exv10w2



 




EXHIBIT
10.2

KRAFT FOODS INC. 2005 PERFORMANCE INCENTIVE PLAN




(Amended April 24, 2007)




Section 1. Purpose; Definitions.



The purpose of the Plan is to support the Company’s ongoing efforts to develop and retain
world-class leaders and to provide the Company with the ability to provide incentives more directly
linked to the profitability of the Company’s businesses and increases in shareholder value.



For purposes of the Plan, the following terms are defined as set forth below:





	(a)	 	“Annual Incentive Award” means an Incentive Award made pursuant to Section 5(a) with a
Performance Cycle of one year or less.
	 
	(b)	 	“Awards” mean grants under the Plan or, to the extent relevant, under any Prior Plan, of
Incentive Awards, Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, Deferred Stock Units, or Other Stock-Based Awards.
	 
	(c)	 	“Board” means the Board of Directors of the Company.
	 
	(d)	 	“Cause” means termination because of:






(i) Continued failure to substantially perform the Participant’s job’s duties
(other than resulting from incapacity due to disability);




(ii) Gross negligence, dishonesty, or violation of any reasonable rule or
regulation of the Company where the violation results in significant damage to the
Company; or




(iii) Engaging in other conduct which adversely reflects on the Company in any
material respect.




	(e)	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any
successor thereto.
	 
	(f)	 	“Commission” means the Securities and Exchange Commission or any successor agency.
	 
	(g)	 	“Committee” means the Compensation Committee of the Board or a subcommittee thereof, any
successor thereto or such other committee or subcommittee as may be designated by the Board to
administer the Plan.
	 
	(h)	 	“Common Stock” or “Stock” means the Class A Common Stock of the Company.
	 
	(i)	 	“Company” means Kraft Foods Inc., a corporation organized under the laws of the Commonwealth
of Virginia, or any successor thereto.




 









 






	(j)	 	“Deferred Stock Unit” means an Award described in Section 5(a)(v).
	 
	(k)	 	“Economic Value Added” means net after-tax operating profit less the cost of capital.
	 
	(l)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and
any successor thereto.
	 
	(m)	 	“Fair Market Value” means, as of any given date, the mean between the highest and lowest
reported sales prices of the Common Stock on the New York Stock Exchange-Composite
Transactions or, if no such sale of Common Stock is reported on such date, the fair market
value of the Stock as determined by the Committee in good faith; provided, however, that the
Committee may in its discretion designate the actual sales price as Fair Market Value in the
case of dispositions of Common Stock under the Plan.
	 
	(n)	 	“Good Reason” means:






	 	(i)	 	the assignment to the Participant of any duties substantially inconsistent with
the Participant’s position, authority, duties or responsibilities in effect immediately
prior to the Change in Control, or any other action by the Company that results in a
marked diminution in the Participant’s position, authority, duties or responsibilities,
excluding for this purpose:






	 	a.	 	changes in the Participant’s position, authority, duties or
responsibilities which are consistent with the Participant’s education,
experience, etc.;
	 
	 	b.	 	an isolated, insubstantial and inadvertent action not taken in
bad faith and that is remedied by the Company promptly after receipt of notice
thereof given by the Participant;






	 	(ii)	 	any reduction in the Participant’s base salary, annual incentive or long-term
incentive opportunity as in effect immediately prior to the Change in Control, other
than an isolated, insubstantial and inadvertent failure not occurring in bad faith and
that is remedied by the Company promptly after receipt of notice thereof given by the
Participant;
	 
	 	(iii)	 	the Company’s, its subsidiaries’ or affiliates’ requiring the Participant to be
based at any office or location other than any other location which does not extend the
Participant’s current home to work location commute by more than 50 miles;
	 
	 	(iv)	 	the Company’s, its subsidiaries’ or affiliates’ requiring the Participant to
travel on business to a substantially greater extent than required immediately prior to
the Change in Control;
	 
	 	(v)	 	any alleged termination by the Company, its subsidiaries or affiliates of the
Participant’s employment otherwise than as expressly permitted by this Plan; or
	 
	 	(vi)	 	any failure by the Company to require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform this Plan
in the same manner and to the




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	 	 	 	same extent that the Company would be required to perform it if no such succession
had taken place, as required by Article 5.






	(o)	 	“Incentive Award” means any Award that is either an Annual Incentive Award or a Long-Term
Incentive Award.
	 
	(p)	 	“Incentive Stock Option” means any Stock Option that complies with Section 422 (or any
amended or successor provision) of the Code.
	 
	(q)	 	“Long-Term Incentive Award” means an Incentive Award made pursuant to Section 5(a)(vi) with a
Performance Cycle of more than one year.
	 
	(r)	 	“Nonqualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
	 
	(s)	 	“Other Stock-Based Award” means an Award made pursuant to Section 5(a)(iii).
	 
	(t)	 	“Participant” means any eligible individual as set forth in Section 3 to whom an Award is
granted.
	 
	(u)	 	“Performance Cycle” means the period selected by the Committee during which the performance
of the Company or any subsidiary, affiliate or unit thereof or any individual is measured for
the purpose of determining the extent to which an Award subject to Performance Goals has been
earned.
	 
	(v)	 	“Performance Goals” mean the objectives for the Company or any subsidiary or affiliate or any
unit thereof or any individual that may be established by the Committee for a Performance
Cycle with respect to any performance-based Awards contingently awarded under the Plan.
Performance Goals may be provided in absolute terms, or in relation to the Company’s peer
group. The Company’s peer group will be determined by the Committee, in its sole discretion.
The Performance Goals for Awards that are intended to constitute “performance-based”
compensation within the meaning of Section 162(m) (or any amended or successor provision) of
the Code shall be based on one or more of the following criteria: earnings per share, total
stockholder return, return on equity, return on capital, net income, adjusted net income, cash
flow, operating income or Economic Value Added.
	 
	(w)	 	“Plan” means this Kraft Foods Inc. 2005 Performance Incentive Plan, as amended from time to
time.
	 
	(x)	 	“Prior Plan” means the Kraft Foods Inc. 2001 Performance Incentive Plan.
	 
	(y)	 	“Restricted Period” means the period during which an Award may not be sold, assigned,
transferred, pledged or otherwise encumbered.




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	(z)	 	“Restricted Stock” means an Award of shares of Common Stock pursuant to Section 5(a)(iv).
	 
	(aa)	 	“Restricted Stock Unit” means an Award described in Section 5(a)(v).
	 
	(bb)	 	“Spread Value” means, with respect to a share of Common Stock subject to an Award, an amount
equal to the excess of the Fair Market Value, on the date such value is determined, over the
Award’s exercise or grant price, if any.
	 
	(cc)	 	“Stock Appreciation Right” or “SAR” means a right granted pursuant to Section 5(a)(ii).
	 
	(dd)	 	“Stock Option” means an Incentive Stock Option or a Nonqualified Stock Option granted
pursuant to Section 5(a)(i).




In addition, the terms “Affiliated Group,” “Business Combination,” “Change in Control,” “Change in
Control Price,” “Incumbent Board,” “Outstanding Company Stock,” “Outstanding Company Voting
Securities” and “Person” have the meanings set forth in Section 6.




Section 2. Administration.



The Plan shall be administered by the Committee, which shall have the power to interpret the Plan
and to adopt such rules and guidelines for carrying out the Plan as it may deem appropriate. The
Committee shall have the authority to adopt such modifications, procedures and subplans as may be
necessary or desirable to comply with the laws, regulations, compensation practices and tax and
accounting principles of the countries in which the Company, a subsidiary or an affiliate may
operate to assure the viability of the benefits of Awards made to individuals employed in such
countries and to meet the objectives of the Plan.



Subject to the terms of the Plan, the Committee shall have the authority to determine those
employees eligible to receive Awards and the amount, type and terms of each Award and to establish
and administer any Performance Goals applicable to such Awards. The Committee may delegate its
authority and power under the Plan to one or more officers of the Company, subject to guidelines
prescribed by the Committee, but only with respect to Participants who are not subject to either
Section 16 (or any amended or successor provision) of the Exchange Act or Section 162(m) (or any
amended or successor provision) of the Code.



Any determination made by the Committee or by one or more officers pursuant to delegated authority
in accordance with the provisions of the Plan with respect to any Award shall be made in the sole
discretion of the Committee or such delegate, and all decisions made by the Committee or any
appropriately designated officer pursuant to the provisions of the Plan shall be final and binding
on all persons, including the Company and Plan Participants.




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Section 3. Eligibility.



Salaried employees of the Company, its subsidiaries and affiliates who are responsible for or
contribute to the management, growth and profitability of the business of the Company, its
subsidiaries or its affiliates, are eligible to be granted Awards under the Plan; provided that
employees of Altria Group, Inc. and its subsidiaries other than the Company and the Company’s
subsidiaries are not eligible to be granted Awards under the Plan (except that employees and former
employees of Altria Group, Inc. and its subsidiaries shall be eligible to be granted Awards under
the Plan in connection with any event as a result of which the Company ceases to be a subsidiary of
Altria Group, Inc.).




Section 4. Common Stock Subject to the Plan.





	(a)	 	Common Stock Available. The total number of shares of Common Stock reserved and available for
distribution pursuant to the Plan shall be 150,000,000 shares. An amount not to exceed
45,000,000 shares of Common Stock may be issued pursuant to Restricted Stock Awards, Other
Stock-Based Awards, and Incentive Awards, except that Other Stock-Based Awards with values
based on Spread Values shall not be included in this limitation. Except as otherwise provided
herein, any Award made under the Prior Plan before the expiration of such Prior Plan shall
continue to be subject to the terms and conditions of such Prior Plan and the applicable Award
agreement. Any adjustments, substitutions, or other actions that may be made or taken in
accordance with Section 4(b) below in connection with the corporate transactions or events
described therein shall, to the extent applied to outstanding Awards made under the Prior
Plan, be deemed made from shares reserved for issuance under such Prior Plan, rather than this
Plan, pursuant to the authority of the Board under the Prior Plan to make adjustments and
substitutions in such circumstances to the aggregate number and kind of shares reserved for
issuance under the Prior Plan and to Awards granted under the Prior Plan. To the extent any
Award under this Plan is exercised or cashed out or terminates or expires or is forfeited
without a payment being made to the Participant in the form of Common Stock, the shares
subject to such Award that were not so paid, if any, shall again be available for distribution
in connection with Awards under the Plan; provided, however, that any shares which are
available again for Awards under the Plan also shall count against the limit described in
Section 5(b)(i). If an SAR or similar Award based on Spread Value with respect to shares of
Common Stock is exercised, only the number of shares of Common Stock issued, if any, will be
deemed delivered for purposes of determining the maximum number of Shares available for
delivery under the Plan. Any shares of Common Stock that are used by a Participant as full or
partial payment of withholding or other taxes or as payment for the exercise or conversion
price of an Award under the Plan shall be available for distribution in connection with Awards
under the Plan. If an SAR or similar Award based on Spread Value with respect to shares of
Common Stock is exercised, the full number of shares of Common Stock with respect to which the
Award is measured will nonetheless be deemed distributed for purposes of determining the
maximum number of shares remaining available for delivery under the Plan. Similarly, any
 shares of Common Stock that are used by a Participant as full or partial payment




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	 	 	of withholding or other taxes or as payment for the exercise or conversion price of an
Award under the Plan will be deemed distributed for purposes of determining the maximum
number of shares remaining available for delivery under the Plan.
	 
	(b)	 	Adjustments for Certain Corporate Transactions






	 	(i)	 	In the event of any merger, share exchange, reorganization, consolidation,
recapitalization, reclassification, distribution, stock dividend, stock split, reverse
stock split, split-up, spin-off, issuance of rights or warrants or other similar
transaction or event affecting the Common Stock or any event as a result of which the
Company ceases to be a subsidiary of Altria Group, Inc., in any case after adoption of
the Plan by the Board, the Committee is authorized to make such adjustments or
substitutions with respect to the Plan and the Prior Plan and to Awards granted
thereunder as it deems appropriate to reflect the occurrence of such event, including,
but not limited to, adjustments (A) to the aggregate number and kind of securities
reserved for issuance under the Plan, (B) to the Award limits set forth in Section 5,
(C) to the Performance Goals or Performance Cycles of any outstanding
Performance-Based Awards, and (D) to the number and kind of securities subject to
outstanding Awards and, if applicable, the grant or exercise price or Spread Value of
outstanding Awards. In addition, the Committee may make an Award in substitution for
incentive awards, stock awards, stock options or similar awards held by an individual
who is, previously was, or becomes an employee of the Company, a subsidiary or an
affiliate in connection with a transaction described in this Section 4(b)(i).
Notwithstanding any provision of the Plan (other than the limitation set forth in
Section 4(a)), the terms of such substituted Awards shall be as the Committee, in its
discretion, determines is appropriate.
	 
	 	(ii)	 	In connection with any of the events described in 4(b)(i), the Committee
shall also have authority with respect to the Plan and the Prior Plan and to Awards
granted thereunder (A) to grant Awards (including Stock Options, Stock Appreciation
Rights, and Other Stock-Based Awards) with a grant price that is less than Fair Market
Value on the date of grant in order to preserve existing gain under any similar type
of award previously granted by the Company or another entity to the extent that the
existing gain would otherwise be diminished without payment of adequate compensation
to the holder of the award for such diminution, and (B) except as may otherwise be
required under an applicable Award agreement, to cancel or adjust the terms of an
outstanding Award as appropriate to reflect the substitution for the outstanding Award
of an award of equivalent value granted by another entity. In connection with a
spin-off or similar corporate transaction, the adjustments described in this Section
4(b) may include, but are not limited to, (C) the imposition of restrictions on any
distribution with respect to Restricted Stock or similar Awards and (D) the
substitution of comparable Stock Options to purchase the stock of another entity or
Stock Appreciation Rights, Restricted Stock




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	 	 	 	Units, Deferred Stock Units or Other Stock-Based Awards denominated in the
securities of another entity, which may be settled in the form of cash, Common
Stock, stock of such other entity, or other securities or property, as determined
by the Committee; and, in the event of such a substitution, references in this Plan
and the Prior Plan and in the applicable Award agreements thereunder to “Common
Stock” or “Stock” shall be deemed (except for purposes of Section 6(b) hereunder
and for any similar provisions of the Prior Plan or applicable Award agreements) to
also refer to the securities of the other entity where appropriate.
	 
	 	(iii)	 	In connection with any of the events described in Section 4(b)(i), with
respect to the Plan and the Prior Plan and to Awards granted hereunder, the Committee
is also authorized to provide for the payment of any outstanding Awards in cash,
including, but not limited to, payment of cash in lieu of any fractional Awards.
	 
	 	(iv)	 	In the event of any conflict between this Section 4(b) and other provisions
of the Plan or the Prior Plan, the provisions of this section shall control. Receipt
of an Award under the Plan shall constitute an acknowledgement by the Participant
receiving such Award of the Committee’s ability to adjust Awards under the Prior Plans
in a manner consistent with this Section 4(b).





Section 5. Awards.





	(a)	 	General. The types of Awards that may be granted under the Plan are set forth below. Awards
may be granted singly, in combination or in tandem with other Awards.






	 	(i)	 	Stock Options. A Stock Option represents the right to purchase a share of
Stock at a predetermined grant price. Stock Options granted under the Plan may be in
the form of Incentive Stock Options or Nonqualified Stock Options, as specified in the
Award agreement but no Stock Option designated as an Incentive Stock Option shall be
invalid in the event that it fails to qualify as an Incentive Stock Option. The term
of each Stock Option shall be set forth in the Award agreement, but no Stock Option
shall be exercisable more than ten years after the grant date. The grant price per
share of Common Stock purchasable under a Stock Option shall not be less than 100% of
the Fair Market Value on the date of grant. Subject to the applicable Award agreement,
Stock Options may be exercised, in whole or in part, by giving written notice of
exercise specifying the number of shares to be purchased. Such notice shall be
accompanied by payment in full of the purchase price by certified or bank check or
such other instrument as the Company may accept (including a copy of instructions to a
broker or bank acceptable to the Company to deliver promptly to the Company an amount
sufficient to pay the purchase price). Unless otherwise determined by the Committee,
payment in full or in part may also be made in the form of Common Stock already owned
by




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	 	 	 	the Participant valued at Fair Market Value on the day preceding the date of
exercise; provided, however, that such Common Stock shall not have been acquired by
the Participant within the six months following the exercise of a Stock Option or
Stock Appreciation Right, within six months after the lapse of restrictions on
Restricted Stock, or within six months after the receipt of Common Stock from the
Company, whether in settlement of any Award or otherwise.
	 
	 	(ii)	 	Stock Appreciation Rights. An SAR represents the right to receive a payment,
in cash, shares of Common Stock, or both (as determined by the Committee), with a
value equal to the Spread Value on the date the SAR is exercised. The grant price of
an SAR shall be set forth in the applicable Award agreement and shall not be less than
100% of the Fair Market Value on the date of grant. Subject to the terms of the
applicable Award agreement, an SAR shall be exercisable, in whole or in part, by
giving written notice of exercise.
	 
	 	(iii)	 	Other Stock-Based Awards. Other Stock-Based Awards are Awards, other than
Stock Options, SARs, Restricted Stock, Restricted Stock Units, or Deferred Stock
Units, that are denominated in, valued in whole or in part by reference to, or
otherwise based on or related to, Common Stock. The grant, purchase, exercise,
exchange or conversion of Other Stock-Based Awards granted under this subsection (iii)
shall be on such terms and conditions and by such methods as shall be specified by the
Committee. Where the value of an Other Stock-Based Award is based on the Spread Value,
the grant price for such an Award will not be less than 100% of the Fair Market Value
on the date of grant.
	 
	 	(iv)	 	Restricted Stock. Shares of Restricted Stock are shares of Common Stock that
are awarded to a Participant and that during the Restricted Period may be forfeitable
to the Company upon such conditions as may be set forth in the applicable Award
agreement. Except as provided in the applicable Award agreement, Restricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered during the
Restricted Period. Except as provided in the applicable Award agreement, a Participant
shall have with respect to such Restricted Stock all the rights of a holder of Common
Stock during the Restricted Period.
	 
	 	(v)	 	Restricted Stock Units and Deferred Stock Units. Restricted Stock Units and
Deferred Stock Units represent the right to receive shares of Common Stock, cash, or
both (as determined by the Committee) upon satisfaction of such conditions as may be
set forth in the applicable Award agreement. Except as provided in the applicable
Award agreement, Restricted Stock Units and Deferred Stock Units may not be sold,
assigned, transferred, pledged or otherwise encumbered during the Restricted Period.
Except as provided in the applicable Award agreement, a Participant shall have with
respect to such Restricted Stock Units and Deferred Stock Units none of the rights of
a holder of Common Stock unless and until shares of




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	 	 	 	Common Stock are actually delivered in satisfaction of the restrictions and other
conditions of such Restricted Stock Units or Deferred Stock Units.
	 
	 	(vi)	 	Incentive Awards. Incentive Awards are performance-based Awards that are
expressed in U.S. currency or Common Stock or any combination thereof. Incentive
Awards shall either be Annual Incentive Awards or Long-Term Incentive Awards.






	(b)	 	Maximum Awards. Subject to the exercise of the Committee’s authority pursuant to Section 4:






	 	(i)	 	The total number of shares of Common Stock subject to Stock Options and Stock
Appreciation Rights awarded during any calendar year to any Participant shall not
exceed 3,000,000 shares.
	 
	 	(ii)	 	The total amount of any Annual Incentive Award awarded to any Participant
with respect to any Performance Cycle, taking into account the cash and the Fair
Market Value of any Common Stock payable with respect to such Award, shall not exceed
$10,000,000.
	 
	 	(iii)	 	The total amount of any Long-Term Incentive Award awarded to any Participant
with respect to any Performance Cycle shall not exceed 400,000 shares of Common Stock
multiplied by the number of years in the Performance Cycle or, in the case of Awards
expressed in currency, $8,000,000 multiplied by the number of years in the Performance
Cycle.
	 
	 	(iv)	 	An amount not in excess of 1,000,000 shares of Common Stock may be issued or
issuable to any Participant in a Plan Year pursuant to Restricted Stock, Restricted
Stock Units, Deferred Stock Units, and Other Stock-Based Awards, except that Other
Stock-Based Awards with values based on Spread Values shall not be included in this
limitation.






	(c)	 	Performance-Based Awards. Any Awards granted pursuant to the Plan may be in the form of
performance-based Awards through the application of Performance Goals and Performance Cycles.





Section 6. Change in Control Provisions.





	(a)	 	Impact of Event. Notwithstanding any other provision of the Plan to the contrary, in the
event of a Change in Control (as defined below in 6(a)(vii)):






	 	(i)	 	If and to the extent that outstanding Awards, other than Incentive
Awards, under the Plan (A) are assumed by the successor corporation
(or affiliate thereto) or (B) are replaced with equity awards that
preserve the existing value of the Awards at the time of the Change in
Control and provide for subsequent payout in accordance with a vesting
schedule and Performance Goals, as applicable, that are the same or
more favorable to the Participants




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	 	 	 	than the vesting schedule and
Performance Goals applicable to the Awards, then all such Awards or
such substitutes thereof shall remain outstanding and be governed by
their respective terms and the provisions of the Plan subject to
Section 6(a)(iv) below.
	 
	 	(ii)	 	If and to the extent that outstanding Awards, other than Incentive
Awards, under the Plan are not assumed or replaced in accordance with
Section 6(a)(i) above, then upon the Change in Control the following
treatment (referred to as “Change-in-Control Treatment”) shall apply
to such Awards: (A) outstanding Options and SARs shall immediately
vest and become exercisable; (B) the restrictions and other
conditions applicable to outstanding Restricted Shares, Restricted
Stock Units and Stock Awards, including vesting requirements, shall
immediately lapse; such Awards shall be free of all restrictions and
fully vested; and, with respect to Restricted Stock Units, shall be
payable immediately in accordance with their terms or, if later, as
of the earliest permissible date under Code Section 409A.
	 
	 	(iii)	 	If and to the extent that outstanding Awards under the Plan are not
assumed or replaced in accordance with Section 6(a)(i) above, then
in connection with the application of the Change-in-Control
Treatment set forth in Section 6(a)(ii) above, the Board may, in its
sole discretion, provide for cancellation of such outstanding Awards
at the time of the Change in Control in which case a payment of
cash, property or a combination thereof shall be made to each such
Participant upon the consummation of the Change in Control that is
determined by the Board in its sole discretion and that is at least
equal to the excess (if any) of the value of the consideration that
would be received in such Change in Control by the holders of the
securities of Kraft Foods Inc. relating to such Awards over the
exercise or purchase price (if any) for such Awards.
	 
	 	(iv)	 	If and to the extent that (A) outstanding Awards are assumed or
replaced in accordance with Section 6(a)(i) above and (B) a
Participant’s employment with, or performance of services for, the
Company is terminated by the Company for any reasons other than Cause
or, by such Participant eligible to participate in the Kraft Foods
Inc. Change in Control Plan for Key Executives, for Good Reason, in
each case, within the two-year period commencing on the Change in
Control, then, as of the date of such Participant’s termination, the
Change-in-Control Treatment set forth in Section 6(a)(ii) above shall
apply to all assumed or replaced Awards of such Participant then
outstanding.
	 
	 	(v)	 	Outstanding Options or SARs that are assumed or replaced
in accordance with Section 6(a)(i) may be exercised by the
Participant in accordance with the applicable terms and
conditions of such Award as set forth in the applicable
award agreement or elsewhere; provided, however, that
Options or SARs that become exercisable in accordance with
Section 6(a)(iv) may be exercised until the expiration of
the original full term of such Option or SAR
notwithstanding the other original terms and conditions of
such Award.




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	 	(vi)	 	Any Incentive Awards relating to Performance Cycles prior to the Performance
Cycle in which the Change in Control occurs that have been earned but not paid shall
become immediately payable in cash. In addition, each Participant who has been awarded
an Incentive Award shall be deemed to have earned a pro rata Incentive Award equal to
the product of (A) such Participant’s target award opportunity for such Performance
Cycle, and (B) a fraction, the numerator of which is the number of full or partial
months that have elapsed since the beginning of such Performance Cycle to the date on
which the Change in Control occurs, and the denominator of which is the total number
of months in such Performance Cycle.
	 
	 	(vii)	 	Definition of Change in Control. “Change in Control” means the occurrence of
any of the following events:
	 
	 	 	 	(A) Acquisition of 20% or more of the outstanding voting securities of the Company
by another entity or group; excluding, however, the following:






(1) any acquisition by the Company or any of its Affiliates;




(2) any acquisition by an employee benefit plan or related trust sponsored
or maintained by the Company or any of its Affiliates; or




(3) any acquisition pursuant to a merger or consolidation described in
clause (C);




(B) During any consecutive 24-month period, persons who constitute the Board at the
beginning of the period cease to constitute at least 50% of the Board (unless the
election of each new Board member was approved by a majority of directors who began
the two-year period);




(C) The consummation of a merger or consolidation of the Company with another
company, and the Company is not the surviving company; or, if after such
transaction, the other entity owns, directly or indirectly, 50% or more of the
outstanding voting securities of the Company; excluding, however, a transaction
pursuant to which all or substantially all of the individuals or entities who are
the beneficial owners of the outstanding voting securities of the Company
immediately prior to such transaction will beneficially own, directly or
indirectly, more than 50% of the combined voting power of the outstanding
securities entitled to vote generally in the election of directors (or similar
persons) of the entity resulting from such transaction (including, without
limitation, an entity which as a result of such transaction owns the Company either
directly or indirectly) in substantially the same proportions relative to each
other as their ownership, immediately prior to such transaction, of the outstanding
voting securities; or




(D) The consummation of a plan of complete liquidation of the Company or the sale
or disposition of all or substantially all of the Company’s assets.



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	(b)	 	Change in Control Price. Unless the Committee determines otherwise, “Change in Control Price”
means the value of the consideration paid to holders of shares of Common Stock for such Common
Stock in connection with a Change in Control transaction (or, if no consideration is paid in
connection with a Change in Control transaction, the Fair Market Value of a share of Common
Stock immediately prior to a Change in Control), except that, in the case of Incentive Stock
Options, such price shall be based only on transactions reported for the date on which such
Incentive Stock Options are cashed out.
	 
	(c)	 	Incumbent Board. “Incumbent Board” means the members of the Board as of the effective date
of the Plan. Notwithstanding the preceding sentence, any individual who becomes a member of
the Board after such effective date whose election, or nomination for election by the
shareholders of the Company, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such member were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board.





Section 7. Plan Amendment and Termination.



The Board may amend or terminate the Plan at any time, provided that no such amendment shall be
made without shareholder approval if such approval is required under applicable law, regulation, or
stock exchange rule, or if such amendment would (i) decrease the grant or exercise price of any
Stock Option, SAR or Other Stock-Based Award to less than the Fair Market Value on the date of
grant, or (ii) increase the total number of shares of Common Stock that may be distributed under
the Plan. Except as may be necessary to comply with a change in the laws, regulations or accounting
principles of a foreign country applicable to Participants subject to the laws of such foreign
country, the Committee may not cancel any Stock Option and substitute therefore a new Stock Option
with a lower grant price. Except as set forth in any Award agreement or as necessary to comply with
applicable law or avoid adverse tax consequences to some or all Plan Participants, no amendment or
termination of the Plan may materially and adversely affect any outstanding Award under the Plan
without the Award recipient’s consent.




Section 8. Payments and Payment Deferrals.



Payment of Awards may be in the form of cash, Common Stock, other Awards or combinations thereof as
the Committee shall determine, and with such restrictions as it may impose. The Committee, either
at the time of grant or by subsequent amendment, may require or permit deferral of the payment of
Awards under such rules and procedures as it may establish. It also may provide that deferred
settlements include the payment or crediting of interest or other earnings on the deferred amounts,
or the payment or crediting of dividend equivalents where the deferred amounts are denominated in
Common Stock equivalents.




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Section 9. Dividends and Dividend Equivalents.



The Committee may provide that any Awards under the Plan earn dividends or dividend equivalents.
Such dividends or dividend equivalents may be paid currently or may be credited to a Participant’s
Plan account. Any crediting of dividends or dividend equivalents may be subject to such
restrictions and conditions as the Committee may establish, including reinvestment in additional
shares of Common Stock or Common Stock equivalents.




Section 10. Transferability.



Except as provided in the applicable Award agreement or otherwise required by law, Awards shall not
be transferable or assignable other than by will or the laws of descent and distribution.




Section 11. Award Agreements.



Each Award under the Plan shall be evidenced by a written agreement (which need not be signed by
the recipient unless otherwise specified by the Committee) that sets forth the terms, conditions
and limitations for each Award. Such terms may include, but are not limited to, the term of the
Award, vesting and forfeiture provisions, and the provisions applicable in the event the
Participant’s employment terminates. The Committee may amend an Award agreement, provided that,
except as set forth in any Award agreement or as necessary to comply with applicable law or avoid
adverse tax consequences to some or all Plan Participants, no such amendment may materially and
adversely affect an Award without the Participant’s consent.




Section 12. Unfunded Status Plan.



It is presently intended that the Plan constitute an “unfunded” plan for incentive and deferred
compensation. The Committee may authorize the creation of trusts or other arrangements to meet the
obligations created under the Plan to deliver Common Stock or make payments; provided, however,
that, unless the Committee otherwise determines, the existence of such trusts or other arrangements
is consistent with the “unfunded” status of the Plan.




Section 13. General Provisions.





	(a)	 	The Committee may require each person acquiring shares of Common Stock pursuant to an Award
to represent to and agree with the Company in writing that such person is acquiring the shares
without a view to the distribution thereof. The certificates for such shares may include any
legend that the Committee deems appropriate to reflect any restrictions on transfer.
	 
	 	 	All certificates for shares of Common Stock or other securities delivered under the Plan
shall be subject to such stock transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other




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	 	 	requirements of the Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable Federal, state or foreign securities law, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate reference
to such restrictions.
	 
	(b)	 	Nothing contained in the Plan shall prevent the Company, a subsidiary or an affiliate from
adopting other or additional compensation arrangements for their respective employees.
	 
	(c)	 	Neither the adoption of the Plan nor the granting of Awards under the Plan shall confer upon
any employee any right to continued employment nor shall they interfere in any way with the
right of the Company, a subsidiary or an affiliate to terminate the employment of any employee
at any time.
	 
	(d)	 	No later than the date as of which an amount first becomes includible in the gross income of
the Participant for income tax purposes with respect to any Award under the Plan, the
Participant shall pay to the Company, or make arrangements satisfactory to the Company
regarding the payment of, any Federal, state, local or foreign taxes of any kind which are
required by law or applicable regulation to be withheld with respect to such amount. Unless
otherwise determined by the Committee, withholding obligations arising from an Award may be
settled with Common Stock, including Common Stock that is part of, or is received upon
exercise or conversion of, the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment or
arrangements, and the Company, its subsidiaries and its affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment otherwise due to
the Participant. The Committee may establish such procedures as it deems appropriate,
including the making of irrevocable elections, for the settling of withholding obligations
with Common Stock.
	 
	(e)	 	The Plan and all Awards made and actions taken thereunder shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia, excluding any conflicts or choice
of law rule or principle that might otherwise refer construction or interpretation of the Plan
to the substantive law of another jurisdiction. Unless otherwise provided in an Award,
recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and
venue of the Federal or state courts of the Commonwealth of Virginia, to resolve any and all
issues that may arise out of or relate to the Plan or any related Award.
	 
	(f)	 	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.




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	(g)	 	If any provision of the Plan is held invalid or unenforceable, the invalidity or
unenforceability shall not affect the remaining parts of the Plan, and the Plan shall be
enforced and construed as if such provision had not been included.
	 
	(h)	 	If approved by stockholders, the Plan shall be effective on May 1, 2005. Except as otherwise
provided by the Board, no Awards shall be made after May 1, 2010, provided that any Awards
granted prior to that date may extend beyond it.






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