EX-10.5



 





Exhibit 10.5




DOVER CORPORATION

1995 INCENTIVE STOCK OPTION PLAN

AND

1995 CASH PERFORMANCE PROGRAM

(as amended effective May 4, 2006 with respect to any awards
then outstanding)




A.
PURPOSE AND SCOPE OF PLAN AND PROGRAM




     1. Purpose. The 1995 Incentive Stock Option Plan (the “Plan”) and 1995 Cash Performance
Program (the “Program”) are intended to promote the long-term success of Dover Corporation by
providing salaried officers and other key employees of Dover Corporation and its subsidiaries, on
whom major responsibility for the present and future success of Dover Corporation rests, with a
long-range inducement to remain with the organization and to encourage them to increase their
efforts to make Dover Corporation successful. The term “Corporation” shall mean Dover Corporation
and any present or future corporation which is or would be a “subsidiary corporation” of Dover
Corporation as defined in Section 424 of the Internal Revenue Code of 1986, as amended (the
“Code”), unless the context requires otherwise.



     2. Successor Plan and Program. The Plan and the Program are successors to the 1984 Incentive
Stock Option Plan and Cash Performance Program (hereinafter the “Predecessor Plans”). No further
grants of options or incentive awards may be made under the Predecessor Plans. Options and
incentive awards under the Predecessor Plans shall be administered pursuant to the provisions of
those respective Plans.



     3. Administration. The Plan and the Program shall be administered and interpreted by the
Compensation Committee (or such other Committee of the Board of Directors as the Board may
designate if there is no Compensation Committee; hereinafter the “Committee”), consisting of not
less than three persons appointed by the Board of Directors of the Corporation from among its
members. A person may serve as a Committee member provided he or she shall comply in all respects
with any qualifications required by law, including specifically being a “disinterested person” for
purposes of the rules promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and an “outside director” for purposes of Section 162(m) of the Code. The
Committee will have sole and complete authority to administer all aspects of the Plan and the
Program, including but not limited to: (a) determining the individuals eligible to receive options
and restricted stock under the Plan and/or to participate in the Program; (b) granting options,
restricted stock and participations; (c) determining the number of options and the amount of
restricted stock and participations to be granted to any such eligible individuals at any time or
from time to time; (d) determining the terms and conditions under which grants and participations
will be made; and (e) determining whether objectives and conditions for performance bonuses have
been met. The Committee may, subject to the provisions of the Plan and Program, from time to time
establish such rules and regulations as it deems appropriate for the proper administration of the
Plan and the Program. The Committee’s decisions shall be final, conclusive and binding with respect
to the interpretation and administration of the Plan and the Program and any grants or awards made
thereunder.



 









 





     4. Eligibility. Grants may be made to any employee of the Corporation who is a salaried
officer or other key employee, including salaried members of the Board of Directors (hereinafter
sometimes referred to as “participants”). The Committee shall select the participants eligible and
determine the terms of the grants and participations to each.



     5. Shares Available for Grant. 20,000,000 shares of Common Stock of Dover Corporation (the
“Common Stock”) will be reserved for issuance upon exercise of options to purchase Common Stock
granted under the Plan, which options may be granted at any time prior to January 30, 2005, and for
awards of restricted stock. These maximum numbers are subject to appropriate adjustment resulting
from future stock splits, stock dividends, recapitalizations, reorganizations and other similar
changes to be computed in the same manner as that provided for in Paragraph 14 below. If any option
or award of restricted stock granted under the Plan expires, terminates or is canceled for any
reason without having been exercised in full, the number of unpurchased shares under such option or
restricted stock under such award will again be available for the purpose of the Plan.



B.
STOCK OPTION AWARDS




     6. Stock Options. Options granted under the terms of this Plan shall be designated as either
“non-qualified” stock options or “incentive” stock options within the meaning of Section 422 of the
Code, and shall contain such terms and conditions as the Committee may from time to time determine,
subject to the following limitations:



          (a) Option Price. The fair market value of a share of Common Stock on the date the option is
granted shall be determined in good faith by the Committee on the basis of such considerations as
the Committee deems appropriate from time to time, including, but not limited to, such factors as
the closing price for a share of Common Stock on such day (or, if such day is not a trading day, on
the next trading day) on the New York Stock Exchange (the “Exchange”), the average of the closing
bid and asked prices for a share of Common Stock on the Exchange on the date the option is granted
by the Committee or the average of the high and low sales price of a share of Common Stock on the
Exchange on the date the option is granted by the Committee. The Committee shall be authorized, in
its discretion, to round the fair market value of a share of Common Stock to the nearest whole
number or quarterly fraction thereof.



          (b) Option Exercise Period. The term of each option will be for such period as the Committee
may determine, but in no event may an option be exercised more than 10 years following the granting
thereof.



          (c) Rights of Option Holder. A recipient of stock options shall have no rights as a
stockholder with respect to any shares issuable or transferable upon exercise thereof until the
date of issuance of a stock certificate for such shares. Except as specifically set forth in
Paragraph 14 below, no adjustment shall be made for dividends or other distributions of cash or
other property on or with respect to shares of stock covered by these options paid or payable to
holders of record prior to such issuance.



          (d) Limits on Individuals. Options on a maximum number of 600,000 shares may be granted each
year to a single participant. The aggregate fair market value (determined on



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the date of grant) of Common Stock with respect to which a participant is granted incentive
stock options (including incentive stock options granted under any Predecessor Plan) which first
become exercisable during any given calendar year shall not exceed $100,000.



     7. Exercise of Option. Stock options may be exercised at such time or times and subject to
such terms and conditions as the Committee shall determine and are specified in the option
instrument, not inconsistent with the terms of the Plan; provided, however, that except as set
forth in Paragraphs 11, 14 and 36, no option may be exercised prior to the third anniversary of
such Option grant and any partial exercise of an option shall be for not less than 500 shares. To
exercise an option, the option holder must give written notice to the Corporation of the number of
shares to be purchased accompanied by payment of the full purchase price of such shares as set
forth in Paragraph 8. The date of actual receipt by the Corporation of such notice and payment
shall be deemed the date of exercise of the option with respect to the shares being purchased and
the stock certificates therefor shall be issued as soon as practicable thereafter. The shares to be
issued upon exercise of an option will be either treasury or authorized and unissued stock, in the
sole discretion of the Corporation.



     8. Payment. Payment of the option exercise price must be made in full at the time of exercise
(a) by check made payable to the Corporation, (b) if available, through the Loan Program (as
hereinafter described), (c) by transfer to the Corporation of shares of Common Stock owned by the
participant or (d) with a combination of the foregoing. If payment is made by the transfer of
shares, the value per share of the shares so transferred to the Corporation to be credited toward
the purchase price will be the average between the high and the low sales price per share of Common
Stock on the Exchange on the date the option is exercised or, if no sales have occurred on that
date, such value will be the closing price per share on the Exchange on the next trading day
following the exercise of the option. The shares transferred to Dover will be added to the
Corporation’s treasury shares or canceled and become authorized and unissued shares.



     9. Option Transfers. The options granted under the Plan may not be sold, transferred,
hypothecated, pledged or otherwise disposed of by any of the holders except by will or by the laws
of descent and distribution, or as otherwise provided herein. The option of any person to acquire
stock and all rights thereunder shall terminate immediately if the holder attempts to or does sell,
assign, transfer, pledge, hypothecate or otherwise dispose of the option or any rights thereunder
to any other person except as permitted herein. Notwithstanding the foregoing, a participant may
transfer any non-qualified option granted under this Plan to members of the holder’s immediate
family (defined as a spouse, children and/or grandchildren), or to one or more trusts for the
benefit of such family members if the instrument evidencing such option expressly so provides and
the option holder does not receive any consideration for the transfer; provided that any such
transferred option shall continue to be subject to the same terms and conditions that were
applicable to such option immediately prior to its transfer (except that such transferred option
shall not be further transferred by the transferee during the transferee’s lifetime).



     10. Registration. The Corporation will stamp stock certificates delivered to the stockholder
with an appropriate legend if the shares are not registered under the Securities Act of 1933, as
amended (the “Act”), or are otherwise not free to be transferred by the holder and will



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issue appropriate stop-order instructions to the transfer agent for the Common Stock, if and
to the extent such stamping or instructions may then be required by the Act or by any rule or
regulation of the Securities and Exchange Commission issued pursuant to the Act.



     11. Effect of Death, or Permanent Disability or Retirement. If an option holder dies or
becomes permanently disabled while employed by the Corporation, all options held by such holder
shall become immediately exercisable and the holder or such holder’s estate or the legatees or
distributees of such holder’s estate or of the options, as the case may be, shall have the right,
on or before the earlier of the respective expiration date of an option or sixty (60) months
following the date of such death or permanent disability, to exercise any or all options held by
such holder as of such date of death or permanent disability. If an option holder retires at or
after age 62, the holder shall have the right, on or before the earlier of the expiration date of
the option or sixty (60) months following the date of such retirement, to purchase shares under any
options which at retirement are, or within sixty (60) months following retirement become,
exercisable.



     If the employment of a holder of an option terminates for any reason other than (i) the
reasons specified above or (ii) termination for “cause” (as defined below), and one of the
following sets of circumstances is applicable: (a) the holder has at least 10 years of service
with the Corporation (including service with any subsidiary corporation of the Corporation while it
is owned by the Corporation), the sum of the holder’s years of service plus his or her age on the
date of such termination equals at least 65 and the holder satisfies the notice requirements set
forth below (“Early Retirement I”), (b) the holder has at least 15 years of service with the
Corporation (including service with any subsidiary corporation of the Corporation while is it owned
by the Corporation), the sum of the holder’s years of service plus his or her age on the date of
such termination equals at least 70 and the holder satisfies the notice requirements set forth
below (“Early Retirement II”), or (c) such holder’s employment with the Corporation terminates due
to the sale of stock or assets of the subsidiary corporation (or line of business) by which the
holder is employed and the holder is so employed in good standing by the subsidiary or line of
business through the date of such sale (“Early Retirement III”; each of Early Retirement I, II and
III from time to time being referred to herein as “Early Retirement”), the holder shall have the
right (subject to the provisions of Paragraph 37 below), (x) in the event of Early Retirement I, on
or before the earlier of the expiration date of the option or twenty-four (24) months following the
date of such Early Retirement, to exercise, and acquire shares under, any options which at such
termination are, or within twenty-four (24) months following such termination become, exercisable,
(y) in the event of Early Retirement II, on or before the earlier of the expiration date of the
option or thirty-six (36) months following the date of such Early Retirement, to exercise, and
acquire shares under, any options which at such termination are, or within thirty-six (36) months
following such termination become, exercisable, or (z) in the event of Early Retirement III, on or
before the earlier of the expiration date of the option or twelve (12) months following the date of
such Early Retirement, to exercise, and acquire shares under, any options which at such termination
are, or within twelve (12) months following such termination become, exercisable. Notwithstanding
the above, if a holder taking Early Retirement III would also qualify for Early Retirement I or II
excluding the notice requirement, the holder shall be entitled to the benefits of Early Retirement
I or II, as appropriate.



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     In order to be eligible for Early Retirement I or II, the holder must give six (6) months
advance notice of retirement and must continue to be employed by the Corporation (or any subsidiary
corporation provided such subsidiary corporation continues to be owned by the Corporation
throughout the notice period) and perform his or her duties throughout such notice period. Failure
to satisfy the notice requirement will render the holder ineligible for Early Retirement I or II
notwithstanding the satisfaction by the holder of all other applicable requirements. Dover’s Chief
Executive Officer shall have the authority to reduce or waive the required notice period.



     12. Voluntary or Involuntary Termination. If any option holder’s employment with the
Corporation is voluntarily or involuntarily terminated for any reason, other than for reasons or in
circumstances specified above or for “cause” (as defined below), the holder shall have the right at
any time on or before the earlier of the expiration date of the option or three (3) months
following the effective date of such termination of employment, to exercise, and acquire shares
under, any options which at such termination are exercisable.



     13. Termination for Cause. If an option holder’s employment with the Corporation is terminated
for cause (defined as (a) a felony conviction of the option holder; (b) the commission by the
option holder of an act of fraud or embezzlement against the Corporation; or (c) the option
holder’s willful misconduct or gross negligence materially detrimental to the Corporation), the
option shall be canceled and the holder shall have no further rights to exercise any such option
and all of such holder’s rights thereunder shall terminate as of the effective date of termination
of employment.



     14. Effect of Stock Dividends, Merger, Recapitalization or Reorganization or Similar Events.
If any Common Stock dividend is paid by the Corporation, if any non-cash distribution is made by
the Corporation as respects its Common Stock, if the shares of Common Stock are split or
reclassified, if the Corporation should be reorganized or consolidated or merged with or into
another corporation, or if all or substantially all the assets of the Corporation are transferred
to any other corporation in a reorganization, each option holder shall be entitled, upon exercise
of such holder’s option, to receive for the same aggregate exercise price the same number and kind
of shares of stock (to the nearest whole number) as he or she would have been entitled to receive
upon the happening of such stock dividend, distribution, stock split, reclassification,
reorganization, consolidation, merger or transfer, if he or she had been, immediately prior to such
event, the holder of such shares. Outstanding options shall be appropriately amended as to price
and other terms in a manner consistent with the aforementioned adjustment to the shares of Common
Stock subject to the Plan. The adjustments to be made pursuant to this Paragraph 14 shall meet the
requirements of Section 409A of the Code and the regulations thereunder. The Board of Directors
shall have the power, in the event of any disposition of substantially all of the assets of the
Corporation, its dissolution, any merger or consolidation, or the merger or consolidation of any
other corporation into the Corporation, to amend all outstanding options to permit their exercise
prior to the effectiveness of any such transaction and to terminate such options as of such
effectiveness. If the Board of Directors shall exercise such power, all options outstanding shall
be deemed to have been amended to permit the exercise thereof in whole or in part by the holder at
any time or from time to time as determined by the Board of Directors prior to the effectiveness of
such transaction and such options shall be deemed to terminate upon such effectiveness.



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     15. Loan Program. Except in unusual circumstances, it is the Corporation’s expectation that
shares acquired through the exercise of options are to be held by participants for the duration of
their employment with the Corporation. In order to help participants finance the exercise of their
options and resulting income taxes, if any, the Corporation may provide for loans to Plan
participants at any time and from time to time after May 1, 1995. If established by the Board, any
loan program will be administered by the Committee and may apply to all existing unexercised
options, with the exception of incentive options, and/or all future option grants, as the Committee
shall decide. The terms of any loans shall be specified by the Committee, as they may deem
appropriate, provided that the following terms shall apply:



          (a) The maximum amount of any loan cannot be greater than the option exercise price of the
acquired stock, together with the amount of any taxes due as a result of such exercise, and in any
event cannot exceed the fair market value of the acquired stock. In the event the participant
chooses to satisfy all or a portion of the option exercise price by surrender, at fair market
value, of other Common Stock already owned by the participant, the maximum amount of the loan will
be reduced by the value of the stock surrendered.



          (b) Loans will be evidenced by promissory notes having a term of not more than ten (10) years,
which notes shall be subject to further extension for additional periods of time not exceeding ten
(10) years at each such extension. Prepayment of loan principal may not be required during the
participant’s employment with the Corporation and/or subsidiaries. Repayment in full must be made
within one (1) month of termination of employment; however, this period is extended to six (6)
months if employment ceases due to death, permanent disability or retirement. Loan prepayment may
be made by the participant at the participant’s discretion but, once reduced, the loan may not be
subsequently increased.



          (c) The Corporation shall have the right to hold as collateral all stock acquired under a
particular option instrument, regardless of the amount of the loan, until the loan is fully repaid.
Such stock will be registered in the participant’s name (or such other name as the Plan permits) so
that the participant may vote the stock and receive the dividends applicable thereto, provided the
loan is current.



          (d) The participant will be responsible for the full repayment of the loan, regardless of the
value of the stock. However, no additional collateral for the loan will be required regardless of
the fair market value of the stock.



          (e) Interest on the loan balance will be due quarterly, in arrears, and will be at a
sufficient rate so as not to result in any imputed income to the participant under the terms of the
Code.



     16. Change in Control. Options and grantees of options shall be subject to the terms of
Paragraph 36 below related to a change in control of the Corporation.



C.
RESTRICTED STOCK AWARDS




     17. Grant. Subject to the provisions and as part of the Plan, the Committee shall have sole
and complete discretion and authority to determine the eligible persons who shall receive shares of
Common Stock which are subject to certain forfeiture restrictions during the restriction



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period and subject to the terms of the Plan (“restricted stock”). Awards of restricted stock
shall contain such terms and conditions as the Committee may from time to time determine, subject
to the following limitations.



     18. Term of Restriction Period. The Committee may adopt such vesting schedules, not longer
than five (5) years from the date of the award, as it may deem appropriate with respect to awards
of restricted stock and may condition the lapse of the restrictions applicable to an award upon the
attainment by the Corporation or any subsidiary or division or by the participant of any
performance objectives set by the Committee.



     19. Issuance of Shares. Certificates issued for restricted stock shall be registered in the
name of the participant and deposited by the participant with the Secretary of the Corporation,
together with a stock power endorsed in blank. Upon lapse of the applicable restriction period, the
Corporation shall deliver such certificates to the participant. In the event that the shares of
restricted stock are forfeited, such shares automatically shall be transferred back to the
Corporation. The Corporation will stamp the stock certificates delivered to the participant with an
appropriate legend if the shares are not registered under the Act, or are otherwise not free to be
transferred by the participant and will issue appropriate stop-order instructions to the transfer
agent for the Common Stock, if and to the extent such stamping or instructions may then be required
by the Act or by any rule or regulation of the Securities and Exchange Commission issued pursuant
to the Act.



     20. Dividends and Voting Rights. In the discretion of the Committee, dividends which become
payable with respect to restricted stock during the restriction period will be reinvested in
additional shares of restricted stock for the account of the award recipient, accumulated for later
distribution to vested participants (in which case this treatment may be put in a separate
agreement in order for such treatment not to be subject to Section 409A of the Code), or
distributed to the award recipient as paid. An employee who receives an award of restricted stock
may also in the discretion of the Committee be entitled, during the restriction period, to exercise
voting rights with respect to such restricted stock.



     21. Nontransferability. Shares of restricted stock may not be sold, assigned, transferred,
pledged or otherwise encumbered and shall not be subject to execution, attachment, garnishment or
other similar legal process, except as otherwise provided in the applicable award agreement. Upon
any attempt to sell, transfer, assign, pledge, or otherwise encumber or dispose of the restricted
stock contrary to the provisions of the award agreement or the Plan, the restricted stock shall
immediately be forfeited to the Corporation.



     22. Termination of Employment. In the case of a participant’s permanent disability, death,
termination of employment by the Corporation other than for cause (as defined in Paragraph 13
above) or special circumstances, as determined by the Committee, any purely temporal restrictions
remaining with respect to shares of restricted stock as of the date of such disability, death or
termination of employment shall lapse and, if any performance objectives are applicable, the shares
of restricted stock shall continue to vest as if the participant’s employment had not terminated
until the prescribed time for determining attainment of performance objectives has passed and the
appropriate determination has been made. If the participant’s employment with the Corporation is
terminated as a result of (a) the retirement of the participant



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at or after age 62, or (b) an Early Retirement, subject to the provisions of Paragraph 37
below, then, in either such case, the shares of restricted stock shall continue to vest as if the
participant’s employment had not terminated until such time as the remaining temporal restrictions
lapse and, if any performance objectives are applicable, the prescribed time for determining
attainment of performance objectives has passed and the appropriate determination has been made. If
a participant’s employment with the Corporation is voluntarily or involuntarily terminated for any
other reason during the restriction period, the shares of restricted stock shall be forfeited.



     23. Effect of Stock Dividends, Merger, Recapitalization or Reorganization or Similar Events.
In the event of a stock dividend, merger, recapitalization, reorganization or other transaction
described in Paragraph 14 above, the terms and conditions of the restricted stock awards shall be
adjusted in a manner consistent with adjustments made to options granted under the Plan.



     24. Change in Control. Awards of restricted stock and persons who are awarded restricted stock
shall be subject to the terms of Paragraph 36 below.



     25. Cancellation. The Committee may at any time, with due consideration to the effect on the
holder of Section 409A of the Code, require the cancellation of any award of restricted stock in
consideration of a cash payment or alternative award under the Plan equal to the fair market value
of the cancelled award of restricted stock.



D.
CASH PERFORMANCE AWARDS




     26. Awards and Period of Contingency. The Committee may, concurrently with, or independently
of, the granting of an option under the Plan, in its sole discretion, grant to a participant the
opportunity to earn a cash performance payment, conditional upon the attainment of an objective
pre-established performance goal during a performance period. The performance period shall be not
less than three fiscal years of the Corporation, including the year in which the conditional grant
is made. Any performance goal established by the Committee shall include an objective formula or
standard for determining the amount of the performance payment payable to a participant if the goal
is attained and shall otherwise meet the requirements of Section 162(m) of the Code and the
regulations thereunder. The performance goal may be fixed by the Committee for the Corporation as a
whole or for a subsidiary or division of the Corporation, depending on the Committee’s judgment as
to what is most appropriate for the individual involved, and shall be set by the Committee not
later than the 90th day after the commencement of the period of services to which the performance
payment relates or by the time 25% of such period of services has elapsed. Performance goals shall
be based on at least one or more of the following factors which the Committee deems appropriate, as
they apply to the Corporation as a whole or to a subsidiary or a division: (a) earnings per share,
(b) operating earnings, (c) return on equity and (d) return on investment. The performance goal
with respect to a performance period will be the same for all persons within the same business
unit. The material terms of the performance goals shall be subject to stockholder approval to the
extent provided in regulations promulgated under Section 162(m) of the Code.



     27. Determination of Payment Amount. The aggregate maximum cash payout for any business unit
within the Corporation or the Corporation as a whole shall not exceed a fixed



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percentage of the annual average earnings increase of the relevant entity during the
performance period, such percentages and dollar amounts to be determined by the Committee annually
when performance goals are established. In no event can an individual receive an annual payment
which exceeds $2 million. A performance payment shall be payable with respect to a performance
period only if the Committee shall have certified that the applicable performance target has been
attained. The Committee shall also have the power to approve proportional or adjusted payments
under the Program to address situations where participants join the Corporation, or transfer within
the Corporation, during a performance period. The Committee shall have the discretion to decrease
the amount payable upon attainment of the performance goal (as determined under such formula or
standard) to take into account the effect of any unusual, non-recurring circumstance, but shall
have the discretion to increase the amount payable to take into account any such effect only if
such discretion would not cause such compensation to fail to qualify as “qualified
performance-based compensation” for purposes of Section 162(m) of the Code. Cash performance awards
shall be paid no later than March 15 of the year following the year in which the Committee
certifies that the performance criteria have been met.



     28. Effect of Death, Disability or Other Early Termination of Employment. If a participant in
the Plan holding a cash performance award dies or becomes permanently disabled while employed by
the Corporation, then, subject to the provisions of Paragraph 37 below, the participant (or the
participant’s estate or the legatees or distributees of the participant’s estate, as the case may
be) shall be entitled to receive on the payment date the cash payment which the participant would
have earned had the participant then been an employee of the Corporation, multiplied by a fraction,
the numerator of which is the number of months the participant was employed by the Corporation
during the performance measurement period and the denominator of which is the number of months of
the performance measurement period (treating fractional months as whole months in each case).



     If the participant in the Plan is the subject of Early Retirement I or Early Retirement II (as
defined in Paragraph 11) and on the date of such Early Retirement the participant holds one or more
outstanding cash performance awards, the Committee, or if the Committee delegates to the
Corporation’s Chief Executive Officer such authority, the Corporation’s Chief Executive Officer,
shall determine in its sole discretion whether the participant shall receive any payment and, if
so, the amount thereof on the date or dates following the date of the participant’s Early
Retirement on which the Corporation pays cash performance awards for the performance measurement
period relating to any such outstanding cash performance award held by such participant. Any such
payment to the participant shall be subject to the provisions of Paragraph 37 below and may not
exceed the amount that the participant would have been entitled to receive had the participant been
an employee of the Corporation on such payment date. Except as provided in this Paragraph 28, if
the participant is the subject of Early Retirement I or II, all cash performance awards held by
such participant shall be canceled and all of the participant’s awards thereunder shall terminate
as of the effective date of such Early Retirement. If the participant in the Plan is the subject
of Early Retirement III, all cash performance awards held by such participant shall be cancelled
and all of the participant’s rights thereunder shall terminate as of the effective date of such
Early Retirement.



     29. Effect of Normal Retirement. If before the date of payment, the participant retires on or
after age 62, the participant shall be entitled to receive on the payment date the same



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amount of cash which the participant would have earned had such participant then been an
employee of the Corporation as of such date.



     30. Effect of Other Terminations of Employment.



          (a) General Termination. If a participant’s employment with the Corporation is terminated for
any reason, whether voluntary, involuntary, or for cause (as defined as Paragraph 13 above), other
than those described in Paragraphs 28 or 29 above or in Paragraph 30 (b) below, then his or her
participation shall be canceled and all of the participant’s rights under the grant shall terminate
as of the effective date of the termination of such employment.



          (b) Pre-Payment Termination. If, after the end of a performance measurement period and before
the date of payment or distribution of any final award, a participant’s employment is terminated,
whether voluntarily or involuntarily for any reason other than for cause (as defined in Paragraph
13 above), the participant shall be entitled to receive on the payment or distribution date the
cash payment which the participant would have earned had the participant continued to be an
employee of the Corporation as of the payment or distribution date.



     31. Change in Control. The terms of a performance goal and each participant in the Cash
Performance Program shall be subject to the terms of Paragraph 36 below.



E.
GENERAL PROVISIONS




     32. Legal Compliance. It is the intent of the Corporation that the Plan comply in all respects
with applicable provisions of the Exchange Act, including Section 16 and Rule 16b-3, so that any
grant of options or restricted stock to, or other transaction by, a participant who is subject to
the reporting requirements of Section 16(a) of the Exchange Act shall not result in short-swing
profits liability under Section 16(b) (except for any transaction exempted under alternative
Exchange Act rules or intended by such participant to be a non-exempt transaction). It is also the
intent of the Corporation that any compensation income realized in connection with options or
restricted stock and any performance payments made under the Plan and Program constitute
“performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code so that any
deduction to which the Corporation is entitled in connection with such compensation will not be
subject to the limitations of Section 162(m)(1) of the Code. Accordingly, if any provision of the
Plan or Program or any agreement relating to an option, grant of restricted stock or participation
does not comply with the requirements of Rule 16b-3 as then applicable to any such transaction so
that such a participant would be subject to Section 16(b) liability (except for any transaction
exempted under alternative Exchange Act rules or intended by such participant to be a non-exempt
transaction), or if any provision of the Plan or Program or any agreement relating to an option,
grant of restricted stock or participation would limit, under Section 162(m)(1) of the Code, the
amount of compensation income to an optionee or participant that the Corporation would otherwise be
entitled to deduct, such provision shall be construed or deemed amended to the extent necessary to
conform to such requirements, or to eliminate such deductibility limitation, and the participant
shall be deemed to have consented to such construction or amendment.



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     33. Withholding Taxes. The Corporation shall make arrangements for the collection of any
Federal, State or local taxes of any kind required to be withheld with respect to any transactions
effected under the Plan or the Program. The obligations of the Corporation under the Plan and the
Program shall be conditional on satisfaction of such obligations and the Corporation, to the extent
permitted by law, shall have the right to deduct any such taxes from any payment of any kind
otherwise due to a participant. A participant shall be solely responsible for any tax or other
amounts payable with respect to amounts included in participant’s income under Section 409A of the
Code in respect of awards received under the Plan, including penalties or interest.



     34. Effect of Recapitalization or Reorganization. The obligations of the Corporation with
respect to an option or restricted stock granted under the Plan or a participation under the
Program shall be binding upon the Corporation, its successors or assigns, including any successor
or resulting company either in liquidation or merger of the Corporation into another company owning
all the outstanding voting stock of the Corporation or in any other transaction whether by merger,
consolidation or otherwise under which such succeeding or resulting company acquires all or
substantially all the assets of the Corporation and assumes all or substantially all its
obligations unless options are terminated in accordance with Paragraph 14.



     35. Employment Rights and Obligations. Neither the granting of any option or award of
restricted stock under the Plan or participation under the Program nor the provisions related to a
change in control of the Corporation (as defined below) or a Person seeking to effect a change in
control of the Corporation shall alter or otherwise affect the rights of the Corporation to change
any and all the terms and conditions of employment of any participant including, but not limited
to, the right to terminate such participant’s employment.



     36. Change in Control.



          (a) Each participant, upon acceptance of a grant of options or restricted stock or the
opportunity to earn a cash performance payment, and as a condition to such grant, shall be deemed
to have agreed that, in the event any Person begins a tender or exchange offer, circulates a proxy
to shareholders, or takes other steps seeking to effect a change in control of the Corporation (as
defined below), such participant will not voluntarily terminate his or her employment with the
Corporation or with a direct or indirect subsidiary of the Corporation, as the case may be, and,
unless terminated by the Corporation or such subsidiary, will continue to render services to the
Corporation or such subsidiary until such Person has abandoned or terminated efforts to effect a
change in control.



          (b) In the event of a change in control,



               (i) all options to purchase shares of common stock of the Corporation shall immediately vest
and become exercisable in accordance with the terms of the appropriate stock option agreement;



               (ii) all outstanding restrictions with respect to any restricted stock shall immediately
expire;



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               (iii) with respect to performance awards under the Cash Performance Program:



                    (A) all performance awards outstanding shall immediately vest and become immediately due and
payable;



                    (B) the performance measurement period of all performance awards outstanding shall terminate
on the last day of the month prior to the month in which the change in control occurs;



                    (C) the participant shall be entitled to a cash payment the amount of which shall be
determined in accordance with the terms and conditions of the Program and the appropriate program
award agreement, which amount shall be multiplied by a fraction, the numerator of which is the
actual number of months in the performance measurement period (as determined in accordance with
clause (iii)(B) above) and the denominator of which is 36 (or 48 if the performance measurement
period established at the date of grant is four years or more); and



                    (D) the Continuing Directors (as defined in Article Fourteenth of the Corporation’s
Certificate of Incorporation) shall promptly determine whether the participant is entitled to any
performance award, and any performance award payable shall be paid to the participant promptly but
in no event more than five days after a change in control;



               (iv) the Continuing Directors shall have the sole and complete authority and discretion to
decide any questions concerning the application, interpretation or scope of any of the terms and
conditions of any grant or participation under the Plan or the Program, and their decisions shall
be binding and conclusive upon all interested parties; and



               (v) other than as set forth above, the terms and conditions of all grants and participations
shall remain unchanged.



          (c) A “change in control” shall be deemed to have taken place upon the occurrence of any of
the following events (capitalized terms are defined below):



               (i) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of
the Corporation (not including in the securities beneficially owned by such Person any securities
acquired directly from the Corporation or its Affiliates) representing 20% or more of either the
then outstanding shares of common stock of the Corporation or the combined voting power of the
Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner
in connection with a transaction described in clause (A) of paragraph (iii) below; or



               (ii) the following individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on February 1, 1995, constituted the Board and any new
director (other than a director whose initial assumption of office is in connection with an actual
or threatened election contest, including but not limited to a consent solicitation, relating to
the election of directors of the Corporation) whose appointment or election by the Board or
nomination for election by the Corporation’s stockholders was



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approved or recommended by a vote of at least two-thirds (2/3) of the directors in office at
the time of such approval or recommendation who either were directors on February 1, 1995 or whose
appointment, election or nomination for election was previously so approved or recommended; or



               (iii) there is consummated a merger or consolidation of the Corporation or any direct or
indirect subsidiary of the Corporation with any other corporation, other than (A) any such merger
or consolidation after the consummation of which the voting securities of the Corporation
outstanding immediately prior to such merger or consolidation continue to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity or any
parent thereof) at least 50% of the combined voting power of the voting securities of the
Corporation or such surviving entity or any parent thereof outstanding immediately after such
merger or consolidation, or (B) any such merger or consolidation effected to implement a
recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the
securities Beneficially Owned by such Person any securities acquired directly from the Corporation
or its Affiliates) representing 20% or more of either the then outstanding shares of common stock
of the Corporation or the combined voting power of the Corporation’s then outstanding securities;
or



               (iv) the stockholders of the Corporation approve a plan of complete liquidation or dissolution
of the Corporation or there is consummated an agreement for the sale or disposition by the
Corporation of all or substantially all of the Corporation’s assets, other than a sale or
disposition by the Corporation of all or substantially all of the Corporation’s assets to an
entity, at least 50% of the combined voting power of the voting securities of which are owned by
stockholders of the Corporation in substantially the same proportions as their ownership of the
Corporation immediately prior to such transaction or series of transactions.



          (d) For purposes of this Paragraph 36, the following terms shall have the meanings indicated:



               (i) “Affiliate” shall have the meaning set forth in Rule 12b-2 under Section 12 of the
Exchange Act.



               (ii) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act,
except that a Person shall not be deemed to be the Beneficial Owner of any securities which are
properly filed on a Form 13-G.



               (iii) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time.



               (iv) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the
Corporation or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any of its Affiliates, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities or (iv) a



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corporation owned, directly or indirectly, by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the Corporation.



               (v) To the extent deemed necessary or advisable by the Committee to comply with the provisions
of Section 409A of the Code, the Committee is authorized to use the definition of “change in the
ownership or effective control of a corporation or a change in the ownership of a substantial
portion of the assets of the corporation” in Section 409A(a)(2)(A)(v) of the Code and the
regulations thereunder in lieu of the definition of “change in control” in this Paragraph 36 with
respect to all or a portion of options, restricted stock awards or cash performance awards
outstanding under the Plan.



     37. Non-compete. (a) Any Early Retirement taken by any participant and the benefits thereof,
as contemplated in Paragraphs 11, 22 and 28, unless such benefits are waived in writing by the
participant, shall be subject to the provisions of this Paragraph 37. Any participant who is the
beneficiary of any such Early Retirement shall be deemed to have expressly agreed not to compete
with the Corporation or any subsidiary of the Corporation at which such participant was employed at
any time in the three years immediately prior to termination of employment, as the case may be, in
the geographic area in which the Corporation or such subsidiary actively carried on business at the
end of the participant’s employment there, for the period with respect to which such Early
Retirement affords the participant enhanced benefits, which period shall be, (a) with respect to
stock options, the additional period allowed the participant for the vesting and exercise of
options outstanding at termination of employment, (b) with respect to restricted stock, the period
remaining after the participant’s termination of employment until the end of the original
restriction period for such restricted stock, and (c) with respect to performance awards under the
Cash Performance Program, the period until the payment date following the end of the last
applicable performance period.



          (b) In the event that a participant shall fail to comply with the provisions of this Paragraph
37, the Early Retirement shall be automatically rescinded and the participant shall forfeit the
enhanced benefits referred to above and shall return to the Corporation the economic value
theretofore realized by reason of such benefits as determined by the Committee. If the provisions
of this Paragraph 37, or the corresponding provisions of a grant, award or participation agreement,
shall be unenforceable as to any participant, the Committee may rescind the benefits of any Early
Retirement with respect to such participant.



          (c) If any provision of this Paragraph 37, or the corresponding provisions of a grant, award
or participation agreement, is determined by a court to be unenforceable because of its scope in
terms of geographic area or duration in time or otherwise, the Corporation and the participant
agree that the court making such determination is specifically authorized to reduce the duration
and/or geographical area and/or other scope of such provision and, in its reduced form, such
provision shall then be enforceable; and in every case the remainder of this Paragraph 37, or the
corresponding provisions of a grant, award or participation agreement, shall not be affected
thereby and shall remain valid and enforceable, as if such affected provision were not contained
herein or therein.



     38. Interpretation. The Committee shall have the sole and complete authority and discretion
to decide any questions concerning the application, interpretation or scope of any of



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the terms and conditions of the Plan and the Program, of any stock option agreement, loan or
restricted stock award agreement entered into pursuant to the Plan, or of any participation under
the Program, and its decisions shall be binding and conclusive upon all interested parties.



     39. Amendment. Except as expressly provided in the next sentence, the Board of Directors may
amend the Plan or Program in any manner it deems necessary or appropriate (including any of the
terms, conditions or definitions contained herein), or terminate the Plan and/or Program at any
time prior to January 30, 2005; provided, however, that any such termination will not affect the
validity of any then outstanding options or restricted stock awards previously granted under the
Plan or outstanding participations under the Program, as the case may be. Without the approval of
the Corporation’s stockholders, the Board cannot: (a) increase the maximum number of shares covered
by the Plan or change the class of employees eligible to receive options or restricted stock
awards; (b) reduce the option price below the fair market value of the Common Stock on the date of
the option grant; or (c) extend beyond 120 months from the date of the grant the period within
which an option may be exercised.



     40. Effectiveness, and Termination of Plan. The Plan and the Program will become effective on
the date of their adoption by the Board of Directors, subject to ratification of the adoption of
the Plan and the Program by affirmative vote of holders of a majority of the issued and outstanding
shares of Common Stock. The Plan and Program will both terminate on January 30, 2005 and no option
or restricted stock award grant or participation grant, as the case may be, may be made on or after
such date. The amendments to the Plan adopted November 3, 2005 and February 2, 2006 shall become
effective January 1, 2006.



     41. Foreign Jurisdictions. The Committee may adopt, amend, and terminate such arrangements,
not inconsistent with the intent of the Plan and the Program, as it may deem necessary or desirable
to make available tax or other benefits of the laws of foreign jurisdictions to participants who
are subject to such laws.



     42. Governing Law. The Plan, the Program and all grants, options, awards and payments made
hereunder shall be governed by and interpreted in accordance with the internal laws of the State of
New York, without regard to conflicts of law principles.




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