exv10w4






Exhibit 10.4




JEFFERIES GROUP, INC.




DEFERRED COMPENSATION PLAN

As Amended and Restated as of January 1, 2009




     WHEREAS, in recognition of the success provided to the Company by certain Employees, the
Company desires to establish a deferred compensation plan to enable those Employees to defer the
payment of all or a portion of the compensation otherwise payable in cash by the Company;



     WHEREAS, the Company adopted the Plan effective January 1, 2001 and amended and restated the
Plan effective January 1, 2003.



     NOW, THEREFORE, the Company hereby adopts this amendment and restatement of the Plan effective
January 1, 2009, as follows:



ARTICLE I

DEFINITIONS




     1.1 Definitions: Whenever used in this Plan:



          (a) “Accounts” shall mean the separate bookkeeping accounts established under the Plan for
each Participant. The Account includes two sub-accounts for purposes of complying with Code
Section 409A: The “Grandfathered Account” is that portion of the Account 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 Account which is not “grandfathered” for
purposes of Code Section 409A. Note: In some cases compensation deferred in a given Plan Year may
by in the Grandfathered Account for some Participants but in the 2005-and-Later Account for others,
or for a single Participant compensation relating to a single Plan Year may be partly in the
Grandfathered Account and partly in the 2005-and-Later Account.




          (b) “Administrator” shall mean a committee of officers authorized to administer the Plan.
Unless otherwise determined by the Committee, the Administrator shall be a committee consisting of
the Chief Executive Officer, the Chairman of the Executive Committee, the Chief Financial Officer
and the Treasurer.




          (c) “Board” shall mean the Board of Directors of the Company.




          (d) “Change of Control” shall mean the first to occur of any of the following events after the
effective date of the Plan:





     (i) Any “person,” as such term is used in Section 13(d) and 14(d) of the Exchange
Act (other than the Company, any trustee or other fiduciary holding



 









 







securities under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), acquires voting securities of
the Company and immediately thereafter is a “50% Beneficial Owner.” For purposes of
this provision, a “50% Beneficial Owner” shall mean a person who is the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting power of the
Company’s then-outstanding voting securities; provided, however, that the term “50%
Beneficial Owner” shall not include any person who shall become the beneficial owner of
50% or more of the combined voting power of the Company’s then-outstanding voting
securities solely as a result of an acquisition by the Company of its voting securities,
until such time thereafter as such person shall become the beneficial owner (other than
by means of a stock dividend or stock split) of any additional voting securities and
becomes a 50% Beneficial Owner in accordance with this subsection;




     (ii) During any period of two consecutive years commencing on or after the
effective date of this Plan, individuals who at the beginning of such period constitute
the Board, and any new director whose election by the Board or nomination for election
by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the period
or whose election or nomination for election was previously so approved (the “Continuing
Directors”), cease for any reason to constitute at least a majority thereof;




     (iii) The shareholders of the Company have approved a merger, consolidation,
recapitalization, or reorganization of the Company, or a reverse stock split of any
class of voting securities of the Company, or the consummation of any such transaction
if shareholder approval is not obtained, other than any such transaction which would
result in at least 50% of the combined voting power of the voting securities of the
Company or the surviving entity outstanding immediately after such transaction being
beneficially owned by persons who together beneficially owned at least 80% of the
combined voting power of the voting securities of the Company outstanding immediately
prior to such transaction, with the relative voting power of each such continuing holder
compared to the voting power of each other continuing holder not substantially altered
as a result of the transaction; provided that, for purposes of this subsection, such
continuity of ownership (and preservation of relative voting power) shall be deemed to
be satisfied if the failure to meet such 50% threshold (or to substantially preserve
such relative voting power) is due solely to the acquisition of voting securities by an
employee benefit plan of the Company or of such surviving entity or a subsidiary
thereof; and provided further, that, if consummation of the corporate transaction
referred to in this subsection is subject, at the time of such approval by shareholders,
to the consent of any government or governmental agency or approval of the shareholders
of another entity or other material contingency, no Change of Control shall occur until
such time as such



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consent and approval has been obtained and any other material
contingency has been satisfied;




     (iv) The shareholders of the Company have approved a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets (or any transaction having a similar effect);
provided that, if consummation of the transaction referred to in this subsection is
subject, at the time of such approval by shareholders, to the consent of any government
or governmental agency or approval of the shareholders of another entity or other
material contingency, no Change of Control shall occur until such time as such consent
and approval has been obtained and any other material contingency has been satisfied;
and




     (v) Any other event which the Board determines shall constitute a Change of Control
for purposes of this Plan.



          (e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the
regulations and other authority issued thereunder by the appropriate governmental authority.
References to the Code shall include references to any successor section or provision of the Code.




          (f) “Committee” shall mean the Compensation Committee of the Board.




          (g) “Company” shall mean Jefferies Group, Inc., a corporation organized under the laws of the
State of Delaware, or any successor corporation.




          (h) “Compensation” shall mean those elements of cash remuneration payable to an Employee by
the Company designated by the Committee (or Administrator) as eligible for deferral with respect to
a given Plan Year. Such designation must be made before any applicable deadline for the
Participant to elect deferral for such Plan Year (to the extent required to comply with Code
Section 409A). The Committee (or Administrator) may, in its discretion, designate salary, bonus
awards, commissions, or sign-on bonus awards as eligible for deferral. Payments to any Employee
for a period during which the Employee is determined to have a 409A Disability shall not be
deferred, however.




          (i) “Date of Grant” shall mean the date on which an Option is credited to a Participant’s
Equity Subaccount pursuant to Section 3.4.




          (j) “Deferral Period” shall mean, with respect to each Account of a Participant, the five-year
period beginning on the first day of the Plan Year with respect to which the Account was
established; provided, however, that (i) this period will be subject to any extension in accordance
with Section 3.6, and (ii), for Plan Years after 2002, the Committee may establish a duration for
the Deferral Period of other than five years, but any such change shall be announced to Employees
invited to participate prior to the enrollment deadline for that Plan Year.




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          (k) “Deferred Shares” shall mean Shares or Restricted Shares during the applicable Deferral
Period.




          (l) “Disability” shall mean a physical or mental impairment that would entitle the Participant
to receive benefits under the Company’s long term disability program, as determined by the
Committee in its sole discretion. The Committee may, in its sole discretion, require a medical
examination performed by a physician at the expense of the Company, as a condition to any
determination of Disability. The term “409A Disability” shall have the meaning as defined in
Section 9.6(a)(v)(C) of the 2003 Incentive Compensation Plan




          (m) “Employee” shall mean any individual employed by the Company, Jefferies & Company, Inc.,
or any other subsidiary designated by the Committee.




          (n) “Equity Subaccount” shall mean the portion of a Participant’s Account deemed to comprise
Options, Restricted Shares and/or Deferred Shares.




          (o) “Equity Unit” shall mean three Restricted Shares and an Option for one Share; provided,
however, that, for any Plan Year after 2002, the Committee may vary the number of Restricted Shares
and number of Options which constitute an Equity Unit, but any such change shall be announced to
Employees invited to participate prior to the enrollment deadline for that Plan Year.




          (p) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to
time, and as now or hereafter construed, interpreted and applied by regulations, rulings and cases.




          (q) “Fair Market Value” shall mean the closing sale price of a Share on the composite tape of
the New York Stock Exchange on the relevant valuation date or Date of Grant, or if Shares are not
traded on such date, on the last date on which Shares are traded preceding such valuation date or
Date of Grant.




          (r) “Investment Subaccount” shall mean the portion of the Participant’s Account that is not
his or her Equity Subaccount.




          (s) “Option” shall mean an option to purchase Shares pursuant to Article V.




          (t) “Option Discount Percentage” means the percentage of the full value of an Option,
determined under such option valuation methodology as may be reasonably selected by the Committee,
represented by the price of an Option specified by the Committee for each Plan Year, which is used
under Section 3.4 to calculate the number of Equity Units or Options credited to a Participant’s
Account. In no event will the Option Discount Percentage be less than 50%.




          (u) “Participant” shall mean an Employee who has satisfied the requirements of Section 2.1.




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          (v) “Plan” shall mean the Jefferies Group, Inc. Deferred Compensation Plan, as amended and
restated, as set forth herein and as amended from time to time. The Plan is implemented as a
sub-plan under the 2003 Incentive Compensation Plan.




          (w) “Plan Quarter” shall mean a calendar quarter ending on March 31, June 30, September 30, or
December 31.




          (x) “Plan Year” shall mean the calendar year.




          (y) “Restricted Period” shall mean the period ending on the last day of the third consecutive
Plan Year for which a Participant defers Compensation pursuant to Section 3.1; provided, however,
that if a Participant ceases to defer Compensation by reason of Disability or 409A Disability, the
Participant shall be treated as if such deferrals have not ceased for the duration of such
Disability or 409A Disability for purposes of determining the end of the Restricted Period. The
foregoing notwithstanding, for any Plan Year after 2002, the Committee may vary the length of the
Restricted Period, but any such change shall be announced to Employees invited to participate prior
to the enrollment deadline for that Plan Year and shall not operate to extend the Restricted Period
applicable to any Account relating to a Participant’s deferrals in a previous Plan Year.




          (z) “Restricted Share” shall mean a contingent right, credited pursuant to Section 3.4, to
receive delivery of a Share at the end of the Deferral Period. A Participant credited with a
Restricted Share has no rights of a shareholder until delivery of a Share has been effected.




          (aa) “Restricted Share Discount Percentage” means the percentage of the Fair Market Value of a
Share specified for the Committee for each Plan Year, which is used under Section 3.4 to calculate
the number of Equity Units or Restricted Shares credited to a Participant’s Account. In no event
will the Restricted Share Discount Percentage be less than 85%.




          (bb) “Retirement Age” shall mean the age at which an Employee’s age plus his years of service
equals 65. For this purpose, years of service shall be credited for each twelve month period
beginning on the date of the Participant’s commencement of employment with the Company and on each
anniversary thereof during which the Employee was in active employment with the Company.




          (cc) “Shares” shall mean the common stock of the Company, $.0001 par value.




ARTICLE II

PARTICIPATION




     2.1 Eligibility to Participate. An Employee who is a full-time employee of the
Company or a participating subsidiary shall become a Participant upon his designation by the
Committee as eligible to participate in the Plan and his election to defer Compensation in
accordance with Article III. A Participant is not automatically eligible to defer compensation in
a given Plan Year, but must be designated as eligible to defer in such Plan Year by the Committee.



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     2.2 Termination of Participation. Once an Employee becomes a Participant, the
Employee shall remain a Participant (subject to Section 2.1) until termination of employment with
the Company and thereafter until all benefits to which the Participant or the Participant’s
beneficiary is entitled under the Plan have been paid.



ARTICLE III

DEFERRAL OF COMPENSATION




     3.1 Deferral Election. With respect to each Plan Year, a Participant may elect to
defer the receipt of Compensation otherwise payable to him. A Participant’s deferral election
shall designate an annual dollar amount or percentage for deferral separately with respect to each
component of Compensation (e.g., base salary, bonus, commissions, to the extent such component is
deferrable). In the event that a designated dollar deferral amount for any component of
Compensation exceeds the actual annual amount of such component of Compensation, 100% of such
component of Compensation shall be deferred in lieu of this designated dollar amount. The
Committee may establish a maximum limit on the aggregate amount of deferrals by any Participant
during any Plan Year. Such election must be made before the beginning of the Plan Year to which
the deferral relates, or by such other deadline as may be specified by the Committee, in the form
and manner prescribed by the Committee; provided, however, that the election deadline for any
deferral of compensation credited or to be credited to the 2005-and-Later Account shall comply with
Exhibit A to the 2003 Incentive Compensation Plan (and to the extent applicable Section 9.6(a)(ii)
of that Plan). Notwithstanding the foregoing, with respect to the Plan Year beginning January 1,
2001, deferral elections must be made before February 16, 2001, and such elections will relate only
to amounts not yet earned or not yet payable as of that date, as specified by the Committee.
Elections to defer (including the related election as to the time of distribution) become
irrevocable at the applicable deadline for the filing of such elections, or at such earlier time as
may be specified by the Committee.



     3.2 Establishment of Account. With respect to each Plan Year, an Account will be
established for each Participant and the Compensation that the Participant elects to defer under
the Plan with respect to that Plan Year will be credited to that Account. Unless otherwise
determined by the Committee, each such credit will be made to the Account as of the last day of the
Plan Quarter during which such Compensation would have otherwise been payable to the Participant in
cash. Prior to the deadline for deferral elections for a given Plan Year, the Committee will
establish the proportions in which amounts deferred will be allocated to the Participant’s
Investment Subaccount in accordance with Section 3.3 and to the Equity Subaccount in accordance
with Section 3.4; provided, however, that Committee may permit the Participant to elect from among
two or more choices as to the allocations of the Participant’s deferrals for the Plan Year to the
Subaccounts, and may permit the Participant to elect among investment alternatives within each
Subaccount.



     3.3 Investment Subaccount. Amounts allocated to the Investment Subaccount portion of
a Participant’s Account shall be treated as if invested in the investment vehicles selected by the
Participant from among the investment vehicles made available by the Committee, as follows:



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          (a) The Participant shall select, in the form and manner prescribed by the Committee, the
investment vehicles in which the Investment Subaccount portion of each Account shall be deemed to
be invested. If one of the available investment vehicles is a money market fund, the Participant
shall be permitted to elect at least once during each Plan Year, in the form and manner prescribed
by the Committee, to treat any amounts deemed invested in the money
market fund as if they were thereafter invested in such other available investment vehicles
(if any are made available by the Committee) as the Participant shall designate.




          (b) The investment vehicles deemed to be made available to the Participant, and any limitation
on the maximum or minimum percentages of the Participant’s Investment Subaccount that may be
invested in any particular investment vehicle and the times and terms upon which Participants will
be permitted to reallocate balances between different investment vehicles, shall be determined by
the Committee from time to time, and the Committee may add, change, or delete investment vehicles
at any time.




          (c) As of the last day of each Plan Quarter, each of a Participant’s Investment Subaccounts
shall be credited or debited with earnings and losses (net of investment management fees and
expenses) as if invested for such Plan Quarter (or portion thereof from the date any deferred
amount would otherwise have been payable to the Participant in cash until the last day of the Plan
Quarter) in the investment vehicles selected by the Participant. The Committee may cause such
crediting or debiting of earnings and losses as of other dates, in its discretion.




          (d) If a Participant does not furnish complete and clear investment designation instructions,
the undesignated portion of the Participant’s Investment Subaccount shall be deemed to be invested
in the money market fund made available under the Plan, until such time as complete and clear
investment designation instructions are provided by the Participant.




3.4 Equity Subaccount.




          (a) As of the last day of each Plan Quarter, the Equity Subaccount portion of a Participant’s
Account shall be credited with Equity Units, or separately with Restricted Shares or Options, in
accordance with the terms established by the Committee and any Participant elections, if permitted
by the Committee, under Section 3.2. The number of Equity Units to be so credited shall equal the
greatest number obtained by dividing (i) the amount of Compensation deferred and allocated to the
Participant’s Equity Subaccount for the Plan Quarter, by (ii) the sum of (A) the Restricted Share
Discount Percentage times the Volume Weighted Average Price of one Share as of the last day of the
Plan Quarter times the number of Restricted Shares included in the Equity Unit, and (B) the price
of an Option specified by the Committee for the Plan Year, which shall be based on the Option
Discount Percentage, times the number of Options included in the Equity Unit. If Restricted Shares
or Options are to be credited to the Equity Subaccount separately from Equity Units, the number of
each shall be calculated in a manner consistent with the manner used for Equity Units. Restricted
Shares and Options shall be credited and relate to whole shares, with any fractional remainder for
the Plan Quarter allocated to the Participant’s Investment Subaccount, unless the Committee
specifies another reasonable method of dealing with fractional Equity Units and fractional Shares
or cash amounts that relate




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thereto. The Committee may cause the crediting of Equity Units,
Restricted Shares and Options at dates other than the last day of Plan Quarters, in its discretion.




          (b) Restricted Shares and Options, and Equity Units comprising them, shall be subject to the
provisions of Article IV and V, as applicable.




          (c) Shares which will be reserved for Restricted Shares and Options under the Plan shall be
authorized and unissued shares or treasury shares (including shares reacquired by the Company for
purposes of the Plan). From and after the time the 2003 Incentive Compensation Plan was adopted by
the Board and approved by the Company’s shareholders (May 5, 2003), the shares to be used under the
Plan for delivery upon exercise of outstanding Options and in connection with outstanding
Restricted Shares and Deferred Shares, and for such awards thereafter, shall be drawn from the 2003
Incentive Compensation Plan, and the shares theretofore reserved under this Plan shall be released.




          (d) If any Restricted Shares or Deferred Shares under the Plan are forfeited, or if any
Options terminate or expire unexercised, the Shares forfeited or subject to the terminated or
expired Options shall (unless the Plan shall have been terminated) again become available for
delivery under the Plan (or 2003 Incentive Compensation Plan to the extent the Shares at issue
originated under such Plan).




     3.5 Account Statements. Each Participant will receive a statement of the balance in
the Participant’s Accounts as promptly as practicable after the end of each Plan Quarter.



     3.6 Redeferral of Account. At least thirteen months prior to the end of the Deferral
Period with respect to each Grandfathered Account, and at the time(s) specified in Section 2 of
Exhibit A to the 2003 Incentive Compensation Plan (and as otherwise permitted under Section
9.6(a)(ii) of that Plan) with respect to each 2005-and-Later Account, a Participant who is an
Employee may elect to defer the amounts credited to that Account for an additional period of five
years (or such other period as may be permitted by the Committee, subject to the applicable
requirements of such Exhibit A), beginning on the first day of the Plan Year immediately following
the last day of the Deferral Period. An election to extend the Deferral Period shall be made in
the form and manner prescribed by the Committee. With respect to Grandfathered Accounts, (i) only
one election to extend the Deferral Period may be made with respect to any Grandfathered Account,
and if a Participant is determined to have incurred a Disability, the election to extend the
Deferral Period for a Grandfathered Account otherwise permitted under this Section 3.6 shall not
become effective if the Participant remains subject to the Disability at the time it otherwise
would become effective.



ARTICLE IV

RESTRICTED SHARES




     4.1 Terms of Restricted Shares. If a Participant’s employment with the Company
terminates prior to the earliest of (i) the end of the Restricted Period, (ii) the Participant’s
retirement after attainment of Retirement Age, (iii) the Participant’s death, (iv) the occurrence
of a Change of Control, or (v) the fifth anniversary of the first day of the Plan Year that
includes the Date of Grant, a portion of the Restricted Shares credited to his or her Equity
Subaccount for



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each Plan Year shall be forfeited. The number of Restricted Shares to be forfeited
shall be (A) the total number of Restricted Shares credited for that Plan Year minus (B) that total
number of Restricted Shares times the Restricted Shares Discount Percentage for that Plan Year.
Any Deferred Shares credited under Section 4.2 that are attributable, directly or indirectly, to
such forfeited Restricted Shares will also be forfeited. Any fractional shares resulting from this
calculation will be disregarded and not forfeited, unless the Equity Subaccount is then being
maintained in a manner that credits and accounts for fractional shares.




     4.2 Dividend Equivalents. As of the last day of each Plan Quarter, each Participant’s
Equity Subaccounts shall be credited with a number of whole and fractional Deferred Shares equal to
(i) the product of (A) the aggregate number of Restricted Shares and Deferred Shares credited to
the Participant’s Equity Subaccounts, multiplied by (B) the cash value or Fair Market Value of any
dividend paid with respect to a Share during such Plan Quarter, determined as of the payment date
for such dividend, divided by (ii) the Volume Weighted Average Price of a Share as of the last day
of such Plan Quarter; provided, however, that, in the case of a non-cash dividend, the Committee
may determine to make an equitable adjustment under Article VII in lieu of crediting the
Participant’s Equity Subaccounts under this Section 4.2. The foregoing notwithstanding, the
Committee may specify an alternative method for crediting dividend amounts, including by cash
crediting to the Participant’s Investment Subaccount, for administrative convenience; such
alternative methods need not apply uniformly to all Participants.



ARTICLE V

OPTIONS




     5.1 Nonqualified Stock Options. Each Option credited to a Participant pursuant to
Section 3.4 shall be a non-qualified stock option and shall be evidenced by a Share Option
Certificate in such form as the Committee shall approve. A Certificate evidencing Options not
forfeited pursuant to Section 5.3(b) shall be issued following the earliest of (i) the third
anniversary of the first day of the Plan Year that includes the Date of Grant, or (ii) the
Participant’s termination of employment for any reason, including death; provided, however, that
the Committee may provide for issuance of such Certificate at earlier dates than those specified
or, if announced to a Participant prior to the effectiveness of his or her deferral election which
results in acquisition of the Option, at later dates later than those specified. References in
this Plan to distributions of Accounts do not include distributions of Options, which are governed
by the certification procedure and vesting described in this Article V.



     5.2 Option Price. The option exercise price of each Option granted under the Plan
shall be such exercise price as may be specified by the Committee in accordance with the 2003
Incentive Compensation Plan.



     5.3 Option Term; Vesting.



          (a) An Option may not be exercised prior to the issuance of a Share Option Certificate with
respect to such Option in accordance with Section 5.1, and may not be exercised after the earlier
of (i) the last day of the Plan Year that includes the fifth anniversary of the Date of Grant, or
(ii) in the case of a Participant who ceases to be an Employee other than by reason



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of the Participant’s death, the sixtieth day following termination of the Participant’s employment. Any
Option not exercised within the foregoing Option term shall automatically terminate at the
expiration of such Option term.




          (b) If a Participant’s employment with the Company terminates before the earliest of (i) the
end of the Restricted Period, (ii) the Participant’s retirement after attainment of Retirement Age,
(iii) the Participant’s death, (iv) the occurrence of a Change of Control, or (v) the third
anniversary of the first day of the Plan Year that includes the Date of Grant, a portion of the
Options credited to his or her Equity Subaccount for that Plan Year shall terminate and be
forfeited, which portion shall be (A) the total number of Options credited for that Plan Year minus
(B) that total number of Options times the Option Discount Percentage for that Plan Year. Any
Option relating to a fractional share resulting from this calculation will be disregarded and not
terminated and forfeited.




     5.4 Exercise and Payment.



          (a) An exercisable Option may be exercised by notice (in the form prescribed by the Committee)
to the Company specifying the number of Shares to be purchased. Payment for the number of Shares
purchased upon the exercise of an Option shall be made in full at the price provided for in the
applicable Share Option Agreement. Such purchase price shall be paid by the delivery to the
Company of cash (including check or similar draft) in United States dollars or whole Shares
(subject to any restrictions the Committee may impose), or a combination thereof. Shares used in
payment of the purchase price shall be valued at their Fair Market Value as of the date the notice
of exercise is received by the Company. Any Shares delivered to the Company shall be in such form
as is acceptable to the Company.




          (b) The Company may defer making delivery of Shares under the Plan until satisfactory
arrangements have been made for the payment of any tax attributable to exercise of the Option. The
Committee may, in its sole discretion, permit a Participant to elect, in such form and at such time
as the Committee may prescribe, to pay all or a portion of any taxes arising in connection with the
exercise of an Option by electing to (i) have the Company withhold whole Shares, or (ii) deliver
other whole Shares previously owned by the Participant, except that the number of shares withheld
or surrendered shall be limited to that number having a Fair Market Value not greater than the
minimum applicable withholding tax rate for federal (including FICA), state and local tax
withholding obligations associated with the transaction if such restriction is then necessary in
order that the Company not recognize additional accounting expense in connection with the
transaction.




          (c) If an Option is exercised, Shares shall be delivered at the time of exercise, subject to
subsection 5.4(b).




     5.5 Nontransferability. Except as otherwise determined by the Committee, no Option or
any rights with respect thereto shall be subject to any debts or liabilities of a Participant, nor
shall they be assignable or transferable except by will or the laws of descent and distribution.



     5.6 Rights as a Shareholder. A Participant shall have no rights as a record holder
with respect to Shares covered by his or her Option until the exercise of such Option and



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payment in full of the purchase price. No adjustment will be made for cash dividends for which the record
date is prior to the date of such exercise.




ARTICLE VI

DISTRIBUTION OF DEFERRED COMPENSATION




     6.1 Election of Distribution Form. At the time of filing of each deferral election
described in Section 3.1 (by the applicable deadline thereunder in the case of 2005-and-Later
Account), the Participant shall elect to receive the balance of the Account with respect to which
such deferral election is made, in the form of a single sum, periodic distributions over a period
of five years, or periodic distributions over a period of ten years. At the time prescribed in
Section 3.6 with respect to each of the Participant’s Accounts, the Participant may make a new
election as to the timing of distribution of that Account. The election timing rules specified
herein are intended to comply with Code Section 409A; the provisions of Section 9.6(a)(ii) of the
2003 Incentive Compensation Plan shall apply for this purpose. Elections made pursuant to this
Section 6.1 shall be made in the form and manner prescribed by the Committee. If a Participant
fails to make an election pursuant to this Section 6.1 with respect to any Account, that Account
will be distributed in a single sum.



     6.2 Form of Distribution. Distribution shall be made in accordance with the election
made pursuant to Section 6.1, as in effect at the time of distribution. Notwithstanding the
preceding sentence, if the balance of a Participant’s Grandfathered Account at the time
distribution is made in accordance with this Article VI has a value of less than $50,000, the
Committee may direct that such distribution shall be made in a single sum. Distributions from the
Investment Subaccount portion of a Participant’s Account shall be made in cash, unless in-kind
distribution of assets that match the Participant’s notional investments is authorized by the
Committee. Distributions from the Equity Subaccount portion of a Participant’s Account shall be
made in the form of Shares, with any fractional Shares distributed in cash unless other means of
settlement of fractional shares is authorized by the Committee. If a Participant’s Investment
Subaccount is distributed in annual installments, the undistributed portion of such Investment
Subaccount shall continue to be credited with earnings and losses in accordance with Section
3.3(c). As of the last day of each Plan Year, the amount of each remaining installment shall be
redetermined by dividing the undistributed balance of the Investment Subaccount, as adjusted in
accordance with the preceding sentence, by the number of remaining installments. The Committee
may, in its sole discretion, accelerate distributions from a Participant’s Grandfathered Account
in the event of the Participant’s Disability.



     6.3 Distribution Upon Expiration of Deferral Period. Unless distribution is made at
an earlier time pursuant to this Article VI, the balance of each Account shall be distributed to
the Participant in the manner prescribed under Section 6.2 in, or beginning in, the January
following the end of the Deferral Period applicable to that Account (including any extension in
accordance with Section 3.6). All installments shall be distributed in January of the applicable
year.



     6.4 Hardship Distribution. Notwithstanding any other provisions of this Plan, if the
Committee determines, after consideration of a Participant’s application, that the Participant has
sustained a severe financial hardship resulting from a sudden and unexpected illness or accident



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of the Participant or the Participant’s dependent (as defined in Section 152(a) of the Code), loss of
the Participant’s property due to casualty, or other similar extraordinary and unforeseeable
circumstances resulting from events beyond the Participant’s control, the Committee may, in
its sole discretion, (i) direct that all or a portion of the balance of the Participant’s
Grandfathered Accounts be paid to the Participant and, (ii) if the applicable conditions of Section
9.6(a)(iv) and (v) of the 2003 Incentive Compensation Plan relating to an “Unforeseeable
Emergency” have been met, direct that all or a portion of the 2005-and-Later Account be paid to the
Participant; provided, however, that during the Restricted Period applicable to any Restricted
Shares, no such Restricted Shares in excess of the number of such Restricted Shares that would
remain after forfeiture under Section 4.1 shall be distributed under this Section 6.4. The
payment will be made in the manner and at the time specified by the Committee, subject to
compliance with such applicable requirements of Code Section 409A in the case of 2005-and-Later
Accounts. No Participant who is also a member of the Committee may in any way take part in any
decision pertaining to a request for payment made by that Participant under this Section 6.4. In
the event of a withdrawal from a 2005-and-Later Account under this Section 6.4, the Participant’s
deferral election shall be cancelled for the Plan Year in which the withdrawal occurs, and in the
event of any withdrawal under this Section 6.4 no deferral election will be permitted for the next
following Plan Year.




     6.5 Penalty Withdrawals. Except as otherwise provided under Section 6.4, prior to the
end of the Deferral Period applicable to any Grandfathered Account, a Participant may withdraw all
or a portion of the balance of that Grandfathered Account; provided, however, that if such
withdrawal is made before the end of the Restricted Period applicable to any Restricted Shares, no
such Restricted Shares in excess of the number of such Restricted Shares remaining after forfeiture
under Section 4.1 may be withdrawn under this Section 6.5. If any such withdrawal is made, the
Participant shall receive from his Grandfathered Account an amount equal to:



          (a) If the withdrawal is made before a Change of Control or more than twenty-four months
following a Change of Control, 90% of the amount requested, and the remaining 10% of the amount
requested shall be forfeited; or




          (b) If the withdrawal is made within the twenty-four month period beginning on the date
following a Change of Control, 95% of the amount requested, and the remaining 5% of the amount
requested shall be forfeited.



No request to withdraw less than 10% of the balance of any Grandfathered Account shall be permitted
under this Section 6.5. Any request to withdraw 75% or more of the balance of any Grandfathered
Account shall result in the withdrawal or forfeiture of the entire balance of such Account. In the
event of a withdrawal under this Section 6.5, the Participant’s deferral election for the
then-current Plan Year shall be unaffected, but no deferral election will be permitted for the next
following Plan Year.




     6.6 Death Benefit. In the event of a Participant’s death before the balance in the
Participant’s Account is fully paid out:



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          (a) If the Participant’s death occurs prior to the commencement of payments from an Account as
otherwise provided under this Article VI, payment of the balance of the Account
will be made to the beneficiary or beneficiaries designated by the Participant or, if the
Participant has made no such designation or no beneficiary survives, to the Participant’s estate.
In either case, such payment will be made in a single sum in January following the date of the
Participant’s death.




          (b) If a Participant’s death occurs after periodic payments have begun to be made from an
Account but before all payments have been made, the remaining payments shall be made to the
beneficiary or beneficiaries designated by the Participant or if there is no such designation or no
beneficiary survives, to the Participant’s estate. Notwithstanding the foregoing, however, if the
remainder of the payments from an Account are to be paid to the estate of the Participant, the
Committee may, in its sole and absolute discretion and upon receipt of an application therefor from
the duly appointed administrator or executor of such estate, direct that the sum of the remaining
payments from any Grandfathered Account be paid to the estate in a single payment in January
following the date of the Participant’s death (this alternative will not apply to a 2005-and-Later
Account, however).




     6.7 Acceleration of Periodic Distributions. If a Participant’s Grandfathered Account
is being paid to the Participant or a beneficiary of the Participant in the form of periodic
payments, such Participant or beneficiary may make an election to have the remainder of the balance
of such Grandfathered Account distributable to him or her distributed in a single sum. In the
event a Participant or beneficiary makes an election under this Section 6.7, the remaining balance
of the Participant’s Grandfathered Account at the time of such election shall be subject to the
forfeiture provisions of Section 6.5. Elections pursuant to this Section 6.7 shall be made in the
form and manner prescribed by the Committee.



     6.8 Tax Withholding; FICA. The Company may defer making delivery of cash or Shares
under this Article VI until satisfactory arrangements have been made for the payment of any
withholding taxes attributable to the distribution or withdrawal, provided that no deferral is
permitted hereunder to the extent not in compliance with Code Section 409A. The Committee may
require that a Participant pay, or permit a Participant to elect, in such form and at such time as
the Committee may prescribe, to pay, all or a portion of any taxes arising in connection with the
distribution of Shares in settlement of a Participant’s Equity Subaccounts by electing to (i) have
the Company withhold whole Shares, or (ii) deliver other whole Shares previously owned by the
Participant, except that the number of shares withheld or surrendered shall be limited to that
number having a Fair Market Value not greater than the minimum applicable withholding tax rate for
federal (including FICA), state and local tax withholding obligations associated with the
transaction if and to the extent such restriction is then necessary in order that the Company not
recognize additional accounting expense in connection with the transaction. By electing to defer
compensation under the Plan, each Participant will have agreed to pay any FICA/HI or other taxes
that may be applicable to the amounts deferred or upon the vesting of Restricted Shares hereunder.



ARTICLE VII

EFFECT OF CERTAIN CHANGES




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In the event of any extraordinary dividend, share dividend, recapitalization, merger,
consolidation,
share split, warrant or rights issuance, or combination or exchange of such shares, or other
similar transactions, the number and type of outstanding Restricted Shares, Deferred Shares, and
Options, the price of Options for the Plan Year, the exercise price of outstanding Options, and
other affected Plan terms, shall be equitably adjusted by the Committee to reflect such event and
preserve the value of such Restricted Shares, Deferred Shares, and Options; and the Committee may
make such other adjustments to the terms of outstanding Restricted Shares, Deferred Shares, and
Options as it may deem equitable under the circumstances; provided, however, that any Options for
fractional Shares resulting from such adjustment shall be eliminated. A Participant’s right to an
adjustment to outstanding Restricted Shares, Deferred Shares and Options is subject to Section 5.3
of the 2003 Incentive Compensation Plan, and this Article VII shall not be deemed to limit or
expand the rights so conferred under the 2003 Incentive Compensation Plan.




ARTICLE VIII

GENERAL




     8.1 Unsecured Claims. The right of any Participant, beneficiary or estate to receive
payment of any unpaid balance in the Participant’s Account will be an unsecured claim against the
general assets of the Company.



     8.2 Anti-alienation and Assignment. During a Participant’s lifetime, any payment
under the Plan will be made only to the Participant. No Account balance, Restricted Shares,
Deferred Shares, sum or other interest under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt by a Participant or any beneficiary under the Plan to do so shall be void. No interest
under the Plan shall in any manner be liable for or subject to the debts, contracts, liabilities,
engagements or torts of a Participant or beneficiary entitled thereto. 2005-and-Later Accounts
shall also be subject to Section 9.6(a)(vii) of the 2003 Incentive Compensation Plan.



     8.3 No Rights to Continued Employment. Nothing in the Plan shall confer upon any
Participant the right to continue employment with the Company or to be entitled to any remuneration
or benefits not set forth in the Plan.



     8.4 Administration.



          (a) The Plan shall be administered by the Committee, except as otherwise specifically provided
in the Plan. The Committee shall have the full authority and discretion to make such
interpretations and constructions of the Plan as are necessary to administer the Plan in accordance
with, and subject to, the Plan’s provisions. Unless otherwise determined by the Committee, the
Administrator shall have delegated authority to take all ministerial actions the Committee is
authorized to take under the Plan, and any other actions the Committee is authorized to take with
respect to the Plan that do not result in more than an immaterial cost to the Company. This
delegated authority includes authority to determine the terms of participation in the Plan,
including the compensation eligible for deferral hereunder. In any case in which such person or
persons are acting on behalf of the Committee pursuant to such delegated authority, references in
the Plan to the Committee shall be deemed to include such person or persons.




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          (b) All decisions, determinations and interpretations of the Committee (or its delegee) shall
be final and binding on all persons, including the Company, the Participant (or any person claiming
any rights under the Plan from or through any Participant) and any shareholder. No member of the
Committee (or its delegee) shall be liable for any action taken or determination made in good faith
with respect to the Plan or any grant hereunder.




          (c) All determinations of the Committee with respect to the terms and timing of elections by
Participants hereunder shall be implemented in a manner that reasonably assures that a Participant
making the election will not be deemed to be in constructive receipt of the compensation or have
the economic benefit of the compensation such that federal income taxation of such compensation
would be triggered prior to the end of the applicable Deferral Period, and to ensure that no
Participant is subject to taxation (including penalties) under Code Section 409A.




     8.5 Amendment and Termination of the Plan. The Board at any time and from time to
time may suspend, terminate, modify or amend the Plan; provided, however, that the Plan may not be
suspended, terminated, modified, or amended for a period of twenty-four months following a Change
of Control, unless approved by Participants whose Accounts represent not less than 50% of the
aggregate value of all Accounts under the Plan. The Committee may act on behalf of the Board under
this Section 8.5 to the extent the Committee is acting within the scope of its authority under any
Committee chartering document or other delegation of authority by the Board. Except as provided in
Article VII hereof, no suspension, termination, modification or amendment of the Plan may
materially and adversely affect any amount, Restricted Shares, Deferred Shares, or Options
previously credited to a Participant, unless the written consent of the Participant is obtained. No
amendment shall be adopted or effective to cause a Participant to be subject to taxation (including
penalties) under Code Section 409A.



     8.6 Governing Law. The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the Delaware General Corporation Law and, in other
respects, the laws of the State of New York without giving effect to the choice of law principles
thereof, except to the extent that any such law is preempted by federal law.



     8.7 Implementing Plan in Foreign Jurisdictions. The Committee is authorized to amend
or vary the terms of the Plan in implementing deferrals in foreign jurisdictions in which eligible
Employees are employed, in order to conform with local laws and customs, and to permit
participation by such Employees on terms deemed by the Committee to be reasonably comparable to the
terms of participation of U.S. resident Employees and consistent with the purposes of the Plan.
Unless otherwise determined by the Committee in advance of the deadline for an election to
participate by a non-U.S. resident, restrictions required to comply with Code Section 409A shall
apply to any such non-U.S. resident.



     8.8 Terms of Deferrals Prior to 2003. The terms of participation and deferrals prior
to 2003 are governed by the terms of the Plan, and terms set thereunder by the Committee, in effect
prior to the amendment and restatement at January 1, 2003, except that revised definitions under
Article I and the discretion of the Committee with respect to existing Accounts, as provided in the
amended and restated Plan, shall apply to Account balances and awards resulting from deferrals
prior to 2003.



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     8.9 Certain Restrictions to Promote Compliance with Code Section 409A. The provisions
of Section 9.6 of the 2003 Incentive Compensation Plan shall be further restrictions under this
Plan. For this purpose, deferrals of compensation hereunder, other than Options and Grandfathered
Accounts, constitute 409A Awards for purposes of the 2003 Incentive Compensation Plan.
Distributions relating to each Plan Year, distributions in respect of a Plan year resulting from
annual incentives, forfeitable Restricted Stock, and non-forfeitable Restricted Stock each shall
constitute a separate payment for purposes of Code Section 409A; distributions relating to a Plan
Year in the form of installments shall constitute a single payment with respect to such Plan Year
for purposes of Code Section 409A.




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