**EXHIBIT 10.2**
 
 
 
 
 
**CLAIRE’S STORES, INC.**
**AMENDED AND RESTATED**
**2005 INCENTIVE COMPENSATION PLAN**
 
 
 
 
 
 

 

**CLAIRE’S STORES, INC.**
**2005 INCENTIVE COMPENSATION PLAN**
     1. *Purpose*. The purpose of this CLAIRE’S STORES, INC. 2005 INCENTIVE COMPENSATION PLAN (the“**Plan**”) is to assist CLAIRE’S STORES, INC., a Florida corporation (the “**Company**”) and its RelatedEntities (as hereinafter defined) in attracting, motivating, retaining and rewarding high-qualityexecutives and other employees, officers, directors, consultants and other persons who provideservices to the Company or its Related Entities by enabling such persons to acquire or increase aproprietary interest in the Company in order to strengthen the mutuality of interests between suchpersons and the Company’s shareholders, and providing such persons with long term performanceincentives to expend their maximum efforts in the creation of shareholder value.
     2. *Definitions*. For purposes of the Plan, the following terms shall be defined as set forthbelow, in addition to such terms defined in Section 1 hereof.
          (a) “**Award**” means any Option, Stock Appreciation Right, Restricted Stock Award, Deferred StockAward, Share granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-BasedAward or Performance Award, together with any other right or interest, granted to a Participantunder the Plan.
          (b) “**Award Agreement**” means any written agreement, contract or other instrument or documentevidencing any Award granted by the Committee hereunder.
          (c) “**Beneficiary**” means the person, persons, trust or trusts that have been designated by aParticipant in his or her most recent written beneficiary designation filed with the Committee toreceive the benefits specified under the Plan upon such Participant’s death or to which Awards orother rights are transferred if and to the extent permitted under Section 10(b) hereof. If, upon aParticipant’s death, there is no designated Beneficiary or surviving designated Beneficiary, thenthe term Beneficiary means the person, persons, trust or trusts entitled by will or the laws ofdescent and distribution to receive such benefits.
          (d) “**Beneficial Owner**” shall have the meaning ascribed to such term in Rule 13d-3 under theExchange Act and any successor to such Rule.
          (e) “**Board**” means the Company’s Board of Directors.
          (f) “**Cause**” shall, with respect to any Participant have the meaning specified in the AwardAgreement. In the absence of any definition in the Award Agreement, “Cause” shall have theequivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment,consulting, or other agreement for the performance of services between the Participant and theCompany or a Related Entity or, in the absence of any such agreement or any such definition in suchagreement, such term shall mean (i) the failure by the Participant to perform, in a reasonablemanner, his or her duties as assigned by the Company or a Related Entity, (ii) any violation orbreach by the Participant of his or her employment, consulting or other similar agreement with theCompany or a Related Entity, if any, (iii) any violation or
 

 

breach by the Participant of any non-competition, non-solicitation, non-disclosure and/orother similar agreement with the Company or a Related Entity, (iv) any act by the Participant ofdishonesty or bad faith with respect to the Company or a Related Entity, (v) use of alcohol, drugsor other similar substances in a manner that adversely affects the Participant’s work performance,or (vi) the commission by the Participant of any act, misdemeanor, or crime reflecting unfavorablyupon the Participant or the Company or any Related Entity. The good faith determination by theCommittee of whether the Participant’s Continuous Service was terminated by the Company for “Cause”shall be final and binding for all purposes hereunder.
          (g) “**Change in Control**” means a Change in Control as defined with related terms in Section9(b) of the Plan.
          (h) “**Code**” means the Internal Revenue Code of 1986, as amended from time to time, includingregulations thereunder and successor provisions and regulations thereto.
          (i) “**Committee**” means a committee designated by the Board to administer the Plan; provided,however, that if the Board fails to designate a committee or if there are no longer any members onthe committee so designated by the Board, then the Board shall serve as the Committee. TheCommittee shall consist of at least two directors, and each member of the Committee shall be (i) a“non-employee director” within the meaning of Rule 16b-3 (or any successor rule) under theExchange Act, unless administration of the Plan by “non-employee directors” is not then required inorder for exemptions under Rule 16b-3 to apply to transactions under the Plan, (ii) an “outsidedirector” within the meaning of Section 162(m) of the Code, and (iii) “Independent”.
          (j) “**Consultant**” means any person (other than an Employee or a Director, solely with respectto rendering services in such person’s capacity as a director) who is engaged by the Company or anyRelated Entity to render consulting or advisory services to the Company or such Related Entity.
          (k) “**Continuous Service**” means the uninterrupted provision of services to the Company or anyRelated Entity in any capacity of Employee, Director, Consultant or other service provider.Continuous Service shall not be considered to be interrupted in the case of (i) any approved leaveof absence, (ii) transfers among the Company, any Related Entities, or any successor entities, inany capacity of Employee, Director, Consultant or other service provider, or (iii) any change instatus as long as the individual remains in the service of the Company or a Related Entity in anycapacity of Employee, Director, Consultant or other service provider (except as otherwise providedin the Award Agreement). An approved leave of absence shall include sick leave, military leave, orany other authorized personal leave.
          (l) “**Covered Employee**” means an Eligible Person who is a “covered employee” within the meaningof Section 162(m)(3) of the Code, or any successor provision thereto.
          (m) “**Deferred Stock**” means a right to receive Shares, including Restricted Stock, cash or acombination thereof, at the end of a specified deferral period.
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          (n) “**Deferred Stock Award**” means an Award of Deferred Stock granted to a Participant underSection 6(e) hereof.
          (o) “**Director**” means a member of the Board or the board of directors of any Related Entity.
          (p) “**Disability**” means a permanent and total disability (within the meaning of Section 22(e)of the Code), as determined by a medical doctor satisfactory to the Committee.
          (q) “**Dividend Equivalent**” means a right, granted to a Participant under Section 6(g) hereof,to receive cash, Shares, other Awards or other property equal in value to regular dividends paidwith respect to a specified number of Shares, or other periodic payments.
          (r) “**Effective Date**” means the effective date of the Plan, which shall be the date on whichthis Plan is approved by the shareholders of the Company.
          (s) “**Eligible Person**” means each officer, Director, Employee, Consultant and other person whoprovides services to the Company or any Related Entity. The foregoing notwithstanding, onlyemployees of the Company, or any parent corporation or subsidiary corporation of the Company (asthose terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be EligiblePersons for purposes of receiving any Incentive Stock Options. An Employee on leave of absence maybe considered as still in the employ of the Company or a Related Entity for purposes of eligibilityfor participation in the Plan.
          (t) “**Employee**” means any person, including an officer or Director, who is an employee of theCompany or any Related Entity. The payment of a director’s fee by the Company or a Related Entityshall not be sufficient to constitute “employment” by the Company.
          (u) “**Exchange Act**” means the Securities Exchange Act of 1934, as amended from time to time,including rules thereunder and successor provisions and rules thereto.
          (v) “**Fair Market Value**” means the fair market value of Shares, Awards or other property asdetermined by the Committee, or under procedures established by the Committee. Unless otherwisedetermined by the Committee, the Fair Market Value of a Share as of any given date shall be theclosing sale price per Share reported on a consolidated basis for stock listed on the principalstock exchange or market on which Shares are traded on the date immediately preceding the date asof which such value is being determined or, if there is no sale on that date, then on the lastprevious day on which a sale was reported.
          (w) “**Good Reason**” shall, with respect to any Participant, have the meaning specified in theAward Agreement. In the absence of any definition in the Award Agreement, “Good Reason” shall havethe equivalent meaning or the same meaning as “good reason” or “for good reason” set forth in anyemployment, consulting or other agreement for the performance of services between the Participantand the Company or a Related Entity or, in the absence of any such agreement or any such definitionin such agreement, such term shall mean (i) the assignment to the Participant of any dutiesinconsistent in any material respect with the Participant’s position (including status, offices,titles and reporting requirements), authority,
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duties or responsibilities as assigned by the Company or a Related Entity, or any other actionby the Company or a Related Entity which results in a material diminution in such position,authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial andinadvertent action not taken in bad faith and which is remedied by the Company or a Related Entitypromptly after receipt of notice thereof given by the Participant; (ii) any material failure by theCompany or a Related Entity to comply with its obligations to the Participant as agreed upon, otherthan an isolated, insubstantial and inadvertent failure not occurring in bad faith and which isremedied by the Company or a Related Entity promptly after receipt of notice thereof given by theParticipant; or (iii) the Company’s or Related Entity’s requiring the Participant to be based atany office or location outside of fifty miles from the location of employment or service as of thedate of Award, except for travel reasonably required in the performance of the Participant’sresponsibilities.
          (x) “**Incentive Stock Option**” means any Option intended to be designated as an incentive stockoption within the meaning of Section 422 of the Code or any successor provision thereto.
          (y) “**Independent**”, when referring to either the Board or members of the Committee, shall havethe same meaning as used in the rules of the New York Stock Exchange or any national securitiesexchange on which any securities of the Company are listed for trading, and if not listed fortrading, by the rules of the Nasdaq Stock Market.
          (z) “**Incumbent Board**” means the Incumbent Board as defined in Section 9(b)(ii) of the Plan.
          (aa) “**Option**” means a right granted to a Participant under Section 6(b) hereof, to purchaseShares or other Awards at a specified price during specified time periods.
          (bb) “**Optionee**” means a person to whom an Option is granted under this Plan or any person whosucceeds to the rights of such person under this Plan.
          (cc) “**Other Stock-Based Awards**” means Awards granted to a Participant under Section 6(i)hereof.
          (dd) “**Participant**” means a person who has been granted an Award under the Plan which remainsoutstanding, including a person who is no longer an Eligible Person.
          (ee) “**Performance Award**” shall mean any Award of Performance Shares or Performance Unitsgranted pursuant to Section 6(h).
          (ff) “**Performance Period**” means that period established by the Committee at the time anyPerformance Award is granted or at any time thereafter during which any performance goals specifiedby the Committee with respect to such Award are to be measured.
          (gg) “**Performance Share**” means any grant pursuant to Section 6(h) of a unit valued byreference to a designated number of Shares, which value may be paid to the Participant by deliveryof such property as the Committee shall determine, including cash, Shares, other property, or anycombination thereof, upon achievement of such performance goals
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during the Performance Period as the Committee shall establish at the time of such grant orthereafter.
          (hh) “**Performance Unit**” means any grant pursuant to Section 6(h) of a unit valued by referenceto a designated amount of property (including cash) other than Shares, which value may be paid tothe Participant by delivery of such property as the Committee shall determine, including cash,Shares, other property, or any combination thereof, upon achievement of such performance goalsduring the Performance Period as the Committee shall establish at the time of such grant orthereafter.
          (ii) “**Person**” shall have the meaning ascribed to such term in Section 3(a)(9) of the ExchangeAct and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section13(d) thereof.
          (jj) “**Prior Plan**” means the Claire’s Stores, Inc. 1996 Incentive Compensation Plan.
          (kk) “**Related Entity**” means any Subsidiary, and any business, corporation, partnership,limited liability company or other entity designated by Board in which the Company or a Subsidiaryholds a substantial ownership interest, directly or indirectly.
          (ll) “**Restricted Stock**” means any Share issued with the restriction that the holder may notsell, transfer, pledge or assign such Share and with such risks of forfeiture and otherrestrictions as the Committee, in its sole discretion, may impose (including any restriction on theright to vote such Share and the right to receive any dividends), which restrictions may lapseseparately or in combination at such time or times, in installments or otherwise, as the Committeemay deem appropriate.
          (mm) “**Restricted Stock Award**” means an Award granted to a Participant under Section 6(d)hereof.
          (nn) “**Rule 16b-3**” means Rule 16b-3, as from time to time in effect and applicable to the Planand Participants, promulgated by the Securities and Exchange Commission under Section 16 of theExchange Act.
          (oo) “**Shareholder Approval Date**” means the date on which this Plan is approved shareholders ofthe Company eligible to vote in the election of directors, by a vote sufficient to meet therequirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (ifapplicable), applicable requirements under the rules of any stock exchange or automated quotationsystem on which the Shares may be listed on quoted, and other laws, regulations and obligations ofthe Company applicable to the Plan.
          (pp) “**Shares**” means the shares of common stock of the Company, par value $.05 per share, andsuch other securities as may be substituted (or resubstituted) for Shares pursuant to Section 10(c)hereof.
          (qq) “**Stock Appreciation Right**” means a right granted to a Participant under Section 6(c)hereof.
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          (rr) “**Subsidiary**” means any corporation or other entity in which the Company has a direct orindirect ownership interest of 50% or more of the total combined voting power of the thenoutstanding securities or interests of such corporation or other entity entitled to vote generallyin the election of directors or in which the Company has the right to receive 50% or more of thedistribution of profits or 50% or more of the assets on liquidation or dissolution.
          (ss) “**Substitute Awards**” shall mean Awards granted or Shares issued by the Company inassumption of, or in substitution or exchange for, awards previously granted, or the right orobligation to make future awards, by a company acquired by the Company or any Related Entity orwith which the Company or any Related Entity combines.
     3. Administration.
          *(a) Authority of the Committee*. The Plan shall be administered by the Committee except to theextent the Board elects to administer the Plan, in which case the Plan shall be administered byonly those directors who are Independent Directors, in which case references herein to the“Committee” shall be deemed to include references to the Independent members of the Board. TheCommittee shall have full and final authority, subject to and consistent with the provisions of thePlan, to select Eligible Persons to become Participants, grant Awards, determine the type, numberand other terms and conditions of, and all other matters relating to, Awards, prescribe AwardAgreements (which need not be identical for each Participant) and rules and regulations for theadministration of the Plan, construe and interpret the Plan and Award Agreements and correctdefects, supply omissions or reconcile inconsistencies therein, and to make all other decisions anddeterminations as the Committee may deem necessary or advisable for the administration of the Plan.In exercising any discretion granted to the Committee under the Plan or pursuant to any Award, theCommittee shall not be required to follow past practices, act in a manner consistent with pastpractices, or treat any Eligible Person or Participant in a manner consistent with the treatment ofother Eligible Persons or Participants.
          (b) *Manner of Exercise of Committee Authority*. The Committee, and not the Board, shallexercise sole and exclusive discretion on any matter relating to a Participant then subject toSection 16 of the Exchange Act with respect to the Company to the extent necessary in order thattransactions by such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Anyaction of the Committee shall be final, conclusive and binding on all persons, including theCompany, its Related Entities, Participants, Beneficiaries, transferees under Section 10(b) hereofor other persons claiming rights from or through a Participant, and shareholders. The expressgrant of any specific power to the Committee, and the taking of any action by the Committee, shallnot be construed as limiting any power or authority of the Committee. The Committee may delegateto officers or managers of the Company or any Related Entity, or committees thereof, the authority,subject to such terms as the Committee shall determine, to perform such functions, includingadministrative functions as the Committee may determine to the extent that such delegation will notresult in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participantssubject to Section 16 of the Exchange Act in respect of the Company and will not cause Awardsintended to qualify as “performance-based compensation” under Code Section 162(m) to fail to soqualify. The Committee may appoint agents to assist it in administering the Plan.
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          (c) *Limitation of Liability*. The Committee and the Board, and each member thereof, shall beentitled to, in good faith, rely or act upon any report or other information furnished to him orher by any officer or Employee, the Company’s independent auditors, Consultants or any other agentsassisting in the administration of the Plan. Members of the Committee and the Board, and anyofficer or Employee acting at the direction or on behalf of the Committee or the Board, shall notbe personally liable for any action or determination taken or made in good faith with respect tothe Plan, and shall, to the extent permitted by law, be fully indemnified and protected by theCompany with respect to any such action or determination.
     4. *Shares Subject to Plan*.
          (a) *Limitation on Overall Number of Shares Available for Delivery Under Plan*. Subject toadjustment as provided in Section 10(c) hereof, the total number of Shares reserved and availablefor delivery under the Plan shall be 2,000,000, plus any Shares remaining available for deliveryunder the Prior Plan on the Effective Date of the Plan. Any Shares delivered under the Plan mayconsist, in whole or in part, of authorized and unissued shares or treasury shares.
          (b) *Application of Limitation to Grants of Award.* No Award may be granted if the number ofShares to be delivered in connection with such an Award or, in the case of an Award relating toShares but settled only in cash (such as cash-only Stock Appreciation Rights), the number of Sharesto which such Award relates, exceeds the number of Shares remaining available for delivery underthe Plan, minus the number of Shares deliverable in settlement of or relating to then outstandingAwards. The Committee may adopt reasonable counting procedures to ensure appropriate counting,avoid double counting (as, for example, in the case of tandem or substitute awards) and makeadjustments if the number of Shares actually delivered differs from the number of Shares previouslycounted in connection with an Award.
          (c) Availability of Shares Not Delivered under Awards and Adjustments to Limits.
               (i) If any Shares subject to an Award are forfeited, expire or otherwise terminate withoutissuance of such Shares, or any Award is settled for cash or otherwise does not result in theissuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extentof such forfeiture, expiration, termination, cash settlement or non-issuance, again be availablefor Awards under the Plan, subject to Section 4(c)(iv) below.
               (ii) In the event that any Option or other Award granted hereunder is exercised through thetendering of Shares (either actually or by attestation) or by the withholding of Shares by theCompany, or withholding tax liabilities arising from such option or other award are satisfied bythe tendering of Shares (either actually or by attestation) or by the withholding of Shares by theCompany, then only the number of Shares issued net of the Shares tendered or withheld shall becounted for purposes of determining the maximum number of Shares available for grant under thePlan.
               (iii) Substitute Awards shall not reduce the Shares authorized for grant under the Plan orauthorized for grant to a Participant in any period. Additionally, in the event
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that a company acquired by the Company or any Related Entity or with which the Company or anyRelated Entity combines has shares available under a pre-existing plan approved by shareholders andnot adopted in contemplation of such acquisition or combination, the shares available for deliverypursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using theexchange ratio or other adjustment or valuation ratio or formula used in such acquisition orcombination to determine the consideration payable to the holders of common stock of the entitiesparty to such acquisition or combination) may be used for Awards under the Plan and shall notreduce the Shares authorized for delivery under the Plan; provided that Awards using such availableshares shall not be made after the date awards or grants could have been made under the terms ofthe pre-existing plan, absent the acquisition or combination, and shall only be made to individualswho were not Employees or Directors prior to such acquisition or combination.
               (iv) Any Shares that again become available for delivery pursuant to this Section 4(c) shallbe added back as one (1) Share.
               (v) Notwithstanding anything in this Section 4(c) to the contrary and solely for purposes ofdetermining whether Shares are available for the delivery of Incentive Stock Options, the maximumaggregate number of shares that may be granted under this Plan shall be determined without regardto any Shares restored pursuant to this Section 4(c) that, if taken into account, would cause thePlan to fail the requirement under Code Section 422 that the Plan designate a maximum aggregatenumber of shares that may be issued.
          (d) *No Further Awards Under Prior Plan*. In light of the adoption of this Plan, no furtherawards shall be made under the Prior Plan after the Effective Date.
     5. *Eligibility; Per-Person Award Limitations.*Awards may be granted under the Plan only toEligible Persons. Subject to adjustment as provided in Section 10(c), in any fiscal year of theCompany during any part of which the Plan is in effect, no Participant may be granted (i) Optionsor Stock Appreciation Rights with respect to more than 500,000 Shares or (ii) Restricted Stock,Deferred Stock, Performance Shares and/or Other Stock-Based Awards with respect to more than500,000 Shares. In addition, the maximum dollar value payable to any one Participant with respectto Performance Units is (x) $5,000,000 with respect to any 12 month Performance Period, and (y)with respect to any Performance Period that is more than 12 months, $10,000,000.
     6. *Specific Terms of Awards*.
          (a) *General*. Awards may be granted on the terms and conditions set forth in this Section 6.In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant orthereafter (subject to Section 10(e)), such additional terms and conditions, not inconsistent withthe provisions of the Plan, as the Committee shall determine, including terms requiring forfeitureof Awards in the event of termination of the Participant’s Continuous Service and terms permittinga Participant to make elections relating to his or her Award. The Committee shall retain fullpower and discretion to accelerate, waive or modify, at any time, any term or condition of an Awardthat is not mandatory under the Plan. Except in cases in which the Committee is authorized torequire other forms of consideration under the Plan, or to the
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extent other forms of consideration must be paid to satisfy the requirements of Florida law,no consideration other than services may be required for the grant (but not the exercise) of anyAward.
          (b) *Options.*The Committee is authorized to grant Options to any Eligible Person on thefollowing terms and conditions:
               *(i) Exercise Price.*Other than in connection with Substitute Awards, the exercise price perShare purchasable under an Option shall be determined by the Committee, provided that such exerciseprice shall not, in the case of Incentive Stock Options, be less than 100% of the Fair Market Valueof a Share on the date of grant of the Option and shall not, in any event, be less than the parvalue of a Share on the date of grant of the Option. If an Employee owns or is deemed to own (byreason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of thecombined voting power of all classes of stock of the Company (or any parent corporation orsubsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of theCode, respectively) and an Incentive Stock Option is granted to such employee, the exercise priceof such Incentive Stock Option (to the extent required by the Code at the time of grant) shall beno less than 110% of the Fair Market Value a Share on the date such Incentive Stock Option isgranted*.*
               *(ii) Time and Method of Exercise*. The Committee shall determine the time or times at which orthe circumstances under which an Option may be exercised in whole or in part (including based onachievement of performance goals and/or future service requirements), the time or times at whichOptions shall cease to be or become exercisable following termination of Continuous Service or uponother conditions, the methods by which the exercise price may be paid or deemed to be paid(including in the discretion of the Committee a cashless exercise procedure), the form of suchpayment, including, without limitation, cash, Shares, other Awards or awards granted under otherplans of the Company or a Related Entity, or other property (including notes or other contractualobligations of Participants to make payment on a deferred basis provided that such deferredpayments are not in violation of the Sarbanes-Oxley Act of 2002, or any rule or regulation adoptedthereunder or any other applicable law), and the methods by or forms in which Shares will bedelivered or deemed to be delivered to Participants.
               *(iii) Incentive Stock Options*. The terms of any Incentive Stock Option granted under the Planshall comply in all respects with the provisions of Section 422 of the Code. Anything in the Planto the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (includingany Stock Appreciation Right issued in tandem therewith) shall be interpreted, amended or altered,nor shall any discretion or authority granted under the Plan be exercised, so as to disqualifyeither the Plan or any Incentive Stock Option under Section 422 of the Code, unless the Participanthas first requested, or consents to, the change that will result in such disqualification. Thus,if and to the extent required to comply with Section 422 of the Code, Options granted as IncentiveStock Options shall be subject to the following special terms and conditions:
                    (A) the Option shall not be exercisable more than ten years after the date such IncentiveStock Option is granted; provided, however, that if a Participant
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owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code)more than 10% of the combined voting power of all classes of stock of the Company (or any parentcorporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e)and (f) of the Code, respectively) and the Incentive Stock Option is granted to such Participant,the term of the Incentive Stock Option shall be (to the extent required by the Code at the time ofthe grant) for no more than five years from the date of grant; and
                    (B) The aggregate Fair Market Value (determined as of the date the Incentive Stock Option isgranted) of the Shares with respect to which Incentive Stock Options granted under the Plan and allother option plans of the Company (and any parent corporation or subsidiary corporation of theCompany, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) duringany calendar year exercisable for the first time by the Participant during any calendar year shallnot (to the extent required by the Code at the time of the grant) exceed $100,000.
          (c) *Stock Appreciation Rights*. The Committee may grant Stock Appreciation Rights to anyEligible Person in conjunction with all or part of any Option granted under the Plan or at anysubsequent time during the term of such Option (a “Tandem Stock Appreciation Right”), or withoutregard to any Option (a “Freestanding Stock Appreciation Right”), in each case upon such terms andconditions as the Committee may establish in its sole discretion, not inconsistent with theprovisions of the Plan, including the following:
               (i) *Right to Payment*. A Stock Appreciation Right shall confer on the Participant to whom itis granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value ofone Share on the date of exercise over (B) the grant price of the Stock Appreciation Right asdetermined by the Committee. The grant price of a Stock Appreciation Right shall not be less thanthe Fair Market Value of a Share on the date of grant, in the case of a Freestanding StockAppreciation Right, or less than the associated Option exercise price, in the case of a TandemStock Appreciation Right.
               (ii) *Other Terms*. The Committee shall determine at the date of grant or thereafter, the timeor times at which and the circumstances under which a Stock Appreciation Right may be exercised inwhole or in part (including based on achievement of performance goals and/or future servicerequirements), the time or times at which Stock Appreciation Rights shall cease to be or becomeexercisable following termination of Continuous Service or upon other conditions, the method ofexercise, method of settlement, form of consideration payable in settlement, method by or forms inwhich Shares will be delivered or deemed to be delivered to Participants, whether or not a StockAppreciation Right shall be in tandem or in combination with any other Award, and any other termsand conditions of any Stock Appreciation Right.
               (iii) *Tandem Stock Appreciation Rights.*Any Tandem Stock Appreciation Right may be granted atthe same time as the related Option is granted or, for Options that are not Incentive StockOptions, at any time thereafter before exercise or expiration of such Option. Any Tandem StockAppreciation Right related to an Option may be exercised only when the related Option would beexercisable and the Fair Market Value of the Shares subject to the related Option exceeds theexercise price at which Shares can be acquired pursuant to the Option. In addition, if a TandemStock Appreciation Right exists with respect to less than
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the full number of Shares covered by a related Option, then an exercise or termination of suchOption shall not reduce the number of Shares to which the Tandem Stock Appreciation Right appliesuntil the number of Shares then exercisable under such Option equals the number of Shares to whichthe Tandem Stock Appreciation Right applies. Any Option related to a Tandem Stock AppreciationRight shall no longer be exercisable to the extent the Tandem Stock Appreciation Right has beenexercised, and any Tandem Stock Appreciation Right shall no longer be exercisable to the extent therelated Option has been exercised.
          *(d) Restricted Stock Awards*. The Committee is authorized to grant Restricted Stock Awards toany Eligible Person on the following terms and conditions:
               (i) *Grant and Restrictions*. Restricted Stock Awards shall be subject to such restrictions ontransferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, oras otherwise provided in this Plan, covering a period of time specified by the Committee (the“Restriction Period”). The terms of any Restricted Stock Award granted under the Plan shall be setforth in a written Award Agreement which shall contain provisions determined by the Committee andnot inconsistent with the Plan. The restrictions may lapse separately or in combination at suchtimes, under such circumstances (including based on achievement of performance goals and/or futureservice requirements), in such installments or otherwise, as the Committee may determine at thedate of grant or thereafter. Except to the extent restricted under the terms of the Plan and anyAward Agreement relating to a Restricted Stock Award, a Participant granted Restricted Stock shallhave all of the rights of a shareholder, including the right to vote the Restricted Stock and theright to receive dividends thereon (subject to any mandatory reinvestment or other requirementimposed by the Committee). During the Restriction Period, subject to Section 10(b) below, theRestricted Stock may not be sold, transferred, pledged, hypothecated, margined or otherwiseencumbered by the Participant.
               (ii) *Forfeiture*. Except as otherwise determined by the Committee, upon termination of aParticipant’s Continuous Service during the applicable Restriction Period, the Participant’sRestricted Stock that is at that time subject to a risk of forfeiture that has not lapsed orotherwise been satisfied shall be forfeited and reacquired by the Company; provided that theCommittee may provide, by rule or regulation or in any Award Agreement, or may determine in anyindividual case, that forfeiture conditions relating to Restricted Stock Awards shall be waived inwhole or in part in the event of terminations resulting from specified causes.
               (iii) *Certificates for Stock*. Restricted Stock granted under the Plan may be evidenced insuch manner as the Committee shall determine. If certificates representing Restricted Stock areregistered in the name of the Participant, the Committee may require that such certificates bear anappropriate legend referring to the terms, conditions and restrictions applicable to suchRestricted Stock, that the Company retain physical possession of the certificates, and that theParticipant deliver a stock power to the Company, endorsed in blank, relating to the RestrictedStock.
               (iv) *Dividends and Splits*. As a condition to the grant of a Restricted Stock Award, theCommittee may require or permit a Participant to elect that any cash dividends paid on a Share ofRestricted Stock be automatically reinvested in additional Shares of Restricted Stock or applied tothe purchase of additional Awards under the Plan. Unless otherwise
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determined by the Committee, Shares distributed in connection with a stock split or stockdividend, and other property distributed as a dividend, shall be subject to restrictions and a riskof forfeiture to the same extent as the Restricted Stock with respect to which such Shares or otherproperty have been distributed.
          (e) *Deferred Stock Award*. The Committee is authorized to grant Deferred Stock Awards to anyEligible Person on the following terms and conditions:
               (i) *Award and Restrictions*. Satisfaction of a Deferred Stock Award shall occur uponexpiration of the deferral period specified for such Deferred Stock Award by the Committee (or, ifpermitted by the Committee, as elected by the Participant). In addition, a Deferred Stock Awardshall be subject to such restrictions (which may include a risk of forfeiture) as the Committee mayimpose, if any, which restrictions may lapse at the expiration of the deferral period or at earlierspecified times (including based on achievement of performance goals and/or future servicerequirements), separately or in combination, in installments or otherwise, as the Committee maydetermine. A Deferred Stock Award may be satisfied by delivery of Shares, cash equal to the FairMarket Value of the specified number of Shares covered by the Deferred Stock, or a combinationthereof, as determined by the Committee at the date of grant or thereafter. Prior to satisfactionof a Deferred Stock Award, a Deferred Stock Award carries no voting or dividend or other rightsassociated with Share ownership.
               (ii) *Forfeiture*. Except as otherwise determined by the Committee, upon termination of aParticipant’s Continuous Service during the applicable deferral period or portion thereof to whichforfeiture conditions apply (as provided in the Award Agreement evidencing the Deferred StockAward), the Participant’s Deferred Stock Award that is at that time subject to a risk of forfeiturethat has not lapsed or otherwise been satisfied shall be forfeited; provided that the Committee mayprovide, by rule or regulation or in any Award Agreement, or may determine in any individual case,that forfeiture conditions relating to a Deferred Stock Award shall be waived in whole or in partin the event of terminations resulting from specified causes, and the Committee may in other caseswaive in whole or in part the forfeiture of any Deferred Stock Award.
               (iii) *Dividend Equivalents*. Unless otherwise determined by the Committee at date of grant,any Dividend Equivalents that are granted with respect to any Deferred Stock Award shall be either(A) paid with respect to such Deferred Stock Award at the dividend payment date in cash or inShares of unrestricted stock having a Fair Market Value equal to the amount of such dividends, or(B) deferred with respect to such Deferred Stock Award and the amount or value thereofautomatically deemed reinvested in additional Deferred Stock, other Awards or other investmentvehicles, as the Committee shall determine or permit the Participant to elect.
          (f) *Bonus Stock and Awards in Lieu of Obligations*. The Committee is authorized to grantShares to any Eligible Persons as a bonus, or to grant Shares or other Awards in lieu ofobligations to pay cash or deliver other property under the Plan or under other plans orcompensatory arrangements, provided that, in the case of Eligible Persons subject to Section 16 ofthe Exchange Act, the amount of such grants remains within the discretion of the Committee to theextent necessary to ensure that acquisitions of Shares or other Awards are exempt from
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liability under Section 16(b) of the Exchange Act. Shares or Awards granted hereunder shallbe subject to such other terms as shall be determined by the Committee.
          (g) *Dividend Equivalents*. The Committee is authorized to grant Dividend Equivalents to anyEligible Person entitling the Eligible Person to receive cash, Shares, other Awards, or otherproperty equal in value to the dividends paid with respect to a specified number of Shares, orother periodic payments. Dividend Equivalents may be awarded on a free-standing basis or inconnection with another Award. The Committee may provide that Dividend Equivalents shall be paidor distributed when accrued or shall be deemed to have been reinvested in additional Shares,Awards, or other investment vehicles, and subject to such restrictions on transferability and risksof forfeiture, as the Committee may specify.
          (h) *Performance Awards*. The Committee is authorized to grant Performance Awards to anyEligible Person payable in cash, Shares, or other Awards, on terms and conditions established bythe Committee, subject to the provisions of Section 8 if and to the extent that the Committeeshall, in its sole discretion, determine that an Award shall be subject to those provisions. Theperformance criteria to be achieved during any Performance Period and the length of the PerformancePeriod shall be determined by the Committee upon the grant of each Performance Award. Except asprovided in Section 9 or as may be provided in an Award Agreement, Performance Awards will bedistributed only after the end of the relevant Performance Period. The performance goals to beachieved for each Performance Period shall be conclusively determined by the Committee and may bebased upon the criteria set forth in Section 8(b), or in the case of an Award that the Committeedetermines shall not be subject to Section 8 hereof, any other criteria that the Committee, in itssole discretion, shall determine should be used for that purpose. The amount of the Award to bedistributed shall be conclusively determined by the Committee. Performance Awards may be paid in alump sum or in installments following the close of the Performance Period or, in accordance withprocedures established by the Committee, on a deferred basis.
          (i) *Other Stock-Based Awards*. The Committee is authorized, subject to limitations underapplicable law, to grant to any Eligible Person such other Awards that may be denominated orpayable in, valued in whole or in part by reference to, or otherwise based on, or related to,Shares, as deemed by the Committee to be consistent with the purposes of the Plan. OtherStock-Based Awards may be granted to Participants either alone or in addition to other Awardsgranted under the Plan, and such Other Stock-Based Awards shall also be available as a form ofpayment in the settlement of other Awards granted under the Plan. The Committee shall determinethe terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of apurchase right granted under this Section 6(i) shall be purchased for such consideration,**(including without limitation loans from the Company or a Related Entity provided that such loansare not in violation of the Sarbanes Oxley Act of 2002, or any rule or regulation adoptedthereunder or any other applicable law)**paid for at such times, by such methods, and in such forms,including, without limitation, cash, Shares, other Awards or other property, as the Committee shalldetermine.
     7. Certain Provisions Applicable to Awards.
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          (a) *Stand-Alone, Additional, Tandem, and Substitute Awards*. Awards granted under the Planmay, in the discretion of the Committee, be granted either alone or in addition to, in tandem with,or in substitution or exchange for, any other Award or any award granted under another plan of theCompany, any Related Entity, or any business entity to be acquired by the Company or a RelatedEntity, or any other right of a Participant to receive payment from the Company or any RelatedEntity. Such additional, tandem, and substitute or exchange Awards may be granted at any time. Ifan Award is granted in substitution or exchange for another Award or award, the Committee shallrequire the surrender of such other Award or award in consideration for the grant of the new Award.In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amountspayable under other plans of the Company or any Related Entity, in which the value of Stock subjectto the Award is equivalent in value to the cash compensation (for example, Deferred Stock orRestricted Stock), or in which the exercise price, grant price or purchase price of the Award inthe nature of a right that may be exercised is equal to the Fair Market Value of the underlyingStock minus the value of the cash compensation surrendered (for example, Options or StockAppreciation Right granted with an exercise price or grant price “discounted” by the amount of thecash compensation surrendered).
          (b) *Term of Awards*. The term of each Award shall be for such period as may be determined bythe Committee; provided that in no event shall the term of any Option or Stock Appreciation Rightexceed a period of ten years (or in the case of an Incentive Stock Option such shorter term as maybe required under Section 422 of the Code).
          (c) *Form and Timing of Payment Under Awards; Deferrals*. Subject to the terms of the Plan andany applicable Award Agreement, payments to be made by the Company or a Related Entity upon theexercise of an Option or other Award or settlement of an Award may be made in such forms as theCommittee shall determine, including, without limitation, cash, Shares, other Awards or otherproperty, and may be made in a single payment or transfer, in installments, or on a deferred basis.Any installment or deferral provided for in the preceding sentence shall, however, be subject tothe Company’s compliance with the provisions of the Sarbanes-Oxley Act of 2002, the rules andregulations adopted by the Securities and Exchange Commission thereunder, and all applicable rulesof the New York Stock Exchange or any national securities exchange on which the Company’ssecurities are listed for trading and, if not listed for trading on either the New York StockExchange or a national securities exchange, then the rules of the Nasdaq Stock Market. Thesettlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with suchsettlement, in the discretion of the Committee or upon occurrence of one or more specified events(in addition to a Change in Control). Installment or deferred payments may be required by theCommittee (subject to Section 10(e) of the Plan, including the consent provisions thereof in thecase of any deferral of an outstanding Award not provided for in the original Award Agreement) orpermitted at the election of the Participant on terms and conditions established by the Committee.Payments may include, without limitation, provisions for the payment or crediting of a reasonableinterest rate on installment or deferred payments or the grant or crediting of Dividend Equivalentsor other amounts in respect of installment or deferred payments denominated in Shares.
          (d) *Exemptions from**Section 16(b)**Liability*. It is the intent of the Company that the grantof any Awards to or other transaction by a Participant who is subject to Section 16 of the ExchangeAct shall be exempt from Section 16 pursuant to an applicable exemption
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(except for transactions acknowledged in writing to be non-exempt by such Participant).Accordingly, if any provision of this Plan or any Award Agreement does not comply with therequirements of Rule 16b-3 then applicable to any such transaction, such provision shall beconstrued or deemed amended to the extent necessary to conform to the applicable requirements ofRule 16b-3 so that such Participant shall avoid liability under Section 16(b).
     8. Code Section 162(m) Provisions.
          (a) *Covered Employees.*The Committee, in its discretion, may determine at the time an Awardis granted to an Eligible Person who is, or is likely to be, as of the end of the tax year in whichthe Company would claim a tax deduction in connection with such Award, a Covered Employee, that theprovisions of this Section 8 shall be applicable to such Award.
          (b) *Performance Criteria*. If an Award is subject to this Section 8, then the lapsing ofrestrictions thereon and the distribution of cash, Shares or other property pursuant thereto, asapplicable, shall be contingent upon achievement of one or more objective performance goals.Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) ofthe Code and regulations thereunder including the requirement that the level or levels ofperformance targeted by the Committee result in the achievement of performance goals being“substantially uncertain.” One or more of the following business criteria for the Company, on aconsolidated basis, and/or for Related Entities, or for business or geographical units of theCompany and/or a Related Entity (except with respect to the total shareholder return and earningsper share criteria), shall be used by the Committee in establishing performance goals for suchAwards: (1) earnings per share; (2) revenues or margins; (3) cash flow; (4) operating margin; (5)return on net assets, investment, capital, or equity; (6) economic value added; (7) directcontribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings beforeinterest, taxes, depreciation and amortization; earnings after interest expense and beforeextraordinary or special items; operating income; income before interest income or expense, unusualitems and income taxes, local, state or federal and excluding budgeted and actual bonuses whichmight be paid under any ongoing bonus plans of the Company; (9) working capital; (10) management offixed costs or variable costs; (11) identification or consummation of investment opportunities orcompletion of specified projects in accordance with corporate business plans, including strategicmergers, acquisitions or divestitures; (12) total shareholder return; (13) debt reduction; (14)comparable store sales; (15) inventory turn; (16) markdowns as a percentage of sales; and (17)selling, general and administrative expenses as a percentage of sales. Any of the above goals maybe determined on an absolute or relative basis or as compared to the performance of a published orspecial index deemed applicable by the Committee including, but not limited to, the Standard &Poor’s 500 Stock Index or a group of companies that are comparable to the Company. The Committeemay exclude the impact of an event or occurrence which the Committee determines shouldappropriately be excluded, including without limitation (i) restructurings, discontinuedoperations, extraordinary items, and other unusual or non-recurring charges, (ii) an event eithernot directly related to the operations of the Company or not within the reasonable control of theCompany’s management, or (iii) a change in accounting standards required by generally acceptedaccounting principles.
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          (c) *Performance Period; Timing For Establishing Performance Goals*. Achievement ofperformance goals in respect of such Performance Awards shall be measured over a PerformancePeriod, as specified by the Committee. Performance goals shall be established not later than 90days after the beginning of any Performance Period applicable to such Performance Awards, or atsuch other date as may be required or permitted for “performance-based compensation” under CodeSection 162(m).
          (d) *Adjustments*. The Committee may, in its discretion, reduce the amount of a settlementotherwise to be made in connection with Awards subject to this Section 8, but may not exercisediscretion to increase any such amount payable to a Covered Employee in respect of an Award subjectto this Section 8. The Committee shall specify the circumstances in which such Awards shall bepaid or forfeited in the event of termination of Continuous Service by the Participant prior to theend of a Performance Period or settlement of Awards.
          (e) *Committee Certification*. No Participant shall receive any payment under the Plan unlessthe Committee has certified, by resolution or other appropriate action in writing, that theperformance criteria and any other material terms previously established by the Committee or setforth in the Plan, have been satisfied to the extent necessary to qualify as “performance basedcompensation” under Code Section 162(m).
     9. Change in Control.
          (a) *Effect of “Change in Control.”*Subject to Section 9(a)(iv), and if and only to the extentprovided in the Award Agreement, or to the extent otherwise determined by the Committee, upon theoccurrence of a “Change in Control,” as defined in Section 9(b):
               (i) Any Option or Stock Appreciation Right that was not previously vested and exercisable asof the time of the Change in Control, shall become immediately vested and exercisable, subject toapplicable restrictions set forth in Section 10(a) hereof.
               (ii) Any restrictions, deferral of settlement, and forfeiture conditions applicable to aRestricted Stock Award, Deferred Stock Award or an Other Stock-Based Award subject only to futureservice requirements granted under the Plan shall lapse and such Awards shall be deemed fullyvested as of the time of the Change in Control, except to the extent of any waiver by theParticipant and subject to applicable restrictions set forth in Section 10(a) hereof.
               (iii) With respect to any outstanding Award subject to achievement of performance goals andconditions under the Plan, the Committee may, in its discretion, deem such performance goals andconditions as having been met as of the date of the Change in Control.
          (b) *Definition of “Change in Control"*. Unless otherwise specified in an Award Agreement, a“Change in Control” shall mean the occurrence of any of the following:
               (i) The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the thenoutstanding shares of common stock of the Company (the “Outstanding
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Company Common Stock”) or (B) the combined voting power of the then outstanding votingsecurities of the Company entitled to vote generally in the election of directors (the “OutstandingCompany Voting Securities) (the foregoing Beneficial Ownership hereinafter being referred to as a“Controlling Interest”); provided, however, that for purposes of this Section 9(b), the followingacquisitions shall not constitute or result in a Change of Control: (v) any acquisition directlyfrom the Company; (w) any acquisition by the Company; (x) any acquisition by any Person that as ofthe Effective Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by anyemployee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary;or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses(A), (B) and (C) of subsection (iii) below; or
               (ii) During any period of two (2) consecutive years (not including any period prior to theEffective Date) individuals who constitute the Board on the Effective Date (the “Incumbent Board”)cease for any reason to constitute at least a majority of the Board; provided, however, that anyindividual becoming a director subsequent to the Effective Date whose election, or nomination forelection by the Company’s shareholders, was approved by a vote of at least a majority of thedirectors then comprising the Incumbent Board shall be considered as though such individual were amember of the Incumbent Board, but excluding, for this purpose, any such individual whose initialassumption of office occurs as a result of an actual or threatened election contest with respect tothe election or removal of directors or other actual or threatened solicitation of proxies orconsents by or on behalf of a Person other than the Board; or
               (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation orsimilar corporate transaction involving the Company or any of its Subsidiaries, a sale or otherdisposition of all or substantially all of the assets of the Company, or the acquisition of assetsor stock of another entity by the Company or any of its Subsidiaries (each a “BusinessCombination”), in each case, unless, following such Business Combination, (A) all or substantiallyall of the individuals and entities who were the Beneficial Owners, respectively, of theOutstanding Company Common Stock and Outstanding Company Voting Securities immediately prior tosuch Business Combination beneficially own, directly or indirectly, more than fifty percent (50%)of the then outstanding shares of common stock and the combined voting power of the thenoutstanding voting securities entitled to vote generally in the election of directors, as the casemay be, of the corporation resulting from such Business Combination (including, without limitation,a corporation which as a result of such transaction owns the Company or all or substantially all ofthe Company’s assets either directly or through one or more subsidiaries) in substantially the sameproportions as their ownership, immediately prior to such Business Combination of the OutstandingCompany Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person(excluding any employee benefit plan (or related trust) of the Company or such corporationresulting from such Business Combination or any Person that as of the Effective Date ownsBeneficial Ownership of a Controlling Interest) beneficially owns, directly or indirectly, fiftypercent (50%) or more of the then outstanding shares of common stock of the corporation resultingfrom such Business Combination or the combined voting power of the then outstanding votingsecurities of such corporation except to the extent that such ownership existed prior to theBusiness Combination and (C) at least a majority of the members of the Board of Directors of thecorporation resulting
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from such Business Combination were members of the Incumbent Board at the time of theexecution of the initial agreement, or of the action of the Board, providing for such BusinessCombination; or
               (iv) Approval by the shareholders of the Company of a complete liquidation or dissolution ofthe Company.
     10. General Provisions.
          (a) *Compliance With Legal and Other Requirements*. The Company may, to the extent deemednecessary or advisable by the Committee, postpone the issuance or delivery of Shares or payment ofother benefits under any Award until completion of such registration or qualification of suchShares or other required action under any federal or state law, rule or regulation, listing orother required action with respect to any stock exchange or automated quotation system upon whichthe Shares or other Company securities are listed or quoted, or compliance with any otherobligation of the Company, as the Committee, may consider appropriate, and may require anyParticipant to make such representations, furnish such information and comply with or be subject tosuch other conditions as it may consider appropriate in connection with the issuance or delivery ofShares or payment of other benefits in compliance with applicable laws, rules, and regulations,listing requirements, or other obligations.
          (b) *Limits on Transferability; Beneficiaries*. No Award or other right or interest grantedunder the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any lien,obligation or liability of such Participant to any party, or assigned or transferred by suchParticipant otherwise than by will or the laws of descent and distribution or to a Beneficiary uponthe death of a Participant, and such Awards or rights that may be exercisable shall be exercisedduring the lifetime of the Participant only by the Participant or his or her guardian or legalrepresentative, except that Awards and other rights (other than Incentive Stock Options and StockAppreciation Rights in tandem therewith) may be transferred to one or more Beneficiaries or othertransferees during the lifetime of the Participant, and may be exercised by such transferees inaccordance with the terms of such Award, but only if and to the extent such transfers are permittedby the Committee pursuant to the express terms of an Award Agreement (subject to any terms andconditions which the Committee may impose thereon). A Beneficiary, transferee, or other personclaiming any rights under the Plan from or through any Participant shall be subject to all termsand conditions of the Plan and any Award Agreement applicable to such Participant, except asotherwise determined by the Committee, and to any additional terms and conditions deemed necessaryor appropriate by the Committee.
          (c) Adjustments.
               (i) *Adjustments to Awards.*In the event that any extraordinary dividend or other distribution(whether in the form of cash, Shares, or other property), recapitalization, forward or reversesplit, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange,liquidation, dissolution or other similar corporate transaction or event affects the Shares and/orsuch other securities of the Company or any other issuer such that a substitution, exchange, oradjustment is determined by the Committee to be
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appropriate, then the Committee shall, in such manner as it may deem equitable, substitute,exchange or adjust any or all of (A) the number and kind of Shares which may be delivered inconnection with Awards granted thereafter, (B) the number and kind of Shares by which annualper-person Award limitations are measured under Section 5 hereof, (C) the number and kind of Sharessubject to or deliverable in respect of outstanding Awards, (D) the exercise price, grant price orpurchase price relating to any Award and/or make provision for payment of cash or other property inrespect of any outstanding Award, and (E) any other aspect of any Award that the Committeedetermines to be appropriate.
               (ii) *Adjustments in Case of Certain Corporate Transactions.*In the event of any merger,consolidation or other reorganization in which the Company does not survive, or in the event of anyChange in Control, any outstanding Awards may be dealt with in accordance with any of the followingapproaches, as determined by the agreement effectuating the transaction or, if and to the extentnot so determined, as determined by the Committee: (a) the continuation of the outstanding Awardsby the Company, if the Company is a surviving corporation, (b) the assumption or substitution for,as those terms are defined in Section 9(b)(iv) hereof, the outstanding Awards by the survivingcorporation or its parent or subsidiary, (c) full exercisability or vesting and acceleratedexpiration of the outstanding Awards, or (d) settlement of the value of the outstanding Awards incash or cash equivalents or other property followed by cancellation of such Awards (which value, inthe case of Options or Stock Appreciation Rights, shall be measured by the amount, if any, by whichthe Fair Market Value of a Share exceeds the exercise or grant price of the Option or StockAppreciation Right as of the effective date of the transaction). The Committee shall give writtennotice of any proposed transaction referred to in this Section 10(c)(ii) a reasonable period oftime prior to the closing date for such transaction (which notice may be given either before orafter the approval of such transaction), in order that Participants may have a reasonable period oftime prior to the closing date of such transaction within which to exercise any Awards that arethen exercisable (including any Awards that may become exercisable upon the closing date of suchtransaction). A Participant may condition his exercise of any Awards upon the consummation of thetransaction.
               (iii) *Other Adjustments.*The Committee (and the Board if and only to the extent suchauthority is not required to be exercised by the Committee to comply with Section 162(m) of theCode) is authorized to make adjustments in the terms and conditions of, and the criteria includedin, Awards (including Performance Awards, or performance goals relating thereto) in recognition ofunusual or nonrecurring events (including, without limitation, acquisitions and dispositions ofbusinesses and assets) affecting the Company, any Related Entity or any business unit, or thefinancial statements of the Company or any Related Entity, or in response to changes in applicablelaws, regulations, accounting principles, tax rates and regulations or business conditions or inview of the Committee’s assessment of the business strategy of the Company, any Related Entity orbusiness unit thereof, performance of comparable organizations, economic and business conditions,personal performance of a Participant, and any other circumstances deemed relevant; provided thatno such adjustment shall be authorized or made if and to the extent that such authority or themaking of such adjustment would cause Options, Stock Appreciation Rights, Performance Awardsgranted pursuant to Section 8(b) hereof to Participants designated by the Committee as CoveredEmployees and intended to qualify as “performance-based compensation” under Code Section 162(m) andthe regulations
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thereunder to otherwise fail to qualify as “performance-based compensation” under Code Section162(m) and regulations thereunder.
          (d) *Taxes*. The Company and any Related Entity are authorized to withhold from any Awardgranted, any payment relating to an Award under the Plan, including from a distribution of Shares,or any payroll or other payment to a Participant, amounts of withholding and other taxes due orpotentially payable in connection with any transaction involving an Award, and to take such otheraction as the Committee may deem advisable to enable the Company or any Related Entity andParticipants to satisfy obligations for the payment of withholding taxes and other tax obligationsrelating to any Award. This authority shall include authority to withhold or receive Shares orother property and to make cash payments in respect thereof in satisfaction of a Participant’s taxobligations, either on a mandatory or elective basis in the discretion of the Committee.
          (e) *Changes to the Plan and Awards*. The Board may amend, alter, suspend, discontinue orterminate the Plan, or the Committee’s authority to grant Awards under the Plan, without theconsent of shareholders or Participants, except that any amendment or alteration to the Plan shallbe subject to the approval of the Company’s shareholders not later than the annual meeting nextfollowing such Board action if such shareholder approval is required by any federal or state law orregulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules of anystock exchange or automated quotation system on which the Shares may then be listed or quoted, andthe Board may otherwise, in its discretion, determine to submit other such changes to the Plan toshareholders for approval; provided that, without the consent of an affected Participant, no suchBoard action may materially and adversely affect the rights of such Participant under anypreviously granted and outstanding Award. The Committee may waive any conditions or rights under,or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any AwardAgreement relating thereto, except as otherwise provided in the Plan; provided that, without theconsent of an affected Participant, no such Committee or the Board action may materially andadversely affect the rights of such Participant under such Award.
          (f) *Limitation on Rights Conferred Under Plan*. Neither the Plan nor any action takenhereunder shall be construed as (i) giving any Eligible Person or Participant the right to continueas an Eligible Person or Participant or in the employ or service of the Company or a RelatedEntity; (ii) interfering in any way with the right of the Company or a Related Entity to terminateany Eligible Person’s or Participant’s Continuous Service at any time, (iii) giving an EligiblePerson or Participant any claim to be granted any Award under the Plan or to be treated uniformlywith other Participants and Employees, or (iv) conferring on a Participant any of the rights of ashareholder of the Company unless and until the Participant is duly issued or transferred Shares inaccordance with the terms of an Award.
          (g) *Unfunded Status of Awards; Creation of Trusts*. The Plan is intended to constitute an“unfunded” plan for incentive and deferred compensation. With respect to any payments not yet madeto a Participant or obligation to deliver Shares pursuant to an Award, nothing contained in thePlan or any Award shall give any such Participant any rights that are greater than those of ageneral creditor of the Company; provided that the Committee may authorize the creation of trustsand deposit therein cash, Shares, other Awards or other property,
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or make other arrangements to meet the Company’s obligations under the Plan. Such trusts orother arrangements shall be consistent with the “unfunded” status of the Plan unless the Committeeotherwise determines with the consent of each affected Participant. The trustee of such trusts maybe authorized to dispose of trust assets and reinvest the proceeds in alternative investments,subject to such terms and conditions as the Committee may specify and in accordance with applicablelaw.
          (h) *Nonexclusivity of the Plan*. Neither the adoption of the Plan by the Board nor itssubmission to the shareholders of the Company for approval shall be construed as creating anylimitations on the power of the Board or a committee thereof to adopt such other incentivearrangements as it may deem desirable including incentive arrangements and awards which do notqualify under Section 162(m) of the Code.
          (i) *Payments in the Event of Forfeitures; Fractional Shares*. Unless otherwise determined bythe Committee, in the event of a forfeiture of an Award with respect to which a Participant paidcash or other consideration, the Participant shall be repaid the amount of such cash or otherconsideration. No fractional Shares shall be issued or delivered pursuant to the Plan or anyAward. The Committee shall determine whether cash, other Awards or other property shall be issuedor paid in lieu of such fractional shares or whether such fractional shares or any rights theretoshall be forfeited or otherwise eliminated.
          (j) *Governing Law*. The validity, construction and effect of the Plan, any rules andregulations under the Plan, and any Award Agreement shall be determined in accordance with the lawsof the State of Florida without giving effect to principles of conflict of laws, and applicablefederal law.
          (k) *Non-U.S. Laws*. The Committee shall have the authority to adopt such modifications,procedures, and subplans as may be necessary or desirable to comply with provisions of the laws offoreign countries in which the Company or its Subsidiaries may operate to assure the viability ofthe benefits from Awards granted to Participants performing services in such countries and to meetthe objectives of the Plan.
          (l) *Plan Effective Date and Shareholder Approval; Termination of Plan*. The Plan shall becomeeffective on the Effective Date, subject to subsequent approval, within 12 months of its adoptionby the Board, by shareholders of the Company eligible to vote in the election of directors, by avote sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule16b-3 under the Exchange Act (if applicable), applicable requirements under the rules of any stockexchange or automated quotation system on which the Shares may be listed or quoted, and other laws,regulations, and obligations of the Company applicable to the Plan. Awards may be granted subjectto shareholder approval, but may not be exercised or otherwise settled in the event the shareholderapproval is not obtained. The Plan shall terminate at the earliest of (a) such time as no Sharesremain available for issuance under the Plan, (b) termination of this Plan by the Board, or (c) thetenth anniversary of the Effective Date. Awards outstanding upon expiration of the Plan shallremain in effect until they have been exercised or terminated, or have expired.
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