1994 Long-Term Incentive Plan, as amended



 
Exhibit 4.1

 
RAWLINGS SPORTING GOODS COMPANY, INC.

1994 LONG-TERM INCENTIVE PLAN 
 
1. Purpose. The purpose of this 1994 Long-Term Incentive Plan (the “Plan”) of
Rawlings Sporting Goods Company, Inc., a Delaware corporation (the “Company”), is to advance the interests of the Company and its stockholders by providing a means to attract, retain, and reward executive and key employees of the Company
and its subsidiaries and to enable such employees to acquire or increase a proprietary interest in the Company, thereby promoting a closer identity of interests between such employees and the Company’s stockholders. 
 
2. Definitions. The definitions of awards under
the Plan, including Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of other awards, Dividend Equivalents, and Other Stock-Based Awards, are set forth in Section 6 of the Plan. Such
awards, together with any other right or interest granted to a Participant under the Plan, are termed “Awards.” The definitions of terms relating to a Change in Control of the Company are set forth in Section 8 of the Plan. For purposes of
the Plan, the following additional terms shall be defined as set forth below: 
 
(a) “Award Agreement” means any written agreement, contract, or other instrument or document evidencing an Award. 
 
(b) “Beneficiary” shall mean the person, persons, trust, or trusts which have been
designated by a Participant in his or her most recent written beneficiary designation filed with the Committee to receive the benefits specified under this Plan upon such Participant’s death or, if there is no designated Beneficiary or
surviving designated Beneficiary, then the person, persons, trust, or trusts entitled by will or the laws of descent and distribution to receive such benefits. 
 
(c) “Board” means the Board of Directors of the Company. 
 
(d) “Code” means the Internal
Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include regulations thereunder and successor provisions and regulations thereto. 
 
(e) “Committee” means the Stock
Option Committee of the Board, or such other Board committee as may be designated by the Board to administer the Plan; provided, however, that the Committee shall at all times after the Company has a class of equity securities
registered under Section 12 of the Exchange Act consist of two or more directors, each of whom is a “disinterested person” within the meaning of Rule 16b-3 under the Exchange Act. 
 
(f) “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include rules thereunder and successor provisions and rules thereto. 
 
(g) “Fair Market Value” means, with
respect to Stock, Awards, or other property, the fair market value of such Stock, Awards, or other property determined by such methods or procedures as shall be established from time to time by the Committee. 
 









 
Unless
otherwise determined by the Committee, the Fair Market Value of Stock as of any given date shall mean the closing price of the Stock on the nearest day preceding the date on which such value is to be determined on which there was a trade, as
reported for such day in the table entitled “NASDAQ National Market Issues” contained in The Wall Street Journal or an equivalent successor table. 
 
(h) “ISO” means any Option intended to be and designated as an incentive stock
option within the meaning of Section 422 of the Code. 
 
(i) “Participant” means a person who, as an executive or key employee of the Company or a subsidiary has been granted an Award under the Plan. 
 
(j) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to
the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act. 
 
(k) “Stock” means the Common Stock, $.01 par value, of the Company and such other securities as may be
substituted for Stock or such other securities pursuant to Section 4. 
 
3. Administration. 
 
(a) Authority of the Committee. The Plan shall be administered by the Committee. The Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the
provisions of the Plan: 
 
(i) to
select Participants to whom Awards may be granted; 
 
(ii) to determine the type or types of Awards to be granted to each Participant; 
 
(iii) to determine the number of Awards to be granted, the number of shares of Stock to which an Award will relate, the
terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to
transferability or forfeiture, exercisability, or settlement of an Award, and waivers or accelerations thereof, and waivers of or modifications to performance conditions relating to an Award, based in each case on such considerations as the
Committee shall determine), and all other matters to be determined in connection with an Award; 
 
(iv) to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of
an Award may be paid, in cash, Stock, other Awards, or other property, or an Award may be cancelled, forfeited, or surrendered; 
 
(v) to determine whether, to what extent, and under what circumstances cash, Stock, other Awards, or other property
payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Participant; 
 

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(vi) to prescribe the form of each Award Agreement, which need not be identical for each Participant; 
 
(vii) to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may
deem necessary or advisable to administer the Plan; 
 
(viii) to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder; and

 
(ix) to make all other
decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan. 
 
(b) Manner of Exercise of Committee Authority. Unless authority is specifically reserved
to the Board under the terms of the Plan, the Company’s Certificate of Incorporation or Bylaws, or applicable law, the Committee shall have sole discretion in exercising authority under the Plan. Any action of the Committee with respect to the
Plan shall be final, conclusive, and binding on all persons, including the Company, subsidiaries of the Company, Participants, any person claiming any rights under the Plan from or through any Participant, and stockholders. The express grant of any
specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. A memorandum signed by all members of the Committee shall constitute the act of the Committee
without the necessity, in such event, to hold a meeting. The Committee may delegate to officers or managers of the Company or any subsidiary of the Company the authority, subject to such terms as the Committee shall determine, to perform
administrative functions and, with respect to Participants not subject to Section 16 of the Exchange Act, to perform such other functions as the Committee may determine, to the extent permitted under Rule 16b-3 and applicable law. 
 
(c) Limitation of Liability. Each member
of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by any officer or other employee of the Company or any subsidiary, the Company’s independent certified public accountants,
or any executive compensation consultant, legal counsel, or other professional retained by the Company to assist in the administration of the Plan. No member of the Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on their behalf shall, to
the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation. 
 
4. Stock Subject to Plan. 
 
(a) Amount of Stock Reserved. Subject to adjustment as hereinafter provided, the total
number of shares of Stock reserved for delivery to Participants in connection with Awards under the Plan shall be 1,125,000. No Award may be granted if the number of shares to which such Award relates, when added to the number of shares previously
delivered under the Plan and 
 

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the number of shares to which
other then-outstanding Awards relate, exceeds the number of shares then reserved under this Section 4. If any shares subject to an Award are forfeited or such Award is settled in cash or otherwise terminates without delivery of shares to the
Participant, such shares shall again be available for Awards under the Plan. Any shares of Stock delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued shares or treasury shares. 
 
(b) Annual Per-Participant Limitations.
During any calendar year, no Participant may be granted under the Plan Options and other Awards that may be settled by delivery of more than 250,000 shares of Stock. In addition, with respect to Awards that may be settled in cash, no Participant may
be paid during any calendar year cash amounts relating to such Awards that exceed the greater of the Fair Market Value of the number of shares of Stock set forth in the preceding sentence at the date of grant or the date of settlement of awards that
may be settled solely by delivery of Stock will not operate to reduce the amount of cash-only Awards, and vice versa; nevertheless, Awards that may be settled in Stock or cash must not exceed either limitation. 
 
(c) Adjustments. In the event that the
Committee shall determine that any dividend or other distribution (whether in the form of cash, Stock, or other property), recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share
exchange, or other similar corporate transaction or event, affects the Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number and kind of shares of Stock which may thereafter be delivered in connection with Awards, (ii) the number and kind of shares of Stock that may be delivered or deliverable in respect of
outstanding Awards, (iii) the number of shares with respect to which Awards may be granted to a given Participant in the specified period as set forth in Section 4(b), and (iv) the exercise price, grant price, or purchase price relating to any Award
(or, if deemed appropriate, the Committee may make provision for a cash payment with respect to any outstanding Award). In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or non-recurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any subsidiary or the financial statements of the Company or any subsidiary, or in response to
changes in applicable laws, regulations, or accounting principles. The foregoing notwithstanding, no adjustments shall be authorized under this Section 4(c) with respect to ISOs or SARs in tandem therewith to the extent that such authority would
cause the Plan to violate Section 422(b)(1) of the Code, and no such adjustment shall be authorized with respect to Options or other Awards granted in accordance with Section 7(f) hereof to the extent that such authority would cause such Options or
other Awards to fail to qualify as “performance-based compensation” under Section 162(m)(4)(C) of the Code and regulations thereunder (including Proposed Regulation 1.162-27(e)(2)). 
 
5. Eligibility. Executive officers and other key
employees of the Company and its subsidiaries, including any director or officer who is also such an employee, are eligible to be granted Awards under the Plan. The foregoing notwithstanding, directors of the Company who are not employees and
members of the Committee shall not be eligible to be granted Awards under the Plan. 
 

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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 Awards or the exercise thereof, at the date of grant or thereafter (subject to Section 9(e)),
such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment by the Participant. Except as provided
in Sections 6(f), 6(h) or 7(a), or to the extent required to comply with requirements of the Delaware General Corporation Law that lawful consideration be paid for Stock, only services may be required as consideration for the grant (but not the
exercise) of any Award. 
 
(b)
Options. The Committee is authorized to grant Options to Participants (including “reload” options automatically granted to offset specified exercises of options) on the following terms and conditions:

 
(i) Exercise
Price. The exercise price per share of Stock purchasable under an Option shall be determined by the Committee; provided, however, that, except as provided in Section 7(a), such exercise price shall be not less than the Fair
Market Value of a share on the date of grant of such Option. 
 
(ii) Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment, including, without imitation, cash, Stock, other Awards or awards granted under other Company plans, or other property (including notes or other contractual obligations of Participants to make
payment on a deferred basis, such as through “cashless exercise” arrangements, to the extent permitted by applicable law), and the methods by which Stock will be delivered or deemed to be delivered to Participants. 
 
(iii) ISOs. The terms of any
ISO granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, including but not limited to the requirement that no ISO shall be granted more than ten years after the effective date of the Plan. Anything in
the Plan to the contrary notwithstanding, no term of the Plan relating to ISOs shall be interpreted, amended, or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any ISO under
Section 422 of the Code. 
 
(c) Stock
Appreciation Rights. The Committee is authorized to grant SARs to Participants on the following terms and conditions: 
 
(i) Right to Payment. An SAR shall confer on the Participant to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise (or, if the Committee shall so determine in the case of any such right other than one related to an ISO, the Fair Market Value of one share at
any time during a specified period before or after the date of exercise), over (B) the grant price of the SAR as determined by the Committee as of the date of grant of 
 

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the SAR,
which, except as provided in Section 7(a), shall be not less than the Fair market Value of one share of Stock on the date of grant. 
 
(ii) Other Terms. The Committee shall determine the time or times at which an SAR may be exercised in whole
or in part, the method of exercise, method of settlement, form of consideration payable in settlement, method by which Stock will be delivered or deemed to be delivered to Participants, whether or not an SAR shall be in tandem with any other Award,
and any other terms and conditions of any SAR. Limited SARs that may only be exercised upon the occurrence of a Change in Control (as such term is defined in Section 8(b) or as otherwise defined by the Committee) may be granted on such terms, not
inconsistent with this Section 6(c), as the Committee may determine. Limited SARs may be either freestanding or in tandem with other Awards. 
 
(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to Participants on the following terms
and conditions: 
 
(i) Grant
and Restrictions. Restricted Stock shall be subject to such restrictions on transferability and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Committee may determine. Except to the extent restricted under the terms of the Plan and any Award Agreement relating to the Restricted Stock, a Participant granted Restricted Stock shall
have all of the rights of a stockholder including, without limitation, the right to vote Restricted Stock or the right to receive dividends thereon. 
 
(ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of employment during the
applicable restriction period, Restricted Stock that is at that time subject to restrictions shall be forfeited and reacquired by the Company; provided, however, that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole 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 in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Restricted Stock, the Company shall retain physical possession of the certificate, and the Participant shall have delivered a stock power to the Company, endorsed in blank,
relating to the Restricted Stock. 
 
(iv) Dividends. Dividends paid on Restricted Stock shall be either paid at the dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or the
payment of such dividends shall be deferred and/or the amount or value thereof automatically reinvested in additional Restricted Stock, other Awards, or other investment vehicles, as the Committee shall determine or permit the Participant to elect.
Stock distributed in connection with a Stock 
 

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split or
Stock dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed. 
 
(e) Deferred Stock. The Committee is
authorized to grant Deferred Stock to Participants, subject to the following terms and conditions: 
 
(i) Award and Restrictions. Delivery of Stock will occur upon expiration of the deferral period specified
for an Award of Deferred Stock by the Committee (or, if permitted by the Committee, as elected by the Participant). In addition, Deferred Stock shall be subject to such restrictions as the Committee may impose, if any, which restrictions may lapse
at the expiration of the deferral period or at earlier specified times, separately or in combination, in installments, or otherwise, as the Committee may determine. 
 
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment (as determined under criteria established by the Committee) during the applicable deferral period or portion thereof to which forfeiture conditions apply (as provided in the Award Agreement evidencing the Deferred Stock),
all Deferred Stock that is at that time subject to deferral (other than a deferral at the election of the Participant) shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award
Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Deferred Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other
cases waive in whole or in part the forfeiture of Deferred Stock. 
 
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of Company obligations to pay cash under other
plans or compensatory arrangements, provided that, in the case of Participants subject to Section 16 of the Exchange Act, such cash amounts are determined under such other plans in a manner that complies with applicable requirements of Rule 16b-3 so
that the acquisition of Stock or Awards hereunder shall be exempt from Section 16(b) liability. Stock or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee. 
 
(g) Dividend Equivalents. The Committee
is authorized to grant Dividend Equivalents to a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic
payments. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award. The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles as the Committee may specify. 
 
(h) Other Stock-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including, without 
 

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limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards
valued by reference to the book value of Stock or the value of securities of or the performance of specified subsidiaries. The Committee shall determine the terms and conditions of such Awards. Stock delivered pursuant to an Award in the nature of a
purchase right granted under this Section 6(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under the Plan, shall also be authorized pursuant to this Section 6(h). 
 
7. Certain Provisions Applicable to Awards. 
 
(a) Stand-alone, Additional, Tandem and Substitute Awards. Awards granted under the Plan
may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution for, any other Award granted under the Plan or any award granted under any other plan of the Company, any subsidiary, or any
business entity to be acquired by the Company or a subsidiary, or any other right of a Participant to receive payment from the Company or any subsidiary. Awards granted in addition to or in tandem with other Awards or awards may be granted either as
of the same time as or a different time from the grant of such other Awards or awards. The per share exercise price of any Option, grant price of any SAR, or purchase price of any other Award conferring a right to purchase Stock: 
 
(i) Granted in substitution for an
outstanding Award or award shall be not less than the lesser of the Fair Market Value of a share of Stock at the date such substitute Award is granted or such Fair Market Value at that date reduced to reflect the Fair Market Value at that date of
the Award or award required to be surrendered by the Participant as a condition to receipt of the substitute Award; or 
 
(ii) Retroactively granted in tandem with an outstanding Award or award shall be not less than the lesser of the Fair
Market Value of a share of Stock at the date of grant of the later Award or at the date of grant of the earlier Award or award. 
 
(b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee;
provided, however, that in no event shall the term of any ISO or an SAR granted in tandem therewith exceed a period of ten years from the date of its grant (or such shorter period as may be applicable under Section 422 of the Code).

 
(c) Form of Payment Under
Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a subsidiary upon the grant or exercise of an Award may be made in such forms as the Committee shall determine, including,
without limitation, cash, Stock, other Awards, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. Such payments may include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents in respect of installment or deferred payments denominated in Stock. 
 

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(d)
Rule 16b-3 Compliance. 
 
(i) Six Month Holding Period. Unless a Participant could otherwise exercise a derivative security or dispose of Stock delivered upon exercise of a derivative security granted under the
Plan without incurring liability under Section 16(b) of the Exchange Act, (i) Stock delivered under the Plan other than upon exercise or conversion of a derivative security granted under the Plan shall be held for at least six months from the date
of acquisition, and (ii) with respect to a derivative security granted under the Plan, at least six months shall elapse from the date of acquisition of the derivative security to the date of disposition of the derivative security (other than upon
exercise or conversion) or its underlying equity security. 
 
(ii) Nontransferability. Awards which constitute derivative securities (including any Option, SAR, Limited SAR, or similar right) under the general definition set forth in Rule
16a-1(c)(3)(i) under the Exchange Act shall not be transferable by a Participant except by will or the laws of descent and distribution (or pursuant to a Beneficiary designation) and, in the case of any Option or SAR, shall be exercisable during the
lifetime of a Participant only by such Participant or his guardian or legal representative. 
 
(iii) Reformation to Comply with Exchange Act Rules. It is the intent of the Company that this Plan comply
in all respects with applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) under the Exchange Act in connection with any grant of Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange Act (except for
transactions exempted under alternative Exchange Act Rules or acknowledged in writing to be non-exempt by such Participant). Accordingly, if any provision of this Plan or any Award Agreement relating to an Award does not comply with the requirements
of Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such transaction, such provision will be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b). In addition, other provisions of the Plan notwithstanding, the exercise price of any Award carrying a right to exercise granted to a Participant subject to Section 16 of the Exchange Act shall
be not less than 50% of the Fair Market Value of Stock as of the date such Award is granted if such pricing limitation is required under Rule 16b-3 at the time of such grant. 
 
(e) Loan Provisions. With the consent of the Committee, and subject at all times to, and
only to the extent, if any, and in accordance with, laws and regulations and other binding obligations or provisions applicable to the Company, the Company may make, guarantee, or arrange for a loan or loans to a Participant with respect to the
exercise of any Option or other payment in connection with any Award, including the payment by a Participant of any or all federal, state, or local income or other taxes due in connection with any Award. Subject to such limitations, the Committee
shall have full authority to decide whether to make a loan or loans hereunder and to determine the amount, terms, and provisions of any such loan or loans, including the interest rate to be charged in respect of any such loan or loans, whether the
loan or loans are to be with or without recourse against the borrower, the terms on which the loan is to be repaid and conditions, if any, under which the loan or loans may be forgiven. 
 

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(f)
Performance-Based Awards to “Covered Employees”. Other provisions of the Plan notwithstanding, the provisions of this Section 7(f) shall apply to any Award the exercisability or settlement of which is subject to the
achievement of performance conditions (other than an Option or SAR granted with an exercise or base price at least equal to 100% of Fair Market Value of Stock on the date of grant) if such Award is granted to a person who, at the time of grant, is a
“covered employee” and if mandatory compliance with this Section 7(f) is necessary in order for such awards to a covered employee to not be subject to the limitation on tax deductibility by the Company under Section 7(f), shall be
interpreted in a manner consistent with Section 162(m) of the Code and regulations thereunder (including Proposed Regulation 1.162-27). The performance objectives for an Award subject to this Section 7(f) shall consist of one or more business
criteria, as specified by the Committee but subject to this Section 7(f). Performance objectives shall be objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of the Code and regulations thereunder (including Proposed
Regulation 1.162-27(e)(2)). The following business criteria shall be used by the Committee in connection with a performance objective: 
 
(1) Annual earnings before payment of taxes and interest; 
 
(2) Annual earnings per share; and/or 
 
(3) Annual return on common equity.

 
Achievement of performance objectives shall be measured over a
period of one, two, three, or four years, as specified by the Committee. No business criteria other than those named above may be used in establishing the performance objective for an Award to a covered employee. For each such Award relating to a
covered employee, the Committee shall establish the targeted level or levels of performance for each business criteria. Performance objectives may differ for Awards under this Section 7(f) to different covered employees. The Committee may determine
that an Award under this Section 7(f) shall be payable upon achievement of any one of the performance objectives or may require that two or more of the performance objectives must be achieved in order for an Award to be payable. The Committee may,
in its discretion, reduce the amount of a payout otherwise to be made in connection with an Award under this Section 7(f), but may not exercise discretion to increase such amount, and the Committee may consider other performance criteria in
exercising such discretion. All determinations by the Committee as to the achievement of performance objectives shall be made in writing. The Committee may not delegate any responsibility under this Section 7(f). 
 
8. Change in Control Provisions. 
 
(a) In the event of a “Change in Control,” as
defined in this Section, the following acceleration provisions shall apply: 
 
(i) any Award carrying a right to exercise, other than an Award subject to Section 7(f), that was not previously exercisable and vested shall become fully exercisable and vested, subject only to the
restrictions set forth in Sections 7(d)(i) and 9(a); and 
 

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(ii) The restrictions, deferral limitations, and forfeiture conditions applicable to any other Award granted under the Plan, other than an Award subject to Section 7(f), shall lapse and such Awards shall be deemed fully vested, and
any performance conditions imposed with respect to Awards, shall be deemed to be fully achieved, subject to the restrictions set forth in Sections 7(d)(i) and 9(a). 
 
(b) For purposes of the Plan, a “Change in Control” shall have occurred if: 
 
(i) Any “person,” as such term is
used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, a subsidiary, any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their ownership of stock of the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the Company’s then outstanding voting securities; 
 
(ii) during any period of two consecutive years beginning at or after equity securities of the Company first become
registered under Section 12 of the Exchange Act, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii), or (iv) of this Section 8(b)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds ( 2/3) of the directors then still in office who either were directors at the beginning of the period or whose election
or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof; 
 
(iii) the stockholders of the Company approve a merger, consolidation, recapitalization, or reorganization of the Company,
or a reverse stock split of any class of voting securities of the Company, or the consummation of any such transaction if stockholder approval is not obtained, other than any such transaction which would result in at least 75% of the total voting
power represented by the voting securities of the Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 75% of the combined voting power of the
voting securities of the Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each other continuing holder not substantially altered as a result of
the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 75% threshold (or to substantially preserve
such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such surviving entity; or 
 

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(iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having
a similar effect). 
 
9. General
Provisions. 
 
(a) Compliance with
Legal and Exchange Requirements. The Company shall not be obligated to deliver Stock upon the exercise or settlement of any Award or take other actions under the Plan until the Company shall have determined that applicable federal and
state laws, rules, and regulations have been complied with and such approvals of any regulatory or governmental agency have been obtained and contractual obligations to which the Award may be subject have been satisfied. The Company, in its
discretion, may postpone the issuance or delivery of Stock under any Award until completion of such stock exchange listing or registration or qualification of such Stock or other required action under any federal or state law, rule, or regulation as
the Company may consider appropriate, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Stock under the Plan. 
 
(b) Nontransferability. In addition to
the restrictions on transferability set forth in Section 7(d)(ii) (which apply to all Participants whether or not they are otherwise subject to Section 16 under the Exchange Act), Awards and other rights of Participants under the Plan may not be
transferred to third parties, pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to claims of creditors. 
 
(c) No Right to Continued Employment. Neither the Plan nor any action taken hereunder shall be construed as giving
any employee the right to be retained in the employ of the Company or any of its subsidiaries, nor shall it interfere in any way with the right of the Company or any of its subsidiaries to terminate any employee’s employment at any time.

 
(d) Taxes. The Company or
any subsidiary is authorized to withhold from any Award granted or to be settled, any payment relating to an Award under the Plan, including from a distribution of Stock, or any payroll or other payment to a Participant, amounts of withholding and
other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant’s tax
obligations. 
 
(e) Changes to the Plan
and Awards. The Board may amend, alter, suspend, discontinue, or terminate the Plan or the Committee’s authority to grant Awards under the Plan without the consent of stockholders or Participants, except that any such action shall
be subject to the approval of the Company’s stockholders at or before the next annual meeting of stockholders for which the record date is after such Board action if such stockholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to the Plan to stockholders for
approval; 
 

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provided,
however, that, without the consent of an affected Participant, no such action may materially impair the rights of such Participant under any Award theretofore granted to him. The Committee may waive any conditions or rights under, or amend,
alter, suspend, discontinue, or terminate, any Award theretofore granted and any Award Agreement relating thereto; provided, however, that, without the consent of an affected Participant, no such action may materially impair the rights
of such Participant under such Award. 
 
(f)
No Rights to Awards; No Stockholder Rights. No Participant or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants and employees. No Award
shall confer on any Participant any of the rights of a stockholder of the Company unless and until Stock is duly issued or transferred and delivered to the Participant in accordance with the terms of the 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 made to a Participant pursuant to an Award, nothing contained in the Plan or any Award
shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the
Company’s obligations under the Plan to deliver cash, Stock other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant. 
 
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in
specific cases. 
 
(i) No Fractional
Shares. No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, 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. 
 
(j) Compliance with Code Section 162(m). It is the intent of the Company that Options and other Awards subject to the
performance objectives specified under Section 7(f) granted under the Plan to persons who are “covered employees” within the meaning of Code Section 162(m) and regulations thereunder (including Proposed Regulation 1.162-27(c)(2)) shall
constitute “qualified performance-based compensation” within the meaning of Code Section 162(m) and regulations thereunder (including Proposed Regulation 1.162-27(e), and subject to the transition rules under Proposed Regulation
1.162-27(h)(2)) thereunder. Accordingly, if any provision of the Plan or any Award Agreement relating to such an Award granted to a “covered employee” does not comply or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to the extent necessary to conform to such requirements, and no provision shall be deemed to confer upon the Committee or any other person discretion to increase the amount
of 
 

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compensation otherwise payable
to a “covered employee” in connection with any such Award upon attainment of the performance objectives. 
 
(k) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the
Plan, and any Award Agreement shall be determined in accordance with the laws of the State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal law. 
 
(l) Effective Deal; Plan Termination. The
Plan shall become effective as at such time as the stockholder of the Company shall have approved the Plan. The Plan shall terminate at such time as no Stock remains available for delivery pursuant to Section 4 and the Company has no further
obligations with respect to any Award granted under the Plan. 
 
As approved by the Board of Directors of the Company on June 15, 1994. 
 
As amended by the Board of Directors on October 16, 1997 and subsequently approved by shareholders on January 15, 1998. 
 

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