify the Management Objectives that, if achieved, will result in
the payment of the Performance Shares or Performance Units.     (d)       Each
grant will specify the time and manner of payment of Performance Shares or
Performance Units which have become payable, which payment may be made in
(i) cash, (ii) shares of Common Stock having an aggregate Market Value per Share
equal to the aggregate value of the Performance Shares or Performance Units
which have become payable or (iii) any combination thereof, as determined by the
Committee in its discretion at the time of payment.     (e)       Any grant of
Performance Shares may specify that the amount payable with respect thereto may
not exceed a maximum specified by the Committee on the Date of Grant. Any grant
of Performance Units may specify that the amount payable, or the number of
shares of Common Stock issued, with respect to the Performance Units may not
exceed maximums specified by the Committee on the Date of Grant.     (f)  
    On or after the Date of Grant, the Committee may provide for the payment to
the Participant of dividend equivalents on Performance Shares in cash or Common
Stock on a current, deferred or contingent basis.     (g)       Any grant may
provide for the effect on the Performance Shares or Performance Units or any
shares of Common Stock issued, or other payment made, with respect to the
Performance Shares or Performance Units of any conduct of the Participant
determined by the Committee to be injurious, detrimental or prejudicial to any
significant interest of the Company or any Subsidiary.     (h)       Each grant
will be evidenced by an Evidence of Award, which will contain such terms and
provisions as the Committee may determine consistent with the Plan, including
without limitation provisions relating to the payment of the Performance Shares
or Performance Units in the event of a change in control or other similar
transaction or event and provisions relating to the Participant’s termination of
employment or other termination of service by reason of retirement, death,
disability or otherwise.

  11.        Senior Executive Plan Bonuses. The Committee may from time to time
authorize the payment of annual incentive compensation to a Participant who is,
or is

11

--------------------------------------------------------------------------------

 

      determined by the Committee to be likely to become, a “covered employee”
within the meaning of Section 162(m) of the Code (or any successor provision),
which incentive compensation will become payable upon achievement of specified
Management Objectives. Subject to Section 5(d), Senior Executive Plan Bonuses
will be payable upon such terms and conditions as the Committee may determine in
accordance with the following provisions:

  (a)       No later than 90 days after the first day of the Company’s fiscal
year, the Committee will specify the Management Objectives that, if achieved,
will result in the payment of a Senior Executive Plan Bonus for such year.    
(b)       Following the close of the Company’s fiscal year, the Committee will
certify in writing whether the specified Management Objectives have been
achieved. Approved minutes of a meeting of the Committee at which such
certification is made will be treated as written certification for this purpose.
The Committee will also specify the time and manner of payment of a Senior
Executive Plan Bonus which becomes payable, which payment may be made in
(i) cash, (ii) shares of Common Stock having an aggregate Market Value per Share
equal to the aggregate value of the Senior Executive Plan Bonus which has become
payable or (iii) any combination thereof, as determined by the Committee in its
discretion at the time of payment.     (c)       If a change in control occurs
during a Performance Period, the Senior Executive Plan Bonus payable to each
Participant for the Performance Period will be determined at the highest level
of achievement of the Management Objectives, without regard to actual
performance and without proration for less than a full Performance Period. The
Senior Executive Plan Bonus will be paid at such time following the change in
control as the Committee determines in its discretion, but in no event later
than 30 days after the date of an event which results in a change in control.  
  (d)       Each grant may be evidenced by an Evidence of Award, which will
contain such terms and provisions as the Committee may determine consistent with
the Plan, including without limitation provisions relating to the Participant’s
termination of employment by reason of retirement, death, disability or
otherwise.

  12.        Awards to Eligible Directors.

  (a)       Effective upon the consummation of the Company’s initial public
offering, each Eligible Director will be granted Restricted Shares having an
aggregate Market Value per Share equal to $25,000 on the Date of Grant.     (b)
      Following the Company’s initial public offering, on the date of an
Eligible Director’s first election to the Board, if such date is not also the
date of an annual meeting of the stockholders of the Company, and immediately
after each annual meeting of the stockholders of the Company, each Eligible
Director will be

12

--------------------------------------------------------------------------------

 

          granted Restricted Shares having an aggregate Market Value per Share
equal to $25,000 on the Date of Grant.

  (c)       Each grant of Restricted Shares to an Eligible Director will vest in
three equal installments on the first, second and third anniversaries of the
Date of Grant and may not be sold or otherwise transferred (other than by will
or the laws of descent and distribution) prior to such vesting date. If, prior
to a vesting date, an Eligible Director voluntarily resigns or is removed from
the Board, the Eligible Director’s unvested Restricted Shares will be forfeited
and cancelled. In the event of an Eligible Director’s retirement from the Board,
death or disability prior to a vesting date, all unvested Restricted Shares will
become fully vested.

  13.        Transferability. No Award may be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution, pursuant to a qualified domestic relations order or, with the
consent of the Committee, by gifts to family members of the Participant,
including to trusts in which family members of the Participant own more than 50%
of the beneficial interests, to foundations in which family members of the
Participant or the Participant controls the management of assets and to other
entities in which more than 50% of the voting interests are owned by family
members of the Participant or the Participant. No Stock Option or Appreciation
Right granted to a Participant will be exercisable during the Participant’s
lifetime by any person other than the Participant or the Participant’s guardian
or legal representative or any permitted transferee.

  14.        Adjustments.

  (a)       The Committee may make or provide for such adjustments in (i) the
maximum number of shares of Common Stock specified in Sections 4 and 5, (ii) the
number of shares of Common Stock covered by outstanding Stock Options,
Appreciation Rights, Performance Shares and Restricted Stock Units granted under
the Plan, (iii) the Option Price or Grant Price applicable to any Stock Options
and Appreciation Rights, and (iv) the kind of shares covered by any such Awards
(including shares of another issuer), as the Committee in its discretion,
exercised in good faith, may determine is equitably required to prevent dilution
or enlargement of the rights of Participants that otherwise would result from
(x) any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, or (y) any merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of rights or
warrants to purchase securities, or (z) any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Committee, in its discretion, may provide in
substitution for any or all outstanding Awards such alternative consideration as
it, in good faith, may determine to be equitable in the circumstances and may
require in connection with such substitution the surrender of all Awards so
replaced. Moreover, the Committee may on or after the Date of Grant provide in
the Evidence of Award under the Plan that the holder of the Award may elect to
receive an equivalent

13

--------------------------------------------------------------------------------

 

      award in respect of securities of the surviving entity of any merger,
consolidation or other transaction or event having a similar effect, or the
Committee may provide that the holder will automatically be entitled to receive
such an equivalent award.

  (b)       The Committee may accelerate the payment of, or vesting with respect
to, any Award under the Plan upon the occurrence of a transaction or event
described in this Section 14; provided, however, that in the case of any Award
that constitutes a deferral of compensation within the meaning of Section 409A
of the Code, the Committee will not accelerate the payment of the Award unless
it determines in good faith that such transaction or event satisfies the
requirements of a change in control event under guidance issued by the Secretary
of the Treasury under Section 409A.

  15.        Fractional Shares. the Company will not be required to issue any
fractional share of Common Stock pursuant to the Plan. The Committee may provide
for the elimination of fractions or for the settlement of fractions in cash.

  16.        Withholding Taxes. To the extent that the Company is required to
withhold federal, state, local or foreign taxes in connection with any payment
made or benefit realized by a Participant or other person under the Plan, and
the amounts available to the Company for such withholding are insufficient, it
will be a condition to the receipt of such payment or the realization of such
benefit that the Participant or such other person make arrangements satisfactory
to the Company for payment of the balance of such taxes required to be withheld.
In addition, if permitted by the Committee, the Participant or such other person
may elect to have any withholding obligation of the Company satisfied with
shares of Common Stock that would otherwise be transferred to the Participant or
such other person in payment of the Participant’s Award. However, without the
consent of the Committee, shares of Common Stock will not be withheld in excess
of the minimum number of shares required to satisfy the Company’s withholding
obligation.

  17.        Administration of the Plan.

  (a)       Unless the administration of the Plan has been expressly assumed by
the Board pursuant to a resolution of the Board, the Plan will be administered
by the Committee. A majority of the Committee will constitute a quorum, and the
action of the members of the Committee present at any meeting at which a quorum
is present, or acts unanimously approved in writing, will be the acts of the
Committee.     (b)       The Committee has the full authority and discretion to
administer the Plan and to take any action that is necessary or advisable in
connection with the administration of the Plan, including without limitation the
authority and discretion to interpret and construe any provision of the Plan or
of any agreement, notification or document evidencing an Award. The
interpretation and construction by the Committee of any such provision and any
determination by

14

--------------------------------------------------------------------------------

 

      the Committee pursuant to any provision of the Plan or of any such
agreement, notification or document will be final and conclusive. No member of
the Committee will be liable for any such action or determination made in good
faith.

  (c)       It is the Company’s intention that any Award granted under the Plan
that constitutes a deferral of compensation within the meaning of Section 409A
of the Code and the guidance issued by the Secretary of the Treasury under
Section 409A satisfy the requirements of Section 409A. In granting such an
Award, the Committee will use its best efforts to exercise its authority under
the Plan with respect to the terms of such Award in a manner that the Committee
determines in good faith will cause the Award to comply with Section 409A and
thereby avoid the imposition of penalty taxes and interest upon the Participant
receiving the Award.     (d)       If the administration of the Plan is assumed
by the Board pursuant to Section 17(a), the Board will have the same authority,
power, duties, responsibilities and discretion given to the Committee under the
terms of the Plan.

  18.        Amendments and Other Matters.

  (a)       The Plan may be amended from time to time by the Committee or the
Board but may not be amended without further approval by the stockholders of the
Company if such amendment would result in the Plan no longer satisfying any
applicable requirements of the New York Stock Exchange (or the principal
national securities exchange on which the Common Stock is traded), Rule 16b-3 or
Section 162(m) of the Code.     (b)       Neither the Committee nor the Board
will authorize the amendment of any outstanding Stock Option to reduce the
Option Price without the further approval of the stockholders of the Company.
Furthermore, no Stock Option will be cancelled and replaced with Stock Options
having a lower Option Price without further approval of the stockholders of the
Company. The provisions of this Section 18(b) are intended to prohibit the
repricing of “underwater” Stock Options and will not be construed to prohibit
the adjustments provided for in Section 14.     (c)       The Plan may be
terminated at any time by action of the Board. The termination of the Plan will
not adversely affect the terms of any outstanding Award.     (d)       The Plan
does not confer upon any Participant any right with respect to continuance of
employment or other service with the Company or any Subsidiary, nor will it
interfere in any way with any right the Company or any Subsidiary would
otherwise have to terminate such Participant’s employment or other service at
any time.     (e)       If the Committee determines, with the advice of legal
counsel, that any provision of the Plan would prevent the payment of any Award
intended to

15

--------------------------------------------------------------------------------

 

      qualify as performance-based compensation within the meaning of Section
162(m) of the Code from so qualifying, such Plan provision will be invalid and
cease to have any effect without affecting the validity or effectiveness of any
other provision of the Plan.

  19.        Governing Law. The Plan, all Awards and all actions taken under the
Plan and the Awards will be governed in all respects in accordance with the laws
of the State of Delaware, including without limitation, the Delaware statute of
limitations, but without giving effect to the principles of conflicts of laws of
such State.

16