exv4w1



 










Exhibit 4.1




EARLE M. JORGENSEN COMPANY



2004 STOCK INCENTIVE PLAN





 









 








EARLE M. JORGENSEN COMPANY

2004 STOCK INCENTIVE PLAN




1. ESTABLISHMENT AND PURPOSE.



The Earle M. Jorgensen Company 2004 Stock Incentive Plan (the “Plan”) is established by Earle
M. Jorgensen Company, a Delaware corporation (the “Company”), to attract and retain persons
eligible to participate in the Plan; motivate Participants to achieve long-term Company goals; and
further align Participants’ interests with those of the Company’s other stockholders. The Plan is
adopted as of December 17, 2004 (the “Effective Date”), subject to approval by the Company’s
stockholders within 12 months after such adoption date. Unless the Plan is discontinued earlier by
the Board as provided herein, no Award shall be granted hereunder on or after the date 10 years
after the Effective Date.



Certain terms used herein are defined as set forth in Section 12.




2. ADMINISTRATION; ELIGIBILITY.



The Plan shall be administered by a Committee determined and appointed by the Board;
provided, however, that, if at any time no Committee has been appointed, the Plan
shall be administered by the Board. The Plan may be administered by different Committees with
respect to different groups of Eligible Individuals. As used herein, the term “Administrator”
means the any of the Committees as may be designated to administer the Plan; provided,
however, that if at any time no Committee has been appointed, the term “Administrator”
means the Board.



The Administrator shall have plenary authority to grant Awards pursuant to the terms of the Plan to
Eligible Individuals, except that grants of Awards to non-employee directors shall be made by the
Board. Participation shall be limited to such Eligible Individuals as are selected by the
Administrator. Awards may be granted as alternatives to, in exchange or substitution for, or
replacement of, other Awards outstanding under the Plan or awards outstanding under any other plan
or arrangement of the Company or a Subsidiary (including a plan or arrangement of a business or
entity, all or a portion of which is acquired by the Company or a Subsidiary), except to the extent
that such grant would constitute a repricing. The provisions of Awards need not be the same with
respect to each Participant.



Among other things, the Administrator shall have the authority, subject to the terms of the Plan:





(a) to select the Eligible Individuals to whom Awards may from time to time be granted;




(b) to determine whether and to what extent Stock Options, Stock Appreciation Rights, Stock Awards or
any combination thereof are to be granted hereunder;




(c) to determine the number of shares of Stock to be covered by each Award granted hereunder;




(d) to approve forms of agreement for use under the Plan;



 









 






(e)to determine the terms and conditions, not inconsistent with the terms of this Plan, of any Award
granted hereunder (including, but not limited to, the option price, any vesting restriction or
limitation, any vesting acceleration or forfeiture waiver and any right of repurchase, right of
first refusal or other transfer restriction regarding any Award and the shares of Stock relating
thereto, based on such factors or criteria as the Administrator shall determine);




(f) subject to Section 9(a), to modify, amend or adjust the terms and conditions of any Award, at any
time or from time to time, including, but not limited to, with respect to (i) performance goals and
targets applicable to performance-based Awards pursuant to the terms of the Plan and (ii) extension
of the post-termination exercisability period of Stock Options;




(g) to determine to what extent and under what circumstances Stock and other amounts payable with
respect to an Award shall be deferred;




(h) to determine the Fair Market Value; and




(i) to determine the type and amount of consideration to be received by the Company for any Stock Award
issued under Section 6.


The Administrator shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem advisable, to
interpret the terms and provisions of the Plan and any Award issued under the Plan (and any
agreement relating thereto) and to otherwise supervise the administration of the Plan.



Except to the extent prohibited by applicable law, the Administrator may allocate all or any
portion of its responsibilities and powers to any one or more of its members and may delegate all
or any portion of its responsibilities and powers to any other person or persons selected by it.
Any such allocation or delegation may be revoked by the Administrator at any time. The
Administrator may authorize any one or more of their members or any officer of the Company to
execute and deliver documents on behalf of the Administrator.



Any determination made by the Administrator or pursuant to delegated authority pursuant to the
provisions of the Plan with respect to any Award shall be made in the sole discretion of the
Administrator or such delegate at the time of the grant of the Award or, unless in contravention of
any express term of the Plan, at any time thereafter. All decisions made by the Administrator or
any appropriately delegated officer pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Participants.



Each Award granted under the Plan (except unconditional, unrestricted Stock Awards granted as
bonuses) shall be evidenced by an Award agreement that contains terms and conditions of such Award,
which terms and conditions shall not conflict with the Plan. By accepting an Award, a Participant
shall be deemed to agree that the Award shall be subject to all of the terms and conditions in the
applicable Award agreement.




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3. STOCK SUBJECT TO PLAN.



Subject to adjustment as provided in this Section 3, the aggregate number of shares of Stock
that may be delivered under the Plan shall not exceed 5% of the aggregate number of shares of Stock
issued by the Company upon completion of the merger pursuant to that certain Agreement and Plan of
Merger and Reorganization, dated as of December 17, 2004, to which the Company is party, and the
Company’s public offering of its Stock. The shares to be delivered under the Plan consist, in
whole or in part, of Stock held in treasury or authorized but unissued Stock, not reserved for any
other purpose.



To the extent any shares of Stock covered by an Award are not delivered to a Participant or
beneficiary thereof because the Award expires, is forfeited, canceled or otherwise terminated, or
the shares of Stock are not delivered because the Award is settled in cash or used to satisfy the
applicable tax withholding obligation, such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Stock available for delivery under the
Plan.



Subject to adjustment as provided in this Section 3, the maximum number of shares of Stock that may
be covered by Awards, in the aggregate, granted to any one Participant during any calendar year
shall be 750,000 shares.



In the event of any Company stock dividend, stock split, combination or exchange of shares,
recapitalization or other change in the capital structure of the Company, corporate separation or
division of the Company (including, but not limited to, a split-up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by the Company of all
or a substantial portion of its assets (measured on either a stand-alone or consolidated basis)
that results in a substantial decrease in the value of the Company, reorganization, rights
offering, partial or complete liquidation, or any other corporate transaction, Company share
offering or other event involving the Company and having an effect similar to any of the foregoing,
the Administrator may make such substitution or adjustments in the (A) number and kind of shares
that may be delivered under the Plan, (B) additional maximums imposed in the immediately preceding
paragraph, (C) number and kind of shares subject to outstanding Awards, (D) exercise price of
outstanding Stock Options and Stock Appreciation Rights and (E) other characteristics or terms of
the Awards as it may determine appropriate in its sole discretion to equitably reflect such
corporate transaction, share offering or other event; provided, however, that the
number of shares subject to any Award shall always be a whole number.




4. STOCK OPTIONS.



Stock Options may be granted alone or in addition to other Awards granted under the Plan and
may be of two types: Incentive Stock Options and Non-Qualified Stock Options. Any Stock Option
granted under the Plan shall be in such form as the Administrator may from time to time approve.



The Administrator shall have the authority to grant any Participant Incentive Stock Options,
Non-Qualified Stock Options or both types of Stock Options. Incentive Stock Options may be granted
only to employees of the Company and its Subsidiaries. To the extent that any Stock




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Option is not
designated as an Incentive Stock Option or, even if so designated, does not qualify as an Incentive
Stock Option, it shall constitute a Non-Qualified Stock Option. Incentive Stock Options may be
granted only within 10 years from the date the Plan is adopted, or the date the Plan is approved by
the Company’s stockholders, whichever is earlier.



An Award agreement for Stock Options shall indicate on its face whether it is intended to be an
agreement for an Incentive Stock Option or a Non-Qualified Stock Option. The grant of a Stock
Option shall occur as of the date the Administrator determines.



Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive
Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Optionee affected, to disqualify any Incentive Stock Option under
Section 422 of the Code.



To the extent that the aggregate Fair Market Value of Stock with respect to which Incentive Stock
Options are exercisable for the first time by a Participant during any calendar year (under all
plans of the Company) exceeds $100,000, such Stock Options shall be treated as Non-Qualified Stock
Options.



Stock Options granted under this Section 4 shall be subject to the following terms and conditions
and shall contain such additional terms and conditions as the Administrator shall deem desirable:





(a) Exercise Price. The exercise price per share of Stock purchasable under a Stock Option shall be
determined by the Administrator; provided, however, the exercise price per share
shall be not less than the Fair Market Value per share on the date the Stock Option is granted, or
if the Stock Option is intended to qualify as an Incentive Stock Option granted to an individual
who is a Ten Percent Holder, not less than 110% of such Fair Market Value per share.




(b) Option Term. The term of each Stock Option shall be fixed by the Administrator, but no Stock
Option shall be exercisable more than 10 years (or five years in the case of the grant of an
Incentive Stock Option to an individual who is a Ten Percent Holder) after the date the Stock
Option is granted.




(c)Exercisability. Except as otherwise provided herein or determined by the Administrator and set
forth in the applicable Award agreement, a Stock Option shall become exercisable with respect to
25% of the shares of Stock covered by the Stock Option in annual installments over a four year
period. If the Administrator provides that any Stock Option is exercisable only in installments,
the Administrator may at any time waive such installment exercise provisions, in whole or in part,
based on such factors as the Administrator may determine. In addition, the Administrator may at
any time, in whole or in part, accelerate the exercisability of any Stock Option.




(d)Method of Exercise. Subject to the provisions of this Section 4, Stock Options may be exercised,
in whole or in part, at any time during the option term by giving written



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notice of exercise to the
Company specifying the number of shares of Stock subject to the Stock Option to be purchased.




The option price of any Stock Option shall be paid in full in cash (by certified or bank
check or such other instrument as the Company may accept) or, unless otherwise provided in
the applicable Award agreement, by one or more of the following: (i) in the form of shares
of unrestricted Stock already owned by the Optionee for at least six months prior to the
date of exercise based in any such instance on the Fair Market Value
of the Stock on the date the Stock Option is exercised; (ii) by certifying ownership of
            shares of Stock owned by the Optionee for at least six months prior to the date of exercise
to the satisfaction of the Administrator for later delivery to the Company (at such time and
in such manner as specified by the Company); (iii) unless otherwise prohibited by law for
either the Company or the Optionee, by irrevocably authorizing a third party to sell shares
of Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Option
and remit to the Company a sufficient portion of the sale proceeds to pay the entire
exercise price and any tax withholding resulting from such exercise; or (iv) by any
combination of cash and/or any one or more of the methods specified in clauses (i), (ii) and
(iii). Notwithstanding the foregoing, a form of payment shall not be permitted to the
extent it would cause the Company to recognize a compensation expense (or additional
compensation expense) with respect to the Stock Option for financial reporting purposes.




If payment of the option exercise price of a Non-Qualified Stock Option is made in whole or
in part in the form of Restricted Stock, the number of shares of Stock to be received upon
such exercise equal to the number of shares of Restricted Stock used for payment of the
option exercise price shall be subject to the same forfeiture restrictions to which such
Restricted Stock was subject, unless otherwise determined by the Administrator.




No shares of Stock shall be issued upon exercise of a Stock Option until full payment
therefor has been made. Upon exercise of a Stock Option (or a portion thereof), the Company
shall have a reasonable time to issue the Stock for which the Stock Option has been
exercised, and the Optionee shall not be treated as a stockholder for any purposes
whatsoever prior to such issuance. No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such Stock is recorded as issued and
transferred in the Company’s official stockholder records, except as otherwise provided
herein or in the applicable Award agreement.




(e) Transferability of Stock Options. Except as otherwise provided in the applicable Award agreement,
a Non-Qualified Stock Option (i) shall be transferable by the Optionee to a Family Member of the
Optionee, provided that (A) any such transfer shall be by gift with no consideration and (B) no
subsequent transfer of such Stock Option shall be permitted other than by will or the laws of
descent and distribution, and (ii) shall not otherwise be transferable except by will or the laws
of descent and distribution. An Incentive Stock Option shall not be transferable except by will or
the laws of descent and distribution. A Stock Option shall be exercisable, during the Optionee’s
lifetime, only by the Optionee or by the guardian or legal representative of the Optionee, it being



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understood that the terms “holder” and “Optionee” include the guardian and legal representative of
the Optionee named in the applicable Award agreement and any person to whom the Stock Option is
transferred in accordance with this Section 4(e). Notwithstanding the foregoing, references herein
to the termination of an Optionee’s employment or provision of services shall mean the termination
of employment or provision of services of the person to whom the Stock Option was originally
granted.




(f) Termination by Death or Disability. Unless otherwise provided in the applicable Award agreement,
if an Optionee’s employment by, or provision of services to, the Company or an
Affiliate terminates by reason of death or Disability, (i) any Stock Option held by such Optionee
may thereafter be exercised, to the extent exercisable at the time of such termination or on such
accelerated basis as the Administrator may determine, for a period of one year from the date of
such death or Disability or until the expiration of the stated term of such Stock Option, whichever
period is shorter, and (ii) each Stock Option that remains unexercisable as of the date of such
termination shall be terminated at the time of such termination. In the event of termination of
employment or provision of services due to death or Disability, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that apply for purposes of Section 422 of
the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option.




(g) Termination by Reason of Retirement. Unless otherwise provided in the applicable option agreement,
if an Optionee’s employment by the Company or an Affiliate terminates by reason of Retirement, any
Stock Option held by such Optionee may thereafter be exercised by the Optionee, to the extent it
was exercisable at the time of such Retirement, or on such accelerated basis as the Administrator
may determine, for a period of 90 days from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is shorter; provided,
however, that if the Optionee dies within such period, any unexercised Stock Option held by
such Optionee shall, notwithstanding the expiration of such period, continue to be exercisable to
the extent to which it was exercisable at the time of death for a period of one year from the date
of such death or until the expiration of the stated term of such Stock Option, whichever period is
shorter. In the event of termination of employment by reason of Retirement, if an Incentive Stock
Option is exercised after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option.




(h) Other Termination. Unless otherwise provided in the applicable Award agreement, if an Optionee’s
employment by, or provision of services to, the Company or an Affiliate terminates for any reason
other than death, Disability or Retirement, any Stock Option held by such Optionee shall thereupon
terminate; provided, however, that, if such termination of employment or provision
of services is by the Company without Cause, such Stock Option, to the extent exercisable at the
time of such termination, or on such accelerated basis as the Administrator may determine, may be
exercised for the lesser of 90 days from the date of such termination of employment or provision of
services or the remainder of such Stock Option’s term and provided, further, that if the Optionee
dies within such period, any unexercised Stock Option held by such Optionee shall,



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notwithstanding
the expiration of such period, continue to be exercisable to the extent to which it was exercisable
at the time of death for a period of one year from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is shorter. In the event of termination
of employment or provision of services for any reason other than death, Disability or Retirement,
if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply
for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.




(i) Exception to Termination. Notwithstanding anything in this Plan to the contrary, if an Optionee’s
employment by, or provision of services to, the Company or an Affiliate ceases as a result of a
transfer of such Optionee from the Company to an Affiliate, or from an Affiliate to the
Company, such transfer will not be a termination of employment or provision of services for
purposes of this Plan, unless expressly determined otherwise by the Administrator. A termination
of employment or provision of services shall occur for an Optionee who is employed by, or provides
services to, an Affiliate of the Company if the Affiliate shall cease to be an Affiliate and the
Optionee shall not immediately thereafter be employed by, or provide services to, the Company or an
Affiliate.



5. STOCK APPRECIATION RIGHTS.



Stock Appreciation Rights may be granted either on a stand-alone basis or in conjunction with
all or part of any Stock Option granted under the Plan. In the case of a Non-Qualified Stock
Option, such rights may be granted either at or after the time of grant of such Stock Option. In
the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such
Stock Option. A Stock Appreciation Right shall terminate and no longer be exercisable as
determined by the Administrator, or, if granted in conjunction with all or part of any Stock
Option, upon the termination or exercise of the related Stock Option.



A Stock Appreciation Right may be exercised by a Participant as determined by the Administrator in
accordance with this Section 5, and, if granted in conjunction with all or part of any Stock
Option, by surrendering the applicable portion of the related Stock Option in accordance with
procedures established by the Administrator. Upon such exercise and surrender, the Participant
shall be entitled to receive an amount determined in the manner prescribed in this Section 5.
Stock Options that have been so surrendered, if any, shall no longer be exercisable to the extent
the related Stock Appreciation Rights have been exercised.



Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined by
the Administrator, including the following:





	 	(i)	 	Stock Appreciation Rights granted on a stand-alone basis shall
be exercisable only at such time or times and to such extent as determined by
the Administrator. Stock Appreciation Rights granted in conjunction with all or
part of any Stock Option shall be exercisable only at the time or times and to
the extent that the Stock Options to which they relate are





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	 	 	 	exercisable in
accordance with the provisions of Section 4 and this Section 5.






	 	(ii)	 	Upon the exercise of a Stock Appreciation Right, a Participant
shall be entitled to receive an amount in cash, shares of Stock or both, which
in the aggregate are equal in value to the excess of the Fair Market Value of
one share of Stock over (i) such value per share of Stock as shall be
determined by the Administrator at the time of grant (if the Stock Appreciation
Right is granted on a stand-alone basis), or (ii) the exercise price per share
specified in the related Stock Option (if the Stock Appreciation Right is
granted in conjunction with all or part of any Stock Option), multiplied by the
number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Administrator having
the right to determine the form of payment.
	 
	 	(iii)	 	A Stock Appreciation Right shall be transferable only to, and
shall be exercisable only by, such persons permitted in accordance with Section
4(e).





6. STOCK AWARDS OTHER THAN OPTIONS AND STOCK APPRECIATION RIGHTS.



Stock Awards may be directly issued under the Plan (without any intervening Stock Options),
subject to such terms, conditions, performance requirements, restrictions, forfeiture provisions,
contingencies and limitations as the Administrator shall determine. Stock Awards may be issued
that are fully and immediately vested upon issuance or that vest in one or more installments over
the Participant’s period of employment or other service to the Company or upon the attainment of
specified performance objectives, or the Company may issue Stock Awards that entitle the
Participant to receive a specified number of vested shares of Stock (or Stock units) upon the
attainment of one or more performance goals or service requirements established by the
Administrator.



Shares (or units) representing a Stock Award shall be evidenced in such manner as the Administrator
may deem appropriate, including book-entry registration or issuance of one or more certificates
(which may bear appropriate legends referring to the terms, conditions and restrictions applicable
to such Award). The Administrator may require that any such certificates be held in custody by the
Company until any restrictions thereon shall have lapsed and that the Participant deliver a stock
power, endorsed in blank, relating to the Stock covered by such Award.



A Stock Award may be issued in exchange for any consideration which the Administrator may deem
appropriate in each individual instance, including, without limitation:





	 	(i)	 	cash or cash equivalents;
	 
	 	(ii)	 	past services rendered to the Company or any Affiliate; or




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	 	(iii)	 	future services to be rendered to the Company or any Affiliate
(provided that, in such case, the par value of the stock subject to such Stock
Award shall be paid in cash or cash equivalents, unless the Administrator
provides otherwise).




A Stock Award that is subject to restrictions on transfer and/or forfeiture provisions may be
referred to as an award of “Restricted Stock” or “Restricted Stock Units.”




7. PERFORMANCE AWARDS.





	 	(a)	 	Performance Conditions. The right of a Participant to exercise or receive a grant
or settlement of any Award, and its timing, may be subject to performance conditions
specified by the Administrator. The Administrator may use business criteria and other
measures of performance it deems appropriate in establishing any performance
conditions, and may exercise its discretion to reduce or increase amounts payable under
any Award subject to performance conditions, except as limited under Sections 7(b) and
7(c) hereof in the case of a Performance Award intended to qualify under Section 162(m)
of the Code.
	 
	 	(b)	 	Performance Awards Granted to Designated Covered Employees. If the
Administrator determines that a Performance Award to be granted to a person the
Administrator regards as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Section 162(m) of the Code, the grant
and/or settlement of such Performance Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this Section 7(b).






	 	(i)	 	Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria and a
targeted level or levels of performance with respect to such criteria, as
specified by the Administrator consistent with this Section 7(b). Performance
goals shall be objective and shall otherwise meet the requirements of Section
162(m) of the Code, including the requirement that the level or levels of
performance targeted by the Administrator result in the performance goals being
“substantially uncertain.” At the time the performance goals are established,
the Administrator may determine that more than one performance goal must be
achieved as a condition to settlement of such Performance Awards. Performance
goals may differ for Performance Awards granted to any one Participant or to
different Participants.
	 
	 	(ii)	 	Business Criteria. One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
Subsidiaries or business units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used




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	 	 	 	exclusively
by the Administrator in establishing performance goals for such Performance
Awards: (1) total stockholder return; (2) such total stockholder return as
compared to total return (on a comparable basis) of a publicly available index;
(3) net income; (4) pre-tax earnings; (5) EBITDA; (6) pre-tax operating
earnings after interest expense and before bonuses and extraordinary or special
items; (7) operating margin; (8) earnings per share; (9) return on equity; (10)
return on capital; (11) return on investment; (12) operating income, excluding
the effect of charges for
acquired in-process technology and before payment of executive bonuses; (13)
earnings per share; (14) working capital; and (15) total revenues.






	 	(iii)	 	Performance Period: Timing For Establishing Performance Goals.
Achievement of performance goals in respect of such Performance Awards shall
be measured over such periods as may be specified by the Administrator.
Performance goals shall be established on or before the dates that are required
or permitted for “performance-based compensation” under Section 162(m) of the
Code.
	 
	 	(iv)	 	Settlement of Performance Awards; Other Terms. Settlement of
Performance Awards may be in cash or Stock, or other Awards, or other property,
in the discretion of the Administrator. The Administrator may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards, but may not exercise discretion to
increase any such amount payable in respect of a Performance Award subject to
this Section 7(b). The Administrator shall specify the circumstances in which
such Performance Awards shall be forfeited or paid in the event of a
termination of employment or a Change in Control prior to the end of a
performance period or settlement of Performance Awards, and other terms
relating to such Performance Awards.






	 	(c)	 	Written Determinations. All determinations by the Administrator as to the
establishment of performance goals and the potential Performance Awards related to such
performance goals and as to the achievement of performance goals relating to such
Awards, shall be made in writing in the case of any Award intended to qualify under
Section 162(m) of the Code. The Administrator may not delegate any responsibility
relating to such Performance Awards.





8. CHANGE IN CONTROL PROVISIONS.





(a) Impact of Event. Notwithstanding any other provision of the Plan to the contrary, except to
the extent otherwise provided in an agreement granting an Award, in the event of a Change in
Control:




	 	(i)	 	The Administrator shall have the discretion to accelerate the
vesting of any Stock Options and Stock Appreciation Rights outstanding, but not





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	 	 	 	fully vested and exercisable as of the date of such Change in Control, to the
extent it deems appropriate;






	 	(ii)	 	The Administrator shall have the discretion to remove all
restrictions applicable to any outstanding Stock Awards, the effect of which
shall be that the Stock relating to such Awards shall become fully vested and
transferable;
	 
	 	(iii)	 	The Administrator shall have the discretion to terminate any
outstanding repurchase rights of the Company with respect to any outstanding
Awards; and
	 
	 	(iv)	 	Outstanding Awards shall be subject to any agreement of merger or reorganization
that effects such Change in Control, which agreement shall provide for:






	 	(A)	 	The continuation of the outstanding Awards by the Company, if the Company is a surviving
corporation;
	 
	 	(B)	 	The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;
	 
	 	(C)	 	The substitution by the surviving corporation or its parent or subsidiary of equivalent awards for
the outstanding Awards; or
	 
	 	(D)	 	Settlement of each share of Stock subject to an outstanding Award for the Change in Control Price
(less, to the extent applicable, the per share exercise price), or, if the per share exercise price
equals or exceeds the Change in Control Price, the outstanding Award shall terminate and be
canceled.






	 	(v)	 	In the absence of any agreement of merger or reorganization
effecting such Change in Control, each share of Stock subject to an outstanding
Award shall be settled for the Change in Control Price (less, to the extent
applicable, the per share exercise price), or, if the per share exercise price
equals or exceeds the Change in Control Price, the outstanding Award shall
terminate and be canceled.






(b) Definition of Change in Control. For purposes of the Plan, a “Change in Control” shall mean the
happening of any of the following events:




	 	(i)	 	An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act),
excluding, however, (1) the Company or any of its Subsidiaries,
(2) any employee benefit plan (or related trust) of the Company or any of its
Subsidiaries, (3) any underwriter temporarily holding securities pursuant to an
offering of such





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	 	 	 	securities, (4) the Kelso Entities, or (5) the Kelso
Affiliates (a “Person”), of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% or more of either (a) the then
outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or (b) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); excluding,
however, the following: (w) any acquisition directly from the Company,
other than an acquisition by virtue of the exercise of a conversion privilege
unless the security being so converted was itself
acquired directly from the Company, (x) any acquisition by the Company, (y)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or
(z) any acquisition by any Person pursuant to a transaction which complies
with clauses (1), (2) and (3) of subsection (iii) of this Section 8(b); or






	 	(ii)	 	Within any period of 24 consecutive months, a change in the composition of the Board
such that the individuals who, immediately prior to such period, constituted
the Board (such Board shall be hereinafter referred to as the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that for purposes of this Section 8(b), any
individual who becomes a member of the Board during such period, whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of those individuals who are members
of the Board and who were also members of the Incumbent Board (or deemed to be
such pursuant to this proviso) shall be considered as though such individual
were a member of the Incumbent Board; but, provided
further, that any such individual whose initial assumption of office
occurs as a result of either 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 shall not be so considered as a member of the Incumbent Board; or
	 
	 	(iii)	 	The approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (“Corporate Transaction”);
excluding, however, such a Corporate Transaction pursuant to
which (1) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock, and the combined voting
power of the then outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of





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	 	 	 	the corporation resulting
from such Corporate Transaction (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially
all of the Company’s assets, either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be, (2)
no Person will beneficially own, directly or indirectly, more than 50% of,
respectively, the outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of the
outstanding voting
securities of such corporation entitled to vote generally in the election of
directors, except to the extent that such ownership existed with respect to
the Company prior to the Corporate Transaction, and (3) individuals who were
members of the Board immediately prior to the approval by the stockholders
of the Corporation of such Corporate Transaction will constitute at least a
majority of the members of the board of directors of the corporation
resulting from such Corporate Transaction; or






	 	(iv)	 	The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company, other than to a corporation pursuant
to a transaction which would comply with clauses (1), (2) and (3) of subsection
(iii) of this Section 8(b), assuming for this purpose that such transaction
were a Corporate Transaction.






(c) Change in Control Price. For purposes of the Plan, “Change in Control Price” means the highest of
(i) the highest reported sales price, regular way, of a share of Stock in any transaction reported
on the New York Stock Exchange Composite Tape or other national securities exchange or market on
which such shares are listed, as applicable, during the 60-day period prior to and including the
date of a Change in Control, (ii) if the Change in Control is the result of a tender or exchange
offer, merger or other corporate transaction, the highest price per share of Stock paid in such
tender or exchange offer, merger or other corporate transaction, and (iii) the Fair Market Value of
a share of Stock upon the Change in Control. To the extent that the consideration paid in any such
transaction described above consists all or in part of securities or other non-cash consideration,
the value of such securities or other non-cash consideration shall be determined in the sole
discretion of the Administrator. The Participant shall receive the same form of consideration
pursuant to the transaction as holders of Stock, subject to the same restrictions and limitations
and indemnification obligations as the holders of Stock, and will execute any and all documents
required by the Administrator to evidence the same.



9. MISCELLANEOUS.





(a) Amendment. The Board may amend, alter, or discontinue the Plan, but no amendment, alteration
or discontinuation shall be made that would adversely affect the rights of a Participant under an
Award theretofore granted without the Participant’s



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consent, except such an amendment (i) made to
avoid an expense charge to the Company or an Affiliate, or (ii) made to permit the Company or an
Affiliate a deduction under the Code. No such amendment shall be made without the approval of the
Company’s stockholders to the extent such approval is required by law, agreement or the rules of
any stock exchange or market on which the Stock is listed.




The Administrator may amend the terms of any Stock Option or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall adversely affect the
rights of the holder thereof without the holder’s consent.




(b) Unfunded Status of Plan. It is intended that this Plan be an “unfunded” plan for incentive and
deferred compensation. The Administrator may authorize the creation of trusts or other
arrangements to meet the obligations created under this Plan to deliver Stock or make payments,
provided that, unless the Administrator otherwise determines, the existence of such trusts or other
arrangements is consistent with the “unfunded” status of this Plan.




(c) General Provisions.




	 	(i)	 	The Administrator may require each person purchasing or receiving
 shares 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 Administrator deems appropriate to reflect any restrictions on
transfer.
	 
	 	 	 	All certificates for shares of Stock or other securities delivered under the
Plan shall be subject to such stock transfer orders and other restrictions
as the Administrator may deem advisable under the rules, regulations and
other requirements of the Commission, any stock exchange or market on which
the Stock is then listed and any applicable Federal or state securities law,
and the Administrator may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
	 
	 	(ii)	 	Nothing contained in the Plan shall prevent the Company or any Affiliate from
adopting other or additional compensation arrangements for its employees.
	 
	 	(iii)	 	The adoption of the Plan shall not confer upon any employee,
director, consultant or advisor any right to continued employment, directorship
or service, nor shall it interfere in any way with the right of the Company or
any Subsidiary or Affiliate to terminate the employment or service of any
employee, consultant or advisor at any time.
	 
	 	(iv)	 	No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay to
the





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	 	 	 	Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Administrator, withholding obligations may be settled with Stock, including
Stock that is part 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 Administrator may
establish such procedures as it deems appropriate for the settlement of
withholding obligations with Stock.






	 	(v)	 	The Administrator shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the Participant’s death are to be paid.
	 
	 	(vi)	 	Subject to applicable law, any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value of
any shares of Stock, cash or other thing of value under this Plan or an
agreement to be transferred to the Participant, and no shares of Stock, cash or
other thing of value under this Plan or an agreement shall be transferred
unless and until all disputes between the Company or any Affiliate and the
Participant have been fully and finally resolved and the Participant has waived
all claims to such against the Company or an Affiliate.
	 
	 	(vii)	 	The grant of an Award shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
	 
	 	(vii)	 	If any payment or right accruing to a Participant under this Plan
(without the application of this Section (9)(c)(viii)), either alone or
together with other payments or rights accruing to the Participant from the
Company or an Affiliate (“Total Payments”) would constitute a “parachute
payment” (as defined in Section 280G of the Code and regulations thereunder),
such payment or right shall be reduced to the largest amount or greatest right
that will result in no portion of the amount payable or right accruing under
the Plan being subject to an excise tax under Section 4999 of the Code or being
disallowed as a deduction under Section 280G of the Code; provided, however,
that the foregoing shall not apply to the extent provided otherwise in an Award
agreement or in the event the Participant is party to an agreement with the
Company or an Affiliate that explicitly provides for an alternate treatment of
payments or rights that would constitute “parachute payments.” The
determination of whether any




15









 






	 	 	 	reduction in the rights or payments under the Plan
is to apply shall be made by the Administrator in good faith after consultation
with the Participant, and such determination shall be conclusive and binding on
the Participant. The Participant shall cooperate in good faith with the
Administrator in making such determination and providing the necessary
information for this purpose. The foregoing provisions of this Section
9(c)(viii) shall apply with respect to any person only if, after reduction for
any applicable Federal excise tax imposed by Section 4999 of the Code and
Federal income tax imposed by the Code, the Total Payments accruing to such
person would be less than the amount of the Total Payments as reduced, if
applicable, under the foregoing provisions of this Plan and after reduction for
only Federal income taxes.






	 	(ix)	 	To the extent that the Administrator determines that the
restrictions imposed by the Plan preclude the achievement of the material
purposes of the Awards in jurisdictions outside the United States, the
Administrator in its discretion may modify those restrictions as it determines
to be necessary
or appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States.
	 
	 	(x)	 	The headings contained in this Plan are for reference purposes only
and shall not affect the meaning or interpretation of this Plan.
	 
	 	(xi)	 	If any provision of this Plan shall for any reason be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereby, and this Plan shall be construed as if such invalid
or unenforceable provision were omitted.
	 
	 	(xii)	 	This Plan shall inure to the benefit of and be binding upon each
successor and assign of the Company. All obligations imposed upon a
Participant, and all rights granted to the Company hereunder, shall be binding
upon the Participant’s heirs, legal representatives and successors.
	 
	 	(xiii)	 	This Plan and each agreement granting an Award constitute the entire
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between this Plan and such agreement, the
terms and conditions of the Plan shall control.
	 
	 	(xiv)	 	In the event there is an effective registration statement under
the Securities Act of 1933, as amended, pursuant to which shares of Stock shall
be offered for sale in an underwritten offering, a Participant shall not,
during the period requested by the underwriters managing the registered public
offering, effect any public sale or distribution of shares of Stock received,
directly or indirectly, as an Award or pursuant to the exercise or settlement
of an Award.




16









 












	 	(xv)	 	Except as may be required by Section 260.140.46 of the California Code of
Regulations or other applicable laws, none of the Company, an Affiliate or the
Administrator shall have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Stock or an Award, and such holder shall have no
right to be advised of, any material information regarding the Company or any
Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Award or the Company’s purchase of Stock or an Award from such
holder in accordance with the terms hereof.
	 
	 	(xvi)	 	This Plan, and all Awards, agreements and actions hereunder, shall
be governed by, and construed in accordance with, the laws of the State of
Delaware (other than its law respecting choice of law).





10. INDEMNIFICATION.



Except for such individual’s own willful misconduct or as expressly provided by law, each
person who is or shall have been a member of the Committee or of the Board or an officer of the
Company shall be indemnified and held harmless by the Company against and from any loss, cost,
liability, or expense that may be imposed upon or reasonably incurred by such person in connection
with or resulting from any claim, action, suit, or proceeding to which such person may be made a
party or in which such person may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by such person in settlement thereof, with
the Company’s approval, or paid by such person in satisfaction of any judgment in any such action,
suit, or proceeding against such person, provided such person shall give the Company an
opportunity, at its own expense, to handle and defend the same before such person undertakes to
handle and defend it on such person’s own behalf. The foregoing right of indemnification shall not
be exclusive and shall be independent of any other rights of indemnification to which such persons
may be entitled under the Company’s Amended and Restated Certificate of Incorporation or Amended
and Restated By-laws, by contract, as a matter of law, or otherwise.




11. DEFERRAL OF AWARDS.



To the extent deferral of Awards may result in deferral of taxation to the Participant under
the Code and to the extent permitted by law, the Administrator (in its sole discretion) may permit
a Participant to:





	 	(a)	 	have cash that otherwise would be paid to such Participant as a result of the
exercise of a Stock Appreciation Right or the settlement of a Stock Award credited to a
deferred compensation account established for such Participant by the Administrator as
an entry on the Company’s books;




17









 












	 	(b)	 	have Stock that otherwise would be delivered to such Participant as a result of
the exercise of a Stock Option or a Stock Appreciation Right converted into an equal
number of Stock units; or
	 
	 	(c)	 	have Stock that otherwise would be delivered to such Participant as a result of
the exercise of a Stock Option or Stock Appreciation Right or the settlement of a Stock
Award converted into amounts credited to a deferred compensation account established
for such Participant by the Administrator as an entry on the Company’s books. Such
amounts shall be determined by reference to the Fair Market Value of the Stock as of
the date on which they otherwise would have been delivered to such Participant.




A deferred compensation account established under this Section 11 may be credited with interest or
other forms of investment return, as determined by the Administrator and permitted by the Code and
other applicable law. A Participant for whom such an account is established shall have no rights
other than those of a general creditor of the Company. Such an account shall represent an unfunded
and unsecured obligation of the Company and shall be subject to the terms and
conditions of the applicable agreement between such Participant and the Company. If the deferral
or conversion of Awards is permitted or required, the Administrator (in its sole discretion) may
establish rules, procedures and forms pertaining to such Awards, including (without limitation) the
settlement of deferred compensation accounts established under this Section 11.




12. DEFINITIONS.



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





(a) “Act” means the Securities Exchange Act of 1934, as amended.




(b) “Affiliate” means a corporation or other entity controlled by the Company and designated by the
Administrator as such.




(c) “Award” means a Stock Appreciation Right, Stock Option, or Stock Award.




(d) “Board” means the Board of Directors of the Company.




(e) “Cause” means (i) the conviction of the Participant for committing a felony under Federal law or
the law of the state in which such action occurred, (ii) dishonesty in the course of fulfilling the
Participant’s duties as an employee or director of, or consultant or advisor to, the Company or
(iii) willful and deliberate failure on the part of the Participant to perform such duties in any
material respect (other than due to Disability). Notwithstanding the foregoing, if the Participant
and the Company or an Affiliate have entered into an employment or services agreement which defines
the term “Cause” (or a similar term), such definition shall govern for purposes of determining
whether such Participant has been terminated for Cause for purposes of this Plan. The
determination of Cause shall be made by the Administrator, in its sole discretion.



18









 






(f) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor
thereto.




(g) “Commission” means the Securities and Exchange Commission or any successor agency.




(h) “Committee” means one or more committees of directors appointed by the Board to administer this
Plan. Insofar as the Committee is responsible for granting Awards to Participants hereunder, it
shall consist solely of two or more directors, each of whom is a “non-employee director” within the
meaning of Rule 16b-3 under the Act, an “outside director” under Section 162(m) of the Code and an
“independent director” as defined by the listing standards of the New York Stock Exchange or other
national securities exchange or market on which such shares are listed, as applicable.




(i) “Covered Employee” means a person who is a “covered employee” within the meaning of Section
162(m) of the Code.




(j) “Disability” means mental or physical illness that entitles the Participant to receive benefits
under the long-term disability plan of the Company or an Affiliate, or if the Participant is not
covered by such a plan or the Participant is not an employee of the Company or an Affiliate, a
mental or physical illness that renders a Participant totally and permanently incapable of
performing the Participant’s duties for the Company or an Affiliate; provided,
however, that a Disability shall not qualify under this Plan if it is the result of (i) a
willfully self-inflicted injury or willfully self-induced sickness; or (ii) an injury or disease
contracted, suffered or incurred while participating in a criminal offense. Notwithstanding the
foregoing, if the Participant and the Company or an Affiliate have entered into an employment or
services agreement which defines the term “Disability” (or a similar term), such definition shall
govern for purposes of determining whether such Participant suffers a Disability for purposes of
this Plan. The determination of Disability shall be made by the Administrator, in its sole
discretion. The determination of Disability for purposes of this Plan shall not be construed to be
an admission of disability for any other purpose.




(k) “Eligible Individual” means any officer, employee or non-employee director of the Company or
an Affiliate, or any consultant or advisor providing services to the Company or an Affiliate.




(l) “Fair Market Value” means, as of any given date, (i) the closing sales price per share of the Stock
on the New York Stock Exchange (or the principal stock exchange or market on which the Stock is
then traded) on the date as of which such value is being determined or, if no sale of Stock is
reported on such date, the last previous day on which a sale was reported, or (ii) if the Stock is
not listed on the New York Stock Exchange or other principal stock exchange or market, the fair
market value of a share of Stock as determined by the Committee, or under procedures established by
the Committee, in good faith.



19









 






(m) “Family Member” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law of a Participant (including adoptive relationships); any person
sharing the Participant’s household (other than a tenant or employee); any trust in which the
Participant and any of these persons have all of the beneficial interest; any corporation,
partnership, limited liability company or other entity in which the Participant and any of these
other persons are the direct and beneficial owners of all of the equity interests (provided the
Participant and these other persons agree in writing to remain the direct and beneficial owners of
all such equity interests); and any personal representative of the Participant upon the
Participant’s death for purposes of administration of the Participant’s estate or upon the
Participant’s incompetency for purposes of the protection and management of the assets of the
Participant.




(n) “Incentive Stock Option” means any Stock Option intended to be and designated as an “incentive
stock option” within the meaning of Section 422 of the Code.




(o) “Kelso Entities” means any of Kelso Investment Associates, LP, Kelso Investment Associates
III-Earle M. Jorgensen, L.P., Kelso Investment Associates IV, L.P. or Kelso Equity Partners II,
L.P.




(p) “Kelso Affiliates” means (i) any corporation, partnership (limited or otherwise), limited liability
company or other entity controlling, controlled by, or under common control with, any of the Kelso
Entities, or (ii) any director, officer or beneficial owner (10% or more of the issued and
outstanding equity securities) of any of the Kelso Entities or any of the entities described in
Section 12(q)(i) immediately above.




(q) “Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.




(r) “Optionee” means a person who holds a Stock Option.




(s) “Participant” means a person granted an Award.




(t) “Performance Award” means a right, granted to a Participant under Section 7, to receive Awards
based upon performance criteria specified by the Administrator.




(u) “Retirement” means termination of a Participant’s employment on or after the date the
Participant attains age 65.




(v) “Stock” means Common Stock, par value $0.001 per share, of the Company.




(w) “Stock Appreciation Right” means a right granted under Section 5.




(x) “Stock Award” means an Award, other than a Stock Option or Stock Appreciation Right, made in stock
or denominated in shares of, or valued in whole or in part by reference to, Stock.



20









 






(y) “Stock Option” means an option granted under Section 4.




(z) “Subsidiary” means any company during any period in which it is a “subsidiary corporation” (as such
term is defined in Section 424(f) of the Code) with respect to the Company.




(aa) “Ten Percent Holder” means an individual who owns, or is deemed to own, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company or of any parent or
subsidiary corporation of the Company, determined pursuant to the rules applicable to Section
422(b)(6) of the Code.


In addition, certain other terms used herein have the definitions given to them in the first places
in which they are used.






21