ALEXANDER & BALDWIN, INC.

2007 INCENTIVE COMPENSATION PLAN

 

 

ARTICLE ONE

GENERAL PROVISIONS

 

I.

PURPOSE OF THE PLAN

This 2007 Incentive Compensation Plan is intended to promote the interests of
Alexander & Baldwin, Inc., a Hawaii corporation, by providing eligible persons
in the Corporation’s service with the opportunity to participate in one or more
cash or equity incentive compensation programs designed to encourage them to
continue their service relationship with the Corporation.

Capitalized terms shall have the meanings assigned to such terms in the attached
Appendix.

 

II.

STRUCTURE OF THE PLAN

A.           The Plan shall be divided into a series of separate incentive
compensation programs:

-              the Discretionary Grant Program under which eligible persons may,
at the discretion of the Plan Administrator, be granted options to purchase
shares of Common Stock or stock appreciation rights tied to the value of such
Common Stock,

-              the Stock Issuance Program under which eligible persons may, at
the discretion of the Plan Administrator, be issued shares of Common Stock
pursuant to restricted stock awards, restricted stock units, performance shares
or other stock-based awards which vest upon the completion of a designated
service period or the attainment of pre-established performance milestones, or
such shares of Common Stock may be issued through direct purchase or as a bonus
for services rendered the Corporation (or any Parent or Subsidiary),

-              the Incentive Bonus Program under which eligible persons may, at
the discretion of the Plan Administrator, be provided with incentive bonus
opportunities through performance unit awards and special cash incentive
programs tied to the attainment of pre-established performance milestones, and

-              the Automatic Grant Program under which eligible non-employee
Board members will automatically receive equity awards at designated intervals
over their period of continued Board service.

B.           The provisions of Articles One and Six shall apply to all incentive
compensation programs under the Plan and shall govern the interests of all
persons under the Plan.

 

III.

ADMINISTRATION OF THE PLAN

A.           The Compensation Committee (either acting directly or through a
subcommittee of two or more members of the Compensation Committee) shall have
sole and exclusive authority to administer the Discretionary Grant, Stock
Issuance and Incentive Bonus Programs with respect to Section 16 Insiders.
Administration of the Discretionary Grant, Stock Issuance and Incentive Bonus
Programs with respect to all other persons eligible to participate in those
programs may, at the Board’s discretion, be vested in the Compensation Committee
or a Secondary Board Committee, or the Board may retain the power to administer
those programs with respect to all such persons. However, any Awards for members
of the Compensation Committee (other than pursuant to the Automatic Grant
Program) must be authorized by a disinterested majority of the Board.

B.           Members of the Compensation Committee or any Secondary Board
Committee shall serve for such period of time as the Board may determine and may
be removed by the Board at any time. The Board may also at any time terminate
the functions of any Secondary Board Committee and reassume all powers and
authority previously delegated to such committee.

C.           Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Grant, Stock
Issuance and Incentive Bonus Programs and to make such determinations under, and
issue such interpretations of, the provisions of those programs and any
outstanding Awards thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative functions under
the Plan shall be final and binding on all parties who have an interest in the
Discretionary Grant, Stock Issuance and Incentive Bonus Programs under its
jurisdiction or any Award thereunder.

D.           Service as a Plan Administrator by the members of the Compensation
Committee or the Secondary Board Committee shall constitute service as Board
members, and the members of each such committee shall accordingly be entitled to
full indemnification and reimbursement as Board members for their service on
such committee. No member of the Compensation Committee or the Secondary Board
Committee shall be liable for any act or omission made in good faith with
respect to the Plan or any Award thereunder.

E.           Administration of the Automatic Grant Program shall be
self-executing in accordance with the terms of that program, and no Plan
Administrator shall exercise any discretionary functions with respect to any
Awards made under that program, except that the Compensation Committee (or
subcommittee thereof) shall have the express authority to establish from time to
time the applicable dollar amount to be used to determine the specific number of
shares of Common Stock for which the initial and annual Awards are to be made to
the non-employee Board members in accordance with the dollar value formula set
forth in Article Five.

IV.ELIGIBILITY

 

A.

The persons eligible to participate in the Plan are as follows:

 

(i)

Employees,

(ii)           non-employee members of the Board or the board of directors of
any Parent or Subsidiary, and

(iii)          consultants and other independent advisors who provide services
to the Corporation (or any Parent or Subsidiary).

B.           The Plan Administrator shall have full authority to determine, (i)
with respect to Awards made under the Discretionary Grant Program, which
eligible persons are to receive such Awards, the time or times when those Awards
are to be made, the number of shares to be covered by each such Award, the time
or times when the Award is to become exercisable, the vesting schedule (if any)
applicable to the Award, the maximum term for which such Award is to remain
outstanding and the status of a granted option as either an Incentive Option or
a Non-Statutory Option; (ii) with respect to Awards under the Stock Issuance
Program, which eligible persons are to receive such Awards, the time or times
when the Awards are to be made, the number of shares subject to each such Award,
the vesting and issuance schedules applicable to the shares which are the
subject of such Award, the cash consideration (if any) payable for those shares
and the form (cash or shares of Common Stock) in which the Award is to be
settled; and (iii) with respect to Awards under the Incentive Bonus Program,
which eligible persons are to receive such Awards, the time or times when the
Awards are to be made, the performance objectives for each such Award, the
amounts payable at designated levels of attained performance, any applicable
service vesting requirements, the payout schedule for each such Award and the
form (cash or shares of Common Stock) in which the Award is to be settled.

C.           The Plan Administrator shall have the absolute discretion to grant
options or stock appreciation rights in accordance with the Discretionary Grant
Program, to effect stock issuances and other stock-based awards in accordance
with the Stock Issuance Program and to grant incentive bonus awards in
accordance with the Incentive Bonus Program.

D.           The individuals who shall be eligible to participate in the
Automatic Grant Program shall be limited to (i) those individuals who first
become non-employee Board members on or after the Plan Effective Date, whether
through appointment by the Board or election by the Corporation’s stockholders,
and (ii) those individuals who continue to serve as non-employee Board members
on or after the Plan Effective Date. A non-employee Board member who has been in
the employ of the Corporation (or any Parent or Subsidiary) at any time within
the twelve (12)-month period ending with the date he or she first becomes a
non-employee Board member shall not be eligible to receive a grant under the
Automatic Grant Program upon such commencement of non-employee Board service,
but shall be eligible to receive periodic grants under the Automatic Grant
Program while he or she continues to serve as a non-employee Board member.

V.  STOCK SUBJECT TO THE PLAN

A.           The stock issuable under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the
Corporation on the open market. The number of shares of Common Stock initially
reserved for issuance over the term of the Plan shall be limited to Two Million
Two Hundred Fifteen Thousand (2,215,000) shares. The Plan shall serve as the
successor to the Predecessor Plans, and no further stock option grants or
unvested share awards shall be made under the Predecessor Plans on or after the
Plan Effective Date. However, all option grants and unvested share awards
outstanding under the Predecessor Plans on the Plan Effective Date shall
continue in full force and effect in accordance with their terms, and no
provision of this Plan shall be deemed to affect or otherwise modify the rights
or obligations of the holders of those awards with respect to their acquisition
of shares of Common Stock thereunder. To the extent any options outstanding
under the Predecessor Plans on the Plan Effective Date expire or terminate
unexercised or any unvested shares outstanding under the Predecessor Plans on
the Plan Effective Date are forfeited or repurchased by the Corporation at the
original issue price, the number of shares of Common Stock subject to those
expired or terminated options at the time of expiration or termination and the
number of such forfeited or repurchased shares shall be added to the share
reserve under this Plan and shall accordingly be available for issuance
hereunder, up to a maximum of an additional Seven Hundred Fifty Thousand
(750,000) shares.

B.           Each person participating in the Plan shall be subject to the
following limitations:

-       for Awards designated in terms of shares of Common Stock at the time of
grant (whether payable in Common Stock, cash or a combination of both), the
maximum number of shares of Common Stock for which such Awards may be made to
such person in any calendar year shall not exceed Five Hundred Thousand
(500,000) shares of Common Stock in the aggregate, and

-       for Awards designated in terms of cash dollars at the time of grant
(whether payable in cash, Common Stock or a combination of both), the maximum
dollar amount for which such Awards may be made to such person in any calendar
year shall not exceed five million dollars ($5,000,000.00).

C.           Shares of Common Stock subject to outstanding Awards made under the
Plan shall be available for subsequent issuance under the Plan to the extent
those Awards expire or terminate for any reason prior to the issuance of the
shares of Common Stock subject to those Awards. Unvested shares issued under the
Plan and subsequently forfeited or repurchased by the Corporation, at a price
per share not greater than the original issue price paid per share, pursuant to
the Corporation’s repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for subsequent reissuance. Should the exercise price of
an option under the Plan be paid with shares of Common Stock, then the
authorized reserve of Common Stock under the Plan shall be reduced

by the gross number of shares for which that option is exercised, and not by the
net number of shares issued under the exercised stock option. Upon the exercise
of any stock appreciation right under the Plan, the share reserve shall be
reduced by the gross number of shares as to which such right is exercised, and
not by the net number of shares actually issued by the Corporation upon such
exercise. If shares of Common Stock otherwise issuable under the Plan are
withheld by the Corporation in satisfaction of the withholding taxes incurred in
connection with the issuance, vesting or exercise of an Award or the issuance of
Common Stock thereunder, then the number of shares of Common Stock available for
issuance under the Plan shall be reduced on the basis of the gross number of
shares issued, vested or exercised under such Award, calculated in each instance
prior to any such share withholding.

D.           Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares, spin-off transaction or other change affecting the outstanding Common
Stock as a class without the Corporation’s receipt of consideration, or should
the value of outstanding shares of Company Stock be substantially reduced as a
result of a spin-off transaction or an extraordinary dividend or distribution,
or should there occur any merger, consolidation or other reorganization, then
equitable adjustments shall be made by the Plan Administrator to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities by which the share reserve under the Plan may
increase by reason of the expiration or termination of unexercised options or
the forfeiture or repurchase of shares under the Predecessor Plans, (iii) the
maximum number and/or class of securities for which any one person may be
granted Common Stock-denominated Awards under the Plan per calendar year, (iv)
the number and/or class of securities and the exercise or base price per share
in effect under each outstanding Award under the Discretionary Grant Program,
(v) the number and/or class of securities subject to each outstanding Award
under the Stock Issuance Program and the issue price (if any) payable per share,
(vi) the number and/or class of securities subject to each outstanding Award
under the Automatic Grant Program, (vii) the number and/or class of securities
for which Awards may subsequently be made to new and continuing non-employee
Board members under the Automatic Grant Program, (viii) the number and/or class
of securities subject to each outstanding Award under the Incentive Bonus
Program denominated in shares of Common Stock and (ix) the number and/or class
of securities subject to the Corporation’s outstanding repurchase rights under
the Plan and the repurchase price payable per share. The adjustments shall be
made in such manner as the Plan Administrator deems appropriate in order to
prevent the dilution or enlargement of benefits under the Plan and the
outstanding Awards thereunder, and such adjustments shall be final, binding and
conclusive. In the event of a Change in Control, however, the adjustments (if
any) shall be made solely in accordance with the applicable provisions of the
Plan governing Change in Control transactions.

E.            Outstanding Awards granted pursuant to the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

ARTICLE TWO

DISCRETIONARY GRANT PROGRAM

 

I.

OPTION TERMS

Each option shall be evidenced by one or more documents in the form approved by
the Plan Administrator; provided, however, that each such document shall comply
with the terms specified below. Each document evidencing an Incentive Option
shall, in addition, be subject to the provisions of the Plan applicable to such
options.

 

A.

Exercise Price.

1. The exercise price per share shall be fixed by the Plan Administrator;
provided, however, that such exercise price shall not be less than one hundred
percent (100%) of the Fair Market Value per share of Common Stock on the grant
date.

2. The exercise price shall become immediately due upon exercise of the option
and shall, subject to the provisions of the documents evidencing the option, be
payable in one or more of the forms specified below:

 

(i)

cash or check made payable to the Corporation,

(ii) shares of Common Stock (whether delivered in the form of actual stock
certificates or through attestation of ownership) held for the requisite period
(if any) necessary to avoid any resulting charge to the Corporation’s earnings
for financial reporting purposes and valued at Fair Market Value on the Exercise
Date, or

(iii) to the extent the option is exercised for vested shares, through a special
sale and remittance procedure pursuant to which the Optionee shall concurrently
provide instructions to (a) a brokerage firm (reasonably satisfactory to the
Corporation for purposes of administering such procedure in compliance with the
Corporation’s pre-clearance/pre-notification policies) to effect the immediate
sale of the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all applicable
income and employment taxes required to be withheld by the Corporation by reason
of such exercise and (b) the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm on such settlement date in
order to complete the sale.

Except to the extent such sale and remittance procedure is utilized, payment of
the exercise price for the purchased shares must be made on the Exercise Date.

B.  Exercise and Term of Options.

1.            Each option shall be exercisable at such time or times, during
such period and for such number of shares as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option. However, no
option shall have a term in excess of ten (10) years measured from the option
grant date.

2.            The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more Awards
under the Discretionary Grant Program so that those Awards shall vest and become
exercisable only after the achievement of pre-established corporate performance
objectives based on one or more Performance Goals and measured over the
performance period specified by the Plan Administrator at the time of the Award

3.            Notwithstanding the foregoing, the following limitations shall
apply with respect to the vesting schedules established for the Awards made
under the Discretionary Grant Program, subject to the acceleration provisions in
Paragraph C.2 below and Section IV of this Article Two:

(i)           for any such Award which is to vest on the basis of Service, the
minimum vesting period shall be three (3) years, with the rate of vesting over
that period to be determined by the Plan Administrator; and

(ii)          for any such Award which is to vest on the basis of performance
objectives, the performance period shall have a duration of at least one year.

 

C.

Effect of Termination of Service.

1.            The following provisions shall govern the exercise of any options
granted pursuant to the Discretionary Grant Program that are outstanding at the
time of the Optionee’s cessation of Service or death:

(i)           Any option outstanding at the time of the Optionee’s cessation of
Service for any reason shall remain exercisable for such period of time
thereafter as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option, but no such option shall be exercisable after
the expiration of the option term.

(ii)          Any option held by the Optionee at the time of the Optionee’s
death and exercisable in whole or in part at that time may be subsequently
exercised by the personal representative of the Optionee’s estate or by the
person or persons to whom the option is transferred pursuant to the Optionee’s
will or the laws of inheritance or by the Optionee’s designated beneficiary or
beneficiaries of that option.

(iii)         Should the Optionee’s Service be terminated for Misconduct or
should the Optionee otherwise engage in Misconduct while holding one or more
outstanding options granted under this Article Two, then all of those options
shall terminate immediately and cease to be outstanding.

(iv)         During the applicable post-Service exercise period, the option may
not be exercised for more than the number of vested shares for which the option
is at the time exercisable; provided, however, that one or more options under
the Discretionary Grant Program may be structured so that those options continue
to vest in whole or part during the applicable post-Service exercise period.
Upon the expiration of the applicable exercise period or (if earlier) upon the
expiration of the option term, the option shall terminate and cease to be
outstanding for any shares for which the option has not been exercised.

2.            The Plan Administrator shall have complete discretion, exercisable
either at the time an option is granted or at any time while the option remains
outstanding, to:

(i)           extend the period of time for which the option is to remain
exercisable following the Optionee’s cessation of Service from the limited
exercise period otherwise in effect for that option to such greater period of
time as the Plan Administrator shall deem appropriate, but in no event beyond
the expiration of the option term,

(ii)          include an automatic extension provision whereby the specified
post-Service exercise period in effect for any option granted under this Article
Two shall automatically be extended by an additional period of time equal in
duration to any interval within the specified post-Service exercise period
during which the exercise of that option or the immediate sale of the shares
acquired under such option could not be effected in compliance with applicable
federal and state securities laws, but in no event shall such an extension
result in the continuation of such option beyond the expiration date of the term
of that option, and/or

(iii)         permit the option to be exercised, during the applicable
post-Service exercise period, not only with respect to the number of vested
shares of Common Stock for which such option is exercisable at the time of the
Optionee’s cessation of Service but also with respect to one or more additional
installments in which the Optionee would have vested had the Optionee continued
in Service.

D.           Stockholder Rights. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

E.           Repurchase Rights. The Plan Administrator shall have the discretion
to grant options which are exercisable for unvested shares of Common Stock.
Should the Optionee cease Service while such shares are unvested, the
Corporation shall have the right to repurchase any or all of those unvested
shares at a price per share equal to the lower of (i) the exercise price paid
per share or (ii) the Fair Market Value per share of Common Stock at the time of
repurchase. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.

F.           Transferability of Options. The transferability of options granted
under the Plan shall be governed by the following provisions:

(i)          Incentive Options: During the lifetime of the Optionee, Incentive
Options shall be exercisable only by the Optionee and shall not be assignable or
transferable other than by will or the laws of inheritance following the
Optionee’s death.

(ii)         Non-Statutory Options. Non-Statutory Options shall be subject to
the same limitation on transfer as Incentive Options, except that the Plan
Administrator may structure one or more Non-Statutory Options so that the option
may be assigned in whole or in part during the Optionee’s lifetime to one or
more Family Members of the Optionee or to a trust established exclusively for
the Optionee and/or such Family Members, to the extent such assignment is in
connection with the Optionee’s estate plan or pursuant to a domestic relations
order. The assigned portion may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to the assignment. The
terms applicable to the assigned portion shall be the same as those in effect
for the option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate.

(iii)       Beneficiary Designations. Notwithstanding the foregoing, the
Optionee may designate one or more persons as the beneficiary or beneficiaries
of his or her outstanding options under this Article Two (whether Incentive
Options or Non-Statutory Options), and those options shall, in accordance with
such designation, automatically be transferred to such beneficiary or
beneficiaries upon the Optionee’s death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options subject to all
the terms and conditions of the applicable agreement evidencing each such
transferred option, including (without limitation) the limited time period
during which the option may be exercised following the Optionee’s death.

 

II.

INCENTIVE OPTIONS

The terms specified below shall be applicable to all Incentive Options. Except
as modified by the provisions of this Section II, all the provisions of Articles
One, Two and Six shall be applicable to Incentive Options. Options which are
specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to the terms of this Section II.

 

A.

Eligibility. Incentive Options may only be granted to Employees.

B.           Dollar Limitation. The aggregate Fair Market Value of the shares of
Common Stock (determined as of the respective date or dates of grant) for which
one or more options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the first time
become exercisable as Incentive Options during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000).

To the extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, then for purposes of
the foregoing limitations on the exercisability of those options as Incentive
Options, such options shall be deemed to become first exercisable in that
calendar year on the basis of the chronological order in which they were
granted, except to the extent otherwise provided under applicable law or
regulation.

 

C.           10% Stockholder. If any Employee to whom an Incentive Option is
granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.

 

III.

STOCK APPRECIATION RIGHTS

A.           Authority. The Plan Administrator shall have full power and
authority, exercisable in its sole discretion, to grant stock appreciation
rights in accordance with this Section III to selected Optionees or other
individuals eligible to receive option grants under the Discretionary Grant
Program.

B.           Types. Two types of stock appreciation rights shall be authorized
for issuance under this Section III: (i) tandem stock appreciation rights
(“Tandem Rights”) and (ii) stand-alone stock appreciation rights (“Stand-alone
Rights”).

C.           Tandem Rights. The following terms and conditions shall govern the
grant and exercise of Tandem Rights.

1.            One or more Optionees may be granted a Tandem Right, exercisable
upon such terms and conditions as the Plan Administrator may establish, to elect
between the exercise of the underlying option for shares of Common Stock or the
surrender of that option in exchange for a distribution from the Corporation in
an amount equal to the excess of (i) the Fair Market Value (on the option
surrender date) of the number of shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over
(ii) the aggregate exercise price payable for such vested shares.

2.            Any distribution to which the Optionee becomes entitled upon the
exercise of a Tandem Right may be made in (i) shares of Common Stock valued at
Fair Market Value on the option surrender date, (ii) cash or (iii) a combination
of cash and shares of Common Stock, as specified in the applicable Award
agreement.

D.           Stand-Alone Rights. The following terms and conditions shall govern
the grant and exercise of Stand-alone Rights:

1.            One or more individuals eligible to participate in the
Discretionary Grant Program may be granted a Stand-alone Right not tied to any
underlying option under this Discretionary Grant Program. The Stand-alone Right
shall relate to a specified number of shares of Common Stock and shall be
exercisable upon such terms and conditions as the Plan Administrator may
establish. In no event, however, may the Stand-alone Right have a maximum term
in excess of ten (10) years measured from the grant date. The provisions and
limitations of Paragraphs B.2 and B.3 of Section I of this Article Two shall
also be applicable to any Stand-Alone Right awarded under the Plan.

2.            Upon exercise of the Stand-alone Right, the holder shall be
entitled to receive a distribution from the Corporation in an amount equal to
the excess of (i) the aggregate Fair Market Value (on the exercise date) of the
shares of Common Stock underlying the exercised right over (ii) the aggregate
base price in effect for those shares.

3.            The number of shares of Common Stock underlying each Stand-alone
Right and the base price in effect for those shares shall be determined by the
Plan Administrator in its sole discretion at the time the Stand-alone Right is
granted. In no event, however, may the base price per share be less than the
Fair Market Value per underlying share of Common Stock on the grant date.

4.            Stand-alone Rights shall be subject to the same transferability
restrictions applicable to Non-Statutory Options and may not be transferred
during the holder’s lifetime, except if such assignment is in connection with
the holder’s estate plan and is to one or more Family Members of the holder or
to a trust established for the holder and/or one or more such Family Members or
pursuant to a domestic relations order covering the Stand-alone Right as marital
property. In addition, one or more beneficiaries may be designated for an
outstanding Stand-alone Right in accordance with substantially the same terms
and provisions as set forth in Section I.F of this Article Two.

5.            The distribution with respect to an exercised Stand-alone Right
may be made in (i) shares of Common Stock valued at Fair Market Value on the
exercise date, (ii) cash or (iii) a combination of cash and shares of Common
Stock, as specified in the applicable Award agreement.

6.            The holder of a Stand-alone Right shall have no stockholder rights
with respect to the shares subject to the Stand-alone Right unless and until
such person shall have exercised the Stand-alone Right and become a holder of
record of the shares of Common Stock issued upon the exercise of such
Stand-alone Right.

E.           Post-Service Exercise. The provisions governing the exercise of
Tandem and Stand-alone Rights following the cessation of the recipient’s Service
shall be substantially the same as those set forth in Section I.C of this
Article Two for the options granted under the Discretionary Grant Program, and
the Plan Administrator’s discretionary authority under Section I.C.2 of this
Article Two shall also extend to any outstanding Tandem or Stand-alone
Appreciation Rights.

 

IV.

CHANGE IN CONTROL

A.           In the event of an actual Change in Control transaction, each
outstanding Award under the Discretionary Grant Program shall automatically
accelerate so that each such Award shall, immediately prior to the effective
date of that Change in Control, become exercisable as to all the shares of
Common Stock at the time subject to such Award and may be exercised as to any or
all of those shares as fully vested shares of Common Stock. However, an
outstanding Award under the Discretionary Grant Program shall not become
exercisable on such an accelerated basis if and to the extent: (i) such Award is
to be assumed by the successor corporation (or parent thereof) or is otherwise
to continue in full force and effect pursuant to the terms of the Change in
Control transaction or (ii) such Award is to be replaced with a cash incentive
program of the successor corporation which preserves the spread existing at the
time of the Change in Control on any shares as to which the Award is not
otherwise at that time exercisable and provides for subsequent payout of that
spread in accordance with the same (or more favorable) exercise/vesting schedule
in effect for that Award or (iii) the acceleration of such Award is subject to
other limitations imposed by the Plan Administrator.

B.           All outstanding repurchase rights under the Discretionary Grant
Program shall automatically terminate, and the shares of Common Stock subject to
those terminated rights shall immediately vest in full, immediately prior to the
effective date of an actual Change in Control transaction, except to the extent:
(i) those repurchase rights are to be assigned to the successor corporation (or
parent thereof) or are otherwise to continue in full force and effect pursuant
to the terms of the Change in Control transaction or (ii) such accelerated
vesting is precluded by other limitations imposed by the Plan Administrator.

C.           Immediately following the consummation of the Change in Control,
all outstanding Awards under the Discretionary Grant Program shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or are otherwise continued in full force and
effect pursuant to the terms of the Change in Control transaction.

D.           Each Award which is assumed in connection with a Change in Control
or otherwise continued in effect shall be appropriately adjusted, immediately
after such Change in Control, to apply to the number and class of securities
into which the shares of Common Stock subject to that Award would have been
converted in consummation of such Change in Control had those shares actually
been outstanding at that time. Appropriate adjustments to reflect such Change in
Control shall also be made to (i) the exercise or base price per share in effect
under each outstanding Award, provided the aggregate exercise or base price in
effect for such securities shall remain the same, (ii) the maximum number and/or
class of securities available for issuance over the remaining term of the Plan
(iii) the maximum number and/or class of securities by which the share reserve
under the Plan may increase by reason of the expiration or termination of
unexercised options or the forfeiture or repurchase of shares under the
Predecessor Plan, (iv) the maximum number and/or class of securities for which
any one person may be granted Common Stock-denominated Awards under the Plan per
calendar year, (v) the number and/or class of securities and the exercise or
base price per share in effect under each outstanding Award under the
Discretionary Grant Program, (vi) the number and/or class of securities subject
to each outstanding Award under the Stock Issuance Program and the issue

price (if any) payable per share, (vii) the number and/or class of securities
subject to each outstanding Award under the Incentive Bonus Program denominated
in shares of Common Stock, (viii) the number and/or class of securities subject
to each outstanding Award under the Automatic Grant Program, (ix) the number
and/or class of securities for which Awards may subsequently be made to new and
continuing non-employee Board members under the Automatic Grant Program and (x)
the number and/or class of securities subject to the Corporation’s outstanding
repurchase rights under the Plan and the repurchase price payable per share. To
the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control, the successor corporation may, in connection with the assumption or
continuation of the outstanding Awards under the Discretionary Grant Program,
substitute, for the securities underlying those assumed rights, one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in Control
transaction, provided such common stock is readily traded on an established U.S.
securities exchange or market.

E.           The Plan Administrator shall have the discretionary authority to
structure one or more outstanding Awards under the Discretionary Grant Program
so that those Awards shall, immediately prior to the effective date of an actual
Change in Control transaction, become exercisable as to all the shares of Common
Stock at the time subject to those Awards and may be exercised as to any or all
of those shares as fully vested shares of Common Stock, whether or not those
Awards are to be assumed in the Change in Control transaction or otherwise
continued in effect. In addition, the Plan Administrator shall have the
discretionary authority to structure one or more of the Corporation’s repurchase
rights under the Discretionary Grant Program so that those rights shall
terminate immediately prior to the effective date of an actual Change in Control
transaction, and the shares subject to those terminated rights shall thereupon
vest in full.

F.            The Plan Administrator shall have full power and authority to
structure one or more outstanding Awards under the Discretionary Grant Program
so that those Awards shall become exercisable as to all the shares of Common
Stock at the time subject to those Awards in the event the Optionee’s Service is
subsequently terminated by reason of an Involuntary Termination within a
designated period following the effective date of any Change in Control
transaction in which those Awards do not otherwise fully accelerate. In
addition, the Plan Administrator may structure one or more of the Corporation’s
repurchase rights so that those rights shall immediately terminate with respect
to any shares held by the Optionee at the time of such Involuntary Termination,
and the shares subject to those terminated repurchase rights shall accordingly
vest in full at that time.

G.           The portion of any Incentive Option accelerated in connection with
a Change in Control shall remain exercisable as an Incentive Option only to the
extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not
exceeded. To the extent such dollar limitation is exceeded, the accelerated
portion of such option shall be exercisable as a Non-statutory Option under the
Federal tax laws.

 

V.

PROHIBITION ON REPRICING PROGRAMS

The Plan Administrator shall not (i) implement any cancellation/regrant program
pursuant to which outstanding options or stock appreciation rights under the
Plan are cancelled and new options or stock appreciation rights are granted in
replacement with a lower exercise price per share, (ii) cancel outstanding
options or stock appreciation rights under the Plan with exercise prices per
share in excess of the then current Fair Market Value per share of Common Stock
for consideration payable in equity securities of the Corporation or (iii)
otherwise directly reduce the exercise price in effect for outstanding options
or stock appreciation rights under the Plan, without in each such instance
obtaining stockholder approval.

ARTICLE THREE

 

STOCK ISSUANCE PROGRAM

 

I.

STOCK ISSUANCE TERMS

Shares of Common Stock may be issued under the Stock Issuance Program, either as
vested or unvested shares, through direct and immediate issuances. Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below. Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to performance shares or restricted stock
units which entitle the recipients to receive the shares underlying those Awards
upon the attainment of designated performance goals or the satisfaction of
specified Service requirements or upon the expiration of a designated time
period following the vesting of those Awards.

 

A.

Issue Price.

1.          The issue price per share shall be fixed by the Plan Administrator,
but shall not be less than one hundred percent (100%) of the Fair Market Value
per share of Common Stock on the Award date.

2.           Shares of Common Stock may be issued under the Stock Issuance
Program for any of the following items of consideration which the Plan
Administrator may deem appropriate in each individual instance:

 

(i)

cash or check made payable to the Corporation,

(ii)        past services rendered to the Corporation (or any Parent or
Subsidiary); or

(iii)       any other valid consideration under the State in which the
Corporation is at the time incorporated.

 

B.

Vesting Provisions.

1.           Shares of Common Stock issued under the Stock Issuance Program may,
in the discretion of the Plan Administrator, be fully and immediately vested
upon issuance as a bonus for Service rendered or may vest in one or more
installments over the Participant’s period of Service or upon the attainment of
specified performance objectives. The elements of the vesting schedule
applicable to any unvested shares of Common Stock issued under the Stock
Issuance Program shall be determined by the Plan Administrator and incorporated
into the Stock Issuance Agreement. Shares of Common Stock may also be issued
under the Stock Issuance Program pursuant to performance shares or restricted
stock units which entitle the recipients to receive the shares underlying those
Awards upon the attainment of designated performance goals

or the satisfaction of specified Service requirements or upon the expiration of
a designated time period following the vesting of those Awards, including
(without limitation) a deferred distribution date following the termination of
the Participant’s Service. Notwithstanding the foregoing, the following
limitations shall apply with respect to the vesting schedules established for
the Awards made under the Stock Issuance Program, subject to the acceleration
provisions in Paragraphs B.6 and B.7 below and Section II of this Article Three:

(i)           for any such Award which is to vest on the basis of Service, the
minimum vesting period shall be three (3) years, with the rate of vesting over
that period to be determined by the Plan Administrator; and

(ii)          for any such Award which is to vest on the basis of performance
objectives, the performance period shall have a duration of at least one year.

2.            The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more Awards
under the Stock Issuance Program so that the shares of Common Stock subject to
those Awards shall vest (or vest and become issuable) upon the achievement of
pre-established corporate performance objectives based on one or more
Performance Goals and measured over the performance period specified by the Plan
Administrator at the time of the Award.

3.            Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant’s
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares, spin-off
transaction, extraordinary dividend or distribution or other change affecting
the outstanding Common Stock as a class without the Corporation’s receipt of
consideration shall be issued subject to (i) the same vesting requirements
applicable to the Participant’s unvested shares of Common Stock and (ii) such
escrow arrangements as the Plan Administrator shall deem appropriate. Equitable
adjustments to reflect each such transaction shall also be made by the Plan
Administrator to the repurchase price payable per share by the Corporation for
any unvested securities subject to its existing repurchase rights under the
Plan; provided the aggregate repurchase price shall in each instance remain the
same.

4.            The Participant shall have full stockholder rights with respect to
any shares of Common Stock issued to the Participant under the Stock Issuance
Program, whether or not the Participant’s interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any dividends paid on such shares, subject to any applicable vesting
requirements. The Participant shall not have any stockholder rights with respect
to the shares of Common Stock subject to a performance share or restricted stock
unit Award until that Award vests and the shares of Common Stock are actually
issued thereunder. However, dividend-equivalent units may be paid or credited,
either in cash or in actual or phantom shares of Common Stock, on outstanding
performance share or restricted stock unit Awards, subject to such terms and
conditions as the Plan Administrator may deem appropriate.

5.            Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to one
or more such unvested shares of Common Stock, then those shares shall be
immediately surrendered to the Corporation for cancellation, and the Participant
shall have no further stockholder rights with respect to those shares. To the
extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent, the Corporation shall repay to
the Participant the lower of (i) the cash consideration paid for the surrendered
shares or (ii) the Fair Market Value of those shares at the time of
cancellation.

6.            The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock which would
otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those shares. Any
such waiver shall result in the immediate vesting of the Participant’s interest
in the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant’s cessation of
Service or the attainment or non-attainment of the applicable performance
objectives. However, no vesting requirements tied to the attainment of
performance objectives may be waived with respect to shares which were intended
at the time of issuance to qualify as performance-based compensation under Code
Section 162(m), except in the event of the Participant’s Involuntary Termination
or as otherwise provided in Section II of this Article Three.

7.            Outstanding performance shares or restricted stock units under the
Stock Issuance Program shall automatically terminate, and no shares of Common
Stock shall actually be issued in satisfaction of those Awards, if the
performance goals or Service requirements established for those Awards are not
attained or satisfied. The Plan Administrator, however, shall have the
discretionary authority to issue vested shares of Common Stock under one or more
outstanding Awards of performance shares or restricted stock units as to which
the designated performance goals or Service requirements have not been attained
or satisfied. However, no vesting requirements tied to the attainment of
performance goals may be waived with respect to Awards which were intended, at
the time those Awards were made, to qualify as performance-based compensation
under Code Section 162(m), except in the event of the Participant’s Involuntary
Termination or as otherwise provided in Section II of this Article Three.

8.            The following additional requirements shall be in effect for any
performance shares awarded under this Article Three:

(i)           At the end of the performance period, the Plan Administrator shall
determine the actual level of attainment for each performance objective and the
extent to which the performance shares awarded for that period are to vest and
become payable based on the attained performance levels.

(ii)          The performance shares which so vest shall be paid as soon as
practicable following the end of the performance period, unless such payment is
to be deferred for the period specified by the Plan Administrator at the time
the performance shares are awarded or the period selected by the Participant in
accordance with the applicable requirements of Code Section 409A.

(iii)         Performance shares may be paid in (i) cash, (ii) shares of Common
Stock or (iii) any combination of cash and shares of Common Stock, as determined
by the Plan Administrator in its sole discretion.

(iv)         Performance shares may also be structured so that the shares are
convertible into shares of Common Stock, but the rate at which each performance
share is to so convert shall be based on the attained level of performance for
each applicable performance objective.

 

II.

CHANGE IN CONTROL

A.           All of the Corporation’s outstanding repurchase rights under the
Stock Issuance Program shall terminate automatically, and all the shares of
Common Stock subject to those terminated rights shall vest in full, immediately
prior to the effective date of an actual Change in Control transaction, except
to the extent (i) the Awards to which those repurchase rights are to be assumed
by the successor corporation (or parent thereof) or are otherwise to continue in
full force and effect pursuant to the terms of the Change in Control
transaction, (ii) those Awards are to be replaced with a cash incentive program
of the successor corporation which preserves, for each such Award, the Fair
Market Value of the underlying shares of Common Stock at the time of the Change
in Control and provides for the subsequent payout of that value in accordance
with the same (or more favorable) vesting schedule in effect for those shares at
the time of such Change in Control or (iii) such accelerated vesting is
precluded by other limitations imposed in the Stock Issuance Agreement.

B.           Each outstanding Award under the Stock Issuance Program which is
assumed in connection with a Change in Control or otherwise continued in effect
shall be adjusted immediately after the consummation of that Change in Control
so as to apply to the number and class of securities into which the shares of
Common Stock subject to that Award immediately prior to the Change in Control
would have been converted in consummation of such Change in Control had those
shares actually been outstanding at that time, and appropriate adjustments shall
also be made to the consideration (if any) payable per share thereunder,
provided the aggregate amount of such consideration shall remain the same. To
the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Change
in Control, the successor corporation may, in connection with the assumption or
continuation of the outstanding Awards, substitute one or more shares of its own
common stock with a fair market value equivalent to the cash consideration paid
per share of Common Stock in such Change in Control transaction, provided such
common stock is readily traded on an established U.S. securities exchange or
market.

C.           If an Award under the Stock Issuance Program is not assumed or
otherwise continued in effect or replaced with a cash incentive program of the
successor corporation which preserves the Fair Market Value of the underlying
shares of Common Stock at the time of the Change in Control and provides for the
subsequent payout of that value in accordance with the same (or more favorable)
vesting schedule in effect for those shares at the time of such Change in
Control, then such Award shall vest, and the shares of Common Stock subject to
that Award shall be issued as fully-vested shares, immediately prior to the
effective date of the Change in Control.

D.           The Plan Administrator shall have the discretionary authority to
structure one or more unvested Awards under the Stock Issuance Program so that
the shares of Common Stock subject to those Awards shall automatically vest (or
vest and become issuable) in whole or in part immediately prior to the effective
date of an actual Change in Control transaction or upon the subsequent
termination of the Participant’s Service by reason of an Involuntary Termination
within a designated period following the effective date of that Change in
Control transaction.

E.           The Plan Administrator’s authority under Paragraphs D and E of this
Section II shall also extend to any Awards intended to qualify as
performance-based compensation under Code Section 162(m), even though the
automatic vesting of those Awards pursuant to Paragraph D or E of this Section
II may result in their loss of performance-based status under Code Section
162(m).

ARTICLE FOUR

 

INCENTIVE BONUS PROGRAM

 

I.

INCENTIVE BONUS TERMS

The Plan Administrator shall have full power and authority to implement one or
more of the following incentive bonus programs under the Plan:

 

(i)

cash bonus awards (“Cash Awards”),

 

(ii)

performance unit awards (“Performance Unit Awards”), and

 

(iii)

dividend equivalent rights (“DER Awards”)

A.           Cash Awards. The Plan Administrator shall have the discretionary
authority under the Plan to make Cash Awards which are to vest in one or more
installments over the Participant’s continued Service with the Corporation or
upon the attainment of specified performance goals. Each such Cash Award shall
be evidenced by one or more documents in the form approved by the Plan
Administrator; provided however, that each such document shall comply with the
terms specified below.

1.            The elements of the vesting schedule applicable to each Cash Award
shall be determined by the Plan Administrator and incorporated into the
Incentive Bonus Award Agreement.

2.            The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more Cash
Awards so that those Awards shall vest upon the achievement of pre-established
corporate performance objectives based upon one or more Performance Goals.

3.            Should the Participant cease to remain in Service while holding
one or more unvested Cash Awards or should the performance objectives not be
attained with respect to one or more such Cash Awards, then those Awards shall
be immediately terminate, and the Participant shall not be entitled to any cash
payment or other consideration with respect to those terminated Awards.

4.            Outstanding Cash Awards shall automatically terminate, and no cash
payment or other consideration shall be due the holders of those Awards, if the
performance goals or Service requirements established for the Awards are not
attained or satisfied. The Plan Administrator may in its discretion waive the
cancellation and termination of one or more unvested Cash Awards which would
otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those Awards. Any
such waiver shall result in the immediate vesting of the Participant’s interest
in the Cash Award as to which the waiver applies. Such wavier may be effected at
any time, whether before or after

the Participant’s cessation of Service or the attainment or non-attainment of
the applicable performance objectives. However, no vesting requirements tied to
the attainment of performance goals may be waived with respect to awards which
were intended, at the time those awards were granted, to qualify as
performance-based compensation under Code Section 162(m), except in the event of
the Participant’s Involuntary Termination or as otherwise provided in Section II
of this Article Four.

5.            Cash Awards which become due and payable following the attainment
of the applicable performance goals or satisfaction of the applicable Service
requirement (or the waiver of such goals or Service requirement) may be paid in
(i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment
date or (iii) a combination of cash and shares of Common Stock as the Plan
Administrator shall determine.

B.           Performance Unit Awards. The Plan Administrator shall have the
discretionary authority to make Performance Unit Awards in accordance with the
terms of this Article Four. Each such Performance Unit Award shall be evidenced
by one or more documents in the form approved by the Plan Administrator;
provided however, that each such document shall comply with the terms specified
below.

1.            A Performance Unit shall represent a participating interest in a
special bonus pool tied to the attainment of pre-established corporate
performance objectives based on one or more Performance Goals. The amount of the
bonus pool may vary with the level at which the applicable performance
objectives are attained, and the value of each Performance Unit which becomes
due and payable upon the attained level of performance shall be determined by
dividing the amount of the resulting bonus pool (if any) by the total number of
Performance Units issued and outstanding at the completion of the applicable
performance period.

2.            Performance Units may also be structured to include a Service
requirement which the Participant must satisfy following the completion of the
performance period in order to vest in the Performance Units awarded with
respect to that performance period.

3.            Performance Units which become due and payable following the
attainment of the applicable performance objectives and the satisfaction of any
applicable Service requirement may be paid in (i) cash, (ii) shares of Common
Stock valued at Fair Market Value on the payment date or (iii) a combination of
cash and shares of Common Stock as the Plan Administrator shall determine.

C.           DER Awards. The Plan Administrator shall have the discretionary
authority to make DER Awards in accordance with the terms of this Article Four.
Each such DER Award shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided however, that each such document
shall comply with the terms specified below.

1.            The DER Awards may be made as stand-alone awards or in tandem with
other Awards made under the Plan. The term of each such DER Award shall be
established by the Plan Administrator at the time of grant, but no DER Award
shall have a term in excess of ten (10) years.

2.            Each DER shall represent the right to receive the economic
equivalent of each dividend or distribution, whether in cash, securities or
other property (other than shares of Common Stock), which is made per issued and
outstanding share of Common Stock during the term the DER remains outstanding. A
special account on the books of the Corporation shall be maintained for each
Participant to whom a DER Award is made, and that account shall be credited per
DER with each such dividend or distribution made per issued and outstanding
share of Common Stock during the term of that DER remains outstanding.

3.            Payment of the amounts credited to such book account may be made
to the Participant either concurrently with the actual dividend or distribution
made per issued and outstanding share of Common Stock or may be deferred for a
period specified by the Plan Administrator at the time the DER Award is made or
selected by the Participant in accordance with the requirements of Code Section
409A.

4.            Payment may be paid in (i) cash, (ii) shares of Common Stock or
(iii) a combination of cash and shares of Common Stock as the Plan Administrator
shall determine. If payment is to be made in the form of Common Stock, the
number of shares of Common Stock into which the cash dividend or distribution
amounts are to be converted for purposes of the Participant’s book account may
be based on the Fair Market Value per share of Common Stock on the date of
conversion, a prior date or an average of the Fair Market Value per share of
Common Stock over a designated period, as the Plan Administrator shall determine
in its sole discretion.

5.            The Plan Administrator shall also have the discretionary
authority, consistent with Code Section 162(m), to structure one or more DER
Awards so that those Awards shall vest only after the achievement of
pre-established corporate performance objectives based upon one or more
Performance Goals.

 

II.

CHANGE IN CONTROL

A.           The Plan Administrator shall have the discretionary authority to
structure one or more incentive bonus awards under this Article Four so that the
awards shall automatically vest in whole or in part immediately prior to the
effective date of an actual Change in Control transaction or upon the subsequent
termination of the Participant’s Service by reason of an Involuntary Termination
within a designated period following the effective date of such Change in
Control.

B.           The Plan Administrator’s authority under Paragraph A of this
Section II shall also extend to any performance bonus awards intended to qualify
as performance-based compensation under Code Section 162(m), even though the
automatic vesting of those awards pursuant to such Paragraph A may result in
their loss of performance-based status under Code Section 162(m).

ARTICLE FIVE

 

AUTOMATIC GRANT PROGRAM

 

I.

AWARD TERMS

A.           Automatic Grants. The Automatic Grant Program shall, as of the Plan
Effective Date, supersede and replace the Corporation’s 1998 Non-Employee
Director Stock Option Plan and the Non-Employee Director Stock Retainer Plan.
The Awards for the non-employee Board members at the 2007 Annual Meeting shall
be made pursuant to the Automatic Grant Program in effect under this Article
Five, and no further option grants or stock issuances shall be made to the
non-employee Board members under the 1998 Non-Employee Director Stock Option
Plan or the Non-Employee Director Stock Retainer Plan on or after the 2007
Annual Meeting, if this Plan is approved by the stockholders at such meeting.
The Awards to be made pursuant to the Automatic Grant Program shall be as
follows:

1.            Each individual who is first elected or appointed as a
non-employee Board member at any time on or after the date of the 2007 Annual
Meeting shall automatically be granted, on the date of such initial election or
appointment, an Award in the form of restricted stock units covering that number
of shares of Common Stock (rounded up to the next whole share) determined by
dividing the Applicable Dollar Amount by the Fair Market Value per share on such
date, provided that individual has not been in the employ of the Corporation or
any Parent or Subsidiary during the preceding twelve (12) months (the “Initial
Grant”). The Applicable Dollar Amount shall be determined by the Plan
Administrator at the time of each such grant, but in no event shall such amount
exceed Three Hundred Thousand Dollars ($300,000.00) per non-employee Board
member.

2.            On the date of each annual stockholders meeting, beginning with
the 2007 Annual Meeting, each individual who is to continue to serve as a
non-employee Board member, whether or not that individual is standing for
re-election to the Board at that particular annual meeting, shall automatically
be granted an Award in the form of restricted stock units covering that number
of shares of Common Stock (rounded up to the next whole share) determined by
dividing the Applicable Annual Amount by the Fair Market Value per share on such
date, provided that such individual has served as a non-employee Board member
for a period of at least six (6) months (the “Annual Grant”). There shall be no
limit on the number of such Annual Grants any one continuing non-employee Board
member may receive over his or her period of Board service, and non-employee
Board members who have previously been in the employ of the Corporation (or any
Parent or Subsidiary) shall be eligible to receive one or more such Annual
Grants over their period of continued Board service. The Applicable Annual
Amount shall be determined by the Plan Administrator on or before the date of
the annual stockholders meeting at which those Annual Grants are to be made, but
in no event shall exceed Three Hundred Thousand Dollars ($300,000.00).

3.            Each restricted unit awarded under this Article Five shall entitle
the non-employee Board member to one share of Common Stock on the applicable
issuance date following the vesting of that unit.

B.           Vesting of Awards and Issuance of Shares. Each Initial and Annual
Grant made under this Article Five shall vest in a series of in three (3)
successive equal annual installments upon the non-employee Board member’s
completion of each year of Board service over the three (3)-year period measured
from the Award date; provided, however, that should such non-employee Board
member cease Board service by reason of (i) death or Permanent Disability or
(ii) retirement at or after age seventy two (72), then each Initial and Annual
Grant made to such individual under this Article Five and outstanding at the
time of such cessation of Board service shall immediately vest in full. The
shares of Common Stock underlying each Initial or Annual Grant which vests in
accordance with the foregoing vesting provisions shall be issued as they vest;
provided, however, that the Plan Administrator may allow one or more
non-employee Board members to defer, in accordance with the applicable
requirements of Code Section 409A and the regulations thereunder, the issuance
of the shares beyond the vesting date to a designated date or until cessation of
Board service or an earlier Change in Control.

C.           Dividend Equivalent Rights. Each restricted stock unit shall
include a dividend equivalent right pursuant to which a book account shall be
established for the non-employee Board member and credited from time to time
with each dividend or distribution, whether in cash, securities or other
property (other than shares of Common Stock) which is made per issued and
outstanding share of Common Stock during the period the share of Common Stock
underlying that restricted stock unit remains unissued. The amount credited to
the book account with respect to such restricted stock unit shall be paid to the
non-employee Board member concurrently with the issuance of the share of Common
Stock underlying that unit, subject to the Corporation’s collection of any
applicable withholding taxes.

 

II.

CHANGE IN CONTROL

Should the non-employee Board member continue in Board service until the
effective date of an actual Change in Control transaction, then the shares of
Common Stock subject to each outstanding Initial and Annual Award made to such
Board member shall, immediately prior to the effective date of that Change in
Control transaction, vest in full and shall be issued to him or her as soon as
administratively practicable thereafter, but in no event more than fifteen (15)
business days after such effective date, or shall otherwise be converted into
the right to receive the same consideration per share of Common Stock payable to
the other stockholders in the Change in Control and distributed at the same time
as such stockholder payments).

ARTICLE SIX

 

MISCELLANEOUS

 

I.

DEFERRED COMPENSATION

A.           The Plan Administrator may, in its sole discretion, structure one
or more Awards under the Stock Issuance or Incentive Bonus Programs so that the
Participants may be provided with an election to defer the compensation
associated with those Awards for federal income tax purposes. Any such deferral
opportunity shall comply with all applicable requirements of Code Section 409A.

B.           To the extent the Corporation maintains one or more separate
non-qualified deferred compensation arrangements which allow the participants
the opportunity to make notional investments of their deferred account balances
in shares of Common Stock, the Plan Administrator may authorize the share
reserve under the Plan to serve as the source of any shares of Common Stock that
become payable under those deferred compensation arrangements. In such event,
the share reserve under the Plan shall be reduced on a share-for-one share basis
for each share of Common Stock issued under the Plan in settlement of the
deferred compensation owed under those separate arrangements.

 

II.

TAX WITHHOLDING

A.           The Corporation’s obligation to deliver shares of Common Stock upon
the exercise, issuance or vesting of an Award under the Plan shall be subject to
the satisfaction of all applicable income and employment tax withholding
requirements.

B.           The Plan Administrator may, in its discretion, provide Optionees
and Participants to whom Awards are made under the Plan (other than the Awards
made under the Automatic Grant Program) with the right to use shares of Common
Stock in satisfaction of all or part of the Withholding Taxes to which such
holders may become subject in connection with the exercise, issuance or vesting
of those Awards or the issuance of shares of Common Stock thereunder. Such right
may be provided to any such holder in either or both of the following formats:

1.            Stock Withholding: The election to have the Corporation withhold,
from the shares of Common Stock otherwise issuable upon the issuance, exercise
or vesting of such Award or the issuance of shares of Common Stock thereunder, a
portion of those shares with an aggregate Fair Market Value equal to the
percentage of the Withholding Taxes (not to exceed one hundred percent (100%))
designated by such individual. The shares of Common Stock so withheld shall
reduce the number of shares of Common Stock authorized for issuance under the
Plan.

2.            Stock Delivery: The election to deliver to the Corporation, at the
time of the issuance, exercise or vesting of such Award or the issuance of
shares of Common Stock thereunder, one or more shares of Common Stock previously
acquired by such individual (other than in connection with the exercise, share
issuance or share vesting triggering the

Withholding Taxes) with an aggregate Fair Market Value equal to the percentage
of the Withholding Taxes (not to exceed one hundred percent (100%)) designated
by the individual. The shares of Common Stock so delivered shall neither reduce
the number of shares of Common Stock authorized for issuance under the Plan nor
be added to the number of shares of Common Stock authorized for issuance under
the Plan.

 

III.

SHARE ESCROW/LEGENDS

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow
by the Corporation until the Participant’s interest in such shares vests or may
be issued directly to the Participant with restrictive legends on the
certificates evidencing those unvested shares.

 

IV.

EFFECTIVE DATE AND TERM OF THE PLAN

 

A.

The Plan shall become effective on the Plan Effective Date.

B.           The Plan shall serve as the successor to each of the Predecessor
Plans, and no further option grants or unvested share issuances shall be made
under the Predecessor Plans if this Plan is approved by the stockholders at the
2007 Annual Meeting. Such stockholder approval shall not affect the option
grants and unvested share awards outstanding under the Predecessor Plans at the
time of the 2007 Annual Meeting, and those option grants and unvested share
awards shall continue in full force and effect in accordance with their terms.
However, should any of those options expire or terminate unexercised or those
unvested shares be forfeited or repurchased by the Corporation at the original
issue price, the shares of Common Stock subject to those options at the time of
expiration or termination and those forfeited or repurchased shares shall be
added to the share reserve of this Plan, up to the maximum number of additional
shares permissible hereunder.

C.           The Plan shall terminate upon the earliest to occur of (i) April
26, 2017, (ii) the date on which all shares available for issuance under the
Plan shall have been issued as fully vested shares or (iii) the termination of
all outstanding Awards in connection with a Change in Control. Should the Plan
terminate on April 26, 2017, then all Awards outstanding at that time shall
continue to have force and effect in accordance with the provisions of the
documents evidencing those Awards.

 

V.

AMENDMENT OF THE PLAN

A.           The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects; provided, however, that
stockholder approval shall be required for any amendment to the Plan which
materially increases the number of shares of Common Stock authorized for
issuance under the Plan (other than pursuant to Section V.D of Article One),
materially increases the benefits accruing to Optionees or Participants,
materially expands the class of individuals eligible to participate in the Plan,
expands the types of awards which may be made under the Plan or extends the term
of the Plan or to the extent such stockholder approval may otherwise required
under applicable law or regulation or pursuant to

the listing standards of the Stock Exchange on which the Common Stock is at the
time primarily traded. However, no such amendment or modification shall
adversely affect the rights and obligations with respect to Awards at the time
outstanding under the Plan unless the Optionee or the Participant consents to
such amendment or modification.

B.           The Compensation Committee shall have the discretionary authority
to adopt and implement from time to time such addenda or subplans to the Plan as
it may deem necessary in order to bring the Plan into compliance with applicable
laws and regulations of any foreign jurisdictions in which grants or awards are
to be made under the Plan and/or to obtain favorable tax treatment in those
foreign jurisdictions for the individuals to whom the grants or awards are made.

C.           Awards may be made under the Plan that involve shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided no shares shall actually be issued pursuant to those Awards until
the number of shares of Common Stock available for issuance under the Plan is
sufficiently increased by stockholder approval of an amendment of the Plan
authorizing such increase. If such stockholder approval is not obtained within
twelve (12) months after the date the first excess Award is made, then all
Awards granted on the basis of such excess shares shall terminate and cease to
be outstanding.

 

VI.

USE OF PROCEEDS

Any cash proceeds received by the Corporation from the sale of shares of Common
Stock under the Plan shall be used for general corporate purposes.

 

VII.

REGULATORY APPROVALS

A.           The implementation of the Plan, the granting of any Award under the
Plan and the issuance of any shares of Common Stock in connection with the
issuance, exercise or vesting of any Award under the Plan shall be subject to
the Corporation’s procurement of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the Awards made under
the Plan and the shares of Common Stock issuable pursuant to those Awards.

B.           No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of applicable securities laws, including the filing
and effectiveness of the Form S-8 registration statement for the shares of
Common Stock issuable under the Plan, and all applicable listing requirements of
any Stock Exchange on which Common Stock is then listed for trading.

 

VIII.

NO EMPLOYMENT/SERVICE RIGHTS

Nothing in the Plan shall confer upon the Optionee or the Participant any right
to continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee or the
Participant, which rights are hereby expressly reserved by each, to terminate
such person’s Service at any time for any reason, with or without cause.

APPENDIX  

The following definitions shall be in effect under the Plan:

A.           Annual Meeting shall mean the 2007 annual meeting of the
Corporation’s stockholders.

B.           Automatic Grant Program shall mean the automatic grant program in
effect for non-employee Board members under Article Five of the Plan.

C.           Award shall mean any of the following awards authorized for
issuance or grant under the Plan: stock options, stock appreciation rights,
direct stock issuances, restricted stock or restricted stock unit awards,
performance shares, performance units, dividend-equivalent rights and cash
incentive awards.

D.           Award Agreement shall mean the agreement(s) between the Corporation
and the Optionee or Participant evidencing a particular Award made to that
individual under the Plan, as such agreement(s) may be in effect from time to
time.

 

E.

Board shall mean the Corporation’s Board of Directors.

F.           Cause shall, with respect to each Award made under the Plan, be
defined in accordance with the following provisions:

-             Cause shall have the meaning assigned to such term in the Award
Agreement for the particular Award or in any other agreement incorporated by
reference into the Award Agreement for purposes of defining such term.

-            In the absence of any other Cause definition in the Award Agreement
for a particular Award (or in any other agreement incorporated by reference into
the Award Agreement), an individual’s termination of Service shall be deemed to
be for Cause if such termination occurs by reason his or her commission of any
act of fraud, embezzlement or dishonesty, any unauthorized use or disclosure by
such person of confidential information or trade secrets of the Corporation (or
any Parent or Subsidiary), or any other intentional misconduct by such person
adversely affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner.

G.           Change in Control shall, with respect to each Award made under the
Plan, be defined in accordance with the following provisions:

-             Change in Control shall have the meaning assigned to such term in
the Award Agreement for the particular Award or in any other agreement
incorporated by reference into the Award Agreement for purposes of defining such
term.

-            In the absence of any other Change in Control definition in the
Award Agreement (or in any other agreement incorporated by reference into the
Award Agreement), Change in Control shall mean a change in ownership or control
of the Corporation effected through any of the following transactions:

(i)           a merger, consolidation or other reorganization approved by the
Corporation’s stockholders, unless securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities of the
successor corporation are immediately thereafter beneficially owned, directly or
indirectly and in substantially the same proportion, by the persons who
beneficially owned the Corporation’s outstanding voting securities immediately
prior to such transaction,

(ii)          a sale, transfer or other disposition of all or substantially all
of the Corporation’s assets,

(iii)        the closing of any transaction or series of related transactions
pursuant to which any person or any group of persons comprising a “group” within
the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a
person that, prior to such transaction or series of related transactions,
directly or indirectly controls, is controlled by or is under common control
with, the Corporation) becomes directly or indirectly (whether as a result of a
single acquisition or by reason of one or more acquisitions within the twelve
(12)-month period ending with the most recent acquisition) the beneficial owner
(within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or
convertible into or exercisable for securities possessing) thirty-five percent
(35%) of the total combined voting power of the Corporation’s securities (as
measured in terms of the power to vote with respect to the election of Board
members) outstanding immediately after the consummation of such transaction or
series of related transactions, whether such transaction involves a direct
issuance from the Corporation or the acquisition of outstanding securities held
by one or more of the Corporation’s existing stockholders, or

(iv)         a change in the composition of the Board over a period of twelve
(12) consecutive months or less such that a majority of the Board members
ceases, by reason of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (A) who were still in office at the time the Board
approved such election or nomination.

 

H.

Code shall mean the Internal Revenue Code of 1986, as amended.

 

I.

Common Stock shall mean the Corporation’s common stock.

J.            Compensation Committee shall mean the Compensation Committee of
the Board comprised of two (2) or more non-employee Board members.

K.           Corporation shall mean Alexander & Baldwin, Inc., a Hawaii
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Alexander & Baldwin, Inc. which has by appropriate
action assumed the Plan.

L.           Discretionary Grant Program shall mean the discretionary grant
program in effect under Article Two of the Plan pursuant to which stock options
and stock appreciation rights may be granted to one or more eligible
individuals.

M.          Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary, whether now existing or subsequently
established), subject to the control and direction of the employer entity as to
both the work to be performed and the manner and method of performance.

N.           Exercise Date shall mean the date on which the Corporation shall
have received written notice of the option exercise.

O.           Fair Market Value per share of Common Stock on any relevant date
shall be the closing selling price per share of Common Stock at the close of
regular hours trading (i.e., before after-hours trading begins) on date on
question on the Stock Exchange serving as the primary market for the Common
Stock, as such price is reported by the National Association of Securities
Dealers (if primarily traded on the Nasdaq Global Select Market) or as
officially quoted in the composite tape of transactions on any other Stock
Exchange on which the Common Stock is then primarily traded. If there is no
closing selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.

P.           Family Member means, with respect to a particular Optionee or
Participant, any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law.

Q.           Good Reason shall, with respect to each Award made under the Plan,
be defined in accordance with the following provisions:

-            Good Reason shall have the meaning assigned to such term in the
Award Agreement for the particular Award or in any other agreement incorporated
by reference into the Award Agreement for purposes of defining such term.

-            In the absence of any other Good Reason definition in the Award
Agreement (or in any other agreement incorporated by reference into the Award
Agreement), Good Reason shall mean an individual’s voluntary resignation
following (A) a change in his or her position with the Corporation (or any
Parent or Subsidiary) which materially reduces his or her duties and
responsibilities or the level of management to which he or she reports, (B) a

reduction in his or her level of compensation (including base salary, fringe
benefits and target bonus under any corporate-performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a relocation of
such individual’s place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected by the Corporation
(or any Parent or Subsidiary) without the individual’s consent.

R.           Incentive Bonus Program shall mean the incentive bonus program in
effect under Article Four of the Plan.

S.            Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.

T.           Involuntary Termination shall mean the termination of the Service
of any individual which occurs by reason of:

(i)           such individual’s involuntary dismissal or discharge by the
Corporation (or any Parent or Subsidiary) for reasons other than for Cause, or

 

(ii)

such individual’s voluntary resignation for Good Reason.

 

U.

1934 Act shall mean the Securities Exchange Act of 1934, as amended.

V.           Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.

W.          Optionee shall mean any person to whom an option is granted under
the Discretionary Grant or Automatic Grant Program.

X.           Parent shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

Y.           Participant shall mean any person who is issued (i) shares of
Common Stock, restricted stock units, performance shares, performance units or
other stock-based awards under the Stock Issuance Program or (ii) an incentive
bonus award under the Incentive Bonus Program.

Z.           Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Grant
Program, Permanent Disability or Permanently Disabled shall mean the inability
of the non-employee Board member to perform his or her usual duties as a Board
member by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.

AA.       Performance Goals shall mean any of the following performance criteria
upon which the vesting of one or more Awards under the Plan may be based:
(i) cash flow; (ii) earnings (including gross margin, earnings before interest
and taxes, earnings before taxes, earnings before interest, taxes, depreciation,
amortization and charges for stock-based compensation, earnings before interest,
taxes, depreciation and amortization, and net earnings); (iii) earnings per
share; (iv) growth in earnings or earnings per share; (v) stock price;
(vi) return on equity or average stockholder equity; (vii) total stockholder
return or growth in total stockholder return either directly or in relation to a
comparative group; (viii) return on capital; (ix) return on assets or net
assets; (x) invested capital, required rate of return on capital or return on
invested capital; (xi) revenue, growth in revenue or return on sales;
(xii) income or net income; (xiii) operating income, net operating income or net
operating income after tax; (xiv) operating profit or net operating profit;
(xv) operating margin; (xvi) return on operating revenue or return on operating
profit; (xvii) collections and recoveries, (xviii) property purchases, sales,
investments and construction goals, (xix) application approvals, (xx) litigation
and regulatory resolution goals, (xxi) occupancy or occupancy rates, (xxii)
leases, contracts or financings, including renewals, (xxiii) overhead, savings,
G&A and other expense control goals, (xxiv) budget comparisons, (xxv) growth in
stockholder value relative to the growth of the S&P 400 or S&P 400 Index, the
S&P Global Industry Classification Standards (“GICS”) or GICS Index, or another
peer group or peer group index; (xxvi) credit rating; (xxvii) development and
implementation of strategic plans and/or organizational restructuring goals;
(xxviii) development and implementation of risk and crisis management programs;
(xxix) improvement in workforce diversity; (xxx) net cost per ton, (xxxi) price
per container or average price of container); (xxxii) voyage days or vessel
scheduling; (xxxiii) lift volume of containers, volume of containers, number of
units or size of units; (xxxiv) compliance requirements and compliance relief;
(xxxv) safety goals; (xxxvi) productivity goals; (xxxvii) workforce management
and succession planning goals; (xxxviii) economic value added (including typical
adjustments consistently applied from generally accepted accounting principles
required to determine economic value added performance measures); (xxxix)
measures of  customer satisfaction, employee satisfaction or staff development;
(xl) development or marketing collaborations, formations of joint ventures or
partnerships or the completion of other similar transactions intended to enhance
the Corporation’s revenue or profitability or enhance its customer base; (xli)
merger and acquisitions; and (xlii) other similar criteria consistent with the
foregoing. In addition, such performance criteria may be based upon the
attainment of specified levels of the Corporation’s performance under one or
more of the measures described above relative to the performance of other
entities and may also be based on the performance of any of the Corporation’s
business units or divisions or any Parent or Subsidiary. Each applicable
Performance Goal may include a minimum threshold level of performance below
which no Award will be earned, levels of performance at which specified portions
of an Award will be earned and a maximum level of performance at which an Award
will be fully earned. Each applicable performance goal may be structured at the
time of the Award to provide for appropriate adjustment for one or more of the
following items: (A) asset impairments or write-downs; (B) litigation judgments
or claim settlements; (C) the effect of changes in tax law, accounting
principles or other such laws or provisions affecting reported results;
(D) accruals for reorganization and restructuring programs; (E) any
extraordinary nonrecurring items as described in Accounting Principles Board
Opinion

No. 30 and/or in management’s discussion and analysis of financial condition and
results of operations appearing in the Corporation’s annual report to
stockholders for the applicable year; (F) the operations of any business
acquired by the Corporation; and (G) any other adjustment consistent with the
operation of the Plan.

BB.        Plan shall mean the Corporation’s 2007 Incentive Compensation Plan,
as set forth in this document.

CC.       Plan Administrator shall mean the particular entity, whether the
Compensation Committee (or subcommittee thereof), the Board or the Secondary
Board Committee, which is authorized to administer the Discretionary Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under the
Plan with respect to the persons under its jurisdiction.

DD.       Plan Effective Date shall mean the April 26, 2007 date on which the
Plan is approved by the stockholders at the 2007 Annual Meeting.

EE.        Predecessor Plans shall mean (i) the Corporation’s 1998 Stock
Option/Stock Incentive Plan, (ii) the Corporation’s 1998 Non-Employee Director
Stock Option Plan, (iii) the Restricted Stock Bonus Plan and (iv) the
Non-Employee Director Stock Retainer Plan, as each such plan is in effect
immediately prior to the 2007 Annual Meeting.

FF.         Secondary Board Committee shall mean a committee of one or more
Board members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.

GG.       Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.

HH.       Service shall mean the performance of services for the Corporation (or
any Parent or Subsidiary, whether now existing or subsequently established) by a
person in the capacity of an Employee, a non-employee member of the board of
directors or a consultant or independent advisor, except to the extent otherwise
specifically provided in the documents evidencing the option grant or stock
issuance. For purposes of the Plan, an Optionee or Participant shall be deemed
to cease Service immediately upon the occurrence of the either of the following
events: (i) the Optionee or Participant no longer performs services in any of
the foregoing capacities for the Corporation or any Parent or Subsidiary or (ii)
the entity for which the Optionee or Participant is performing such services
ceases to remain a Parent or Subsidiary of the Corporation, even though the
Optionee or Participant may subsequently continue to perform services for that
entity. Service shall not be deemed to cease during a period of military leave,
sick leave or other personal leave approved by the Corporation; provided,
however, that should such leave of absence exceed three (3) months, then for
purposes of determining the period within which an Incentive Option may be
exercised as such under the federal tax laws, the Optionee’s Service shall be
deemed to cease on the first day immediately following the expiration of such
three (3)-month period, unless Optionee is provided with the right to return to
Service following such leave either by statute or by written contract. Except to
the extent

otherwise required by law or expressly authorized by the Plan Administrator or
by the Corporation’s written policy on leaves of absence, no Service credit
shall be given for vesting purposes for any period the Optionee or Participant
is on a leave of absence.

II.           Stock Exchange shall mean the American Stock Exchange, the Nasdaq
Global Market or the New York Stock Exchange.

JJ.          Stock Issuance Agreement shall mean the agreement entered into by
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

KK.       Stock Issuance Program shall mean the stock issuance program in effect
under Article Three of the Plan.

LL.        Subsidiary shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

MM.     10% Stockholder shall mean the owner of stock (as determined under Code
Section 424(d)) possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation (or any Parent or
Subsidiary).

NN.       Withholding Taxes shall mean the applicable federal and state income
and employment withholding taxes to which the holder of an Award under the Plan
may become subject in connection with the issuance, exercise or vesting of that
Award or the issuance of shares of Common Stock thereunder.