exv10w5






Exhibit 10.5




 


JEFFERIES GROUP, INC.




1999 Directors’ Stock Compensation Plan 

As Amended and Restated January 1, 2009




     1. PURPOSE. The purpose of this 1999 Directors’ Stock Compensation Plan (the “Plan”) is to
advance the interests of the Company and its stockholders by providing a means to attract, retain
and compensate non-employee directors and to enable such persons to increase their proprietary
interest in the Company. In furtherance of this purpose, the Plan provides for periodic grants of
options, Deferred Shares or Restricted Stock (as defined below), the opportunity for a director to
elect deferred and alternative forms of compensation in lieu of cash fees for service as a
director, including Options, Deferred Shares, and deferred cash, and the opportunity to defer
delivery of shares deliverable upon exercise of options or in settlement of other awards.



     2. DEFINITIONS. In addition to the terms defined in Section 1, the following terms shall be
defined as set forth below:



     2.1 “Administrator” means the administrative committee specified in Section 3(b) to whom the
Board has delegated the authority to take action under the Plan.



     2.2 “Beneficiary” means the person(s) or trust(s) which have been designated by a Participant
in his or her most recent written beneficiary designation filed with the Administrator to receive
the benefits specified under the Plan upon such Participant’s death. If, upon a Participant’s
death, there is no designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the person(s) or trust(s) entitled by will or the laws of descent and
distribution to receive such benefits.



     2.3 “Board” means the Board of Directors of the Company.



     2.4 “Code” means the Internal Revenue Code of 1986, as amended, including regulations
thereunder and successor provisions and regulations thereto.



     2.5 “Company” means Jefferies Group, Inc., a Delaware corporation, formerly named JEF Holding
Company, Inc., the common stock of which was distributed in the Spin-off.



     2.6 “DDCP” means Predecessor’s Non-Employee Directors’ Deferred Compensation Plan.



     2.7 “Deferral Account” means the account established and maintained by the Company for
Deferred Shares credited under Sections 7 and 8 and deferred cash credited under Section 8. A
Deferral Account shall include one or more subaccounts, including a Deferred Share Account for
forfeitable Deferred Shares under Section 7, a Deferred Share Account for Deferred Shares that have
become nonforfeitable under Section 7 or that are at all times nonforfeitable under Section 8(c), a
Deferred Share Account for Deferred Shares resulting from Option exercises under Section 9(a), and
a Deferred Cash Account described in Section 8(d). The Deferral Account also includes two
subaccounts for purposes of complying with Code Section 409A: The “Grandfathered Account” is that
portion of the Deferral Account (and subaccouns) resulting from deferrals of compensation that was
vested before 2005, except for any designated deferred compensation which the Committee has caused
to be not grandfathered for purposes of Code Section 409A. The “2005-and-Later Account” is the
remaining portion of the Deferral Account (and subaccounts) which is not “grandfathered” for
purposes of Code Section 409A. The Deferral Account and subaccounts, and Deferred Shares and
deferred cash credited thereto, will be maintained solely as bookkeeping entries by the Company to
evidence unfunded obligations of the Company.



     2.8 “Deferred Share” means a credit to a Participant’s Deferred Share Account under Sections 7
or 8 which represents the right to receive one Share upon settlement of such Account. Deferred
Shares granted under Section 7 may be designated as “Restricted Stock Units.”



     2.9 “Disability” means a Participant’s termination of service as a director of the Company due
to a physical or
mental incapacity of long duration which renders the Participant unable to perform the duties of a
director of the



 









 




Company.




     2.10 “Eligible Holder” means each person who, at the Spin-off Date, holds an option or
deferred share granted by Predecessor under a plan or program for Predecessor’s non-employee
directors with respect to which the Company has agreed to grant, or offer to grant, an Option or
Deferred Share award in substitution for such Predecessor award or to offset any lost value due to
the early termination of such option or deferred share.



     2.11 “Exchange Act” means the Securities Exchange Act of 1934, as amended, including rules
thereunder and successor provisions and rules thereto.



     2.12 “Fair Market Value,” means, with respect to Shares, the fair market value of such Shares
determined by such methods or procedures as shall be established from time to time by the Board.
Unless otherwise determined by the Board, the Fair Market Value of a Share as of any given date
means the average of the closing sales prices of a Share as reported in the table entitled “New
York Stock Exchange Composite Transactions” contained in The Wall Street Journal (or an equivalent
successor table) for the day as of which the valuation is to be made or, if that day is not a
trading day, the nearest preceding trading day, and the four trading days immediately prior
thereto; PROVIDED, HOWEVER, that Fair Market Value at the date of the Spin-off shall be determined
based on the first five trading days for which a closing price is reported following the Spin-off.



     2.13 “Option” means the right, granted to a Participant under Section 6 or 8, to purchase a
specified number of Shares at the specified exercise price for a specified period of time under the
Plan. All Options will be non-qualified stock options.



     2.14 “Option Valuation Methodology” means the method for determining the number of shares to
be subject to Options, and the exercise price thereof, granted in payment of Retainer Fees under
Section 8(b).



     2.15 “Other Director Compensation” means fees payable to a director in his or her capacity as
such, other than Retainer Fees, for attending meetings and other service on the Board and Board
committees.



     2.16 “Participant” means any person who has been granted an Option which remains outstanding,
has Deferred Shares or cash credited to his or her Deferral Account, or has elected to be granted
Options in payment of Retainer Fees or to defer payment of Retainer Fees and Other Director
Compensation in the form of Deferred Shares or cash under the Plan.



     2.17 “Plan Year” means, with respect to a Participant, the period commencing at the time of
election of the director at an annual meeting of stockholders (or the election of a class of
directors if the Company then has a classified Board of Directors), or the director’s initial
appointment to the Board if not at an annual meeting of stockholders, and continuing until the
close of business of the day preceding the next annual meeting of stockholders; PROVIDED, HOWEVER,
that the initial Plan Year shall be deemed to be a continuation of the plan year in effect under
the DDCP at the Spin-Off Date. “409A Plan Year” means the calendar year.



     2.18 “Predecessor” means Jefferies Group, Inc., a Delaware corporation, as it existed
immediately prior to the Spin-off.



     2.19 “Restricted Stock” means Shares granted under Section 7, subject to a risk of forfeiture
and restrictions on transfer for a specified period.



     2.20 “Retainer Fees” means annual retainer fees payable to a director in his or her capacity
as such for service on the Board and service as chairman of any Board committee.



     2.21 “Retirement” means a Participant’s termination of service as a director of the Company at
or after age 65.



     2.22 “Shares” means shares of common stock, par value $.01 per share, of the Company and such
other securities as may be substituted or resubstituted for Shares pursuant to Section 5.3.



 









 





     2.23 “Spin-off” means the distribution of the Common Stock of the Company by the Predecessor
to the Predecessor’s stockholders, which was approved by the Predecessor’s stockholders on April
20, 1999.



     2.24 “Spin-off Date” means the record date for Predecessor’s distribution of Shares in the
Spin- off.



     2.25 “Valuation Date” shall mean the close of business on the last business day of each
calendar quarter and, in the case of any final distribution from a Participant’s Deferred Cash
Account, the day preceding such distribution.



     3. ADMINISTRATION.



     3.1 AUTHORITY. Both the Board and the Administrator (subject to the ability of the Board to
restrict the Administrator) shall administer the Plan in accordance with its terms, and shall have
all powers necessary to accomplish such purpose, including the power and authority to construe and
interpret the Plan, to define the terms used herein, to prescribe, amend and rescind rules and
regulations, agreements, forms, and notices relating to the administration of the Plan, and to make
all other determinations necessary or advisable for the administration of the Plan. The
Administrator may perform any function of the Board under the Plan, except for grants of awards
under Sections 6 and 7, adoption of material amendments to the Plan under Section 11.5, or other
functions from time to time specifically reserved by the Board to itself. Any actions of the Board
or the Administrator with respect to the Plan shall be final, conclusive, and binding upon all
persons interested in the Plan, except that any action of the Administrator will not be binding on
the Board. The Board and Administrator may each appoint agents and delegate thereto powers and
duties under the Plan, except as otherwise limited by the Plan.



     3.2 ADMINISTRATOR. The Administrator shall be the Director of Human Resources and the
Secretary or such other committee as may designated by the Board. In any case in which a director
is a member of the Administrator, such director shall be not act on or decide any matter relating
solely to himself or herself or any of his or her rights or benefits under the Plan. No bond or
other security need be required of the Administrator or any member thereof in any jurisdiction.



     3.3 LIMITATION OF LIABILITY. Each member of the Board and the Administrator shall be entitled
to, in good faith, rely or act upon any report or other information furnished to him or her 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 Board or the
Administrator, nor any person to whom ministerial duties under the Plan have been delegated, shall
be personally liable for any action, determination, or interpretation taken or made in good faith
with respect to the Plan, and any such person 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. SHARES AVAILABLE UNDER THE PLAN. The total number of Shares reserved and available for
delivery under the Plan is 2,000,000, subject to adjustment as provided in Section 11.2 (this
reflects stock splits from the effective date of the Plan through January 1, 2009). Shares that
may be delivered under the Plan may consist, in whole or in part, of authorized and unissued
Shares, treasury Shares or Shares acquired in the market for the account of a Participant. For
purposes of the Plan, shares that may be purchased upon exercise of an Option or distributed in
settlement of Deferred Shares will not be considered to be available after such Option has been
granted or Deferred Share credited, except for purposes of delivery in connection with such Option
or Deferred Share; provided, however, that, if an Option expires for any reason without having been
exercised in full or Deferred Shares or shares of Restricted Stock are forfeited or cancelled, the
shares subject to the unexercised portion of such Option or to the forfeited or cancelled Deferred
Shares or Restricted Stock will again be available for delivery under the Plan.



     5. ELIGIBILITY. Each non-employee director of the Company who is paid fees for service on
the Board or a Board committee, and each Eligible Holder, may participate in the Plan, subject to
the terms hereof. No person other than those specified in this Section 5 will be eligible to
participate in the Plan. The Administrator will notify each person of his or her eligibility to
participate in the Plan on an elective basis not later than 15 days (or such other period as may be
determined by the Administrator) prior to any deadline for filing an election form.



 









 





     6. INITIAL AND ANNUAL GRANTS OF OPTIONS. Options shall be granted to non-employee directors
in accordance with policies established from time to time by the Board specifying the classes of
directors to be granted Options, the number of Shares to be subject to each Option, and the time or
times at which such Options shall be granted; provided, however, that the maximum number of Shares
that may be subject to Options granted to a director in a given year under this Section 6 (i.e.,
without a corresponding reduction in fees) shall be 40,000, subject to adjustment as provided in
Section 11.2. Options granted to an Eligible Holder under Section 9.6 shall not be counted against
the limitation set forth in the preceding sentence.



     6.1 GRANT POLICY — OPTION GRANTS. The policy with respect to grants of Options under this
Section 6 shall be established, modified and/or revoked from time to time by the Board.



     6.2 TERMS OF OPTIONS GRANTED UNDER SECTION 6. Each Option granted under this Section 6 shall
be subject to the following terms and conditions:




     (a) EXERCISE PRICE. The exercise price per Share purchasable under an Option will be
equal to 100% of the Fair Market Value of a Share on the date of grant of the Option.




     (b) OPTION TERM. Each Option shall expire at the end of a term fixed by the Board, not
longer than ten years after the date of grant, or at such earlier date as the Option may no
longer be exercised and cannot, by its terms, thereafter become exercisable. Options
granted under the initial policy set out in Section 6.1 shall expire at the earlier of (i) a
fixed term of five years after the date of grant, (ii) 12 months after the Participant
ceases to serve as a Director of the Company due to death, Disability, or Retirement, or
(iii) 60 days after the Participant ceases to serve as a Director of the Company for any
reason other than death, Disability, or Retirement.




     (c) VESTING AND EXERCISABILITY. The Board may establish terms regarding the times at
which Options shall become vested and exercisable. Options granted under the initial policy
set out in Section 6.1 and not previously forfeited shall vest and become exercisable by a
Participant on the date three months after the date of grant, and, unless otherwise provided
in the Participant’s Option agreement, any portion of a Participant’s Option that has not
vested and become exercisable at the time of termination of the Participant’s service as a
director shall be forfeited.




     (d) PAYMENT. The exercise price of an Option shall be paid to the Company either in
cash or by the surrender of Shares, or any combination thereof, or in such other form or
manner as may be established by the Administrator; PROVIDED, HOWEVER, that, unless otherwise
determined by the Administrator, shares shall not be surrendered in payment of the exercise
price if such surrender would result in additional accounting expense to the Company.



     7. GRANTS OF DEFERRED SHARES AND RESTRICTED STOCK. Deferred Shares and/or Restricted Stock
shall be granted to non-employee directors in accordance with policies established from time to
time by the Board specifying the classes of directors to be granted such awards, the number of
Deferred Shares or shares of Restricted Stock to be granted, and the time or times at which such
awards shall be granted; provided, however, that the maximum number of Deferred Shares and shares
of Restricted Stock that may be granted to a director in a given year under this Section 7, without
a corresponding reduction in fees, shall be 50% of the number of Deferred Shares that could be
granted under Section 8.3 in that year with such a corresponding reduction in fees. A grant of a
specified dollar amount of Deferred Shares or Restricted Stock shall be deemed a reduction in fees
for purposes of this Section 7. Deferred Shares and Restricted Stock granted to an Eligible Holder
under Section 9.6 shall not be counted against the limitation set forth in the preceding sentence.



     7.1 GRANT POLICY. The policy with respect to grants of awards under this Section 7 shall be
established, modified and/or revoked from time to time by the Board.



 









 





     7.2 TERMS OF DEFERRED SHARES AND RESTRICTED STOCK GRANTED UNDER SECTION 7.
Deferred Shares granted under this Section 7 shall be subject to the terms and conditions of
Deferred Shares specified in Sections 9.2, 9.3, and 9.4 (including the requirement that any
Deferred Shares granted or vested in 2005 or thereafter comply with Code Section 409A), unless
otherwise determined by the Board. Deferred Shares and Restricted Stock granted under this Section
7 shall also be subject to the following additional terms and conditions:




     (a) VESTING AND FORFEITURE. The Board may establish terms regarding the times at which
Deferred Shares and Restricted Stock shall become vested and non-forfeitable. Unless
otherwise determined by the Board, an award granted under this Section 7 shall be subject to
the following terms: Such award, if not previously forfeited, shall become vested and
non-forfeitable as to one-third of the number of Deferred Shares or shares of Restricted
Stock at the close of business on the day preceding each of the three annual meetings of
stockholders following the date of grant of such award, rounded to the nearest number of
whole shares; provided, however, that if such award was not previously vested or forfeited,
it shall vest and become non-forfeitable on an accelerated basis upon the termination of the
Participant’s service as a director due to death, Disability or Retirement (settlement shall
remain subject to Section 9.4, however). Unless otherwise determined by the Board, an award
of Deferred Shares or Restricted Stock not previously vested or forfeited will cease to vest
and will be forfeited upon the termination of the Participant’s service as a director for
any reason other than death, Disability or Retirement.




     (b) DEFERRED SHARES CREDITED AS A RESULT OF DIVIDEND EQUIVALENTS. Unless otherwise
determined by the Board, Deferred Shares credited as a result of dividend equivalents under
Section 9.2 shall be subject to the same terms, including risk of forfeiture, as the
Deferred Shares with respect to which the dividend equivalents were credited.




     (c) DIVIDENDS ON RESTRICTED STOCK. Unless otherwise determined by the Board, dividends
on Restricted Stock declared and paid prior to the lapse of the risk of forfeiture on such
Restricted Stock shall be automatically reinvested in additional shares of Restricted Stock,
which shall be subject to the same terms, including risk of forfeiture, as the Restricted
Stock on which the dividend was paid.




     (d) AWARDS NONTRANSFERABLE. Deferred Shares and Restricted Stock shall be
nontransferable by the Participant at any time that the award remains subject to a risk of
forfeiture.




     (e) CONSIDERATION FOR RESTRICTED STOCK. If shares to be granted as Restricted Stock
are not treasury shares, the Board or Administrator may impose additional conditions upon
the grant of the Restricted Stock, possibly including a requirement that cash consideration
be paid by the Participant, if and to the extent necessary to ensure that the Company will
receive lawful consideration equal to the aggregate par value of the Shares being granted as
Restricted Stock.



     8. OPTIONS GRANTED IN PAYMENT OF FEES AND DEFERRAL OF FEES IN DEFERRED SHARES AND DEFERRED
CASH. Each director of the Company who is eligible under Section 5 may elect, in accordance with
Section 8.1, to be paid Retainer Fees in the form of Options under Section 8.2 or to defer receipt
of Retainer Fees and Other Director Compensation in the form of Deferred Shares under Section 8.3
or deferred cash under Section 8.4.



     8.1 ELECTIONS. A director shall elect to participate and the terms of such participation by
filing an election with the Company prior to the beginning of a 409A Plan Year or, in the case of a
director commencing service with the Company, prior to his or her commencement of service, or at
such other date compliant with Exhibit A to the 2003 Incentive Compensation Plan and/or compliant
with Section 9.6(a)(ii) of the 2003 Incentive Compensation Plan as may be specified by the
Administrator, provided that any date so specified shall ensure effective deferral of taxation
(including under Code Section 409A) and otherwise comply with applicable laws.




     (a) EFFECT AND IRREVOCABILITY OF ELECTIONS. Elections shall be deemed continuing, and
therefore applicable to Plan Years or 409A Plan Years after the initial Plan Year or 409A
Plan Year



 









 






covered by the election, until the election is modified or superseded by the
Participant. Elections to participate (including the amount of any deferrals), other than
those elections subject to Section 9.4, shall become irrevocable with respect to a given
Plan Year or 409A Plan Year at the commencement of the Plan Year/409A Plan Year to which an
election relates, unless the Administrator specifies a different time (which in no event
may be later than the permitted deadline for filing an election to defer). Elections
relating to the time of settlement of a Deferral Account shall become irrevocable at the
time specified in Section 9.4. Elections may be modified or revoked by filing a new
election prior to the time the election to be modified or revoked has become irrevocable.
The latest election filed with the Administrator shall be deemed to revoke all prior
inconsistent elections that remain revocable at the time of filing of the latest election.




     (b) MATTERS TO BE ELECTED. The Administrator will provide a form of election which
will permit a director to make appropriate elections with respect to all relevant matters
under this Section 8.




     (c) TIME OF FILING ELECTIONS. An election must be received by the Administrator prior
to the applicable deferral election deadline. Under no circumstances may a Participant
defer compensation to which the Participant has attained, at the time of deferral, a legally
enforceable right to current receipt of such compensation.



     8.2 OPTIONS GRANTED IN PAYMENT OF RETAINER FEES. A Participant who has validly elected to be
paid a specified amount of Retainer Fees in the form of Options shall be granted, at the close of
business on the day the Participant’s Plan Year commences, an Option to purchase the number of
whole Shares determined in accordance with the Option Valuation Methodology specified by the Board.
Each Option granted under this Section 8.2 shall be subject to the following terms and conditions:




     (a) OPTION VALUATION METHODOLOGY. The Board shall determine the Option Valuation
Methodology which will be used to determine the number of Options granted and the Option
exercise price. The Option Valuation Methodology may be based upon a valuation of the
Option (for example, using the Black-Scholes option valuation model), a discounting of the
aggregate exercise price of the Options by the amount of Retainer Fees to be paid in the
form of Options, or such other methodology as may be deemed reasonable for purposes of this
Section 8.2.




     (b) OPTION TERM. Each Option will expire ten years after the date of grant; PROVIDED,
HOWEVER, that, unless otherwise determined by the Board, any portion of an Option that is
not yet exercisable at the date a Participant ceases to serve as a director for any reason
will expire at the date such service ceases; and, PROVIDED FURTHER, that, unless otherwise
determined by the Board, any portion of an Option that is not yet exercisable at the date a
Participant ceases to serve as chair or a member of a Board committee will, to the extent
specified in Section 8.2(e), expire at the date such service ceases.




     (c) VESTING AND EXERCISABILITY. Each Option will vest and become exercisable as to 25%
of the underlying shares on the June 30, September 30, December 31, and March 31 following
the date of grant; PROVIDED, HOWEVER, that, in the case of a Plan Year which begins on or
after June 30 and before September 30, the vesting percentage shall be 33%, and in the case
of a Plan Year which begins on or after September 30 and before December 31, the vesting
percentage shall be 50%; and PROVIDED FURTHER, that an Option will become fully vested and
exercisable at the close of business on the last day of the Plan Year in which it was
granted. The number of Shares as to which the Option becomes vested and exercisable will be
rounded to the nearest whole number. The foregoing notwithstanding, upon termination of the
Participant’s service as a director due to death, Disability, or Retirement, that portion of
the Option which would become vested and exercisable on the last day of the calendar quarter
in which such death, Disability, or Retirement occurred will become immediately vested and
exercisable. Unless otherwise determined by the Board, an Option will cease to further vest
and become exercisable upon the termination of the Participant’s service as a director for
any reason, and the portion that has not vested and become exercisable at the time of such
termination shall be forfeited.




     (d) EXERCISE PRICE. The exercise price per Share purchasable under an Option will be



 









 






determined in accordance with the Option Valuation Methodology. The exercise price of an
Option shall be paid to the Company either in cash or by the surrender of Shares, or any
combination thereof, or in such other form or manner as may be established by the
Administrator; PROVIDED, HOWEVER, that, unless otherwise determined by the Administrator,
shares shall not be surrendered in payment of the exercise price if such surrender would
result in additional accounting expense to the Company.




     (e) CHANGES IN FEES; CHANGES IN SERVICE AS A COMMITTEE CHAIR. If the amount of
Retainer Fees is increased during a Plan Year, or if a Director is appointed chair of a
Board committee such that an additional Retainer Fee is payable during a Plan Year, such
increased or additional fees will not be paid in the form of Options. Unless otherwise
determined by the Board, if a Director has been granted an Option in respect of a Plan Year
in payment of Retainer Fees which included committee-related fees for service as chair or a
member of any Board committee, and during such Plan Year he or she ceases such service but
remains on the Board, the Option will expire in part at the time such service ceases, to the
extent of that portion of the Option which is not yet exercisable multiplied by a fraction
the numerator of which is the amount of committee-related fees included in such Retainer
Fees and the denominator of which is the total amount of such Retainer Fees.




     (f) SERVICE DURING PART OF A QUARTER. If a Participant ceases to serve as a director
or on committee at a date other than a vesting date for the Option and if the Board does not
exercise its discretion to permit vesting of the Participant’s Option in consideration for
the Participant’s service in that final quarterly period, the Participant shall be entitled
to payment in cash for his or her service in that final quarterly period if and to the
extent then provided in the Company’s regular non-employee director compensation policies.



     8.3 DEFERRAL OF RETAINER FEES AND OTHER DIRECTOR COMPENSATION IN THE FORM OF DEFERRED SHARES.
If a Participant has validly elected to defer receipt of a specified amount of Retainer Fees or
Other Director Compensation in the form of Deferred Shares, a number of Deferred Shares shall be
credited to the Participant’s Deferred Share Account, as of the date such Retainer Fees or Other
Director Compensation otherwise would have been payable to the Participant but for such election to
defer, equal to (i) such amount otherwise payable divided by (ii) the Fair Market Value of a Share
at that date. Deferred Shares credited under this Section 8.3 shall be subject to the terms and
conditions of Deferred Shares specified in Sections 9.2, 9.3, and 9.4. The right and interest of
each Participant in Deferred Shares credited to the Participant’s Deferred Share Account under this
Section 8.3 at all times will be nonforfeitable.



     8.4 DEFERRAL OF RETAINER FEES AND OTHER DIRECTOR COMPENSATION IN THE FORM OF DEFERRED CASH.
If a Participant has validly elected to defer receipt of a specified amount of Retainer Fees or
Other Director Compensation in the form of deferred cash, an amount equal to such specified amount
shall be credited to the Participant’s Deferred Cash Account as of the date such Retainer Fees or
Other Director Compensation otherwise would have been payable to the Participant but for such
election to defer. As of the close of business on each Valuation Date, interest shall be credited
to such Deferred Cash Account in an amount equal to the average daily balance in such Deferred Cash
Account since the last Valuation Date multiplied by the interest rate as specified by the Board and
applicable to the period since the last Valuation Date. The initial policy with respect to the
interest rate under this Section 8.4, effective as of the Spin-off Date and continuing until
modified or revoked by the Board, shall be to credit interest at the prime interest rate of a
single large bank as published in The Wall Street Journal and effective on the date of the latest
annual meeting of stockholders of the Company or the date on which Predecessor’s stockholders
approved the Plan. The right and interest of each Participant relating to his or her Deferred Cash
Account at all times will be nonforfeitable.



     9. OTHER DEFERRALS AND TERMS OF DEFERRAL ACCOUNTS.



     9.1 [Reserved.]



     9.2 DIVIDEND EQUIVALENTS ON DEFERRED SHARES. Dividend equivalents will be credited on
Deferred Shares credited to a Participant’s Deferred Share Account as follows, unless the
Administrator determines



 









 




to credit dividend equivalents in an alternative form deemed to be
equitable by the Administrator





     (a) CASH AND NON-SHARE DIVIDENDS. If the Company declares and pays a dividend on
Shares in the form of cash or property other than Shares, then a number of additional
Deferred Shares shall be credited to a Participant’s Deferred Share Account as of the
payment date for such dividend equal to (i) the number of Deferred Shares credited to the
Account as of the record date for such dividend, multiplied by (ii)
the amount of cash plus the Fair Market Value of any property other than shares actually
paid as a dividend on each share at such payment date, divided by (iii) the Fair Market
Value of a Share at such payment date.




     (b) SHARE DIVIDENDS AND SPLITS. If the Company declares and pays a dividend on Shares
in the form of additional Shares, or there occurs a forward split of Share, then a number of
additional Deferred Shares shall be credited to the Participant’s Deferred Share Account as
of the payment date for such dividend or forward Share split equal to (i) the number of
Deferred Shares credited to the Account as of the record date for such dividend or split
multiplied by (ii) the number of additional Shares actually paid as a dividend or issued in
such split in respect of each Share.



     9.3 REALLOCATION OF ACCOUNTS. A Participant shall have no right to have amounts credited as
cash to the Participant’s Deferred Cash Account reallocated or switched to his or her Deferred
Share Account or amounts credited to the Participant’s Deferred Share Account reallocated or
switched to his or her Deferred Cash Account, unless otherwise determined by the Board.



     9.4 ELECTIONS AS TO SETTLEMENT. Each Participant, while still a director of the Company,
shall file an election with the Administrator specifying the time or times at which the
Participant’s Deferral Account will be settled, following the Participant’s termination of service
as a director of the Company, and whether distribution will be in a single lump sum or in a number
of annual installments not exceeding ten; PROVIDED, HOWEVER, that, if no valid election has been
filed as to the time of settlement of a Participant’s Deferral Account or any portion thereof, such
Deferral Account or portion thereof shall be distributed in a single lump sum on the first business
day of the year following the year in which the Participant ceases to serve as a director. If
installments are elected, such installments must be annual installments commencing not later than
the first year following the year in which the Participant ceases to serve as a director (on such
annual installment date as may be specified by the Administrator) and extending over a period not
to exceed ten years.




     (a) MATTERS COVERED BY ELECTION. Subject to the terms of the Plan, the Administrator
shall determine whether all deferrals under the Plan must be subject to a single election as
to the time or times of settlement, or whether settlement elections may relate to a
specified sub-account (I.E., the Deferred Share Account or the Deferred Cash Account) and/or
a specified Plan Year or 409A Plan Year. If the Administrator permits elections to relate
to a specified Plan Year or 409A Plan Year, such election shall apply to the amounts
originally credited to the specified subaccount in respect of such Plan Year or 409A Plan
Year and to any additional amounts credited as dividend equivalents or interest in respect
of such originally credited amounts and previously credited additional amounts.




     (b) MODIFYING ELECTIONS. A Participant may modify a prior election as to the time at
which a Participant’s Deferral Account (including a specified subaccount) will be settled at
any time prior to the time the Participant ceases to serve as a director of the Company,
subject to such requirements as may be specified by the Administrator. Such modification
shall be made by filing a new election with the Administrator. The foregoing
notwithstanding, elections under this Section 9.4 shall not be permitted, including
elections which would have the effect of advancing the time of settlement of any portion of
the Deferral Account, if permitting such an election would result in constructive receipt by
the Participant of compensation in respect of the Participant’s Deferral Account prior to
the actual settlement of such Deferral Account.




     (c) COMPLIANCE RULES FOR CODE SECTION 409A. 2005 and Later Accounts, including any
award granted under Section 7 and credited thereto but only to the extent that such award
constitutes a deferral of compensation under Code Section 409A, shall be subject to the
terms of Section 9.6 of the 2003



 









 






Incentive Compensation Plan (treating such a 2005-and-Later Account as a “409A Award”), including the following:




	 	•	 	If any distribution is triggered by a termination of service as a director,
only a separation from service within the meaning of Treasury Regulation § 1.409A-1(h)
shall qualify. For this purpose, continued service as an employee as described in
Section 11.8 shall be taken into account in determining whether the Participant has had
a separation from service.
	 
	 	•	 	Settlement may only occur in accordance with Section 9.6(a)(iii) of the 2003
Incentive Compensation
Plan, and the six-month delay rule of Section 9.6(a)(iii)(B) will apply in accordance
with its terms;
	 
	 	•	 	Acceleration of settlement will be limited as specified in Section 9.6(a)(iv)
of the 2003 Incentive Compensation Plan;
	 
	 	•	 	Each vesting tranche of Deferred Shares subject to a substantial risk of
forfeiture (and any pro rata portion that would vest upon a termination or other event
as of December 31 of a given year, and the remaining portion that would not so vest)
will be deemed a separate payment for purposes of Code Section 409A.
	 
	 	•	 	The provisions of Section 9.6 of the 2003 Incentive Compensation Plan shall be
further restrictions under this Plan applicable to any right hereunder which
constitutes a deferral of compensation under Code Section 409A (excluding a
grandfathered deferral).
	 
	 	•	 	Any restriction imposed on Deferred Shares solely to ensure compliance with
Section 409A shall not be applied to a Deferred Share that is not a deferral of
compensation under Code Section 409A except to the extent necessary to preserve the
status of such Deferred Share as not a deferral under Code Section 409A.
	 
	 	•	 	If any mandatory term required for a 2005-and-Later Account to avoid tax
penalties under Section 409A is not otherwise explicitly provided under this Plan or
other applicable documents, such term is hereby incorporated by reference and fully
applicable as though set forth at length herein.





     9.5 ELECTION FORMS. Elections under the Plan shall be made in writing on such form or forms
as may be specified from time to time by the Administrator.



     9.6 TREATMENT OF PREDECESSOR AWARDS AND DEFERRALS. Options may be granted under the Plan to
Eligible Holders in substitution for options granted by Predecessor, including under the DDCP. The
terms of such substitute Options shall be adjusted to the extent authorized under the applicable
Predecessor plan or agreement, and otherwise as determined to be equitable by the Board. In
addition, the Board may grant Options to Eligible Holders intended to offset any value lost by the
Eligible Holder due to the early termination of a Predecessor option in connection with the
Spin-off. In such case, the Board will determine such value lost and the replacement value of the
Options granted under the Plan in accordance with Section 8.2(a). Deferred Shares and Deferred
Cash shall be credited to an Eligible Holder in place of like credits under the DDCP, subject to
adjustment to the terms of the Deferred Shares to the extent authorized under the DDCP and
otherwise as determined to be equitable by the Board. The interest rate applicable to amounts of
Deferred Cash so credited and deferrals of cash under Section 8.4 prior to the Company’s first
annual meeting of stockholders shall be based on the applicable interest rate that would apply
under the DDCP assuming the meeting of Predecessor’s stockholders at which the Plan was approved
had been an annual meeting.



     9.7 STATEMENTS. The Administrator will furnish statements to each Participant reflecting the
amount credited to a Participant’s Deferral Account, transactions therein, and other related
information no less frequently than once each calendar year.



     9.8 FRACTIONAL SHARES. The amount of Deferred Shares credited to a Deferred Share Account
shall include fractional shares calculated to at least three decimal places.



     10. SETTLEMENT OF DEFERRAL ACCOUNTS. The Company will settle a Participant’s Deferral
Account by making one or more distributions to the Participant (or his or her Beneficiary,
following Participant’s death) at the time or times, in a lump sum or installments, as specified in
the Participant’s election(s) filed in accordance with Section 9.4; PROVIDED, HOWEVER, that a
Deferral Account will be settled at times earlier than



 









 




those specified in such election in accordance with Sections 10.2 and 10.3.




     10.1 FORM OF DISTRIBUTION. Distributions in respect of a Participant’s Deferred Share Account
shall be made only in Shares, together with cash in lieu of any fractional share remaining at a
time that less than one whole Deferred Share is credited to such Deferred Share Account. Shares
may be delivered in certificate form to a Participant (or his or her Beneficiary) or to a nominee
for the account of the Participant (or his or her Beneficiary), or in such other manner as the
Administrator may determine. Distributions in respect of a Participant’s Deferred Cash Account
shall be made only in cash.



     10.2 DEATH. If a Participant ceases to serve as a director due to death or dies prior to
distribution of all amounts from his or her Deferral Account, the Company shall make a single
lump-sum distribution to the Participant’s Beneficiary. Any such distribution shall be made as
soon as practicable following notification to the Company of the Participant’s death, provided
that, in the case of a 2005-and-Later Account, such distribution shall be made on the
30th day after death.



     10.3 FINANCIAL EMERGENCY AND OTHER PAYMENTS. Other provisions of the Plan notwithstanding,
if, upon the written application of a Participant, the Board determines that the Participant has a
financial emergency of such a substantial nature and beyond the Participant’s control that payment
of amounts previously deferred under the Plan is warranted, the Board may direct the payment to the
Participant of all or a portion of the balance of a Deferral Account and the time and manner of
such payment; provided, however, that payments from the 2005-and-Later Account shall be made only
in compliance with Section 9.6(a)(iv)(A) and (v)(D) of the 2003 Incentive Compensation Plan.



     11. GENERAL PROVISIONS.



     11.1 LIMITS ON TRANSFERABILITY. Options, Deferred Shares, Restricted Stock and all other
rights under the Plan will not be transferable by a Participant except by will or the laws of
descent and distribution, or to a Beneficiary in the event of a Participant’s death, and will not
otherwise be subject to alienation, anticipation, encumbrance, garnishment, attachment, levy,
execution or other legal or equitable process, nor subject to the debts, contracts, liabilities or
engagements, or torts of any Participant or his or her Beneficiary. Any attempt to alienate, sell,
transfer, assign, pledge, garnish, attach or take any other action subject to legal or equitable
process or encumber or dispose of any interest in the Plan shall be void. The foregoing
notwithstanding:




	 	(i)	 	the Administrator may permit a Participant to transfer Options, Deferred
Shares, and related rights to one or more trusts, partnerships, or family members
during the lifetime of the Participant solely for estate planning purposes, but only if
and to the extent then consistent with the registration of any offer and sale of shares
related thereto on Form S-8, Form S-3, or such other registration form of the
Securities and Exchange Commission as may then be permitted to be filed with respect to
the Plan, and subject to clause (ii) below; and
	 
	 	(ii)	 	Any amount credited to the Participant’s 2005-and-Later Account(including any
award) shall be subject to the limitation on transferability specified in Section
9.6(a)(vii) of the 2003 Incentive Compensation Plan.




The Company may rely upon the beneficiary designation last filed in accordance with this Section
11.1.




     11.2 ADJUSTMENTS. In the event that any large, special and non-recurring dividend or other
distribution (whether in the form of cash, Shares, or other property), recapitalization, forward or
reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution or other similar corporate transaction or event affects the
Shares such that an adjustment is determined by the Board to be appropriate in order to prevent
dilution or enlargement of a Participant’s rights under the Plan, then the Board shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and kind of Shares reserved
and available for delivery under the Plan and to be subject to Options, Deferred Shares, and
Restricted Stock thereafter granted or credited, (ii) the number of Shares subject to Options
automatically granted under any policy under Section 6.1, the number of Deferred Shares and/or
Shares of Restricted Stock automatically granted under any policy



 









 




under Section 7.1, and the
maximum number of Shares that may be subject to Options granted to a director in a single year
under Section 6, (iii) the number and kind of Shares deliverable upon exercise of outstanding
Options, and the exercise price per share thereof (provided that no fractional shares will be
delivered upon exercise of any Option), (iv) the number and kind of Shares to be delivered upon
settlement of outstanding Deferred Shares (taking into account any Deferred Shares credited as
dividend equivalents under Section 9.2), and (v) the number and kind of shares outstanding as
Restricted Stock. Upon the occurrence of an event constituting an “equity restructuring” as
defined under Statement of Financial Accounting Standards No. 123R with respect to Shares, each
Participant shall have a legal right to the equitable adjustment to Options, Deferred Shares and
Restricted Stock (including Deferred Shares credited to his or her Deferral Account), with the
manner of such adjustment to be determined by the Board.




     11.3 RECEIPT AND RELEASE. Payments (in any form) to any Participant or Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of
all claims for the compensation deferred and relating to the Deferral Account to which the payments
relate against the Company, the Board, or the Administrator, and the Administrator may require such
Participant or Beneficiary, as a condition to such payments, to execute a receipt and release to
such effect. In the case of any payment under the Plan of less than all amounts then credited to a
Deferral Account in the form of Deferred Shares, the amounts paid shall be deemed to relate to the
Deferred Shares credited to the Account at the earliest time.



     11.4 COMPLIANCE. The Company shall have no obligation to settle any Deferral Account of a
Participant (in any form) until all legal and contractual obligations of the Company relating to
establishment of the Plan and such settlement shall have been complied with in full. In addition,
the Company shall impose such restrictions on Shares delivered to a Participant hereunder and any
other interest constituting a security as it may deem advisable in order to comply with the
Securities Act of 1933, as amended, the requirements of the New York Stock Exchange or any other
stock exchange or automated quotation system upon which the Shares are then listed or quoted, any
state securities laws applicable to such a transfer, any provision of the Company’s Certificate of
Incorporation or By-laws, or any other law, regulation, or binding contract to which the Company is
a party.



     11.5 CHANGES TO THE PLAN AND AWARDS. The Board may amend, suspend, discontinue, or terminate
the Plan or the authority to grant awards under the Plan without the consent of stockholders or
Participants, except that any amendment 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 the date of 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 Shares may then be listed or quoted, and the Board may otherwise, in its discretion, determine
to submit other such amendments to stockholders for approval; 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. The Committee may amend, suspend, discontinue, or
terminate any award theretofore granted and any award agreement relating thereto; PROVIDED,
HOWEVER, that no such amendment may reduce the exercise price of an outstanding Option (except as
authorized under Section 11.2) or provide for award terms that the Plan would not then permit for a
newly granted award; and PROVIDED FURTHER, that, without the consent of an affected Participant, no
such action may materially impair the rights of such Participant under such award. The foregoing
notwithstanding, the Board may, in its sole discretion, terminate the Plan (in whole or in part)
and, and may distribute to any Participant (in whole or in part, and whether or not in connection
with a termination of the Plan) the amounts credited to the Participant’s Deferral Account.



     11.6 UNFUNDED STATUS OF PLAN; CREATION OF TRUSTS. The Plan is intended to constitute an
“unfunded” plan for deferred compensation and Participants shall rely solely on the unsecured
promise of the Company for payment hereunder. With respect to any payment not yet made to a
Participant under the Plan, nothing contained in the Plan shall give a Participant any rights that
are greater than those of a general unsecured creditor of the Company; PROVIDED, HOWEVER, that the
Board may authorize the creation of trusts or make other arrangements to meet the Company’s
obligations under the Plan, which trusts or other arrangements shall be consistent with the
“unfunded” status of the Plan unless the Board otherwise determines with the consent of each
affected Participant. The establishment and maintenance of, or allocations and credits to, the
Deferral Account of any Participant shall not vest in any Participant any right, title or interest
in and to any Plan assets or benefits except at the time or times and upon the terms and conditions
and to the extent expressly set forth in the Plan and in accordance with the terms of any trust.



 









 





     11.7 OTHER PARTICIPANT RIGHTS. No Participant shall have any of the rights or privileges of a
stockholder of the Company under the Plan, including as a result of the grant of an Option or
crediting of Deferred Shares or other amounts to a Deferral Account, or the creation of any Trust
and deposit of Shares therein, except at such time as such Option may have been duly exercised or
Shares may be actually delivered in settlement of a Deferral Account, except that a Participant
granted Restricted Stock shall have rights of a stockholder except to the extent that those rights
are limited by the terms of the Plan and the agreement relating to the Restricted Stock. No
provision of the Plan, document relating to the Plan, or transaction hereunder shall confer upon
any Participant any right to continue to serve as a director of the Company or in any other
capacity with the Company or a subsidiary or to be nominated for reelection as a director, or
interfere in any way with the right of the Company to increase or decrease the amount of any
compensation payable to such Participant. Subject to the limitations set forth in Section 11.1,
the Plan shall inure to the benefit of, and be binding upon, the parties hereto and their
successors and assigns.



     11.8 CONTINUED SERVICE AS AN EMPLOYEE. If a Participant ceases to serve as a director and,
immediately thereafter, is employed by the Company or any subsidiary, then such Participant will
not be deemed to have ceased to serve as a director or as chair or as a member of a Board committee
at that time, and his or her continued employment by the Company or any subsidiary will be deemed
to be continued service as a director or chair or a member of a Board committee; PROVIDED, HOWEVER,
that, for purposes of Section 5, such former director will not be deemed to be a non-employee
director eligible for further grants of awards.



     11.9 GOVERNING LAW. The validity, construction, and effect of the Plan, any rules and
regulations under the Plan, and any agreement under the Plan will be determined in accordance with
the Delaware General Corporation Law and other laws (including those governing contracts) of the
State of Delaware, without giving effect to principles of conflicts of laws, and applicable federal
law.



     11.10 LIMITATION. A Participant and his or her Beneficiary shall assume all risk in
connection with any decrease in value of Options or a Deferral Account and neither the Company, the
Board nor the Administrator shall be liable or responsible therefor.



     11.11 CONSTRUCTION. The captions and numbers preceding the sections of the Plan are included
solely as a matter of convenience of reference and are not to be taken as limiting or extending the
meaning of any of the terms and provisions of the Plan. Whenever appropriate, words used in the
singular shall include the plural or the plural may be read as the singular.



     11.12 SEVERABILITY. In the event that any provision of the Plan shall be declared illegal or
invalid for any reason, said illegality or invalidity shall not affect the remaining provisions of
the Plan but shall be fully severable, and the Plan shall be construed and enforced as if said
illegal or invalid provision had never been inserted herein.



     11.13 NONEXCLUSIVITY OF THE PLAN. The adoption of the Plan by the Board shall not be
construed as creating any limitation on the power of the Board to adopt such other compensatory
arrangements for directors as it may deem desirable.



     11.14 EFFECTIVE DATE, STOCKHOLDER APPROVAL, AND PLAN TERMINATION. The Plan shall become
effective on April 20, 1999. Unless earlier terminated by action of the Board, the Plan will
remain in effect until such time as no Shares remain available for delivery under the Plan and the
Company has no further rights or obligations under the Plan with respect to outstanding Options or
other awards under the Plan.