exv10w1






Exhibit 10.1




THE MEN’S WEARHOUSE, INC.

1996 LONG-TERM INCENTIVE PLAN




(As Amended and Restated

Effective April 1, 2008)




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Section	 
	 
	 	 	 	 
	ARTICLE I — ESTABLISHMENT, PURPOSE AND DURATION
	 	 	 	 
	 
	 	 	 	 
	Establishment
	 	 	1.1	 
	Purpose of the Plan
	 	 	1.2	 
	Duration of Authority to Make Grants Under the Plan
	 	 	1.3	 
	 
	 	 	 	 
	ARTICLE II — DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	Affiliate
	 	 	2.1	 
	Award
	 	 	2.2	 
	Award Agreement
	 	 	2.3	 
	Board
	 	 	2.4	 
	Cash-Based Award
	 	 	2.5	 
	Code
	 	 	2.6	 
	Committee
	 	 	2.7	 
	Company
	 	 	2.8	 
	Corporate Change
	 	 	2.9	 
	Covered Employee
	 	 	2.10	 
	Deferred Stock Unit
	 	 	2.11	 
	Deferred Stock Unit Award
	 	 	2.12	 
	Disability
	 	 	2.13	 
	Dividend Equivalent
	 	 	2.14	 
	Effective Date
	 	 	2.15	 
	Employee
	 	 	2.16	 
	Exchange Act
	 	 	2.17	 
	Fair Market Value
	 	 	2.18	 
	Fiscal Year
	 	 	2.19	 
	Freestanding SAR
	 	 	2.20	 
	Holder
	 	 	2.21	 
	Incentive Stock Option or ISO
	 	 	2.22	 
	Mature Shares
	 	 	2.23	 
	Minimum Statutory Tax Withholding Obligation
	 	 	2.24	 
	Nonqualified Stock Option or NQSO
	 	 	2.25	 
	Option
	 	 	2.26	 
	Optionee
	 	 	2.27	 
	Option Price
	 	 	2.28	 
	Option Agreement
	 	 	2.29	 
	Other Stock-Based Award
	 	 	2.30	 
	Parent Corporation
	 	 	2.31	 
	Performance-Based Award
	 	 	2.32	 
	Performance-Based Compensation
	 	 	2.33	 
	Performance Goals
	 	 	2.34	 
	Performance Period
	 	 	2.35	 
	Performance Stock Award
	 	 	2.36	 
	Performance Unit Award
	 	 	2.37	 






-i-









 






TABLE OF CONTENTS

(continued)





	 	 	 	 	 
	 	 	Section	 
	 
	 	 	 	 
	Period of Restriction
	 	 	2.38	 
	Plan
	 	 	2.39	 
	Restricted Stock
	 	 	2.40	 
	Restricted Stock Award
	 	 	2.41	 
	Retirement
	 	 	2.42	 
	Section 409A
	 	 	2.43	 
	Stock Appreciation Right or SAR
	 	 	2.44	 
	Stock
	 	 	2.45	 
	Subsidiary Corporation
	 	 	2.46	 
	Substantial Risk of Forfeiture
	 	 	2.47	 
	Tandem SAR
	 	 	2.48	 
	Ten Percent Stockholder
	 	 	2.49	 
	Termination of Employment
	 	 	2.50	 
	TMW Group
	 	 	2.51	 
	 
	 	 	 	 
	ARTICLE III — ELIGIBILITY AND PARTICIPATION
	 	 	 	 
	 
	 	 	 	 
	Eligibility
	 	 	3.1	 
	Participation
	 	 	3.2	 
	 
	 	 	 	 
	ARTICLE IV — GENERAL PROVISIONS RELATING TO AWARDS
	 	 	 	 
	 
	 	 	 	 
	Authority to Grant Awards
	 	 	4.1	 
	Dedicated Shares; Maximum Awards
	 	 	4.2	 
	Shares That Count Against Limit
	 	 	4.3	 
	Non-Transferability
	 	 	4.4	 
	Requirements of Law
	 	 	4.5	 
	Changes in the Company’s Capital Structure
	 	 	4.6	 
	Election Under Section 83(b) of the Code
	 	 	4.7	 
	Forfeiture for Cause
	 	 	4.8	 
	Forfeiture Events
	 	 	4.9	 
	Award Agreements
	 	 	4.10	 
	Amendment of Award Agreements
	 	 	4.11	 
	Rights as Stockholder
	 	 	4.12	 
	Issuance of Shares of Stock
	 	 	4.13	 
	Restrictions on Stock Received
	 	 	4.14	 
	Compliance With Section 409A
	 	 	4.15	 
	Source of Shares Deliverable Under Awards
	 	 	4.16	 
	 
	 	 	 	 
	ARTICLE V — OPTIONS
	 	 	 	 
	 
	 	 	 	 
	Authority to Grant Options
	 	 	5.1	 
	Type of Options Available
	 	 	5.2	 
	Option Agreement
	 	 	5.3	 
	Option Price
	 	 	5.4	 
	Duration of Options
	 	 	5.5	 






-ii-









 





TABLE OF CONTENTS

(continued)





	 	 	 	 	 
	 	 	Section	 
	 
	 	 	 	 
	Amount Exercisable
	 	 	5.6	 
	Exercise of Options
	 	 	5.7	 
	Transferability of Options
	 	 	5.8	 
	Notification of Disqualifying Disposition
	 	 	5.9	 
	No Rights as Stockholder
	 	 	5.10	 
	$100,000 Limitation on Incentive Stock Options
	 	 	5.11	 
	 
	 	 	 	 
	ARTICLE VI — STOCK APPRECIATION RIGHTS
	 	 	 	 
	 
	 	 	 	 
	Authority to Grant Stock Appreciation Rights Awards
	 	 	6.1	 
	Type of Stock Appreciation Rights Available
	 	 	6.2	 
	General Terms
	 	 	6.3	 
	Stock Appreciation Right Agreement
	 	 	6.4	 
	Term of Stock Appreciation Rights
	 	 	6.5	 
	Exercise of Freestanding SARs
	 	 	6.6	 
	Exercise of Tandem SARs
	 	 	6.7	 
	Payment of SAR Amount
	 	 	6.8	 
	Termination of Employment
	 	 	6.9	 
	Nontransferability of SARs
	 	 	6.10	 
	No Rights as Stockholder
	 	 	6.11	 
	Restrictions on Stock Received
	 	 	6.12	 
	 
	 	 	 	 
	ARTICLE VII — RESTRICTED STOCK AWARDS
	 	 	 	 
	 
	 	 	 	 
	Restricted Stock Awards
	 	 	7.1	 
	Restricted Stock Award Agreement
	 	 	7.2	 
	Holder’s Rights as Stockholder
	 	 	7.3	 
	 
	 	 	 	 
	ARTICLE VIII — DEFERRED STOCK UNIT AWARDS
	 	 	 	 
	 
	 	 	 	 
	Authority to Grant Deferred Stock Unit Awards
	 	 	8.1	 
	Deferred Stock Unit Awards
	 	 	8.2	 
	Deferred Stock Unit Award Agreement
	 	 	8.3	 
	Dividend Equivalents
	 	 	8.4	 
	Form of Payment Under Deferred Stock Unit Award
	 	 	8.5	 
	Time of Payment Under Deferred Stock Unit Award
	 	 	8.6	 
	Holder’s Rights as Stockholder
	 	 	8.7	 
	 
	 	 	 	 
	ARTICLE IX — PERFORMANCE STOCK AND PERFORMANCE UNIT AWARDS
	 	 	 	 
	 
	 	 	 	 
	Authority to Grant Performance Stock and Performance Unit Awards
	 	 	9.1	 
	Time of Payment Under Performance Unit Award
	 	 	9.2	 
	Holder’s Rights as Stockholder With Respect to a Performance Stock Award
	 	 	9.3	 
	Increases Prohibited
	 	 	9.4	 
	Stockholder Approval
	 	 	9.5	 
	Dividend Equivalents
	 	 	9.6	 






-iii-









 





TABLE OF CONTENTS

(continued)





	 	 	 	 	 
	 	 	Section	 
	 
	 	 	 	 
	ARTICLE X — CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS
	 	 	 	 
	 
	 	 	 	 
	Authority to Grant Cash-Based Awards
	 	 	10.1	 
	Authority to Grant Other Stock-Based Awards
	 	 	10.2	 
	Value of Cash-Based Awards and Other Stock-Based Awards
	 	 	10.3	 
	Payment of Cash-Based Awards and Other Stock-Based Awards
	 	 	10.4	 
	Termination of Employment
	 	 	10.5	 
	Nontransferability
	 	 	10.6	 
	 
	 	 	 	 
	ARTICLE XI — SUBSTITUTION AWARDS
	 	 	 	 
	 
	 	 	 	 
	ARTICLE XII — ADMINISTRATION
	 	 	 	 
	 
	 	 	 	 
	Awards
	 	 	12.1	 
	Authority of the Committee
	 	 	12.2	 
	Decisions Binding
	 	 	12.3	 
	No Liability
	 	 	12.4	 
	 
	 	 	 	 
	ARTICLE XIII — AMENDMENT OR TERMINATION OF PLAN
	 	 	 	 
	 
	 	 	 	 
	Amendment, Modification, Suspension, and Termination
	 	 	13.1	 
	Awards Previously Granted
	 	 	13.2	 
	 
	 	 	 	 
	ARTICLE XIV — MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Unfunded Plan/No Establishment of a Trust Fund
	 	 	14.1	 
	No Employment Obligation
	 	 	14.2	 
	Tax Withholding
	 	 	14.3	 
	Written Agreement
	 	 	14.4	 
	Indemnification of the Committee
	 	 	14.5	 
	Gender and Number
	 	 	14.6	 
	Severability
	 	 	14.7	 
	Headings
	 	 	14.8	 
	Other Compensation Plans
	 	 	14.9	 
	Other Awards
	 	 	14.10	 
	Successors
	 	 	14.11	 
	Law Limitations/Governmental Approvals
	 	 	14.12	 
	Delivery of Title
	 	 	14.13	 
	Inability to Obtain Authority
	 	 	14.14	 
	Investment Representations
	 	 	14.15	 
	Persons Residing Outside of the United States
	 	 	14.16	 
	No Fractional Shares
	 	 	14.17	 
	Arbitration of Disputes
	 	 	14.18	 
	Governing Law
	 	 	14.19	 






-iv-











 





THE MEN’S WEARHOUSE, INC.

1996 LONG-TERM INCENTIVE PLAN

(As Amended and Restated Effective April 1, 2008)




WITNESSETH:




     WHEREAS, effective March 29, 2004, The Men’s Wearhouse, Inc. (the “Company”) amended and
restated The Men’s Wearhouse, Inc. 1996 Long-Term Incentive Plan (the “Plan”) for the benefit of
key employees of the Company and affiliates of the Company;



     WHEREAS, the Company desires to restate the limitations set forth in the Plan on the number of
shares of stock available for awards granted or paid in shares of stock to reflect the
three-for-two stock split effected by the Company through the payment of a 50 percent stock
dividend to shareholders of record as of May 31, 2005; and



     WHEREAS, the Company desires to amend and restate the Plan on behalf of itself and on behalf
of the other adopting entities;



     NOW THEREFORE, the Plan is hereby amended and restated in its entirety as follows, effective
as of April 1, 2008, except insofar as an earlier effective date is expressly specified.



 









 





ARTICLE I




ESTABLISHMENT, PURPOSE AND DURATION




     1.1 Establishment. The Company hereby amends and restates in its entirety as set forth in
this document the Company’s incentive compensation plan originally named “The Men’s Wearhouse, Inc.
1996 Stock Option Plan,” which was subsequently renamed “The Men’s Wearhouse, Inc. 1996 Long-Term
Incentive Plan.” The Plan, as amended and restated, permits the grant of Options (both Incentive
Stock Options and Nonqualified Stock Options), Stock Appreciation Rights, Restricted Stock,
Deferred Stock Units, Performance Stock Awards, Performance Units, Cash-Based Awards, and Other
Stock-Based Awards. The amendment and restatement of the Plan became effective on March 29, 2004,
the date the amendment and restatement of the Plan was approved by the Board, which date was within
one year of the date the amendment and restatement of the Plan was approved by the holders of at
least a majority of the outstanding shares of voting stock of the Company at a meeting of the
stockholders of the Company (the “Effective Date”), and shall remain in effect as provided in
Section 1.3.



     1.2 Purpose of the Plan. The purpose of the Plan is to reward certain corporate officers and
other employees of the Company and its Affiliates (collectively, the “TMW Group”) by enabling them
to acquire shares of common stock of the Company and to receive other compensation based on the
increase in value of the common stock of the Company or certain other performance measures. The
Plan is intended to advance the best interests of the Company, its Affiliates and its stockholders
by providing those persons who have substantial responsibility for the management and growth of the
TMW Group with additional performance incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in their employment with
the TMW Group.



     1.3 Duration of Authority to Make Grants Under the Plan. The Plan shall continue indefinitely
until it is terminated pursuant to Section 13.1. No Awards may be granted under the Plan on or
after the tenth anniversary of the Effective Date. The applicable provisions of the Plan will
continue in effect with respect to an Award granted under the Plan for as long as such Award
remains outstanding.



 









 





ARTICLE II




DEFINITIONS




     The words and phrases defined in this Article shall have the meaning set out below throughout
the Plan, unless the context in which any such word or phrase appears reasonably requires a
broader, narrower or different meaning.



     2.1 “Affiliate” means any corporation, partnership, limited liability company or association,
trust or other entity or organization which, directly or indirectly, controls, is controlled by, or
is under common control with, the Company. For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any entity or organization, shall mean the possession, directly or
indirectly, of the power (a) to vote more than 50 percent (50%) of the securities having ordinary
voting power for the election of directors of the controlled entity or organization, or (ii) to
direct or cause the direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract or otherwise.



     2.2 “Award” means, individually or collectively, a grant under the Plan of Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock
Units, Performance Stock Awards, Performance Units, Cash-Based Awards, and Other Stock-Based
Awards, in each case subject to the terms and provisions of the Plan.



     2.3 “Award Agreement” means an agreement that sets forth the terms and conditions applicable
to an Award granted under the Plan.



     2.4 “Board” means the board of directors of the Company.



     2.5 “Cash-Based Award” means an Award granted to a Holder pursuant to Article X.



     2.6 “Code” means the United States Internal Revenue Code of 1986, as amended from time to
time.



     2.7 “Committee” means a committee of at least two persons, who are members of the Compensation
Committee of the Board and are appointed by the Compensation Committee of the Board, or, to the
extent it chooses to operate as the Committee, the Compensation Committee of the Board. Each
member of the Committee in respect of his or her participation in any decision with respect to an
Award that is intended to satisfy the requirements of section 162(m) of the Code must satisfy the
requirements of “outside director” status within the meaning of section 162(m) of the Code;
provided, however, that the failure to satisfy such requirement shall not affect the validity of
the action of any committee otherwise duly authorized and acting in the matter. As to Awards,
grants or other transactions that are authorized by the Committee and that are intended to be
exempt under Rule 16b-3, the requirements of Rule 16b-3(d)(1) with respect to committee action must
also be satisfied.



     2.8 “Company” means The Men’s Wearhouse, Inc., a Texas corporation, or any successor (by
reincorporation, merger or otherwise).



II-1









 





     2.9 “Corporate Change” shall have the meaning ascribed to that term in Section 4.6(c).



     2.10 “Covered Employee” means a Holder who is a “covered employee,” as defined in section
162(m) of the Code and the regulations promulgated thereunder, or any successor statute.



     2.11 “Deferred Stock Unit” means a unit credited to a Holder’s ledger account maintained by
the Company pursuant to Article VIII.



     2.12 “Deferred Stock Unit Award” means an Award granted pursuant to Article VIII.



     2.13 “Disability” means, effective for awards issued under the Plan that are earned and vested
on or after January 1, 2005, as determined by the Committee in its discretion exercised in good
faith, (a) in the case of an Award that is exempt from the application of the requirements of
Section 409A, a physical or mental condition of the Holder that would entitle him to payment of
disability income payments under the Company’s long-term disability insurance policy or plan for
employees as then in effect; or in the event that the Holder is not covered, for whatever reason,
under the Company’s long-term disability insurance policy or plan for employees or in the event the
Company does not maintain such a long-term disability insurance policy, “Disability” means a
permanent and total disability as defined in section 22(e)(3) of the Code and (b) in the case of an
Award that is not exempt from the application of the requirements of Section 409A, (i) the Holder
is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) the Holder is, by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an accident and health plan
covering employees of the Company. A determination of Disability may be made by a physician
selected or approved by the Committee and, in this respect, the Holder shall submit to an
examination by such physician upon request by the Committee.



     2.14 Dividend Equivalent” means a payment equivalent in amount to dividends paid to the
Company’s stockholders.



     2.15 “Effective Date” shall have the meaning ascribed to that term in Section 1.1.



     2.16 “Employee” means (a) a person employed by the Company or any Affiliate as a common law
employee or (b) a person who has agreed to become a common law employee of the Company or any
Affiliate and is expected to become such within six (6) months from the date of a determination
made for purposes of the Plan.



     2.17 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended from
time to time.



     2.18 “Fair Market Value” of the Stock as of any particular date means,




     (a) if the Stock is traded on a stock exchange,



II-2









 






     (i) and if the Stock is traded on that date, the closing sale price of the
Stock on that date; or




     (ii) and if the Stock is not traded on that date, the closing sale price of the
Stock on the last trading date immediately preceding that date;




as reported on the principal securities exchange on which the Stock is traded; or




     (b) if the Stock is traded in the over-the-counter market,




     (i) and if the Stock is traded on that date, the average between the high bid
and low asked price on that date; or




     (ii) and if the Stock is not traded on that date, the average between the high
bid and low asked price on the last trading date immediately preceding that date;




as reported in such over-the-counter market; provided, however, that (x) if the Stock is not
so traded, or (y) if, in the discretion of the Committee, another means of determining the
fair market value of a share of Stock at such date shall be necessary or advisable, the
Committee may provide for another means for determining such fair market value that complies
with the requirements of Section 409A.



     2.19 “Fiscal Year” means the Company’s fiscal year.



     2.20 “Freestanding SAR” means a SAR that is granted pursuant to Article VI independently of
any Option.



     2.21 “Holder” means a person who has been granted an Award or any person who is entitled to
receive shares of Stock (and/or cash in the case of a Stock Appreciation Right) under an Award.



     2.22 “Incentive Stock Option” or “ISO” means an option which is intended, as evidenced by its
designation, as an incentive stock option within the meaning of section 422 of the Code, the award
of which contains such provisions (including but not limited to the receipt of stockholder approval
of the Plan, if the Award is made prior to such approval) and is made under such circumstances and
to such persons as may be necessary to comply with that section.



     2.23 “Mature Shares” means shares of Stock that the Holder has held for at least six months.



     2.24 “Minimum Statutory Tax Withholding Obligation” means, with respect to an Award, the
amount the Company or an Affiliate is required to withhold for federal, state and local taxes based
upon the applicable minimum statutory withholding rates required by the relevant tax authorities.



     2.25 “Nonqualified Stock Option” or “NQSO” means an Option that is designated as a
nonqualified stock option. Any Option granted hereunder that is not designated as an incentive



II-3









 







stock option shall be deemed to be designated a nonqualified stock option under the Plan and not an
incentive stock option under the Code.



     2.26 “Option” means an Incentive Stock Option or a Nonqualified Stock Option granted pursuant
to Article V.



     2.27 “Optionee” means a person who is granted an Option under the Plan.



     2.28 “Option Price” shall have the meaning ascribed to that term in Section 5.4.



     2.29 “Option Agreement” means a written contract setting forth the terms and conditions of an
Option.



     2.30 “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise
described by the terms and provisions of the Plan that is granted pursuant to Article X.



     2.31 “Parent Corporation” means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company if, at the time of the action or transaction, each of the
corporations other than the Company owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other corporations in the chain.



     2.32 “Performance-Based Award” means a Performance Stock Award, a Performance Unit, or a
Cash-Based Award granted to a Holder under which the fulfillment of performance goals determines
the degree of payout or vesting.



     2.33 “Performance-Based Compensation” means compensation under an Award that satisfies the
requirements of section 162(m) of the Code for deductibility of remuneration paid to Covered
Employees.



     2.34 “Performance Goals” means one or more of the criteria described in Article IX on which
the performance goals applicable to an Award are based.



     2.35 “Performance Period” means the period of time during which the performance goals
applicable to a Performance-Based Award must be met.



     2.36 “Performance Stock Award” means an Award designated as a performance stock award granted
to a Holder pursuant to Article IX.



     2.37 “Performance Unit Award” means an Award designated as a performance unit award granted to
a Holder pursuant to Article IX.



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



II-4









 





     2.39 “Plan” means The Men’s Wearhouse, Inc. 1996 Long-Term Incentive Plan, as set forth in
this document and as it may be amended from time to time.



     2.40 “Restricted Stock” means shares of restricted Stock issued or granted under the Plan
pursuant to Article VII.



     2.41 “Restricted Stock Award” means an authorization by the Committee to issue or transfer
Restricted Stock to a Holder.



     2.42 “Retirement” means retirement in accordance with the terms of a retirement plan that is
qualified under section 401(a) of the Code and maintained by the Company or an Affiliate in which
the Holder is a participant.



     2.43 “Section 409A” means section 409A of the Code and Department of Treasury rules and
regulations issued thereunder.



     2.44 “Stock Appreciation Right” or “SAR” means any stock appreciation right granted pursuant
to Article VI of the Plan.



     2.45 “Stock” means the common stock of the Company, $.01 par value per share (or such other
par value as may be designated by act of the Company’s stockholders).



     2.46 “Subsidiary Corporation” means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of the action or transaction, each
of the corporations other than the last corporation in an unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all classes of stock in one of the other
corporations in the chain.



     2.47 “Substantial Risk of Forfeiture” shall have the meaning ascribed to that term in Section
409A.



     2.48 “Tandem SAR” means a SAR that is granted in connection with a related Option pursuant to
Article VI, the exercise of which shall require forfeiture of the right to purchase a share of the
Stock under the related Option (and when a share of the Stock is purchased under the Option, the
Tandem SAR shall similarly be canceled).



     2.49 “Ten Percent Stockholder” means an individual who, at the time the Option is granted,
owns stock possessing more than ten percent (10%) of the total combined voting power of all classes
of stock or series of the Company or of any Parent Corporation or Subsidiary Corporation. An
individual shall be considered as owning the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole or half blood), spouse,
ancestors and lineal descendants; and stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust, shall be considered as being owned proportionately by or for its
stockholders, partners or beneficiaries.



     2.50 “Termination of Employment” means, in the case of an Award other than an Incentive Stock
Option, the termination of the Award recipient’s employment relationship with the Company and all
Affiliates. “Termination of Employment” means, in the case of an Incentive



II-5









 







Stock Option, the termination of the Optionee’s employment relationship with all of the Company, any Parent
Corporation, any Subsidiary Corporation and any parent or subsidiary corporation (within the
meaning of section 422(a)(2) of the Code) of any such corporation that issues or assumes an
Incentive Stock Option in a transaction to which section 424(a) of the Code applies.



     2.51 “TMW Group” shall have the meaning ascribed to that term in Section 1.2.



II-6









 





ARTICLE III




ELIGIBILITY AND PARTICIPATION




     3.1 Eligibility. The persons who are eligible to receive Awards under the Plan are key
Employees who have substantial responsibility for or involvement with the management and growth of
one or more members of the TMW Group; provided that George Zimmer and James Zimmer shall not be
eligible to participate in the Plan. However, only those persons who are, on the dates of grant,
key employees of the Company or any Parent Corporation or Subsidiary Corporation are eligible for
grants of Incentive Stock Options under the Plan.



     3.2 Participation. Subject to the terms and provisions of the Plan, the Committee may, from
time to time, select from all eligible Employees those persons to whom Awards shall be granted and
shall determine the nature and amount of each Award.



III-1









 





ARTICLE IV




GENERAL PROVISIONS RELATING TO AWARDS




     4.1 Authority to Grant Awards. The Committee may grant Awards to those key Employees as the
Committee shall from time to time determine, under the terms and conditions of the Plan. Subject
only to any applicable limitations set out in the Plan, the number of shares of Stock or other
value to be covered by any Award to be granted under the Plan shall be as determined by the
Committee in its sole discretion.



     4.2 Dedicated Shares; Maximum Awards. The aggregate number of shares of Stock with respect to
which Awards may be granted under the Plan is 2,775,000. The aggregate number of shares of Stock
with respect to which Incentive Stock Options may be granted under the Plan is 2,775,000. The
aggregate number of shares of Stock with respect to which Nonqualified Stock Options may be granted
under the Plan is 2,775,000. The aggregate number of shares of Stock with respect to which Stock
Appreciation Rights may be granted under the Plan is 2,775,000. The aggregate number of shares of
Stock with respect to which Restricted Stock Awards may be granted under the Plan is 1,387,500 The
aggregate number of shares of Stock with respect to which Performance Stock Awards may be granted
under the Plan is 1,387,500. The maximum number of shares of Stock with respect to which Incentive
Stock Options may be granted to an Employee during a Fiscal Year is 900,000. The maximum number of
shares of Stock with respect to which Nonqualified Stock Options may be granted to an Employee or
Director during a Fiscal Year is 900,000. The maximum number of shares of Stock with respect to
which Stock Appreciation Rights may be granted to an Employee or Director during a Fiscal Year is
900,000. The maximum number of shares of Stock with respect to which Restricted Stock Awards may
be granted to an Employee or Director during a Fiscal Year is 675,000. The maximum amount with
respect to which Deferred Stock Unit Awards may be granted to an Employee or Director during a
Fiscal Year may not exceed in value the Fair Market Value of 675,000 shares of Stock determined as
of the date of grant. The maximum number of shares of Stock with respect to which Performance
Stock Awards may be granted to an Employee or Director during a Fiscal Year is 675,000. The
maximum number of shares of Stock with respect to which Performance Unit Awards may be granted to
an Employee or Director during a Fiscal Year is 675,000. The maximum number of shares of Stock
with respect to which Other Stock-Based Awards may be granted to an Employee during a Fiscal Year
is 675,000. The maximum aggregate amount with respect to which Cash-Based Awards may be awarded or
credited to an Employee or Director during a Fiscal Year may not exceed in value $3,000,000
determined as of the date of grant. The maximum aggregate amount with respect to which Performance
Unit Awards may be awarded or credited to an Employee or Director during a Fiscal Year may not
exceed in value $3,000,000 determined as of the date of grant. Each of the foregoing numerical
limits stated in this Section 4.2 shall be subject to adjustment in accordance with the provisions
of Section 4.6. The number of shares of Stock stated in this Section 4.2 shall also be increased
by such number of shares of Stock as become subject to substitute Awards granted pursuant to
Article XI; provided, however, that such increase shall be conditioned upon the approval of the
stockholders of the Company to the extent stockholder approval is required by law or applicable
stock exchange rules.



IV-1









 





     4.3 Shares That Count Against Limit.




     (a) If any outstanding Award expires or terminates for any reason, is settled in cash
in lieu of shares of Stock or any Award is surrendered, the shares of Stock allocable to the
unexercised portion of that Award may again be subject to an Award granted under the Plan.




     (b) If shares of Stock are withheld from payment of an Award to satisfy tax obligations
with respect to the Award, such shares of Stock will not count against the aggregate number
of shares of Stock with respect to which Awards may be granted under the Plan. If a Stock
Appreciation Right is exercised, only the number of shares of Stock actually issued shall be
charged against the maximum number of shares of Stock that may be delivered pursuant to
Awards under the Plan.



     4.4 Non-Transferability. Except as specified in the applicable Award Agreement or in a
domestic relations court order, an Award shall not be transferable by the Holder (whether for
consideration or otherwise) other than by will or under the laws of descent and distribution, and
shall be exercisable, during the Holder’s lifetime, only by him or her. Any attempted assignment
of an Award in violation of this Section 4.4 shall be null and void. In the discretion of the
Committee, any attempt to transfer an Award other than under the terms of the Plan and the
applicable Award Agreement may terminate the Award. No ISO granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, all ISOs granted to an Employee under the Plan shall be
exercisable during his or her lifetime only by the Employee, and after that time, by the Employee’s
heirs or estate.



     4.5 Requirements of Law. The Company shall not be required to sell or issue any shares of
Stock under any Award if issuing those shares of Stock would constitute or result in a violation by
the Holder or the Company of any provision of any law, statute or regulation of any governmental
authority. Specifically, in connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any other Award, the Company
shall not be required to issue any shares of Stock unless the Committee has received evidence
satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in
accordance with applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law. The determination
by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall
in no event be obligated to, register any shares of Stock covered by the Plan pursuant to
applicable securities laws of any country or any political subdivision. In the event the shares of
Stock issuable on exercise of an Option or pursuant to any other Award are not registered, the
Company may imprint on the certificate evidencing the shares of Stock any legend that counsel for
the Company considers necessary or advisable to comply with applicable law, or, should the shares
of Stock be represented by book or electronic entry rather than a certificate, the Company may take
such steps to restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law. The Company shall not be obligated to take
any other affirmative action in order to cause or enable the exercise of an Option or any other
Award, or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of
any governmental authority.



IV-2









 





     4.6 Changes in the Company’s Capital Structure.




     (a) The existence of outstanding Awards shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital structure or
its business, any merger or consolidation of the Company, any issue of bonds, debentures,
preferred or prior preference shares ahead of or affecting the Stock or Stock rights, the
dissolution or liquidation of the Company, any sale or transfer of all or any part of its
assets or business or any other corporate act or proceeding, whether of a similar character
or otherwise.




     (b) If the Company shall effect a subdivision or consolidation of Stock or other
capital readjustment, the payment of a Stock dividend, or other increase or reduction of the
number of shares of Stock outstanding, without receiving compensation therefor in money,
services or property, then (1) the number, class or series and per share price of Stock
subject to outstanding Options or other Awards under the Plan shall be appropriately
adjusted (subject to the restriction in Section 4.11 prohibiting repricing) in such a manner
as to entitle a Holder to receive upon exercise of an Option or other Award, for the same
aggregate cash consideration, the equivalent total number and class or series of Stock the
Holder would have received had the Holder exercised his or her Option or other Award in full
immediately prior to the event requiring the adjustment, and (2) the number and class or
series of Stock then reserved to be issued under the Plan shall be adjusted by substituting
for the total number and class or series of Stock then reserved, that number and class or
series of Stock that would have been received by the owner of an equal number of outstanding shares of Stock of each class or series of Stock as the result of the event requiring the
adjustment.




     (c) If while unexercised Options or other Awards remain outstanding under the Plan (1)
the Company shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other than an entity that was
wholly-owned by the Company immediately prior to such merger, consolidation or other
reorganization), (2) the Company sells, leases or exchanges or agrees to sell, lease or
exchange all or substantially all of its assets to any other person or entity (other than an
entity wholly-owned by the Company), (3) the Company is to be dissolved or (4) the Company
is a party to any other corporate transaction (as defined under section 424(a) of the Code
and applicable Department of Treasury regulations) that is not described in clauses (1), (2)
or (3) of this sentence (each such event is referred to herein as a “Corporate Change”),
then, except as otherwise provided in an Award Agreement or another agreement between the
Holder and the Company (provided that such exceptions shall not apply in the case of a
reincorporation merger), or as a result of the Committee’s effectuation of one or more of
the alternatives described below, there shall be no acceleration of the time at which any
Award then outstanding may be exercised, and no later than ten days after the approval by
the stockholders of the Company of such Corporate Change, the Committee, acting in its sole
and absolute discretion without the consent or approval of any Holder, shall act to effect
one or more of the following alternatives, which may vary among individual Holders and which
may vary among Awards held by any individual Holder (provided that, with respect to a
reincorporation



IV-3









 







merger in which Holders of the Company’s ordinary shares will receive one ordinary
share of the successor corporation for each ordinary share of the Company, none of such
alternatives shall apply and, without Committee action, each Award shall automatically
convert into a similar award of the successor corporation exercisable for the same number of
ordinary shares of the successor as the Award was exercisable for ordinary shares of Stock
of the Company):




     (1) accelerate the time at which some or all of the Awards then
outstanding may be exercised so that such Awards may be exercised in full
for a limited period of time on or before a specified date (before or after
such Corporate Change) fixed by the Committee, after which specified date
all such Awards that remain unexercised and all rights of Holders thereunder
shall terminate;




     (2) require the mandatory surrender to the Company by all or selected
Holders of some or all of the then outstanding Awards held by such Holders
(irrespective of whether such Awards are then exercisable under the
provisions of the Plan or the applicable Award Agreement evidencing such
Award) as of a date, before or after such Corporate Change, specified by the
Committee, in which event the Committee shall thereupon cancel such Award
and the Company shall pay to each such Holder an amount of cash per share
equal to the excess, if any, of the per share price offered to stockholders
of the Company in connection with such Corporate Change over the exercise
prices under such Award for such shares;




     (3) with respect to all or selected Holders, have some or all of their
then outstanding Awards (whether vested or unvested) assumed or have a new
award of a similar nature substituted for some or all of their then
outstanding Awards under the Plan (whether vested or unvested) by an entity
which is a party to the transaction resulting in such Corporate Change and
which is then employing such Holder or which is affiliated or associated
with such Holder in the same or a substantially similar manner as the
Company prior to the Corporate Change, or a parent or subsidiary of such
entity, provided that (A) such assumption or substitution is on a basis
where the excess of the aggregate fair market value of the Stock subject to
the Award immediately after the assumption or substitution over the
aggregate exercise price of such Stock is equal to the excess of the
aggregate fair market value of all Stock subject to the Award immediately
before such assumption or substitution over the aggregate exercise price of
such Stock, and (B) the assumed rights under such existing Award or the
substituted rights under such new Award, as the case may be, will have the
same terms and conditions as the rights under the existing Award assumed or
substituted for, as the case may be;




     (4) provide that the number and class or series of Stock covered by an
Award (whether vested or unvested) theretofore granted



IV-4









 







shall be adjusted so that such Award when exercised shall thereafter
cover the number and class or series of Stock or other securities or
property (including, without limitation, cash) to which the Holder would
have been entitled pursuant to the terms of the agreement or plan relating
to such Corporate Change if, immediately prior to such Corporate Change, the
Holder had been the holder of record of the number of shares of Stock then
covered by such Award; or




     (5) make such adjustments to Awards then outstanding as the Committee
deems appropriate to reflect such Corporate Change (provided, however, that
the Committee may determine in its sole and absolute discretion that no such
adjustment is necessary).




     In effecting one or more of the alternatives set out in paragraphs (3), (4) or (5)
immediately above, and except as otherwise may be provided in an Award Agreement, the
Committee, in its sole and absolute discretion and without the consent or approval of any
Holder, may accelerate the time at which some or all Awards then outstanding may be
exercised.




     (d) In the event of changes in the outstanding Stock by reason of recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes
in capitalization occurring after the date of the grant of any Award and not otherwise
provided for by this Section 4.6, any outstanding Award and any Award Agreement evidencing
such Award shall be subject to adjustment by the Committee in its sole and absolute
discretion as to the number and price of Stock or other consideration subject to such Award.
In the event of any such change in the outstanding Stock, the aggregate number of shares of
Stock available under the Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.




     (e) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company shall be the
surviving corporation, each Holder shall be entitled to have his Restricted Stock
appropriately adjusted based on the manner in which the shares of Stock were adjusted under
the terms of the agreement of merger or consolidation.




     (f) The issuance by the Company of stock of any class or series, or securities
convertible into, or exchangeable for, stock of any class or series, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights or warrants
to subscribe for them, or upon conversion or exchange of stock or obligations of the Company
convertible into, or exchangeable for, stock or other securities, shall not affect, and no
adjustment by reason of such issuance shall be made with respect to, the number, class or
series, or price of shares of Stock then subject to outstanding Options or other Awards.



     4.7 Election Under Section 83(b) of the Code. No Holder shall exercise the election permitted
under section 83(b) of the Code with respect to any Award without the prior written approval of the
Chief Financial Officer of the Company. Any Holder who makes an election



IV-5









 







under section 83(b) of the Code with respect to any Award without the prior written approval
of the Chief Financial Officer of the Company may, in the discretion of the Committee, forfeit any
or all Awards granted to him or her under the Plan.



     4.8 Forfeiture for Cause. Notwithstanding any other provision of the Plan or an Award
Agreement, if the Committee finds by a majority vote that a Holder, before or after his Termination
of Employment (a) committed a fraud, embezzlement, theft, felony or an act of dishonesty in the
course of his employment by the Company or an Affiliate which conduct damaged the Company or an
Affiliate, (b) disclosed trade secrets of the Company or an Affiliate, or (c) violated the terms of
any non-competition, non-disclosure or similar agreement with respect to the Company or any
Affiliate to which the Holder is a party, then as of the date the Committee makes its finding some
or all Awards awarded to the Holder (including vested Awards that have been exercised, vested
Awards that have not been exercised and Awards that have not yet vested), as determined by the
Committee in its sole discretion, and all net proceeds realized with respect to any such Awards,
will be forfeited to the Company on such terms as determined by the Committee. The findings and
decision of the Committee with respect to such matter, including those regarding the acts of the
Holder and the damage done to the Company, will be final for all purposes. No decision of the
Committee, however, will affect the finality of the discharge of the individual by the Company or
an Affiliate.



     4.9 Forfeiture Events. The Committee may specify in an Award Agreement that the Holder’s
rights, payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance conditions of an Award. Such events
may include, but shall not be limited to, Termination of Employment for cause, termination of the
Holder’s provision of services to the Company or its Affiliates, violation of material policies of
the TMW Group, breach of noncompetition, confidentiality, or other restrictive covenants that may
apply to the Holder, or other conduct by the Holder that is detrimental to the business or
reputation of the TMW Group.



     4.10 Award Agreements. Each Award shall be embodied in a written Award Agreement that shall
be subject to the terms and conditions of the Plan. The Award Agreement shall be signed by an
executive officer of the Company, other than the Holder, on behalf of the Company, and may be
signed by the Holder to the extent required by the Committee. The Award Agreement may specify the
effect of a change in control of the Company on the Award. The Award Agreement may contain any
other provisions that the Committee in its discretion shall deem advisable which are not
inconsistent with the terms and provisions of the Plan.



     4.11 Amendments of Award Agreements. The terms of any outstanding Award under the Plan may be
amended from time to time by the Committee in its discretion in any manner that it deems
appropriate and that is consistent with the terms of the Plan. However, no such amendment shall
adversely affect in a material manner any right of a Holder without his or her written consent.
Except as specified in Section 4.6(c), the Committee may not directly or indirectly lower the
exercise price of a previously granted Option or the grant price of a previously granted SAR.



IV-6









 





     4.12 Rights as Stockholder. A Holder shall not have any rights as a stockholder with respect
to Stock covered by an Option, a SAR, a DSU or a Performance Unit Award payable in Stock until the
date, if any, such Stock is issued by the Company; and, except as otherwise provided in Section
4.6, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior
to the date of issuance of such Stock.



     4.13 Issuance of Shares of Stock. Shares of Stock, when issued, may be represented by a
certificate or by book or electronic entry.



     4.14 Restrictions on Stock Received. The Committee may impose such conditions and/or
restrictions on any shares of Stock issued pursuant to an Award as it may deem advisable or
desirable. These restrictions may include, but shall not be limited to, a requirement that the
Holder hold the shares of Stock for a specified period of time.



     4.15 Compliance With Section 409A. Awards shall be designed, granted and administered in such
a manner that they are either exempt from the application of, or comply with, the requirements of
Section 409A. If the Committee determines that an Award, Award Agreement, payment, distribution,
deferral election, transaction, or any other action or arrangement contemplated by the provisions
of the Plan would, if undertaken, cause a Holder to become subject to additional taxes under
Section 409A, then unless the Committee specifically provides otherwise, such Award, Award
Agreement, payment, distribution, deferral election, transaction or other action or arrangement
shall not be given effect to the extent it causes such result and the related provisions of the
Plan and/or Award Agreement will be deemed modified, or, if necessary, suspended in order to comply
with the requirements of Section 409A to the extent determined appropriate by the Committee, in
each case without the consent of or notice to the Holder. The exercisability of an Option or a SAR
shall not be extended to the extent that such extension would subject the Holder to additional
taxes under Section 409A. This Section 4.15 is effective for awards issued under the Plan that are
earned and vested on or after January 1, 2005.



     4.16 Source of Shares Deliverable Under Awards. Any shares of Stock delivered pursuant to an
Award may consist, in whole or in part, of authorized and unissued shares of Stock or of treasury
shares of Stock.




IV-7











 





ARTICLE V




OPTIONS




     5.1 Authority to Grant Options. Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons
in such number and upon such terms as the Committee shall determine.



     5.2 Type of Options Available. Options granted under the Plan may be Incentive Stock Options
intended to satisfy the requirements of section 422 of the Code or Nonqualified Stock Options that
are not intended to satisfy the requirements of section 422 of the Code.



     5.3 Option Agreement. Each Option grant under the Plan shall be evidenced by an Option
Agreement that shall specify (a) whether the Option is intended to be an ISO or a NQSO, (b) the
Option Price, (c) the duration of the Option, (d) the number of shares of Stock to which the Option
pertains, (e) the exercise restrictions applicable to the Option, and (f) such other provisions as
the Committee shall determine that are not inconsistent with the terms and provisions of the Plan.
Notwithstanding the designation of an Option as an ISO in the applicable Option Agreement, to the
extent the limitations of section 422 of the Code are exceeded with respect to the Option, the
portion of the Option in excess of the limitation shall be treated as a NQSO. Effective for
Options granted under the Plan on or after January 1, 2005, an Option granted under the Plan may
not be granted with any Dividend Equivalents rights.



     5.4 Option Price. The price at which shares of Stock may be purchased under an Option (the
“Option Price”) shall not be less than 100 percent (100%) of the Fair Market Value of the shares of
Stock on the date the Option is granted. However, in the case of a Ten Percent Stockholder, the
Option Price for an Incentive Stock Option shall not be less than 110 percent (110%) of the Fair
Market Value of the shares of Stock on the date the Incentive Stock Option is granted. Subject to
the limitations set forth in the preceding sentences of this Section 5.4, the Committee shall
determine the Option Price for each grant of an Option under the Plan.



     5.5 Duration of Options. An Option shall not be exercisable after the earlier of (i) the
general term of the Option specified in Section 5.5(a), or (ii) the period of time specified herein
that follows the Optionee’s death, Disability, Retirement or other Termination of Employment.
Unless the Optionee’s applicable Option Agreement specifies otherwise, an Option shall not continue
to vest after the Optionee’s Termination of Employment for any reason other than the death or
Disability of the Optionee.




     (a) General Term of Option. Unless the Option Agreement specifies a shorter general
term, an Option shall expire on the tenth anniversary of the date the Option is granted.
Notwithstanding the foregoing, unless the Option Agreement specifies a shorter term, in the
case of an Incentive Stock Option granted to a Ten Percent Stockholder, the Option shall
expire on the fifth anniversary of the date the Option is granted.




     (b) Early Termination of Option Due to Termination of Employment Other Than for Death,
Disability or Retirement. Except as may be otherwise expressly provided by the Committee in
an Option Agreement, an Option shall terminate on the



V-1









 







earlier of (1) the date of the expiration of the general term of the Option or (2) the
date that is one day less than one month after the date of the Optionee’s Termination of
Employment, whether with or without cause, for any reason other than the death, Disability
or Retirement of the Optionee, during which period the Optionee shall be entitled to
exercise the Option in respect of the number of shares of Stock that the Optionee would have
been entitled to purchase had the Optionee exercised the Option on the date of such
Termination of Employment. The Committee shall determine whether an authorized leave of
absence, absence on military or government service, or any other absence from service shall
constitute a termination of the employment relationship between the Optionee and the Company
and all Affiliates. Notwithstanding the foregoing, in the case of an Incentive Stock
Option, if an Optionee has an authorized leave of absence from employment with the Company,
a Parent Corporation or a Subsidiary Corporation that exceeds 90 days and the Optionee’s
right to reemployment is not guaranteed by either statute or contract, the Optionee will be
deemed to incur a Termination of Employment on the 91st day of such leave.




     (c) Early Termination of Option Due to Death. Unless the Committee specifies otherwise
in the applicable Option Agreement, in the event of the Optionee’s Termination of Employment
due to death before the date of expiration of the general term of the Option, the Optionee’s
Option shall terminate on the earlier of the date of expiration of the general term of the
Option or the first anniversary of the date of the Optionee’s death, during which period the
Optionee’s executors or administrators or such persons to whom such Options were transferred
by will or by the laws of descent and distribution, shall be entitled to exercise the Option
in respect of the number of shares of Stock that the Optionee would have been entitled to
purchase had the Optionee exercised the Option on the date of his death.




     (d) Early Termination of Option Due to Disability. Unless the Committee specifies
otherwise in the applicable Option Agreement, in the event of the Termination of Employment
due to Disability before the date of the expiration of the general term of the Option, the
Optionee’s Option shall terminate on the earlier of the expiration of the general term of
the Option or the first anniversary of the date of the Termination of Employment due to
Disability, during which period the Optionee shall be entitled to exercise the Option in
respect of the number of shares of Stock that the Optionee would have been entitled to
purchase had the Optionee exercised the Option on the date of such Termination of
Employment.




     (e) Early Termination of Option Due to Retirement. Unless the Committee specifies
otherwise in the applicable Option Agreement, in the event of the Optionee’s Termination of
Employment due to Retirement before the date of the expiration of the general term of the
Option, the Optionee’s Option shall terminate on the earlier of the expiration of the
general term of the Option or the first anniversary of the date of the Termination of
Employment due to Retirement, during which period the Optionee shall be entitled to exercise
the Option in respect of the number of shares of Stock that the Optionee would have been
entitled to purchase had the Optionee exercised the Option on the date of such Termination
of Employment.



V-2









 





     After the death of the Optionee, the Optionee’s executors, administrators or any person or
persons to whom the Optionee’s Option may be transferred by will or by the laws of descent and
distribution, shall have the right, at any time prior to the termination of the Option to exercise
the Option, in respect to the number of all of the remaining unexercised and unexpired shares of
Stock subject to the Option.



     5.6 Amount Exercisable. Each Option may be exercised at the time, in the manner and subject
to the conditions the Committee specifies in the Option Agreement in its sole discretion. Unless
the Committee specifies otherwise in an applicable Option Agreement, an Option Agreement shall set
forth the following terms regarding the exercise of the Option covered by the Option Agreement:




     (a) No Option granted under the Plan may be exercised until an Optionee has completed
one year of continuous employment with the Company or any subsidiary of the Company
following the date of grant;




     (b) Beginning on the day after the first anniversary of the date of grant, an Option
may be exercised up to 1/3 of the shares subject to the Option;




     (c) After the expiration of each succeeding anniversary date of the date of grant, the
Option may be exercised up to an additional 1/3 of the shares initially subject to the
Option, so that after the expiration of the third anniversary of the date of grant, the
Option shall be exercisable in full;




     (d) To the extent not exercised, installments shall be cumulative and may be exercised
in whole or in part until the Option expires on the tenth anniversary of the date of grant.




     However, the Committee, in its discretion, may change the terms of exercise so that any Option
may be exercised so long as it is valid and outstanding from time to time in part or as a whole in
such manner and subject to such conditions as the Committee may set. In addition, the Committee,
in its discretion, may accelerate the time in which any outstanding Option may be exercised.
However, in no event shall any Option be exercisable on or after the tenth anniversary of the date
of the grant of the Option.



     5.7
Exercise of Options.





     (a) General Method of Exercise. Subject to the terms and provisions of the Plan and an
Optionee’s Option Agreement, Options may be exercised in whole or in part from time to time
by the delivery of written notice in the manner designated by the Committee stating (1) that
the Optionee wishes to exercise such option on the date such notice is so delivered, (2) the
number of shares of Stock with respect to which the Option is to be exercised and (3) the
address to which the certificate representing such shares of Stock should be mailed. Except
in the case of exercise by a third party broker as provided below, in order for the notice
to be effective the notice must be accompanied by payment of the Option Price and any
applicable tax withholding amounts which must be made at the time of exercise by any
combination of the following: (a) cash, certified check, bank draft or postal or express
money order for an amount equal to the Option



V-3









 







Price under the Option, (b) Mature Shares with a Fair Market Value on the date of
exercise equal to the Option Price under the Option (if approved in advance by the Committee
or an executive officer of the Company), (c) an election to make a cashless exercise through
a registered broker-dealer (if approved in advance by the Committee or an executive officer
of the Company) or (d) except as specified below, any other form of payment which is
acceptable to the Committee. If Mature Shares are used for payment by the Optionee, the
aggregate Fair Market Value of the shares of Stock tendered must be equal to or less than
the aggregate Option Price of the shares of Stock being purchased upon exercise of the
Option, and any difference must be paid by cash, certified check, bank draft or postal or
express money order payable to the order of the Company.




     If, at the time of receipt by the Company or its delegate of such written notice, (i)
the Company has unrestricted surplus in an amount not less than the Option Price of such
shares of Stock, (ii) all accrued cumulative preferential dividends and other current
preferential dividends on all outstanding shares of preferred stock of the Company have been
fully paid, (iii) the acquisition by the Company of its own shares of Stock for the purpose
of enabling such Optionee to exercise such Option is otherwise permitted by applicable law,
does not require any vote or consent of any stockholder of the Company and does not violate
the terms of any agreement to which the Company is a party or by which it is bound, and (iv)
there shall have been adopted, and there shall be in full force and effect, a resolution of
the Board authorizing the acquisition by the Company of its own shares of stock for such
purpose, then such Optionee may deliver to the Company, in payment of the Option Price of
the shares of Stock with respect to which such Option is exercised, (x) certificates
registered in the name of such Optionee that represent a number of shares of stock legally
and beneficially owned by such Optionee (free of all liens, claims and encumbrances of every
kind) and having a Fair Market Value on the date of receipt by the Company or its delegate
of such written notice that is not greater than the Option Price of the shares of Stock with
respect to which such Option is to be exercised, such certificates to be accompanied by
stock powers duly endorsed in blank by the record holder of the shares of Stock represented
by such certificates, with the signature of such record holder guaranteed by a national
banking association, and (y) if the Option Price of the shares of Stock with respect to
which such Option is to be exercised exceeds such Fair Market Value, a cashier’s check drawn
on a national banking association and payable to the order of the Company, in an amount, in
United States dollars, equal to the amount of such excess. Notwithstanding the provisions
of the immediately preceding sentence, the Committee, in its sole discretion, may refuse to
accept shares of Stock in payment of the Option Price of the shares of Stock with respect to
which such Option is to be exercised and, in that event, any certificates representing
shares of Stock that were received by the Company or its delegate with such written notice
shall be returned to such Optionee, together with notice by the Company or its delegate to
such Optionee of the refusal of the Committee to accept such shares of Stock. If, at the
expiration of seven business days after the delivery to such Optionee of such written notice
from the Company or its delegate, such Optionee shall not have delivered to the Company or
its delegate a cashier’s check drawn on a national banking association and payable to the
order of the Company in an amount, in United States dollars, equal to the Option Price of
the shares of Stock with respect to which such Option is to be exercised, such written



V-4









 







notice from the Optionee to the Company or its delegate shall be ineffective to
exercise such Option.




     Whenever an Option is exercised by exchanging shares of Stock owned by the Optionee,
the Optionee shall deliver to the Company or its delegate certificates registered in the
name of the Optionee representing a number of shares of Stock legally and beneficially owned
by the Optionee, free of all liens, claims, and encumbrances of every kind, accompanied by
stock powers duly endorsed in blank by the record holder of the shares represented by the
certificates, (with signature guaranteed by a commercial bank or trust company or by a
brokerage firm having a membership on a registered national stock exchange). The delivery
of certificates upon the exercise of Option is subject to the condition that the person
exercising the Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition of an Option.




     (b) Issuance of Shares. Subject to Section 4.4 and Section 5.7(c), as promptly as
practicable after receipt of written notification and payment, in the form required by
Section 5.7(a), of an amount of money necessary to satisfy any withholding tax liability
that may result from the exercise of such Option, the Company shall deliver to the Optionee
certificates for the number of shares with respect to which the Option has been exercised,
issued in the Optionee’s name. Delivery of the shares shall be deemed effected for all
purposes when a stock transfer agent of the Company shall have deposited the certificates in
the United States mail, addressed to the Optionee, at the address specified by the Optionee.




     (c) Exercise Through Third-Party Broker. The Committee may permit an Optionee to elect
to pay the Option Price and any applicable tax withholding resulting from such exercise by
authorizing a third-party broker to sell all or a portion of the shares of Stock acquired
upon exercise of the Option and remit to the Company a sufficient portion of the sale
proceeds to pay the Option Price and any applicable tax withholding resulting from such
exercise.




     (d) Limitations on Exercise Alternatives. The Committee shall not permit an Optionee
to pay such Optionee’s Option Price upon the exercise of an Option by having the Company
reduce the number of shares of Stock that will be delivered pursuant to the exercise of the
Option. In addition, the Committee shall not permit an Optionee to pay such Optionee’s
Option Price upon the exercise of an Option by using shares of Stock other than Mature
Shares. An Option may not be exercised for a fraction of a share of Stock.



     5.8 Transferability of Options.





     (a) Incentive Stock Options. No ISO granted under the Plan may be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated, other than by will or by the laws
of descent and distribution. Further, all ISOs granted to an Optionee under the Plan shall
be exercisable during his or her lifetime only by the Optionee, and after that time, by the
Optionee’s heirs or estate.



V-5









 






     (b) Nonqualified Stock Options. Except as otherwise provided in an Optionee’s Option
Agreement, no NQSO granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided in an Optionee’s Option Agreement, all
NQSOs granted to an Optionee under the Plan shall be exercisable during his or her lifetime
only by such Optionee.



     Any attempted assignment of an Option in violation of this Section 5.8 shall be null and void.



     5.9 Notification of Disqualifying Disposition. If any Optionee shall make any disposition of
shares of Stock issued pursuant to the exercise of an ISO under the circumstances described in
section 421(b) of the Code (relating to certain disqualifying dispositions), such Optionee shall
notify the Company of such disposition within ten (10) days thereof.



     5.10 No Rights as Stockholder. An Optionee shall not have any rights as a stockholder with
respect to Stock covered by an Option until the date a stock certificate for such Stock is issued
by the Company; and, except as otherwise provided in Section 4.6, no adjustment for dividends, or
otherwise, shall be made if the record date therefor is prior to the date of issuance of such
certificate.



     5.11 $100,000 Limitation on Incentive Stock Options. To the extent that the aggregate Fair
Market Value of Stock with respect to which Incentive Stock Options first become exercisable by a
Holder in any calendar year exceeds $100,000, taking into account both shares of Stock subject to
Incentive Stock Options under the Plan and Stock subject to incentive stock options under all other
plans of the Company, such Options shall be treated as Nonqualified Stock Options. For this
purpose, the “Fair Market Value” of the Stock subject to Options shall be determined as of the date
the Options were awarded. In reducing the number of Options treated as Incentive Stock Options to
meet the $100,000 limit, the most recently granted Options shall be reduced first. To the extent a
reduction of simultaneously granted Options is necessary to meet the $100,000 limit, the Committee
may, in the manner and to the extent permitted by law, designate which shares of Stock are to be
treated as shares acquired pursuant to the exercise of an Incentive Stock Option.



V-6









 





ARTICLE VI




STOCK APPRECIATION RIGHTS




     6.1 Authority to Grant Stock Appreciation Rights Awards. Subject to the terms and provisions
of the Plan, the Committee, at any time, and from time to time, may grant Stock Appreciation Rights
under the Plan to eligible persons in such number and upon such terms as the Committee shall
determine. Subject to the terms and conditions of the Plan, the Committee shall have complete
discretion in determining the number of SARs granted to each Employee and, consistent with the
provisions of the Plan, in determining the terms and conditions pertaining to such SARs.



     6.2 Type of Stock Appreciation Rights Available. SARs granted under the Plan may be
Freestanding SARs, Tandem SARs or any combination of these forms of SARs.



     6.3 General Terms. Subject to the terms and conditions of the Plan, a SAR granted under the
Plan shall confer on the recipient a right to receive, upon exercise thereof, a cash amount equal
to the excess of (a) the Fair Market Value of one share of the Stock on the date of exercise over
(b) the grant price of the SAR, which shall not be less than 100 percent of the Fair Market Value
of one share of the Stock on the date of grant of the SAR and in no event less than par value of
one share of the Stock. The grant price of a Freestanding SAR shall not be less than the Fair
Market Value of a share of the Stock on the date of grant of the SAR. The grant price of a Tandem
SAR shall equal the Option Price of the Option which is related to the Tandem SAR. Effective for
SARs granted under the Plan on or after January 1, 2005, a SAR granted under the Plan may not be
granted with any Dividend Equivalents rights.



     6.4 Stock Appreciation Right Agreement. Each Award of SARs granted under the Plan shall be
evidenced by an Award Agreement that shall specify (a) whether the SAR is intended to be a
Freestanding SAR or a Tandem SAR, (b) the grant price of the SAR, (c) the term of the SAR, (d) the
vesting and termination provisions and (e) such other provisions as the Committee shall determine
that are not inconsistent with the terms and provisions of the Plan. The Committee may impose such
additional conditions or restrictions on the exercise of any SAR as it may deem appropriate.



     6.5 Term of Stock Appreciation Rights. The term of a SAR granted under the Plan shall be
determined by the Committee, in its sole discretion; provided that no SAR shall be exercisable on
or after the tenth anniversary date of its grant.



     6.6 Exercise of Freestanding SARs. Subject to the terms and provisions of the Plan and the
applicable Award Agreement, Freestanding SARs may be exercised in whole or in part from time to
time by the delivery of written notice in the manner designated by the Committee stating (a) that
the Holder wishes to exercise such SAR on the date such notice is so delivered, (b) the number of
shares of Stock with respect to which the SAR is to be exercised and (c) the address to which the
payment due under such SAR should be mailed. In accordance with applicable law, a Freestanding SAR
may be exercised upon whatever additional terms and conditions the Committee, in its sole
discretion, imposes.



VI-1









 





     6.7 Exercise of Tandem SARs.





     (a) Subject to the terms and provisions of the Plan and the applicable Award Agreement,
Tandem SARs may be exercised for all or part of the shares of Stock subject to the related
Option upon the surrender of the right to exercise the equivalent portion of the related
Option and by the delivery of written notice in the manner designated by the Committee
stating (a) that the Holder wishes to exercise such SAR on the date such notice is so
delivered, (b) the number of shares of Stock with respect to which the SAR is to be
exercised and (c) the address to which the payment due under such SAR should be mailed. A
Tandem SAR may be exercised only with respect to the shares of Stock for which its related
Option is then exercisable. In accordance with applicable law, a Tandem SAR may be
exercised upon whatever additional terms and conditions the Committee, in its sole
discretion, imposes.




     (b) Notwithstanding any other provision of the Plan to the contrary, with respect to a
Tandem SAR granted in connection with an ISO: (1) the Tandem SAR will expire no later than
the expiration of the underlying ISO; (2) the value of the payout with respect to the Tandem
SAR may be for no more than 100 percent (100%) of the excess of the Fair Market Value of the
shares of Stock subject to the underlying ISO at the time the Tandem SAR is exercised over
the Option Price of the underlying ISO; and (3) the Tandem SAR may be exercised only when
the Fair Market Value of the shares of Stock subject to the ISO exceeds the Option Price of
the ISO.



     6.8 Payment of SAR Amount. Upon the exercise of a SAR, an Employee shall be entitled to
receive payment from the Company in an amount determined by multiplying:




     (a) The excess of the Fair Market Value of a share of the Stock on the date of exercise
over the grant price of the SAR by




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


At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Stock of
equivalent value, in some combination thereof or in any other manner approved by the Committee in
its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set
forth in the Award Agreement pertaining to the grant of the SAR.




     6.9 Termination of Employment. Each Award Agreement shall set forth the extent to which the
grantee of a SAR shall have the right to exercise the SAR following the grantee’s Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee, may be
included in the Award Agreement entered into with the grantee, and need not be uniform among all
SARs issued pursuant to the Plan and may reflect distinctions based on the reasons for termination.



     6.10 Nontransferability of SARs. Except as otherwise provided in a Holder’s Award Agreement,
no SAR granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. Further, except as
otherwise provided in a Holder’s Award Agreement, all SARs granted to a Holder under the Plan shall
be exercisable during his or her lifetime only by the



VI-2









 







Holder, and after that time, by the Holder’s heirs or estate. Any attempted assignment of a
SAR in violation of this Section 6.10 shall be null and void.



     6.11 No Rights as Stockholder. A grantee of a SAR award, as such, shall have no rights as a
stockholder.



     6.12 Restrictions on Stock Received. The Committee may impose such conditions and/or
restrictions on any shares of Stock received upon exercise of a SAR granted pursuant to the Plan as
it may deem advisable or desirable. These restrictions may include, but shall not be limited to, a
requirement that the Holder hold the shares of Stock received upon exercise of a SAR for a
specified period of time.



VI-3









 





ARTICLE VII




RESTRICTED STOCK AWARDS




     7.1 Restricted Stock Awards. Subject to the terms and conditions of the Plan, the Committee,
at any time, and from time to time, may make Awards of Restricted Stock to eligible persons in such
numbers and upon such terms as the Committee shall determine. The amount of, the vesting and the
transferability restrictions applicable to any Restricted Stock Award shall be determined by the
Committee in its sole discretion. If the Committee imposes vesting or transferability restrictions
on a Holder’s rights with respect to Restricted Stock, the Committee may issue such instructions to
the Company’s share transfer agent in connection therewith as it deems appropriate. The Committee
may also cause the certificate for shares of Stock issued pursuant to a Restricted Stock Award to
be imprinted with any legend which counsel for the Company considers advisable with respect to the
restrictions or, should the shares of Stock be represented by book or electronic entry rather than
a certificate, the Company may take such steps to restrict transfer of the shares of Stock as
counsel for the Company considers necessary or advisable to comply with applicable law.



     7.2 Restricted Stock Award Agreement. Each Restricted Stock Award shall be evidenced by an
Award Agreement that contains any vesting, transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.



     7.3 Holder’s Rights as Stockholder. Subject to the terms and conditions of the Plan, each
recipient of a Restricted Stock Award shall have all the rights of a stockholder with respect to
the shares of Restricted Stock included in the Restricted Stock Award during the Period of
Restriction established for the Restricted Stock Award. Dividends paid with respect to Restricted
Stock in cash or property other than shares of Stock or rights to acquire shares of Stock shall be
paid to the recipient of the Restricted Stock Award currently. Dividends paid in shares of Stock
or rights to acquire shares of Stock shall be added to and become a part of the Restricted Stock.
During the Period of Restriction, certificates representing the Restricted Stock shall be
registered in the recipient’s name and bear a restrictive legend to the effect that ownership of
such Restricted Stock, and the enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms, and conditions provided in the Plan and the applicable Restricted Stock Award
Agreement. Such certificates shall be deposited by the recipient with the Secretary of the Company
or such other officer of the Company as may be designated by the Committee, together with all stock
powers or other instruments of assignment, each endorsed in blank, which will permit transfer to
the Company of all or any portion of the Restricted Stock which shall be forfeited in accordance
with the Plan and the applicable Restricted Stock Award Agreement.



VII-1









 





ARTICLE VIII




DEFERRED STOCK UNIT AWARDS




     8.1 Authority to Grant Deferred Stock Unit Awards. Subject to the terms and provisions of the
Plan, the Committee, at any time, and from time to time, may grant Deferred Stock Units under the
Plan to eligible persons in such amounts and upon such terms as the Committee shall determine. The
amount of, the vesting and the transferability restrictions applicable to any Deferred Stock Unit
Award shall be determined by the Committee in its sole discretion. The Committee shall maintain a
bookkeeping ledger account which reflects the number of Deferred Stock Units credited under the
Plan for the benefit of a Holder.



     8.2 Deferred Stock Unit Awards. A Deferred Stock Unit shall be similar in nature to
Restricted Stock except that no shares of Stock are actually transferred to the Holder until a
later date specified in the applicable Award Agreement. Each Deferred Stock Unit shall have a
value equal to the Fair Market Value of a share of Stock.



     8.3 Deferred Stock Unit Award Agreement. Each Deferred Stock Unit Award shall be evidenced by
an Award Agreement that contains any Substantial Risk of Forfeiture, vesting, transferability
restrictions, form and time of payment provisions and other provisions not inconsistent with the
Plan as the Committee may specify.



     8.4 Dividend Equivalents. Effective for Deferred Stock Awards granted under the Plan on or
after January 1, 2005, an Award Agreement for a Deferred Stock Unit Award may specify that the
Holder shall be entitled to the payment of Dividend Equivalents under the Award.



     8.5 Form of Payment Under Deferred Stock Unit Award. Payment under a Deferred Stock Unit
Award shall be made in either cash or shares of Stock as specified in the applicable Award
Agreement.



     8.6 Time of Payment Under Deferred Stock Unit Award. A Holder’s payment under a Deferred
Stock Unit Award shall be made at such time as is specified in the applicable Award Agreement. The
Award Agreement shall specify that the payment will be made (a) by a date that is no later than the
date that is two and one-half (2 1/2) months after the end of the Fiscal Year in which the Deferred
Stock Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (b) at a time
that is permissible under Section 409A. This Section 8.6 is effective for awards issued under the
Plan that are earned and vested on or after January 1, 2005.



     8.7 Holder’s Rights as Stockholder. Each recipient of Deferred Stock Units shall have no
rights of a stockholder with respect to the Holder’s Deferred Stock Units. A Holder shall have no
voting rights with respect to any Deferred Stock Unit Awards.



VIII-1









 





ARTICLE IX




PERFORMANCE STOCK AND PERFORMANCE UNIT AWARDS




     9.1 Authority to Grant Performance Stock and Performance Unit Awards. Subject to the terms
and provisions of the Plan, the Committee, at any time, and from time to time, may grant
Performance Stock and Performance Unit Awards under the Plan to eligible persons in such amounts
and upon such terms as the Committee shall determine. The amount of, the vesting and the
transferability restrictions applicable to any Performance Stock or Performance Unit Award shall be
based upon the attainment of such Performance Goals as the Committee may determine. A Performance
Goal for a particular Performance Stock or Performance Unit Award must be established by the
Committee prior to the earlier to occur of (a) 90 days after the commencement of the period of
service to which the Performance Goal relates or (b) the lapse of 25 percent of the period of
service, and in any event while the outcome is substantially uncertain. A Performance Goal must be
objective such that a third party having knowledge of the relevant facts could determine whether
the goal is met. Such a Performance Goal may be based on one or more business criteria that apply
to the Employee, one or more business units of the Company, or the Company as a whole, with
reference to one or more of the following: earnings per share, earnings per share growth, total
shareholder return, economic value added, cash return on capitalization, increased revenue, revenue
ratios (per employee or per customer), net income, stock price, market share, return on equity,
return on assets, return on capital, return on capital compared to cost of capital, return on
capital employed, return on invested capital, shareholder value, net cash flow, operating income,
earnings before interest and taxes, cash flow, cash flow from operations, cost reductions, cost
ratios (per employee or per customer), proceeds from dispositions, project completion time and
budget goals, net cash flow before financing activities, customer growth and total market value.
Goals may also be based on performance relative to a peer group of companies. Unless otherwise
stated, such a Performance Goal need not be based upon an increase or positive result under a
particular business criterion and could include, for example, maintaining the status quo or
limiting economic losses (measured, in each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Performance Goals and Performance Stock or Performance
Unit Awards, it is intended that the Plan will conform with the standards of section 162(m) of the
Code and Treasury Regulations § 1.162-27(e)(2)(i), and the Committee in establishing such goals and
interpreting the Plan shall be guided by such provisions. Prior to the payment of any compensation
based on the achievement of Performance Goals, the Committee must certify in writing that
applicable Performance Goals and any of the material terms thereof were, in fact, satisfied.
Subject to the foregoing provisions, the terms, conditions and limitations applicable to any
Performance Stock or Performance Unit Awards made pursuant to the Plan shall be determined by the
Committee. If the Committee imposes vesting or transferability restrictions on a recipient’s
rights with respect to Performance Stock or Performance Unit Awards, the Committee may issue such
instructions to the Company’s share transfer agent in connection therewith as it deems appropriate.
The Committee may also cause the certificate for shares of Stock issued pursuant to a Performance
Stock or Performance Unit Award to be imprinted with any legend which counsel for the Company
considers advisable with respect to the restrictions or, should the shares of Stock be represented
by book or electronic entry rather than a certificate, the Company may take such steps to restrict
transfer of the shares of Stock as counsel for the Company considers necessary or advisable to
comply with applicable law.



IX-1









 





     Each Performance Stock or Performance Unit Award shall be evidenced by an Award Agreement that
contains any vesting, transferability restrictions and other provisions not inconsistent with the
Plan as the Committee may specify.



     9.2 Time of Payment Under Performance Unit Award. A Holder’s payment under a Performance Unit
Award shall be made at such time as is specified in the applicable Award Agreement. The Award
Agreement shall specify that the payment will be made (a) by a date that is no later than the date
that is two and one-half (2 1/2) months after the end of the calendar year in which the Performance
Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (b) at a time that
is permissible under Section 409A. This Section 9.2 is effective for awards issued under the Plan
that are earned and vested on or after January 1, 2005.



     9.3 Holder’s Rights as Stockholder With Respect to a Performance Stock Award. Subject to the
terms and conditions of the Plan, each Holder of a Performance Stock Award shall have all the
rights of a stockholder with respect to the shares of Stock issued to the Holder pursuant to the
Award during any period in which such issued shares of Stock are subject to forfeiture and
restrictions on transfer, including without limitation, the right to vote such shares of Stock.



     9.4 Increases Prohibited. Neither the Committee nor the Board may increase the amount of
compensation payable under a Performance Stock Award or Performance Unit Award. If the time at
which a Performance Stock Award or Performance Unit Award will vest or be paid is accelerated for
any reason, the number of shares of Stock subject to, or the amount payable under, the Performance
Stock Award or Performance Unit Award shall be reduced pursuant to Department of Treasury
Regulation § 1.162-27(e)(2)(iii) to reasonably reflect the time value of money.



     9.5 Stockholder Approval. No payments of Stock or cash will be made pursuant to this Article
IX unless the stockholder approval requirements of Department of Treasury Regulation §
1.162-27(e)(4) are satisfied.



     9.6 Dividend Equivalents. Effective for Performance Unit Awards granted under the Plan on or
after January 1, 2005, an Award Agreement for a Performance Unit Award may specify that the Holder
shall be entitled to the payment of Dividend Equivalents under the Award.



IX-2









 





ARTICLE X




CASH-BASED AWARDS AND OTHER STOCK-BASED AWARDS




     10.1 Authority to Grant Cash-Based Awards. Subject to the terms and provisions of the Plan,
the Committee, at any time, and from time to time, may grant Cash-Based Awards under the Plan to
Employees in such amounts and upon such terms, including the achievement of specific performance
goals, as the Committee shall determine.



     10.2 Authority to Grant Other Stock-Based Awards. Subject to the terms and provisions of the
Plan, the Committee, at any time, and from time to time, may grant other types of equity-based or
equity-related Awards not otherwise described by the terms and provisions of the Plan (including
the grant or offer for sale of unrestricted shares of Stock) under the Plan to eligible persons in
such amounts and subject to such terms and conditions, as the Committee shall determine. Such
Awards may involve the transfer of actual shares of Stock to Holders, or payment in cash or
otherwise of amounts based on the value of shares of Stock and may include, without limitation,
Awards designed to comply with or take advantage of the applicable local laws of jurisdictions
other than the United States.



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



     10.4 Payment of Cash-Based Awards and Other Stock-Based Awards. Payment, if any, with respect
to a Cash-Based Award or an Other Stock-Based Award shall be made in accordance with the terms of
the Award, in cash or shares of Stock as the Committee determines.



     10.5 Termination of Employment. The Committee shall determine the extent to which a grantee’s
rights with respect to Cash-Based Awards and Other Stock-Based Awards shall be affected by the
grantee’s Termination of Employment. Such provisions shall be determined in the sole discretion of
the Committee and need not be uniform among all Awards of Cash-Based Awards and Other Stock-Based
Awards issued pursuant to the Plan.



     10.6 Nontransferability. Except as otherwise determined by the Committee, neither Cash-Based
Awards nor Other Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and distribution. Further,
except as otherwise provided by the Committee, a Holder’s rights under the Plan, if exercisable,
shall be exercisable during his or her lifetime only by such Holder.



X-1









 





ARTICLE XI




SUBSTITUTION AWARDS




     Awards may be granted under the Plan from time to time in substitution for stock options and
other awards held by employees of other corporations who are about to become Employees, or whose
employer is about to become a parent or subsidiary corporation as contemplated in Section 3.1,
conditioned in the case of an Incentive Stock Option upon the employee becoming an employee of the
Company or a parent or subsidiary corporation of the Company, as the result of a merger of
consolidation of the Company with another corporation, or the acquisition by the Company of
substantially all the assets of another corporation, or the acquisition by the Company of at least
50 percent (50%) of the issued and outstanding stock of another corporation as the result of which
it becomes a subsidiary of the Company. The terms and conditions of the substitute Awards so
granted may vary from the terms and conditions set forth in the Plan to such extent as the Board at
the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the
Award in substitution for which they are granted, but with respect to Options that are Incentive
Stock Options, no such variation shall be such as to affect the status of any such substitute
Option as an incentive stock option under section 422 of the Code.



XI-1









 





ARTICLE XII




ADMINISTRATION




     12.1 Awards. The Plan shall be administered by the Committee or, in the absence of the
Committee, the Plan shall be administered by the Board. The members of the Committee shall serve
at the discretion of the Board. The Committee shall have full and exclusive power and authority to
administer the Plan and to take all actions that the Plan expressly contemplates or are necessary
or appropriate in connection with the administration of the Plan with respect to Awards granted
under the Plan.



     12.2 Authority of the Committee. The Committee shall have full and exclusive power to
interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to
adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem
necessary or proper, all of which powers shall be exercised in the best interests of the Company
and in keeping with the objectives of the Plan. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority of those members
present at any meeting shall decide any question brought before that meeting. Any decision or
determination reduced to writing and signed by a majority of the members shall be as effective as
if it had been made by a majority vote at a meeting properly called and held. All questions of
interpretation and application of the Plan, or as to Awards granted under the Plan, shall be
subject to the determination, which shall be final and binding, of a majority of the whole
Committee. When appropriate, the Plan shall be administered in order to qualify certain of the
Options granted hereunder as Incentive Stock Options. No member of the Committee shall be liable
for any act or omission of any other member of the Committee or for any act or omission on his own
part, including but not limited to the exercise of any power or discretion given to him under the
Plan, except those resulting from his own gross negligence or willful misconduct. In carrying out
its authority under the Plan, the Committee shall have full and final authority and discretion,
including but not limited to the following rights, powers and authorities, to:




     (a) determine the persons to whom and the time or times at which Awards will be made;




     (b) determine the number and exercise price of shares of Stock covered in each Award,
subject to the terms and provisions of the Plan;




     (c) determine the terms, provisions and conditions of each Award, which need not be
identical and need not match the default terms set forth in the Plan;




     (d) accelerate the time at which any outstanding Award will vest;




     (e) prescribe, amend and rescind rules and regulations relating to administration of
the Plan; and




     (f) make all other determinations and take all other actions deemed necessary,
appropriate or advisable for the proper administration of the Plan.



XII-1









 





     The Committee may make an Award to an individual who the Company expects to become an Employee
of the Company or any of its Affiliates within six (6) months after the date of grant of the Award,
with the Award being subject to and conditioned on the individual actually becoming an Employee
within that time period and subject to other terms and conditions as the Committee may establish.
The Committee may correct any defect or supply any omission or reconcile any inconsistency in the
Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary or
desirable to further the Plan’s objectives. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the Plan. As permitted
by law and the terms and provisions of the Plan, the Committee may delegate its authority as
identified in this Section 12.2.



     The actions of the Committee in exercising all of the rights, powers, and authorities set out
in this Article XII and all other Articles of the Plan, when performed in good faith and in its
sole judgment, shall be final, conclusive and binding on all persons. The Committee may employ
attorneys, consultants, accountants, agents, and other persons, any of whom may be an Employee, and
the Committee, the Company, and its officers and Board shall be entitled to rely upon the advice,
opinions, or valuations of any such persons.



     12.3 Decisions Binding. All determinations and decisions made by the Committee and the Board
pursuant to the provisions of the Plan and all related orders and resolutions of the Committee and
the Board shall be final, conclusive and binding on all persons, including the Company, its
stockholders, Employees, Holders and the estates and beneficiaries of Employees and Holders.



     12.4 No Liability. Under no circumstances shall the Company, the Board or the Committee incur
liability for any indirect, incidental, consequential or special damages (including lost profits)
of any form incurred by any person, whether or not foreseeable and regardless of the form of the
act in which such a claim may be brought, with respect to the Plan or the Company’s or the
Committee’s roles in connection with the Plan.



XII-2









 





ARTICLE XIII




AMENDMENT OR TERMINATION OF PLAN




     13.1 Amendment, Modification, Suspension, and Termination. Subject to Section 13.2 the
Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the
Plan and any Award Agreement in whole or in part; provided, however, that, without the prior
approval of the Company’s stockholders and except as provided in Section 4.6, the Committee shall
not directly or indirectly lower the Option Price of a previously granted Option or the grant price
of a previously granted SAR issued under the Plan, and no amendment of the Plan shall be made
without stockholder approval if stockholder approval is required by applicable law or stock
exchange rules.



     13.2 Awards Previously Granted. Notwithstanding any other provision of the Plan to the
contrary, no termination, amendment, suspension, or modification of the Plan or an Award Agreement
shall adversely affect in any material way any Award previously granted under the Plan, without the
written consent of the Holder holding such Award.



XIII-1









 





ARTICLE XIV




MISCELLANEOUS




     14.1 Unfunded Plan/No Establishment of a Trust Fund. Holders shall have no right, title, or
interest whatsoever in or to any investments that the Company or any of its Affiliates may make to
aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or
any other person. To the extent that any person acquires a right to receive payments from the
Company under the Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid from the general funds of
the Company and no special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts, except as expressly set forth in the Plan. No property
shall be set aside nor shall a trust fund of any kind be established to secure the rights of any
Holder under the Plan. All Holders shall at all times rely solely upon the general credit of the
Company for the payment of any benefit which becomes payable under the Plan. The Plan is not
intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.



     14.2 No Employment Obligation. The granting of any Award shall not constitute an employment
contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder. The right of the Company or any
Affiliate to terminate the employment of any person shall not be diminished or affected by reason
of the fact that an Award has been granted to him, and nothing in the Plan or an Award Agreement
shall interfere with or limit in any way the right of the Company or its Affiliates to terminate
any Holder’s employment at any time or for any reason not prohibited by law.



     14.3 Tax Withholding. The Company or any Affiliate shall be entitled to deduct from other
compensation payable to each Holder any sums required by federal, state or local tax law to be
withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award.
In the alternative, the Company may require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check
within ten days after the date of vesting, exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company may reduce the number of shares of
Stock issued to the Holder upon such Holder’s exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of
Stock held back shall not exceed the Company’s or the Affiliate’s Minimum Statutory Withholding Tax
Obligations. The Committee may, in its discretion, permit a Holder to satisfy any Minimum
Statutory Withholding Tax Obligations arising upon the vesting of Award by delivering to the Holder
of the Award a reduced number of shares of Stock in the manner specified herein. If permitted by
the Committee and acceptable to the Holder, at the time of vesting of shares of under the Award,
the Company shall (a) calculate the amount of the Company’s or an Affiliate’s Minimum Statutory
Withholding Tax Obligations on the assumption that all such shares of Stock vested under the Award
are made available for delivery, (b) reduce the number of such shares of Stock made available for
delivery so that the Fair Market



XIV-1









 







Value of the shares of Stock withheld on the vesting date approximates the Company’s or an
Affiliate Minimum Statutory Withholding Tax Obligation and (c) in lieu of the withheld shares of
Stock, remit cash to the United States Treasury and/or other applicable governmental authorities,
on behalf of the Holder, in the amount of the Minimum Statutory Withholding Tax Obligations due.
The Company shall withhold only whole shares of Stock to satisfy its Minimum Statutory Withholding
Tax Obligations. Where the Fair Market Value of the withheld shares of Stock does not equal the
amount of the Minimum Statutory Withholding Tax Obligations, the Company shall withhold shares of
Stock with a Fair Market Value slightly less than the amount of its Minimum Statutory Withholding
Tax Obligation and the Holder must satisfy the remaining Minimum Statutory Withholding Tax
Obligation in some other manner permitted under this Section 14.3. The withheld shares of Stock
not made available for delivery by the Company shall be retained as treasury shares or will be
cancelled and, in either case, the Holder’s right, title and interest in such shares of Stock shall
terminate. The Company shall have no obligation upon vesting or exercise of any Award or lapse of
restrictions on an Award until the Company or an Affiliate has received payment sufficient to cover
the Minimum Statutory Withholding Tax Obligation with respect to that vesting, exercise or lapse of
restrictions. Neither the Company nor any Affiliate shall be obligated to advise a Holder of the
existence of the tax or the amount which it will be required to withhold.



     14.4 Written Agreement. Each Award shall be embodied in a written agreement or statement
which shall be subject to the terms and conditions of the Plan. The Award Agreement shall be
signed by a member of the Committee on behalf of the Committee and the Company or by an executive
officer of the Company, other than the Holder, on behalf of the Company, and may be signed by the
Holder to the extent required by the Committee. The Award Agreement may contain any other
provisions that the Committee in its discretion shall deem advisable which are not inconsistent
with the terms and provisions of the Plan.



     14.5 Indemnification of the Committee. The Company shall indemnify each present and future
member of the Committee against, and each member of the Committee shall be entitled without further
action on his or her part to indemnity from the Company for, all expenses (including attorney’s
fees, the amount of judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably
incurred by such member in connection with or arising out of any action, suit or proceeding in
which such member may be involved by reason of such member being or having been a member of the
Committee, whether or not he or she continues to be a member of the Committee at the time of
incurring the expenses, including, without limitation, matters as to which such member shall be
finally adjudged in any action, suit or proceeding to have been negligent in the performance of
such member’s duty as a member of the Committee. However, this indemnity shall not include any
expenses incurred by any member of the Committee in respect of matters as to which such member
shall be finally adjudged in any action, suit or proceeding to have been guilty of gross negligence
or willful misconduct in the performance of his duty as a member of the Committee. In addition, no
right of indemnification under the Plan shall be available to or enforceable by any member of the
Committee unless, within 60 days after institution of any action, suit or proceeding, such member
shall have offered the Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs, executors or
administrators of each



XIV-2









 







member of the Committee and shall be in addition to all other rights to which a member of the
Committee may be entitled as a matter of law, contract or otherwise.



     14.6 Gender and Number. If the context requires, words of one gender when used in the Plan
shall include the other and words used in the singular or plural shall include the other.



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



     14.8 Headings. Headings of Articles and Sections are included for convenience of reference
only and do not constitute part of the Plan and shall not be used in construing the terms and
provisions of the Plan.



     14.9 Other Compensation Plans. The adoption of the Plan shall not affect any other option,
incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor
shall the Plan preclude the Company from establishing any other forms of incentive compensation
arrangements for Employees.



     14.10 Other Awards. The grant of an Award shall not confer upon the Holder the right to
receive any future or other Awards under the Plan, whether or not Awards may be granted to
similarly situated Holders, or the right to receive future Awards upon the same terms or conditions
as previously granted.



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



     14.12 Law Limitations/Governmental Approvals. The granting of Awards and the issuance of
shares of Stock under the Plan shall be subject to all applicable laws, rules, and regulations, and
to such approvals by any governmental agencies or national securities exchanges as may be required.



     14.13 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of
title for shares of Stock issued under the Plan prior to:




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




     (b) completion of any registration or other qualification of the Stock under any
applicable national or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable.



     14.14 Inability to Obtain Authority. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any shares of Stock hereunder, shall



XIV-3









 







relieve the Company of any liability in respect of the failure to issue or sell such shares of
Stock as to which such requisite authority shall not have been obtained.



     14.15 Investment Representations. The Committee may require any person receiving Stock
pursuant to an Award under the Plan to represent and warrant in writing that the person is
acquiring the shares of Stock for investment and without any present intention to sell or
distribute such Stock.



     14.16 Persons Residing Outside of the United States. Notwithstanding any provision of the
Plan to the contrary, in order to comply with the laws in other countries in which the TMW Group
operates or has Employees, the Committee, in its sole discretion, shall have the power and
authority to:




     (a) determine which Affiliates shall be covered by the Plan;




     (b) determine which persons employed outside the United States are eligible to
participate in the Plan;




     (c) amend or vary the terms and provisions of the Plan and the terms and conditions of
any Award granted to persons who reside outside the United States;




     (d) establish subplans and modify exercise procedures and other terms and procedures to
the extent such actions may be necessary or advisable — any subplans and modifications to
Plan terms and procedures established under this Section 14.16 by the Committee shall be
attached to the Plan document as Appendices; and




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



     Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards
shall be granted, that would violate the Exchange Act, the Code, any securities law or governing
statute or any other applicable law.



     14.17 No Fractional Shares. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash, additional Awards,
or other property shall be issued or paid in lieu of fractional shares of Stock or whether such
fractional shares or any rights thereto shall be forfeited or otherwise eliminated.



     14.18 Arbitration of Disputes. Any controversy arising out of or relating to the Plan or an
Option Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of
the American Arbitration Association. The arbitration shall be final and binding on the parties.



     14.19 Governing Law. The provisions of the Plan and the rights of all persons claiming
thereunder shall be construed, administered and governed under the laws of the State of Texas.




XIV-4