Exhibit
4.1


 


INVESTMENT TECHNOLOGY
GROUP, INC.


 


2007 OMNIBUS EQUITY
COMPENSATION PLAN


 


Amended and
Restated Effective May 12, 2009


 

















 


INVESTMENT
TECHNOLOGY GROUP, INC.


 


2007
OMNIBUS EQUITY COMPENSATION PLAN


 


1.                                      Purpose


 


The purpose of the Investment Technology Group, Inc.
2007 Omnibus Equity Compensation Plan (the “Plan”) is to provide (i) designated
employees of Investment Technology Group, Inc. (the “Company”) and its
subsidiaries, and (ii) non-employee members of the board of directors of
the Company with the opportunity to receive grants of stock options, stock
units, stock awards, dividend equivalents and other stock-based awards.  The Company believes that the Plan will
encourage the participants to contribute materially to the growth of the
Company, thereby benefiting the Company’s stockholders, and will align the
economic interests of the participants with those of the stockholders.  The Plan was originally effective on May 8,
2007 upon approval by the stockholders of the Company.  This amendment and restatement will be
effective May 12, 2009 if approved by the Company’s stockholders as of
such date.


 


The Investment Technology Group, Inc.
Non-Employee Directors Stock Option Plan (the “Director Plan”), the Investment
Technology Group, Inc. Amended and Restated 1994 Stock Option and
Long-term Incentive Plan (the “1994 Plan”), the Amended and Restated Investment
Technology Group, Inc. Stock Unit Award Program Subplan (the “SUA Subplan”),
the Amended and Restated Investment Technology Group, Inc. Directors’
Retainer Fee Subplan (the “Directors’ Retainer Fee Subplan”), and the Amended
and Restated Investment Technology Group, Inc. Directors’ Equity Subplan
(the “Directors’ Equity Subplan”, and collectively with the SUA Subplan and the
Directors’ Retainer Fee Subplan, the “Subplans”) were merged with and into this
Plan as of May 8, 2007.  No
additional grants will be made thereafter under the Director Plan and the 1994
Plan.  Outstanding grants under the
Director Plan, the 1994 Plan and the Subplans as of May 8, 2007 will
continue in effect according to their terms as in effect on May 8, 2007
(subject to such amendments as the Committee (as defined below) determines
appropriate, consistent with the terms of the Director Plan, the 1994 Plan or
the Subplans, as applicable), and the shares with respect to such outstanding
grants will be issued or transferred under this Plan.  After May 8, 2007, the Subplans shall
continue in effect as subplans of the Plan and grants and/or deferrals may
continue to be made under the Subplans with shares associated with such grants
and/or deferrals being issued under this Plan.


 


2.                                      Definitions


 


Whenever used in this Plan, the following terms will
have the respective meanings set forth below:


 


(a)           “Board” means the Company’s Board of Directors.


 


(b)           “Change in Control” means and shall be deemed to have
occurred:


 


(i)            if
any person (within the meaning of the Exchange Act), other than the Company or
a Related Party, is or becomes the “beneficial owner” (as defined in Rule 13d-3



 

















 


under the Exchange Act), directly or indirectly, of
Voting Securities representing 35% percent or more of the total voting power of
all the then-outstanding Voting Securities; or


 


(ii)           if
the individuals who, as of the date hereof, constitute the Board, together with
those who first become directors subsequent to such date and whose
recommendation, election or nomination for election to the Board was approved
by a vote of at least a majority of the directors then still in office who
either were directors as of the date hereof or whose recommendation, election
or nomination for election was previously so approved, cease for any reason to
constitute a majority of the members of the Board; or


 


(iii)          upon
consummation of a merger, consolidation, recapitalization or reorganization of
the Company, reverse split of any class of Voting Securities, or an acquisition
of securities or assets by the Company other than (i) any such transaction
in which the holders of outstanding Voting Securities immediately prior to the
transaction receive (or retain), with respect to such Voting Securities, voting
securities of the surviving or transferee entity representing more than 50
percent of the total voting power outstanding immediately after such
transaction, with the voting power of each such continuing holder relative to
other such continuing holders not substantially altered in the transaction, or (ii) any
such transaction which would result in a Related Party beneficially owning more
than 50 percent of the voting securities of the surviving or transferee entity
outstanding immediately after such transaction; or


 


(iv)          upon
consummation of the sale or disposition by the Company of all or substantially
all of the Company’s assets, other than any such transaction which would result
in a Related Party owning or acquiring more than 50 percent of the assets owned
by the Company immediately prior to the transaction; or


 


(v)           if
the stockholders of the Company approve a plan of complete liquidation of the
Company.


 


(c)           “Code” means the Internal Revenue Code of 1986, as amended.


 


(d)           “Committee” means (i) with respect to Grants to
Employees, the Compensation Committee of the Board or another committee
appointed by the Board to administer the Plan, (ii) with respect to Grants
made to Non-Employee Directors, the Board, and (iii) with respects to
Grants that are intended to be “qualified performance-based compensation” under
section 162(m) of the Code, a committee that consists of two or more
persons appointed by the Board, all of whom shall be “outside directors” as
defined under section 162(m) of the Code and related Treasury
regulations.


 


(e)           “Company” means Investment Technology Group, Inc. and
any successor corporation.


 


(f)            “Company Stock” means the common stock of the Company.


 


(g)           “Dividend Equivalent” means an amount determined by
multiplying the number of shares of Company Stock subject to a Grant by the
per-share cash dividend, or the per-share 


 


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fair market value (as determined by the Committee) of
any dividend in consideration other than cash, paid by the Company on its
Company Stock.


 


(h)           “Employee” means an employee of the Employer (including an
officer or director who is also an employee).


 


(i)            “Employer” means the Company and its subsidiaries.


 


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


 


(k)           “Exercise Price” means the per share price at which shares
of Company Stock may be purchased under an Option, as designated by the
Committee.


 


(l)            “Fair Market Value,”
unless otherwise required by an applicable provision of the Code, as of any
date, means the closing sales price of the Common Stock as reported on the New
York Stock Exchange on the date of grant; provided, however, that at any time
that the Common Stock is not quoted on the New York Stock Exchange on such
trading days, Fair Market Value shall be determined by the Committee in its
discretion.


 


(m)          “Grant” means an Option, Stock Unit, Stock Award, SAR,
Dividend Equivalent or Other Stock-Based Award granted under the Plan.


 


(n)           “Grant Agreement” means the written instrument that sets
forth the terms and conditions of a Grant, including all amendments thereto.


 


(o)           “Incentive Stock Option” means an Option that is intended to
meet the requirements of an incentive stock option under section 422 of the
Code.


 


(p)           “Non-Employee Director” means a member of the Board who is
not an employee of the Employer.


 


(q)           “Nonqualified Stock Option” means an Option that is not
intended to be taxed as an incentive stock option under section 422 of the
Code.


 


(r)            “Option” means an option to purchase shares of Company
Stock, as described in Section 7.


 


(s)           “Other Stock-Based Award” means any Grant based on, measured
by or payable in, Company Stock (other than a Grant described in Sections 7, 8,
9 or 10(a) of the Plan), as described in Section 10(b).


 


(t)            “Participant” means an Employee or Non-Employee Director
designated by the Committee to participate in the Plan.


 


(u)           “Person” means an individual, a partnership, a corporation,
a limited liability company, an association, a joint stock company, an estate,
a trust, a joint venture, an 


 


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unincorporated organization or a governmental entity
or any department, agency or political subdivision thereof.


 


(v)           “Plan” means this Investment Technology Group, Inc.
2007 Omnibus Equity Compensation Plan, as in effect from time to time.


 


(w)          “Related Party” means (a) a Subsidiary of the Company; (b) an
employee or group of employees of the Company or any Subsidiary of the Company;
(c) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any majority-owned Subsidiary of the Company; or
(d) a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportion as their ownership of Voting
Securities.


 


(x)            “SAR” means a stock appreciation right as described in Section 10(a).


 


(y)           “Stock Award” means an award of Company Stock as described
in Section 9.


 


(z)            “Stock Unit” means an award of a phantom unit representing a
share of Company Stock, as described in Section 8.


 


(aa)         “Subsidiary” or “Subsidiaries” means, with respect to any
Person, any corporation, partnership, limited liability company, association or
other business entity of which (a) if a corporation, fifty (50) percent or
more of the total voting power of shares of stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or combination thereof; or (b) if a partnership, limited liability
company, association or other business entity, fifty (50) percent or more of
the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes of this definition, a Person or
Persons will be deemed to have a fifty (50) percent or more ownership interest
in a partnership, limited liability company, association or other business
entity if such Person or Persons are allocated fifty (50) percent or more of
partnership, limited liability company, association or other business entity
gains or losses or control the managing director or member or general partner
of such partnership, limited liability company, association or other business
entity.


 


(bb)         “Voting Securities or Security” means any securities of the Company
which carry the right to vote generally in the election of directors.


 


3.                                      Administration


 


(a)           Committee.  The Plan shall be administered and
interpreted by the Compensation Committee of the Board or another committee
appointed by the Board to administer the Plan with respect to grants to
Employees.  The Plan shall be
administered and interpreted by the Board with respect to grants to
Non-Employee Directors.  The Board or
committee, as applicable, that has authority with respect to a specific Grant
shall be referred to as the 


 


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“Committee” with respect to that Grant.  Ministerial functions may be performed by an
administrative committee comprised of Company employees appointed by the
Committee.


 


(b)           Committee
Authority.  The Committee shall have
the sole authority to (i) determine the Participants to whom Grants shall
be made under the Plan, (ii) determine the type, size and terms and
conditions of the Grants to be made to each such Participant, (iii) determine
the time when the grants will be made and the duration of any applicable
exercise or restriction period, including the criteria for exercisability and
the acceleration of exercisability, (iv) amend the terms and conditions of
any previously issued Grant, subject to the provisions of Section 18
below, and (v) deal with any other matters arising under the Plan.


 


(c)           Committee
Determinations.  The Committee shall
have full power and express discretionary authority to administer and interpret
the Plan, to make factual determinations and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan and for the
conduct of its business as it deems necessary or advisable, in its sole discretion.  The Committee’s interpretations of the Plan
and all determinations made by the Committee pursuant to the powers vested in
it hereunder shall be conclusive and binding on all persons having any interest
in the Plan or in any awards granted hereunder.  All powers of the Committee shall be executed
in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan and need not be
uniform as to similarly situated Participants.


 


4.                                      Grants


 


(a)           Grants
under the Plan may consist of Options as described in Section 7, Stock
Units as described in Section 8, Stock Awards as described in Section 9,
and SARs or Other Stock-Based Awards as described in Section 10.  All Grants shall be subject to such terms and
conditions as the Committee deems appropriate and as are specified in writing
by the Committee to the Participant in the Grant Agreement.


 


(b)           All
Grants shall be made conditional upon the Participant’s acknowledgement, in
writing or by acceptance of the Grant, that all decisions and determinations of
the Committee shall be final and binding on the Participant, his or her
beneficiaries and any other person having or claiming an interest under such
Grant.  Grants under a particular Section of
the Plan need not be uniform as among the Participants.


 


5.                                      Shares Subject to the Plan


 


(a)           Shares
Authorized.  The total aggregate
number of shares of Company Stock that may be issued under the Plan is the sum
of the following (i) 1,300,000 new shares of Company Stock plus (ii) that number of
shares of Company Stock subject to outstanding grants under the Plan as of May 12,
2009 plus (iii) that number of shares remaining available for issuance
under the Plan but not subject to previously exercised, vested or paid grants
as of May 12, 2009;
provided that of the total number of shares of Company Stock described in (i),
50,000 shares shall be used solely to grant Options.


 


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(b)           Source
of Shares; Share Counting.  Shares issued
under the Plan may be authorized but unissued shares of Company Stock or
reacquired shares of Company Stock, including shares purchased by the Company
on the open market for purposes of the Plan. 
If and to the extent Options or SARs granted under the Plan (including
options granted under the Director Plan, the 1994 Plan and the Subplans)
terminate, expire, or are canceled, forfeited, exchanged or surrendered without
having been exercised, and if and to the extent that any Stock Awards, Stock
Units, or Other Stock-Based Awards (including any stock awards, stock units or
other-stock based awards granted under the Director Plan, the 1994 Plan and the
Subplans) are forfeited or terminated, or otherwise are not paid in full, the
shares reserved for such Grants shall again be available for purposes of the
Plan.  Shares of Company Stock
surrendered in payment of the Exercise Price of an Option shall again be
available for purposes of the Plan.  To the extent
any Grants are paid in cash, and not in shares of Company Stock, any shares
previously subject to such Grants shall again be available for issuance or
transfer under the Plan.


 


(c)           Individual
Limits.  All Grants under the Plan
shall be expressed in shares of Company Stock. 
The maximum aggregate number of shares of Company Stock with respect to
which all Grants may be made under the Plan to any individual during any
calendar year shall be 1,000,000 shares, subject to adjustment as described in
subsection (d) below.  A Participant
may not accrue Dividend Equivalents during any calendar year in excess of
$1,000,000.  The individual limits of
this subsection (c) shall apply without regard to whether the Grants are
to be paid in Company Stock or cash.  All
cash payments (other than with respect to Dividend Equivalents) shall equal the
Fair Market Value of the shares of Company Stock to which the cash payments
relate.


 


(d)           Adjustments.  If there is any change in the number or kind
of shares of Company Stock outstanding by reason of a stock dividend, spinoff,
stock split or reverse stock split, or by reason of a combination,
reorganization, recapitalization or reclassification affecting the outstanding
Company Stock as a class without the Company’s receipt of consideration, the
maximum number of shares of Company Stock available for Grants, the maximum
number of shares of Company Stock that any individual participating in the Plan
may be granted in any year, the number of shares covered by outstanding Grants,
the kind of shares issued under the Plan and outstanding Grants, and the price
per share of outstanding Grants shall be equitably adjusted by the Committee,
as the Committee deems appropriate, to reflect any increase or decrease in the
number of, or change in the kind or value of, issued shares of Company Stock to
preclude, to the extent practicable, the enlargement or dilution of rights and
benefits under Grants; provided, however, that any fractional shares resulting
from such adjustment shall be eliminated. 
In addition, the Committee shall have discretion to make the foregoing
equitable adjustments in any circumstances in which an adjustment is not
mandated by this subsection (d) or applicable law, including in the event
of a Change in Control.  Any adjustments
to outstanding Grants shall be consistent with section 409A or 422 of the Code,
to the extent applicable.  Any
adjustments determined by the Committee shall be final, binding and conclusive.


 


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6.                                      Eligibility for
Participation


 


(a)           Eligible
Persons.  All Employees, including
Employees who are officers or members of the Board, and all Non-Employee
Directors shall be eligible to participate in the Plan.


 


(b)           Selection
of Participants.  The Committee shall
select the Employees and Non-Employee Directors to receive Grants and shall
determine the number of shares of Company Stock subject to each Grant.


 


7.                                      Options


 


(a)           General
Requirements. The Committee may grant Options to an Employee or
Non-Employee Director upon such terms and conditions as the Committee deems
appropriate under this Section 7. 
The Committee shall determine the number of shares of Company Stock that
will be subject to each Grant of Options to Employees and Non-Employee
Directors.


 


(b)           Type of Option, Price and Term.


 


(i)            The
Committee may grant Incentive Stock Options or Nonqualified Stock Options or
any combination of the two, all in accordance with the terms and conditions set
forth herein.  Incentive Stock Options
may be granted only to Employees of the Company or its parents or subsidiaries,
as defined in section 424 of the Code. 
Nonqualified Stock Options may be granted to Employees or Non-Employee
Directors.


 


(ii)           The
Exercise Price of Company Stock subject to an Option shall be determined by the
Committee and may be equal to or greater than the Fair Market Value of a share
of Company Stock on the date the Option is granted.  However, an Incentive Stock Option may not be
granted to an Employee who, at the time of grant, owns stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary, as defined in section 424 of the Code,
unless the Exercise Price per share is not less than 110% of the Fair Market
Value of the Company Stock on the date of grant.


 


(iii)          The
Committee shall determine the term of each Option, which shall not exceed ten
years from the date of grant.  However,
an Incentive Stock Option that is granted to an Employee who, at the time of
grant, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any parent or subsidiary, as defined
in section 424 of the Code, may not have a term that exceeds five years from
the date of grant.


 


(c)           Exercisability of Options.


 


(i)            Options
shall become exercisable in accordance with such terms and conditions as may be
determined by the Committee and specified in the Grant Agreement.  The Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason.


 


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(ii)           The
Committee may provide in a Grant Agreement that the Participant may elect to
exercise part or all of an Option before it otherwise has become
exercisable.  Any shares so purchased
shall be restricted shares and shall be subject to a repurchase right in favor
of the Company during a specified restriction period, with the repurchase price
equal to the lesser of (A) the Exercise Price or (B) the Fair Market
Value of such shares at the time of repurchase, or such other restrictions as
the Committee deems appropriate.


 


(iii)          Options
granted to persons who are non-exempt employees under the Fair Labor Standards
Act of 1938, as amended, may not be exercisable for at least six months after
the date of grant (except that such Options may become exercisable, as
determined by the Committee, upon the Participant’s death, Disability or
retirement, or upon a Change in Control or other circumstances permitted by
applicable regulations).


 


(d)           Termination
of Employment or Service.  Except as
provided in the Grant Agreement, an Option may only be exercised while the
Participant is employed by the Employer, or providing service as a Non-Employee
Director.  The Committee shall determine
in the Grant Agreement under what circumstances and during what time periods a
Participant may exercise an Option after termination of employment or service.


 


(e)           Exercise
of Options.  A Participant may
exercise an Option that has become exercisable, in whole or in part, by
delivering a notice of exercise to the Company. 
The Participant shall pay the Exercise Price for the Option (i) in
cash, (ii) if permitted by the Committee, by delivering shares of Company
Stock owned by the Participant and having a Fair Market Value on the date of
exercise equal to the Exercise Price or by attestation to ownership of shares
of Company Stock having an aggregate Fair Market Value on the date of exercise
equal to the Exercise Price, (iii) by payment through a broker in
accordance with procedures permitted by Regulation T of the Federal Reserve
Board, or (iv) by such other method as the Committee may approve.  Shares of Company Stock used to exercise an
Option shall have been held by the Participant for the requisite period of time
to avoid adverse accounting consequences to the Company with respect to the Option.  Payment for the shares pursuant to the
Option, and any required withholding taxes, must be received by the time
specified by the Committee depending on the type of payment being made, but in
all cases prior to the issuance of the Company Stock.


 


(f)            Limits
on Incentive Stock Options.  Each
Incentive Stock Option shall provide that, if the aggregate Fair Market Value
of the stock on the date of the grant with respect to which Incentive Stock
Options are exercisable for the first time by a Participant during any calendar
year, under the Plan or any other stock option plan of the Company or a parent
or subsidiary, as defined in section 424 of the Code, exceeds $100,000, then
the Option, as to the excess, shall be treated as a Nonqualified Stock Option.  An Incentive Stock Option shall not be
granted to any person who is not an Employee of the Company or a parent or
subsidiary, as defined in section 424 of the Code.


 


8.                                      Stock Units


 


(a)           General
Requirements.  The Committee may
grant Stock Units to an Employee or Non-Employee Director, upon such terms and
conditions as the Committee deems appropriate 


 


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under this Section 8.  Each Stock Unit shall represent the right of
the Participant to receive a share of Company Stock or an amount based on the
value of a share of Company Stock.  All
Stock Units shall be credited to bookkeeping accounts on the Company’s records
for purposes of the Plan.


 


(b)           Terms
of Stock Units.  The Committee may
grant Stock Units that are payable on terms and conditions determined by the
Committee, which may include payment based on achievement of performance
goals.  Stock Units may be paid at the
end of a specified vesting or performance period, or payment may be deferred to
a date authorized by the Committee.  The
Committee shall determine the number of Stock Units to be granted and the
requirements applicable to such Stock Units.


 


(c)           Payment
With Respect to Stock Units.  Payment
with respect to Stock Units shall be made in cash, in Company Stock, or in a
combination of the two, as determined by the Committee.  The Grant Agreement shall specify the maximum
number of shares that can be issued under the Stock Units.


 


(d)           Requirement
of Employment or Service.  The
Committee shall determine in the Grant Agreement under what circumstances a
Participant may retain Stock Units after termination of the Participant’s
employment or service, and the circumstances under which Stock Units may be
forfeited.


 


9.                                      Stock Awards


 


(a)           General
Requirements. The Committee may issue shares of Company Stock to an
Employee or Non-Employee Director under a Stock Award, upon such terms and
conditions as the Committee deems appropriate under this Section 9.  Shares of Company Stock issued pursuant to
Stock Awards may be issued for cash consideration or for no cash consideration,
and subject to restrictions or no restrictions, as determined by the
Committee.  The Committee may establish
conditions under which restrictions on Stock Awards shall lapse over a period of
time or according to such other criteria as the Committee deems appropriate,
including restrictions based upon the achievement of specific performance
goals.  The Committee shall determine the
number of shares of Company Stock to be issued pursuant to a Stock Award.


 


(b)           Requirement
of Employment or Service.  The
Committee shall determine in the Grant Agreement under what circumstances a
Participant may retain Stock Awards after termination of the Participant’s
employment or service, and the circumstances under which Stock Awards may be
forfeited.


 


(c)           Restrictions
on Transfer.  While Stock Awards are
subject to restrictions, a Participant may not sell, assign, transfer, pledge
or otherwise dispose of the shares of a Stock Award except upon death as described
in Section 15(a).  Each certificate
for a share of a Stock Award shall contain a legend giving appropriate notice
of the restrictions in the Grant.  The
Participant shall be entitled to have the legend removed when all restrictions
on such shares have lapsed.  The Company
may retain possession of any certificates for Stock Awards until all
restrictions on such shares have lapsed.


 


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(d)           Right
to Vote and to Receive Dividends. 
The Committee shall determine to what extent, and under what conditions,
the Participant shall have the right to vote shares of Stock Awards and to
receive any dividends or other distributions paid on such shares during the
restriction period.


 


10.                               Stock Appreciation Rights
and Other Stock-Based Awards


 


(a)           SARs.  The Committee may grant SARs to an Employee
or Non-Employee Director separately or in tandem with an Option.  The following provisions are applicable to
SARs:


 


(i)            Base
Amount.  The Committee shall
establish the base amount of the SAR at the time the SAR is granted.  The base amount of each SAR shall be equal to
the per share Exercise Price of the related Option or, if there is no related
Option, an amount that is at least equal to the Fair Market Value of a share of
Company Stock as of the date of Grant of the SAR.


 


(ii)           Tandem
SARs.  The Committee may grant tandem
SARs either at the time the Option is granted or at any time thereafter while
the Option remains outstanding; provided, however, that, in the case of an
Incentive Stock Option, SARs may be granted only at the date of the grant of
the Incentive Stock Option.  In the case
of tandem SARs, the number of SARs granted to a Participant that shall be
exercisable during a specified period shall not exceed the number of shares of
Company Stock that the Participant may purchase upon the exercise of the
related Option during such period.  Upon
the exercise of an Option, the SARs relating to the Company Stock covered by
such Option shall terminate.  Upon the
exercise of SARs, the related Option shall terminate to the extent of an equal
number of shares of Company Stock.


 


(iii)          Exercisability.  An SAR shall be exercisable during the period
specified by the Committee in the Grant Agreement and shall be subject to such
vesting and other restrictions as may be specified in the Grant Agreement.  The Committee may grant SARs the exercise of
which is subject to achievement of performance goals or other conditions.  The Committee may accelerate the
exercisability of any or all outstanding SARs at any time for any reason.  The Committee shall determine in the Grant
Agreement under what circumstances and during what periods a Participant may
exercise an SAR after termination of employment or service.  A tandem SAR shall be exercisable only while
the Option to which it is related is exercisable.


 


(iv)          Grants
to Non-Exempt Employees.  SARs
granted to persons who are non-exempt employees under the Fair Labor Standards
Act of 1938, as amended, may not be exercisable for at least six months after the
date of grant (except that such SARs may become exercisable, as determined by
the Committee, upon the Participant’s death, Disability or retirement, or upon
a Change in Control or other circumstances permitted by applicable
regulations).


 


(v)           Value
of SARs.  When a Participant
exercises SARs, the Participant shall receive in settlement of such SARs an
amount equal to the value of the stock appreciation for the number of SARs
exercised.  The stock appreciation for an
SAR is the amount by which the Fair 


 


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Market Value of the underlying Company Stock on the
date of exercise of the SAR exceeds the base amount of the SAR as described in
subsection (i).


 


(vi)          Form of
Payment.  The Committee shall
determine whether the stock appreciation for an SAR shall be paid in the form
of shares of Company Stock, cash or a combination of the two.  For purposes of calculating the number of
shares of Company Stock to be received, shares of Company Stock shall be valued
at their Fair Market Value on the date of exercise of the SAR.  If shares of Company Stock are to be received
upon exercise of an SAR, cash shall be delivered in lieu of any fractional
share.


 


(b)           Other
Stock-Based Awards.  The Committee
may grant other awards not specified in Sections 7, 8 or 9 or subsection (a) above
that are based on or measured by Company Stock to Employees and Non-Employee
Directors, on such terms and conditions as the Committee deems
appropriate.  Other Stock-Based Awards
may be granted subject to achievement of performance goals or other conditions
and may be payable in Company Stock or cash, or in a combination of the two, as
determined by the Committee in the Grant Agreement.


 


11.          Dividend Equivalents.


 


(a)           General
Requirements.  When the Committee
makes a Grant under the Plan, the Committee may grant Dividend Equivalents in
connection with the Grant, under such terms and conditions as the Committee
deems appropriate under this Section 11. 
Dividend Equivalents may be paid to Participants currently or may be
deferred, as determined by the Committee. 
All Dividend Equivalents that are not paid currently shall be credited
to bookkeeping accounts on the Company’s records for purposes of the Plan.  Dividend Equivalents may be accrued as a cash
obligation, or may be converted to Stock Units for the Participant, and
deferred Dividend Equivalents may accrue interest, all as determined by the
Committee.  The Committee may provide
that Dividend Equivalents shall be payable based on the achievement of specific
performance goals.


 


(b)           Payment
with Respect to Dividend Equivalents. 
Dividend Equivalents may be payable in cash or shares of Company Stock
or in a combination of the two, as determined by the Committee.


 


12.                               Qualified
Performance-Based Compensation


 


(a)           Designation
as Qualified Performance-Based Compensation.  The Committee may determine that Stock Units,
Stock Awards, Dividend Equivalents or Other Stock-Based Awards granted to an
Employee shall be considered “qualified performance-based compensation” under
section 162(m) of the Code, in which case the provisions of this Section 12
shall apply.  The Committee may also
grant Options or SARs under which the exercisability of the Options is subject
to achievement of performance goals as described in this Section 12 or
otherwise.


 


(b)           Performance
Goals.  When Grants are made under
this Section 12, the Committee shall establish in writing (i) the
objective performance goals that must be met, (ii) the period during which
performance will be measured, (iii) the maximum amounts that may be paid
if the 


 


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performance goals are met, and (iv) any other
conditions that the Committee deems appropriate and consistent with the
requirements of section 162(m) of the Code for “qualified
performance-based compensation.”  The
performance goals shall satisfy the requirements for “qualified
performance-based compensation,” including the requirement that the achievement
of the goals be substantially uncertain at the time they are established and
that the performance goals be established in such a way that a third party with
knowledge of the relevant facts could determine whether and to what extent the
performance goals have been met.  The
Committee shall not have discretion to increase the amount of compensation that
is payable, but may reduce the amount of compensation that is payable, pursuant
to Grants identified by the Committee as “qualified performance-based
compensation.”


 


(c)           Criteria
Used for Objective Performance Goals. 
The Committee shall use objectively determinable performance goals based
on one or more of the following criteria: 
stock price, earnings per share, price-earnings multiples, net earnings,
operating earnings, revenue, number of days sales outstanding in accounts
receivable, productivity, margin, EBITDA (earnings before interest, taxes,
depreciation and amortization), net capital employed, return on assets,
shareholder return, return on equity, return on capital employed, growth in
assets, unit volume, sales, cash flow, market share, relative performance to a
comparison group designated by the Committee, or strategic business criteria
consisting of one or more objectives based on meeting specified revenue goals,
market penetration goals, customer growth, geographic business expansion goals,
cost targets or goals relating to acquisitions or divestitures.  The performance goals may relate to one or
more business units or the performance of the Company as a whole, or any
combination of the foregoing.  Performance
goals need not be uniform as among Participants.


 


(d)           Timing
of Establishment of Goals. The Committee shall establish the performance
goals in writing either before the beginning of the performance period or
during a period ending no later than the earlier of (i) 90 days after the
beginning of the performance period or (ii) the date on which 25% of the
performance period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code.


 


(e)           Certification
of Results.  The Committee shall
certify the performance results for the performance period specified in the
Grant Agreement after the performance period ends.  The Committee shall determine the amount, if
any, to be paid pursuant to each Grant based on the achievement of the
performance goals and the satisfaction of all other terms of the Grant
Agreement.


 


(f)            Death,
Disability or Other Circumstances. 
The Committee may provide in the Grant Agreement that Grants under this Section 12
shall be payable, in whole or in part, in the event of the Participant’s death
or disability, a Change in Control or under other circumstances consistent with
the Treasury regulations and rulings under section 162(m) of the Code.


 


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13.                               Deferrals


 


The Committee may permit or require a Participant to
defer receipt of the payment of cash (including dividend equivalents) or the
delivery of shares that would otherwise be due to the Participant in connection
with any Grant.  The Committee shall
establish rules and procedures for any such deferrals, consistent with
applicable requirements of section 409A of the Code.


 


14.                               Withholding of Taxes


 


(a)           Required
Withholding.  All Grants under the
Plan shall be subject to applicable federal (including FICA), state and local
tax withholding requirements.  The
Company may require that the Participant or other person receiving or
exercising Grants pay to the Company the amount of any federal, state or local
taxes that the Company is required to withhold with respect to such Grants, or
the Company may deduct from other wages paid by the Company the amount of any
withholding taxes due with respect to such Grants.


 


(b)           Election
to Withhold Shares.  If the Committee
so permits, a Participant may elect to satisfy the Company’s tax withholding
obligation with respect to Grants paid in Company Stock by having shares
withheld, at the time such Grants become taxable, up to an amount that does not
exceed the minimum applicable withholding tax rate for federal (including
FICA), state and local tax liabilities. 
The election must be in a form and manner prescribed by the Committee.


 


15.                               Transferability of Grants


 


(a)           Restrictions
on Transfer.  Except as described in
subsection (b) below, only the Participant may exercise rights under a
Grant during the Participant’s lifetime, and a Participant may not transfer
those rights except by will or by the laws of descent and distribution.  When a Participant dies, the personal
representative or other person entitled to succeed to the rights of the
Participant may exercise such rights. 
Any such successor must furnish proof satisfactory to the Company of his
or her right to receive the Grant under the Participant’s will or under the
applicable laws of descent and distribution.


 


(b)           Transfer
of Nonqualified Stock Options to or for Family Members.  Notwithstanding subsection (a) above,
the Committee may provide, in a Grant Agreement, that a Participant may
transfer Nonqualified Stock Options to family members, or one or more trusts or
other entities for the benefit of or owned by family members, consistent with
the applicable securities laws, according to such terms as the Committee may
determine; provided that the Participant receives no consideration for the
transfer of an Option and the transferred Option shall continue to be subject
to the same terms and conditions as were applicable to the Option immediately
before the transfer.


 


16.                               Consequences of a Change
in Control


 


(a)           In
the event of a Change in Control, the Committee may take any one or more of the
following actions with respect to some or all outstanding Grants, without the
consent of any Participant: (i) the Committee may determine that
outstanding Options and SARs shall be fully 


 


13

















 


exercisable, and restrictions on outstanding Stock
Awards and Stock Units shall lapse, as of the date of the Change in Control or
at such other time as the Committee determines, (ii) the Committee may
require that Participants surrender their outstanding Options and SARs in
exchange for one or more payments by the Company, in cash or Company Stock as
determined by the Committee, in an amount equal to the amount by which the then
Fair Market Value of the shares of Company Stock subject to the Participant’s
unexercised Options and SARs exceeds the Exercise Price, or Base Amount, as
applicable, if any, and on such terms as the Committee determines, (iii) after
giving Participants an opportunity to exercise their outstanding Options and
SARs, the Committee may terminate any or all unexercised Options and SARs at
such time as the Committee deems appropriate, (iv) with respect to
Participants holding Stock Units, Other Stock-Based Awards or Dividend
Equivalents, the Committee may determine that such Participants shall receive
one or more payments in settlement of such Stock Units, Other Stock-Based
Awards or Dividend Equivalents, in such amount and form and on such terms as
may be determined by the Committee, (v) if the Company is the surviving
corporation, the Committee may determine that Grants will remain outstanding
after the Change in Control, or (vi) if the Company is not the surviving
corporation, the Committee may determine that Grants that remain outstanding
after the Change in Control shall be converted to similar grants of the
surviving corporation (or a parent or subsidiary of the surviving
corporation).  Such acceleration,
surrender, termination, settlement or conversion shall take place as of the
date of the Change in Control or such other date as the Committee may specify.


 


(b)           Other
Transactions.  The Committee may
provide in a Grant Agreement that a sale or other transaction involving a
subsidiary or other business unit of the Company shall be considered a Change
in Control for purposes of a Grant, or the Committee may establish other
provisions that shall be applicable in the event of a specified transaction.


 


17.                               Requirements for Issuance
of Shares


 


No Company Stock shall be issued in connection with
any Grant hereunder unless and until all legal requirements applicable to the
issuance of such Company Stock have been complied with to the satisfaction of
the Committee.  The Committee shall have
the right to condition any Grant made to any Participant hereunder on such
Participant’s undertaking in writing to comply with such restrictions on his or
her subsequent disposition of such shares of Company Stock as the Committee
shall deem necessary or advisable, and certificates representing such shares
may be legended to reflect any such restrictions.  Certificates representing shares of Company
Stock issued under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed
thereon.  Except as determined under Section 9(a),
no Participant shall have any right as a shareholder with respect to Company
Stock covered by a Grant until shares have been issued to the Participant.


 


18.                               Amendment and Termination
of the Plan


 


(a)           Amendment.  The Board may amend or terminate the Plan at
any time; provided, however, that the Board shall not amend the Plan without
approval of the stockholders of the Company if such approval is required in
order to comply with the Code or applicable laws, or to comply with applicable
stock exchange requirements.  No
amendment or termination of this Plan 


 


14

















 


shall, without the consent of the Participant,
materially impair any rights or obligations under any Grant previously made to
the Participant under the Plan, unless such right has been reserved in the Plan
or the Grant Agreement, or except as provided in Section 19(b) below.  Notwithstanding anything in the Plan to the
contrary, the Board may amend the Plan in such manner as it deems appropriate
in the event of a change in applicable law or regulations.


 


(b)           No
Repricing Without Stockholder Approval. 
Except as otherwise provided in Section 5(d), the terms of outstanding
Grants may not be amended to reduce the exercise price of outstanding Options
or the base amount of outstanding SARs or to cancel outstanding Options or SARs
in exchange for cash, other awards, Options with an exercise price that is less
than the exercise price of the original Options or SARs with a base amount that
is less than the base amount for the original SARs, without stockholder
approval.


 


(c)           Stockholder
Approval for “Qualified Performance-Based Compensation.”  If Grants are made under Section 12
above, the Plan must be reapproved by the Company’s stockholders no later than
the first stockholders meeting that occurs in the fifth year following the year
in which the stockholders previously approved the provisions of Section 12,
if additional Grants are to be made under Section 12 and if required by
section 162(m) of the Code or the regulations thereunder.


 


(d)           Termination
of Plan.  The Plan shall terminate on
May 7, 2017, unless the Plan is terminated earlier by the Board or is
extended by the Board with the approval of the stockholders.  The termination of the Plan shall not impair
the power and authority of the Committee with respect to an outstanding Grant.


 


19.                               Miscellaneous


 


(a)           Grants
in Connection with Corporate Transactions and Otherwise.  Nothing contained in this Plan shall be
construed to (i) limit the right of the Committee to make Grants under
this Plan in connection with the acquisition, by purchase, lease, merger,
consolidation or otherwise, of the business or assets of any corporation, firm
or association, including Grants to employees thereof who become Employees, or
for other proper corporate purposes, or (ii) limit the right of the
Company to grant stock options or make other stock-based awards outside of this
Plan.  Without limiting the foregoing,
the Committee may make a Grant to an employee of another corporation who
becomes an Employee by reason of a corporate merger, consolidation, acquisition
of stock or property, reorganization or liquidation involving the Company in
substitution for a grant made by such corporation.  The terms and conditions of the Grants may
vary from the terms and conditions required by the Plan and from those of the
substituted stock incentives, as determined by the Committee


 


(b)           Compliance
with Law.  The Plan, the exercise of
Options and the obligations of the Company to issue or transfer shares of
Company Stock under Grants shall be subject to all applicable laws and to
approvals by any governmental or regulatory agency as may be required.  With respect to persons subject to section 16
of the Exchange Act, it is the intent of the Company that the Plan and all
transactions under the Plan comply with all applicable provisions of Rule 16b-3
or its successors under the Exchange Act. 
In addition, it is the intent of the Company that 


 


15

















 


Incentive Stock Options comply with the applicable
provisions of section 422 of the Code, that Grants of “qualified
performance-based compensation” comply with the applicable provisions of
section 162(m) of the Code and that, to the extent applicable, Grants are
either exempt from, or comply with, the requirements of section 409A of the
Code.  To the extent that any legal
requirement of section 16 of the Exchange Act or section 422, 162(m) or
409A of the Code as set forth in the Plan ceases to be required under section
16 of the Exchange Act or section 422, 162(m) or 409A of the Code, that
Plan provision shall cease to apply.  The
Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with any valid and mandatory government
regulation.  The Committee may also adopt
rules regarding the withholding of taxes on payments to Participants.


 


(c)           Enforceability.  The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.


 


(d)           Funding
of the Plan; Limitation on Rights. 
This Plan shall be unfunded.  The
Company shall not be required to establish any special or separate fund or to
make any other segregation of assets to assure the payment of any Grants under
this Plan.  Nothing contained in the Plan
and no action taken pursuant hereto shall create or be construed to create a
fiduciary relationship between the Company and any Participant or any other
person.  No Participant or any other
person shall under any circumstances acquire any property interest in any
specific assets of the Company.  To the
extent that any person acquires a right to receive payment from the Company
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.


 


(e)           Rights
of Participants.  Nothing in this
Plan shall entitle any Employee, Non-Employee Director or other person to any
claim or right to receive a Grant under this Plan.  Neither this Plan nor any action taken
hereunder shall be construed as giving any individual any rights to be retained
by or in the employment or service of the Employer.


 


(f)            No
Fractional Shares.  No fractional
shares of Company Stock shall be issued or delivered pursuant to the Plan or
any Grant.  The Committee shall determine
whether cash, other awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.


 


(g)           Employees
Subject to Taxation Outside the United States.  With respect to Participants who are subject
to taxation in countries other than the United States, the Committee may make
Grants on such terms and conditions as the Committee deems appropriate to
comply with the laws of the applicable countries, and the Committee may create
such procedures, addenda and subplans and make such modifications as may be
necessary or advisable to comply with such laws.


 


(h)           Governing
Law.  The validity, construction,
interpretation and effect of the Plan and Grant Agreements issued under the
Plan shall be governed and construed by and determined in accordance with the
laws of the State of New York, without giving effect to the conflict of laws
provisions thereof.


 


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