exv10w9



 





Exhibit 10.9




VOLCOM, INC.



AMENDED AND RESTATED 2005 INCENTIVE AWARD PLAN




ARTICLE 1




PURPOSE




     The purpose of the Volcom, Inc. 2005 Amended and Restated Incentive Award Plan (the
“Plan”) is to promote the success and enhance the value of Volcom, Inc. (the
“Company”) by linking the personal interests of the members of the Board, Employees and
Consultants to those of Company stockholders and by providing such individuals with an incentive
for outstanding performance to generate superior returns to Company stockholders. The Plan is
further intended to provide flexibility to the Company in its ability to motivate, attract, and
retain the services of members of the Board, Employees and Consultants upon whose judgment,
interest, and special effort the successful conduct of the Company’s operation is largely
dependent. The Plan amends and restates Section 11.1 of the 2005 Incentive Award Plan (the
“Original Plan”).



ARTICLE 2




DEFINITIONS AND CONSTRUCTION




     Wherever the following terms are used in the Plan they shall have the meanings specified
below, unless the context clearly indicates otherwise. The singular pronoun shall include the
plural where the context so indicates.



     2.1 “Award” means an Option, a Restricted Stock award, a Stock Appreciation Right
award, a Performance Share award, a Performance Stock Unit award, a Dividend Equivalents award, a
Stock Payment award, a Deferred Stock award, a Restricted Stock Unit award, an Other Stock-Based
Award, or a Performance Bonus Award granted to a Participant pursuant to the Plan.



     2.2 “Award Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award, including through an electronic medium.



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



     2.4 “Code” means the Internal Revenue Code of 1986, as amended.



     2.5 “Committee” means the committee of the Board described in Article 12.



     2.6 “Consultant” means any consultant or adviser if:



          (a) The consultant or adviser renders bona fide services to the Company;



          (b) The services rendered by the consultant or adviser are not in connection with the offer or
sale of securities in a capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities; and



 









 





          (c) The consultant or adviser is a natural person who has contracted directly with the Company
to render such services.



     2.7 “Covered Employee” means an Employee who is, or could be, a “covered employee”
within the meaning of Section 162(m) of the Code.



     2.8 “Deferred Stock” means a right to receive a specified number of shares of Stock
during specified time periods pursuant to Article 8.



     2.9 “Dividend Equivalents” means a right granted to a Participant pursuant to Article
8 to receive the equivalent value (in cash or Stock) of dividends paid on Stock.



     2.10 “Effective Date” shall have the meaning set forth in Section 13.1.



     2.11 “Eligible Individual” means any person who is a member of the Board, an Employee
or a Consultant, as determined by the Committee.



     2.12 “Employee” means any officer or other employee (as defined in accordance with
Section 3401(c) of the Code) of the Company or any Subsidiary.



     2.13 “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     2.14 “Fair Market Value” means, as of any given date, the fair market value of a share
of Stock on such date determined by such methods or procedures as may be established from time to
time by the Committee. Unless otherwise determined by the Committee, if the Stock is listed on any
established stock exchange or a national market system, including, without limitation, the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value
shall be the closing selling price for a share of Stock as quoted on such exchange or system for
such date or, if there is no closing selling price for the Stock on the date in question, the
closing selling price for a share of Stock on the last preceding date for which such quotation
exists.



     2.15 “Incentive Stock Option” means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.



     2.16 “Independent Director” means a member of the Board who is not an Employee of the
Company.



     2.17 “Non-Qualified Stock Option” means an Option that is not intended to be an
Incentive Stock Option.



     2.18 “Option” means a right granted to a Participant pursuant to Article 5 of the Plan
to purchase a specified number of shares of Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.



     2.19 “Other Stock-Based Award” means an Award granted or denominated in Stock or units
of Stock pursuant to Section 8.7 of the Plan.



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     2.20 “Participant” means any Eligible Individual who, as a member of the Board,
Consultant or Employee, has been granted an Award pursuant to the Plan.



     2.21 “Performance-Based Award” means an Award granted to selected Covered Employees
pursuant to Articles 6 and 8, but which is subject to the terms and conditions set forth in Article
9. All Performance-Based Awards are intended to qualify as Qualified Performance-Based
Compensation.



     2.22 “Performance Bonus Award” has the meaning set forth in Section 8.8.



     2.23 “Performance Criteria” means the criteria that the Committee selects for purposes
of establishing the Performance Goal or Performance Goals for a Participant for a Performance
Period. The Performance Criteria that will be used to establish Performance Goals are limited to
the following: net earnings (either before or after interest, taxes, depreciation and
amortization), economic value-added (as determined by the Committee), sales or revenue, net income
(either before or after taxes), operating earnings, cash flow (including, but not limited to,
operating cash flow and free cash flow), cash flow return on capital, return on net assets, return
on stockholders’ equity, return on assets, return on capital, stockholder returns, return on sales,
gross or net profit margin, productivity, expense, margins, operating efficiency, customer
satisfaction, working capital, earnings per share, price per share of Stock, and market share, any
of which may be measured either in absolute terms or as compared to any incremental increase or as
compared to results of a peer group. The Committee shall, within the time prescribed by Section
162(m) of the Code, define in an objective fashion the manner of calculating the Performance
Criteria it selects to use for such Performance Period for such Participant.



     2.24 “Performance Goals” means, for a Performance Period, the goals established in
writing by the Committee for the Performance Period based upon the Performance Criteria. Depending
on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be
expressed in terms of overall Company performance or the performance of a division, business unit,
or an individual. The Committee, in its discretion, may, within the time prescribed by Section
162(m) of the Code, adjust or modify the calculation of Performance Goals for such Performance
Period in order to prevent the dilution or enlargement of the rights of Participants (a) in the
event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event,
or development, or (b) in recognition of, or in anticipation of, any other unusual or nonrecurring
events affecting the Company, or the financial statements of the Company, or in response to, or in
anticipation of, changes in applicable laws, regulations, accounting principles, or business
conditions.



     2.25 “Performance Period” means the one or more periods of time, which may be of
varying and overlapping durations, as the Committee may select, over which the attainment of one or
more Performance Goals will be measured for the purpose of determining a Participant’s right to,
and the payment of, a Performance-Based Award.



     2.26 “Performance Share” means a right granted to a Participant pursuant to Article 8,
to receive Stock, the payment of which is contingent upon achieving certain Performance Goals or
other performance-based targets established by the Committee.



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     2.27 “Performance Stock Unit” means a right granted to a Participant pursuant to
Article 8, to receive Stock, the payment of which is contingent upon achieving certain Performance
Goals or other performance-based targets established by the Committee.



     2.28 “Plan” means this Volcom, Inc. 2005 Incentive Award Plan, as it may be amended
from time to time.



     2.29 “Public Trading Date” means the first date upon which Stock is listed (or
approved for listing) upon notice of issuance on any securities exchange or designated (or approved
for designation) upon notice of issuance as a national market security on an interdealer quotation
system.



     2.30 “Qualified Performance-Based Compensation” means any compensation that is
intended to qualify as “qualified performance-based compensation” as described in Section
162(m)(4)(C) of the Code.



     2.31 “Restricted Stock” means Stock awarded to a Participant pursuant to Article 6
that is subject to certain restrictions and may be subject to risk of forfeiture.



     2.32 “Restricted Stock Unit” means an Award granted pursuant to Section 8.6.



     2.33 “Securities Act” shall mean the Securities Act of 1933, as amended.



     2.34 “Stock” means the common stock of the Company, par value $0.001 per share, and
such other securities of the Company that may be substituted for Stock pursuant to Article 11.



     2.35 “Stock Appreciation Right” or “SAR” means a right granted pursuant to
Article 7 to receive a payment equal to the excess of the Fair Market Value of a specified number
of shares of Stock on the date the SAR is exercised over the Fair Market Value on the date the SAR
was granted as set forth in the applicable Award Agreement.



     2.36 “Stock Payment” means (a) a payment in the form of shares of Stock, or (b) an
option or other right to purchase shares of Stock, as part of any bonus, deferred compensation or
other arrangement, made in lieu of all or any portion of the Participant’s compensation, granted
pursuant to Article 8.



     2.37 “Subsidiary” means any “subsidiary corporation” as defined in Section 424(f) of
the Code and any applicable regulations promulgated thereunder or any other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.



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ARTICLE 3




SHARES SUBJECT TO THE PLAN




     3.1 Number of Shares.



          (a) Subject to Article 11 and Section 3.1(b), the maximum aggregate number of shares of Stock
which may be issued or transferred pursuant to Awards under the Plan shall be 2,300,000 shares.
The maximum aggregate number of shares of Stock which may be issued or transferred pursuant to
Awards under the Plan shall automatically increase on the first trading day of January each
calendar year during the term of the Plan, beginning with calendar year 2006, by an amount equal to
two percent (2%) of the total number of shares of Stock outstanding on the last trading day in
December of the immediately preceding calendar year, but in no event shall any such annual increase
exceed 750,000 shares.



          (b) To the extent that an Award terminates, expires, or lapses for any reason, any shares of
Stock subject to the Award shall again be available for the grant of an Award pursuant to the Plan.
Additionally, any shares of Stock tendered or withheld to satisfy the grant or exercise price or
tax withholding obligation pursuant to any Award shall again be available for the grant of an Award
pursuant to the Plan. To the extent permitted by applicable law or any exchange rule, shares of
Stock issued in assumption of, or in substitution for, any outstanding awards of any entity
acquired in any form of combination by the Company or any Subsidiary shall not be counted against
shares of Stock available for grant pursuant to this Plan.



     3.2 Stock Distributed. Any Stock distributed pursuant to an Award may consist, in
whole or in part, of authorized and unissued Stock, treasury Stock or Stock purchased on the open
market.



     3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any provision
in the Plan to the contrary, and subject to Article 11, the maximum number of shares of Stock with
respect to one or more Awards that may be granted to any one Participant during a rolling
three-year period (measured from the date of any grant) shall be 500,000.



ARTICLE 4




ELIGIBILITY AND PARTICIPATION




     4.1 Eligibility. Each Eligible Individual shall be eligible to be granted one or more
Awards pursuant to the Plan.



     4.2 Participation. Subject to the provisions of the Plan, the Committee may, from
time to time, select from among all Eligible Individuals, those to whom Awards shall be granted and
shall determine the nature and amount of each Award. No Eligible Individual shall have any right
to be granted an Award pursuant to this Plan.



     4.3 Foreign Participants. In order to assure the viability of Awards granted to
Participants employed in foreign countries, the Committee may provide for such special terms as it
may consider necessary or appropriate to accommodate differences in local law, tax policy, or



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custom. Moreover, the Committee may approve such supplements to, or amendments, restatements,
or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes
without thereby affecting the terms of the Plan as in effect for any other purpose; provided,
however, that no such supplements, amendments, restatements, or alternative versions shall increase
the share limitations contained in Sections 3.1 and 3.3 of the Plan.



ARTICLE 5




STOCK OPTIONS




     5.1 General. The Committee is authorized to grant Options to Participants on the
following terms and conditions:



          (a) Exercise Price. The exercise price per share of Stock subject to an Option shall
be determined by the Committee and set forth in the Award Agreement; provided that the exercise
price for any Option shall not be less than 100% of the Fair Market Value of a share of Stock on
the date of grant.



          (b) Time and Conditions of Exercise. The Committee shall determine the time or times
at which an Option may be exercised in whole or in part; provided, that the term of any Option
granted under the Plan shall not exceed ten years. The Committee shall also determine the
performance or other conditions, if any, that must be satisfied before all or part of an Option may
be exercised.



          (c) Payment. The Committee shall determine the methods by which the exercise price of
an Option may be paid, the form of payment, including, without limitation: (i) cash, (ii) shares of
Stock held for such period of time as may be required by the Committee in order to avoid adverse
accounting consequences and having a Fair Market Value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof, or (iii) other property
acceptable to the Committee (including through the delivery of a notice that the Participant has
placed a market sell order with a broker with respect to shares of Stock then issuable upon
exercise of the Option, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that
payment of such proceeds is then made to the Company upon settlement of such sale), and the methods
by which shares of Stock shall be delivered or deemed to be delivered to Participants.
Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of
the Board or an “executive officer” of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to pay the exercise price of an Option in any method which would
violate Section 13(k) of the Exchange Act.



          (d) Evidence of Grant. All Options shall be evidenced by a written Award Agreement
between the Company and the Participant. The Award Agreement shall include such additional
provisions as may be specified by the Committee.



     5.2 Incentive Stock Options. The terms of any Incentive Stock Options granted
pursuant to the Plan must comply with the conditions and limitations contained Section 13.2 and
this Section 5.2.



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          (a) Eligibility. Incentive Stock Options may be granted only to employees of the
Company or any “subsidiary corporation” thereof (within the meaning of Section 424(f) of the Code
and the applicable regulations promulgated thereunder).



          (b) Exercise Price. The exercise price per share of Stock shall be set by the
Committee; provided that subject to Section 5.2(d) the exercise price for any Incentive Stock
Option shall not be less than 100% of the Fair Market Value on the date of grant.



          (c) Individual Dollar Limitation. The aggregate Fair Market Value (determined as of
the time the Option is granted) of all shares of Stock with respect to which Incentive Stock
Options are first exercisable by a Participant in any calendar year may not exceed $100,000 or such
other limitation as imposed by Section 422(d) of the Code, or any successor provision. To the
extent that Incentive Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.



          (d) Ten Percent Owners. An Incentive Stock Option shall be granted to any individual
who, at the date of grant, owns stock possessing more than ten percent of the total combined voting
power of all classes of Stock of the Company only if such Option is granted at a price that is not
less than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.



          (e) Notice of Disposition. In the event that a Participant acquires shares of Stock
by exercise of an Incentive Stock Option, such Participant shall give the Company prompt notice of
any disposition of such shares of Stock within (i) two years from the date of grant of such
Incentive Stock Option or (ii) one year after the transfer of such shares of Stock to the
Participant.



          (f) Right to Exercise. During a Participant’s lifetime, an Incentive Stock Option may
be exercised only by the Participant.



     5.3 Substitution of Stock Appreciation Rights. The Committee may provide in the Award
Agreement evidencing the grant of an Option that the Committee, in its sole discretion, shall have
to right to substitute a Stock Appreciation Right for such Option at any time prior to or upon
exercise of such Option, subject to the provisions of Section 7.2 hereof; provided that such Stock
Appreciation Right shall be exercisable with respect to the same number of shares of Stock for
which such substituted Option would have been exercisable.



     5.4 Paperless Exercise. In the event that the Company establishes, for itself or
using the services of a third party, an automated system for the exercise of Options, such as a
system using an internet website or interactive voice response, then the paperless exercise of
options by a Participant may be permitted through the use of such an automated system.



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     5.5 Granting of Options to Independent Directors. The Board may from time to time, in
its sole discretion, and subject to the limitations of the Plan:



          (a) Select from among the Independent Directors (including Independent Directors who have
previously been granted Options under the Plan) such of them as in its opinion should be granted
Options;



          (b) Subject to Section 3.3, determine the number of shares of Stock that may be purchased upon
exercise of the Options granted to such selected Independent Directors; and



          (c) Subject to the provisions of this Article 5, determine the terms and conditions of such
Options, consistent with the Plan.


Options granted to Independent Directors shall be Non-Qualified Stock Options.




ARTICLE 6




RESTRICTED STOCK AWARDS




     6.1 Grant of Restricted Stock. The Committee is authorized to make Awards of
Restricted Stock to any Participant selected by the Committee in such amounts and subject to such
terms and conditions as determined by the Committee. All Awards of Restricted Stock shall be
evidenced by a written Restricted Stock Award Agreement.



     6.2 Issuance and Restrictions. Restricted Stock shall be subject to such restrictions
on transferability and other restrictions as the Committee may impose (including, without
limitation, limitations on the right to vote Restricted Stock or the right to receive dividends on
the Restricted Stock). These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at
the time of the grant of the Award or thereafter.



     6.3 Forfeiture. Except as otherwise determined by the Committee at the time of the
grant of the Award or thereafter, upon termination of employment or service during the applicable
restriction period, Restricted Stock that is at that time subject to restrictions shall be
forfeited; provided, however, that the Committee may (a) provide in any Restricted Stock Award
Agreement that restrictions or forfeiture conditions relating to Restricted Stock will be waived in
whole or in part in the event of terminations resulting from specified causes, and (b) in other
cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Stock.



     6.4 Certificates for Restricted Stock. Restricted Stock granted pursuant to the Plan
may be evidenced in such manner as the Committee shall determine. If certificates representing
shares of Restricted Stock are registered in the name of the Participant, certificates must bear an
appropriate legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.



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ARTICLE 7




STOCK APPRECIATION RIGHTS




     7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be granted to
any Participant selected by the Committee. A Stock Appreciation Right may be granted (a) in
connection and simultaneously with the grant of an Option, (b) with respect to a previously granted
Option, or (c) independent of an Option. A Stock Appreciation Right shall be subject to such terms
and conditions not inconsistent with the Plan as the Committee shall impose and shall be evidenced
by an Award Agreement.



     7.2 Coupled Stock Appreciation Rights.



          (a) A Coupled Stock Appreciation Right (“CSAR”) shall be related to a particular
Option and shall be exercisable only when and to the extent the related Option is exercisable.



          (b) A CSAR may be granted to a Participant for no more than the number of shares subject to
the simultaneously granted Option to which it is coupled.



          (c) A CSAR shall entitle the Participant (or other person entitled to exercise the Option
pursuant to the Plan) to surrender to the Company the unexercised portion of the Option to which
the CSAR relates (to the extent then exercisable pursuant to its terms) and to receive from the
Company in exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of Stock on the date of
exercise of the CSAR by the number of shares of Stock with respect to which the CSAR shall have
been exercised, subject to any limitations the Committee may impose.



     7.3 Independent Stock Appreciation Rights.



          (a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any Option
and shall have a term set by the Committee. An ISAR shall be exercisable in such installments as
the Committee may determine. An ISAR shall cover such number of shares of Stock as the Committee
may determine. The exercise price per share of Stock subject to each ISAR shall be set by the
Committee; provided, however, that the exercise price for any ISAR shall not be less than 100% of
the Fair Market Value on the date of grant; and provided, further, that the Committee in its sole
and absolute discretion may provide that the ISAR may be exercised subsequent to a termination of
employment or service, as applicable, or following a merger, consolidation or other similar
transaction involving the Company, or because of the Participant’s retirement, death or disability,
or otherwise.



          (b) An ISAR shall entitle the Participant (or other person entitled to exercise the ISAR
pursuant to the Plan) to exercise all or a specified portion of the ISAR (to the extent then
exercisable pursuant to its terms) and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the exercise price per share of the ISAR from
the Fair Market Value of a share of Stock on the date of exercise of the ISAR by the



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number of shares of Stock with respect to which the ISAR shall have been exercised, subject to
any limitations the Committee may impose.



     7.4 Payment and Limitations on Exercise.



          (a) Payment of the amounts determined under Sections 7.2(c) and 7.3(b) above shall be in cash,
in Stock (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised)
or a combination of both, as determined by the Committee.



          (b) To the extent payment for a Stock Appreciation Right is to be made in cash, the Award
Agreement shall, to the extent necessary to comply with the requirements to Section 409A of the
Code, specify the date of payment which may be different than the date of exercise of the Stock
Appreciation Right. If the date of payment for a Stock Appreciation Right is later than the date
of exercise, the Award Agreement may specify that the Participant be entitled to earnings on such
amount until paid.



          (c) To the extent any payment under Section 7.2(c) or 7.3(b) is effected in Stock it shall be
made subject to satisfaction of all provisions of Article 5 above pertaining to Options.



ARTICLE 8




OTHER TYPES OF AWARDS




     8.1 Performance Share Awards. Any Participant selected by the Committee may be
granted one or more Performance Share awards which shall be denominated in a number of shares of
Stock and which may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a specified date or
dates or over any period or periods determined by the Committee. In making such determinations,
the Committee shall consider (among such other factors as it deems relevant in light of the
specific type of award) the contributions, responsibilities and other compensation of the
particular Participant.



     8.2 Performance Stock Units. Any Participant selected by the Committee may be granted
one or more Performance Stock Unit awards which shall be denominated in units of value including
dollar value of shares of Stock and which may be linked to any one or more of the Performance
Criteria or other specific performance criteria determined appropriate by the Committee, in each
case on a specified date or dates or over any period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other factors as it deems
relevant in light of the specific type of award) the contributions, responsibilities and other
compensation of the particular Participant.



     8.3 Dividend Equivalents.



          (a) Any Participant selected by the Committee may be granted Dividend Equivalents based on the
dividends declared on the shares of Stock that are subject to any Award, to be credited as of
dividend payment dates, during the period between the date the Award is granted and the date the
Award is exercised, vests or expires, as determined by the



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Committee. Such Dividend Equivalents shall be converted to cash or additional shares of Stock
by such formula and at such time and subject to such limitations as may be determined by the
Committee.



          (b) Dividend Equivalents granted with respect to Options or SARs that are intended to be
Qualified Performance-Based Compensation shall be payable, with respect to pre-exercise periods,
regardless of whether such Option or SAR is subsequently exercised.



     8.4 Stock Payments. Any Participant selected by the Committee may receive Stock
Payments in the manner determined from time to time by the Committee. The number of shares shall
be determined by the Committee and may be based upon the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.



     8.5 Deferred Stock. Any Participant selected by the Committee may be granted an award
of Deferred Stock in the manner determined from time to time by the Committee. The number of
shares of Deferred Stock shall be determined by the Committee and may be linked to the Performance
Criteria or other specific performance criteria determined to be appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined by the Committee.
Stock underlying a Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Participant awarded Deferred Stock shall have no rights as a
Company stockholder with respect to such Deferred Stock until such time as the Deferred Stock Award
has vested and the Stock underlying the Deferred Stock Award has been issued.



     8.6 Restricted Stock Units. The Committee is authorized to make Awards of Restricted
Stock Units to any Participant selected by the Committee in such amounts and subject to such terms
and conditions as determined by the Committee. At the time of grant, the Committee shall specify
the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable,
and may specify such conditions to vesting as it deems appropriate. At the time of grant, the
Committee shall specify the maturity date applicable to each grant of Restricted Stock Units which
shall be no earlier than the vesting date or dates of the Award and, subject to compliance with the
requirements of Section 409A of the Code, may be determined at the election of the grantee. On the
maturity date, the Company shall, subject to Section 10.5(b), transfer to the Participant one
unrestricted, fully transferable share of Stock for each Restricted Stock Unit scheduled to be paid
out on such date and not previously forfeited. The Committee shall specify the purchase price, if
any, to be paid by the grantee to the Company for such shares of Stock.



     8.7 Other Stock-Based Awards. Any Participant selected by the Committee may be
granted one or more Awards that provide Participants with shares of Stock or the right to purchase
shares of Stock or that have a value derived from the value of, or an exercise or conversion
privilege at a price related to, or that are otherwise payable in shares of Stock and which may be
linked to any one or more of the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, in each case on a specified date or dates or over any
period or periods determined by the Committee. In making such



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determinations, the Committee shall consider (among such other factors as it deems relevant in
light of the specific type of Award) the contributions, responsibilities and other compensation of
the particular Participant.



     8.8 Performance Bonus Awards. Any Participant selected by the Committee may be
granted one or more Awards in the form of a cash bonus (a “Performance Bonus Award”)
payable with respect to any period of employment and based upon any performance criteria and
subject to any terms and conditions that the Committee may determine, in its sole discretion. The
payment of bonuses pursuant to this Section 8.8 shall be made on any date or dates determined by
the Committee and subject to any terms and conditions determined by the Committee, in its sole
discretion.



     8.9 Term. Except as otherwise provided herein, the term of any Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock, Restricted
Stock Units or Other Stock-Based Award shall be set by the Committee in its discretion.



     8.10 Exercise or Purchase Price. The Committee may establish the exercise or purchase
price, if any, of any Award of Performance Shares, Performance Stock Units, Deferred Stock, Stock
Payments, Restricted Stock Units or Other Stock-Based Award; provided, however, that such price
shall not be less than the par value of a share of Stock on the date of grant, unless otherwise
permitted by applicable state law.



     8.11 Exercise Upon Termination of Employment or Service. An Award of Performance
Shares, Performance Stock Units, Dividend Equivalents, Deferred Stock, Stock Payments, Restricted
Stock Units and Other Stock-Based Award shall only be exercisable or payable while the Participant
is an Employee, Consultant or a member of the Board, as applicable; provided, however, that the
Committee in its sole and absolute discretion may provide that an Award of Performance Shares,
Performance Stock Units, Dividend Equivalents, Stock Payments, Deferred Stock, Restricted Stock
Units or Other Stock-Based Award may be exercised or paid subsequent to a termination of employment
or service, as applicable, or following a merger, consolidation or other similar transaction
involving the Company, or because of the Participant’s retirement, death or disability, or
otherwise; provided, however, that any such provision with respect to Performance Shares or
Performance Stock Units shall be subject to the requirements of Section 162(m) of the Code that
apply to Qualified Performance-Based Compensation.



     8.12 Form of Payment. Payments with respect to any Awards granted under this Article
8 shall be made in cash, in Stock or a combination of both, as determined by the Committee.



     8.13 Award Agreement. All Awards under this Article 8 shall be subject to such
additional terms and conditions as determined by the Committee and shall be evidenced by a written
Award Agreement.



12









 





ARTICLE 9




PERFORMANCE-BASED AWARDS




     9.1 Purpose. The purpose of this Article 9 is to provide the Committee the ability to
qualify Awards other than Options and SARs and that are granted pursuant to Articles 6 and 8 as
Qualified Performance-Based Compensation. If the Committee, in its discretion, decides to grant a
Performance-Based Award to a Covered Employee, the provisions of this Article 9 shall control over
any contrary provision contained in Articles 6 or 8; provided, however, that the Committee may in
its discretion grant Awards to Covered Employees that are based on Performance Criteria or
Performance Goals but that do not satisfy the requirements of this Article 9.



     9.2 Applicability. This Article 9 shall apply only to those Covered Employees
selected by the Committee to receive Performance-Based Awards. The designation of a Covered
Employee as a Participant for a Performance Period shall not in any manner entitle the Participant
to receive an Award for the period. Moreover, designation of a Covered Employee as a Participant
for a particular Performance Period shall not require designation of such Covered Employee as a
Participant in any subsequent Performance Period and designation of one Covered Employee as a
Participant shall not require designation of any other Covered Employees as a Participant in such
period or in any other period.



     9.3 Procedures with Respect to Performance-Based Awards. To the extent necessary to
comply with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) of
the Code, with respect to any Award granted under Articles 6 and 8 which may be granted to one or
more Covered Employees, no later than ninety (90) days following the commencement of any fiscal
year in question or any other designated fiscal period or period of service (or such other time as
may be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (a)
designate one or more Covered Employees, (b) select the Performance Criteria applicable to the
Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as applicable,
which may be earned for such Performance Period, and (d) specify the relationship between
Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be
earned by each Covered Employee for such Performance Period. Following the completion of each
Performance Period, the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned by a Covered
Employee, the Committee shall have the right to reduce or eliminate (but not to increase) the
amount payable at a given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate performance for the
Performance Period.



     9.4 Payment of Performance-Based Awards. Unless otherwise provided in the applicable
Award Agreement, a Participant must be employed by the Company or a Subsidiary on the day a
Performance-Based Award for such Performance Period is paid to the Participant. Furthermore, a
Participant shall be eligible to receive payment pursuant to a Performance-Based Award for a
Performance Period only if the Performance Goals for such period are achieved.



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     9.5 Additional Limitations. Notwithstanding any other provision of the Plan, any
Award which is granted to a Covered Employee and is intended to constitute Qualified
Performance-Based Compensation shall be subject to any additional limitations set forth in Section
162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or
rulings issued thereunder that are requirements for qualification as qualified performance-based
compensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended
to the extent necessary to conform to such requirements.



ARTICLE 10




PROVISIONS APPLICABLE TO AWARDS




     10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the
discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other
Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards
must be granted at the same time as the grant of such other Awards.



     10.2 Award Agreement. Awards under the Plan shall be evidenced by Award Agreements
that set forth the terms, conditions and limitations for each Award which may include the term of
an Award, the provisions applicable in the event the Participant’s employment or service
terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind an Award.



     10.3 Limits on Transfer. No right or interest of a Participant in any Award may be
pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a
Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any
other party other than the Company or a Subsidiary. Except as otherwise provided by the Committee,
no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by
will or the laws of descent and distribution. The Committee by express provision in the Award or
an amendment thereto may permit an Award (other than an Incentive Stock Option) to be transferred
to, exercised by and paid to certain persons or entities related to the Participant, including but
not limited to members of the Participant’s family, charitable institutions, or trusts or other
entities whose beneficiaries or beneficial owners are members of the Participant’s family and/or
charitable institutions, or to such other persons or entities as may be expressly approved by the
Committee, pursuant to such conditions and procedures as the Committee may establish. Any
permitted transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a
“blind trust” in connection with the Participant’s termination of employment or service with the
Company or a Subsidiary to assume a position with a governmental, charitable, educational or
similar non-profit institution) and on a basis consistent with the Company’s lawful issue of
securities.



     10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of the Participant and
to receive any distribution with respect to any Award upon the Participant’s death. A beneficiary,
legal guardian, legal representative, or other person claiming any rights pursuant to



14









 







the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable
to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If the Participant is
married and resides in a community property state, a designation of a person other than the
Participant’s spouse as his or her beneficiary with respect to more than 50% of the Participant’s
interest in the Award shall not be effective without the prior written consent of the Participant’s
spouse. If no beneficiary has been designated or survives the Participant, payment shall be made
to the person entitled thereto pursuant to the Participant’s will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is filed with the Committee.



     10.5 Stock Certificates; Book Entry Procedures.



          (a) Notwithstanding anything herein to the contrary, the Company shall not be required to
issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award,
unless and until the Board has determined, with advice of counsel, that the issuance and delivery
of such certificates is in compliance with all applicable laws, regulations of governmental
authorities and, if applicable, the requirements of any exchange on which the shares of Stock are
listed or traded. All Stock certificates delivered pursuant to the Plan are subject to any
stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply
with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and
the rules of any national securities exchange or automated quotation system on which the Stock is
listed, quoted, or traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock. In addition to the terms and conditions provided herein, the
Board may require that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to comply with any such
laws, regulations, or requirements. The Committee shall have the right to require any Participant
to comply with any timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion of the Committee.



          (b) Notwithstanding any other provision of the Plan, unless otherwise determined by the
Committee or required by any applicable law, rule or regulation, the Company shall not deliver to
any Participant certificates evidencing shares of Stock issued in connection with any Award and
instead such shares of Stock shall be recorded in the books of the Company (or, as applicable, its
transfer agent or stock plan administrator).



ARTICLE 11




CHANGES IN CAPITAL STRUCTURE




     11.1 Adjustments.



          (a) In the event of any stock dividend, stock split, combination or exchange of shares,
merger, consolidation, spin-off, recapitalization, distribution of Company assets to stockholders
(other than normal cash dividends), or any other corporate event affecting the number of
outstanding shares of Stock or the share price of the Stock, the Committee must make



15









 







such proportionate adjustments, as required, to reflect such changes with respect to (i) the
aggregate number and type of shares that may be issued under the Plan (including, but not limited
to, adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and conditions of any
outstanding Awards (including, without limitation, any applicable performance targets or criteria
with respect thereto); and (iii) the grant or exercise price per share for any outstanding Awards
under the Plan. Any adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m) of the Code.



          (b) In the event of any transaction or event described in Section 11.1(a) or any unusual or
nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the
financial statements of the Company or any affiliate, or of changes in applicable laws, regulations
or accounting principles, and in order to prevent the dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect to any Award under
the Plan, to facilitate such transactions or events or to give effect to such changes in laws,
regulations or principles, the Committee either by amendment of the terms of any outstanding Awards
or by action taken prior to the occurrence of such transaction or event and either automatically or
upon the Participant’s request, shall, as required, take any one or more of the following actions:



                    (i) To provide for either (A) termination of any such Award in exchange for an amount of cash
and/or other property, if any, equal to the amount that would have been attained upon the exercise
of such Award or realization of the Participant’s rights (and, for the avoidance of doubt, if as of
the date of the occurrence of the transaction or event described in this Section 11.1(b) the
Committee determines in good faith that no amount would have been attained upon the exercise of
such Award or realization of the Participant’s rights, then such Award may be terminated by the
Company without payment) or (B) the replacement of such Award with other rights or property
selected by the Committee in its sole discretion;



                    (ii) To provide that such Award be assumed by the successor or survivor corporation, or a
parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and prices;



                    (iii) To make adjustments in the number and type of shares of Stock (or other securities or
property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock
or Deferred Stock and/or in the terms and conditions of (including the grant or exercise price),
and the criteria included in, outstanding options, rights and awards and options, rights and awards
which may be granted in the future;



                    (iv) To provide that such Award shall be exercisable or payable or fully vested with respect
to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the
applicable Award Agreement; and



                    (v) To provide that the Award cannot vest, be exercised or become payable after such event.



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     11.2 Corporate Transactions. Notwithstanding Section 11.1, and except as may
otherwise be provided in any applicable Award Agreement or other written agreement entered into
between the Company and a Participant, in the event of any merger, consolidation or other similar
transaction involving the Company in which a Participant’s Awards are not converted, assumed, or
replaced by a successor entity, then such Awards shall become fully exercisable immediately prior
to the consummation of such transaction and all forfeiture restrictions on such Awards shall lapse.
Upon, or in anticipation of, a merger, consolidation or other similar transaction involving the
Company, the Committee may cause any and all Awards outstanding hereunder to terminate at a
specific time in the future, including but not limited to the date of such transaction, and shall
give each Participant the right to exercise such Awards during a period of time as the Committee,
in its sole and absolute discretion, shall determine. In the event that the terms of any agreement
between the Company or any Company subsidiary or affiliate and a Participant contains provisions
that conflict with and are more restrictive than the provisions of this Section 11.2, this Section
11.2 shall prevail and control and the more restrictive terms of such agreement (and only such
terms) shall be of no force or effect.



     11.3 No Other Rights. Except as expressly provided in the Plan, no Participant shall
have any rights by reason of any subdivision or consolidation of shares of stock of any class, the
payment of any dividend, any increase or decrease in the number of shares of stock of any class or
any dissolution, liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Stock subject to an Award or the grant or exercise price of any Award.



ARTICLE 12




ADMINISTRATION




     12.1 Committee. Unless and until the Board delegates administration of the Plan to a
Committee as set forth below, the Plan shall be administered by the full Board, and for such
purposes the term “Committee” as used in this Plan shall be deemed to refer to the Board. The
Board, at its discretion or as otherwise necessary to comply with the requirements of Section
162(m) of the Code, Rule 16b-3 promulgated under the Exchange Act or to the extent required by any
other applicable rule or regulation, shall delegate administration of the Plan to a Committee. The
Committee shall consist solely of two or more members of the Board each of whom is both an “outside
director,” within the meaning of Section 162(m) of the Code, and a “non-employee director,” as
defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the Board.
Notwithstanding the foregoing: (a) the full Board, acting by a majority of its members in office,
shall conduct the general administration of the Plan with respect to all Awards granted to
Independent Directors and for purposes of such Awards the term “Committee” as used in this Plan
shall be deemed to refer to the Board and (b) the Committee may delegate its authority hereunder to
the extent permitted by Section 12.5. Appointment of Committee members shall be effective upon
acceptance of appointment. The Board may abolish the Committee at any time and revest in the Board
the administration of the Plan. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the



17









 




Committee may only be filled by the Board.




     12.2 Action by the Committee. A majority of the Committee shall constitute a quorum.
The acts of a majority of the members present at any meeting at which a quorum is present, and acts
approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts
of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other employee of the
Company or any Subsidiary, the Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist in the
administration of the Plan.



     12.3 Authority of Committee. Subject to any specific designation in the Plan, the
Committee has the exclusive power, authority and discretion to:



          (a) Designate Participants to receive Awards;



          (b) Determine the type or types of Awards to be granted to each Participant;



          (c) Determine the number of Awards to be granted and the number of shares of Stock to which an
Award will relate;



          (d) Determine the terms and conditions of any Award granted pursuant to the Plan, including,
but not limited to, the exercise price, grant price, or purchase price, any reload provision, any
restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers thereof, any
provisions related to non-competition and recapture of gain on an Award, based in each case on such
considerations as the Committee in its sole discretion determines; provided, however, that the
Committee shall not have the authority to accelerate the vesting or waive the forfeiture of any
Performance-Based Awards;



          (e) Determine whether, to what extent, and pursuant to what circumstances an Award may be
settled in, or the exercise price of an Award may be paid in, cash, Stock, other Awards, or other
property, or an Award may be canceled, forfeited, or surrendered;



          (f) Prescribe the form of each Award Agreement, which need not be identical for each
Participant;



          (g) Decide all other matters that must be determined in connection with an Award;



          (h) Establish, adopt, or revise any rules and regulations as it may deem necessary or
advisable to administer the Plan;



          (i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award
Agreement; and



          (j) Make all other decisions and determinations that may be required pursuant to the Plan or
as the Committee deems necessary or advisable to administer the Plan.



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     12.4 Decisions Binding. The Committee’s interpretation of the Plan, any Awards
granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and conclusive on all parties.



     12.5 Delegation of Authority. To the extent permitted by applicable law, the
Committee may from time to time delegate to a committee of one or more members of the Board or one
or more officers of the Company the authority to grant or amend Awards to Participants other than
(a) senior executives of the Company who are subject to Section 16 of the Exchange Act, (b) Covered
Employees, or (c) officers of the Company (or members of the Board) to whom authority to grant or
amend Awards has been delegated hereunder. Any delegation hereunder shall be subject to the
restrictions and limits that the Committee specifies at the time of such delegation, and the
Committee may at any time rescind the authority so delegated or appoint a new delegatee. At all
times, the delegatee appointed under this Section 12.5 shall serve in such capacity at the pleasure
of the Committee.



ARTICLE 13




EFFECTIVE AND EXPIRATION DATE




     13.1 Effective Date. The Plan is effective as of the date the Plan is approved by the
Company’s stockholders (the “Effective Date”). The Plan will be deemed to be approved by
the stockholders if it receives the affirmative vote of the holders of a majority of the shares of
stock of the Company present or represented and entitled to vote at a meeting duly held in
accordance with the applicable provisions of the Company’s Bylaws.



     13.2 Expiration Date. The Plan will expire on, and no Incentive Stock Option or other
Award may be granted pursuant to the Plan after, the earlier of the tenth anniversary of (i) the
Effective Date or (ii) the date this Plan is approved by the Board. Any Awards that are
outstanding on the tenth anniversary of the Effective Date shall remain in force according to the
terms of the Plan and the applicable Award Agreement.



ARTICLE 14




AMENDMENT, MODIFICATION, AND TERMINATION




     14.1 Amendment, Modification, And Termination. With the approval of the Board, at any
time and from time to time, the Committee may terminate, amend or modify the Plan; provided,
however, that (a) to the extent necessary and desirable to comply with any applicable law,
regulation, or stock exchange rule, the Company shall obtain stockholder approval of any Plan
amendment in such a manner and to such a degree as required, and (b) stockholder approval is
required for any amendment to the Plan that (i) increases the number of shares available under the
Plan (other than any adjustment as provided by Article 11), (ii) permits the Committee to grant
Options with an exercise price that is below Fair Market Value on the date of grant, or (iii)
permits the Committee to extend the exercise period for an Option beyond ten years from the date of
grant. Notwithstanding any provision in this Plan to the contrary, absent approval of the
stockholders of the Company, no Option may be amended to reduce the per share exercise price of the
shares subject to such Option below the per share exercise price as of the date the Option



19









 




is granted and, except as permitted by Article 11, no Option may be granted in exchange for,
or in connection with, the cancellation or surrender of an Option having a higher per share
exercise price.




     14.2 Awards Previously Granted. Except as otherwise provided in Section 15.13 below,
no termination, amendment, or modification of the Plan shall adversely affect in any material way
any Award previously granted pursuant to the Plan without the prior written consent of the
Participant.



ARTICLE 15




GENERAL PROVISIONS




     15.1 No Rights to Awards. No Eligible Individual or other person shall have any claim
to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is
obligated to treat Eligible Individuals, Participants or any other persons uniformly.



     15.2 No Stockholders Rights. Except as otherwise provided herein, a Participant shall
have none of the rights of a stockholder with respect to shares of Stock covered by any Award until
the Participant becomes the record owner of such shares of Stock.



     15.3 Withholding. The Company or any Subsidiary shall have the authority and the
right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy federal, state, local and foreign taxes (including the Participant’s FICA obligation)
required by law to be withheld with respect to any taxable event concerning a Participant arising
as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing
requirement allow a Participant to elect to have the Company withhold shares of Stock otherwise
issuable under an Award (or allow the return of shares of Stock) having a Fair Market Value equal
to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number
of shares of Stock which may be withheld with respect to the issuance, vesting, exercise or payment
of any Award (or which may be repurchased from the Participant of such Award within six months (or
such other period as may be determined by the Committee) after such shares of Stock were acquired
by the Participant from the Company) in order to satisfy the Participant’s federal, state, local
and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise or
payment of the Award shall be limited to the number of shares which have a Fair Market Value on the
date of withholding or repurchase equal to the aggregate amount of such liabilities based on the
minimum statutory withholding rates for federal, state, local and foreign income tax and payroll
tax purposes that are applicable to such supplemental taxable income.



     15.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate
any Participant’s employment or services at any time, nor confer upon any Participant any right to
continue in the employ or service of the Company or any Subsidiary.



     15.5 Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan for
incentive compensation. With respect to any payments not yet made to a Participant pursuant to



20









 







an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any
rights that are greater than those of a general creditor of the Company or any Subsidiary.



     15.6 Indemnification. To the extent allowable pursuant to applicable law, each member
of the Committee or of the Board shall be indemnified and held harmless by the Company from any
loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in
connection with or resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure to act pursuant to
the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in
such action, suit, or proceeding against him or her; provided he or she gives the Company an
opportunity, at its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be entitled pursuant to
the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.



     15.7 Relationship to other Benefits. No payment pursuant to the Plan shall be taken
into account in determining any benefits pursuant to any pension, retirement, savings, profit
sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to
the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.



     15.8 Expenses. The expenses of administering the Plan shall be borne by the Company
and its Subsidiaries.



     15.9 Titles and Headings. The titles and headings of the Sections in the Plan are for
convenience of reference only and, in the event of any conflict, the text of the Plan, rather than
such titles or headings, shall control.



     15.10 Fractional Shares. No fractional shares of Stock shall be issued and the
Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional
shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate.



     15.11 Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any Participant who is then
subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth
in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, the Plan and Awards granted or awarded hereunder shall
be deemed amended to the extent necessary to conform to such applicable exemptive rule.



     15.12 Government and Other Regulations. The obligation of the Company to make payment
of awards in Stock or otherwise shall be subject to all applicable laws, rules, and regulations,
and to such approvals by government agencies as may be required. The Company



21









 







shall be under no obligation to register pursuant to the Securities Act of 1933, as amended,
any of the shares of Stock paid pursuant to the Plan. If the shares paid pursuant to the Plan may
in certain circumstances be exempt from registration pursuant to the Securities Act of 1933, as
amended, the Company may restrict the transfer of such shares in such manner as it deems advisable
to ensure the availability of any such exemption.



     15.13 Section 409A. To the extent that the Committee determines that any Award
granted under the Plan is subject to Section 409A of the Code, the Award Agreement evidencing such
Award shall incorporate the terms and conditions required by Section 409A of the Code. To the
extent applicable, the Plan and Award Agreements shall be interpreted in accordance with Section
409A of the Code and Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance that may be issued
after the Effective Date. Notwithstanding anything to the contrary in Section 14.2 or any other
provision of the Plan, in the event that following the Effective Date the Committee determines that
any Award may be subject to Section 409A of the Code and related Department of Treasury guidance
(including such Department of Treasury guidance as may be issued after the Effective Date), the
Committee may adopt such amendments to the Plan and the applicable Award Agreement or adopt other
policies and procedures (including amendments, policies and procedures with retroactive effect), or
take any other actions, that the Committee determines are necessary or appropriate to (a) exempt
the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits
provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code
and related Department of Treasury guidance.



     15.14 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.



* * * * *




     I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Volcom,
Inc. on February 6, 2007.



* * * * *




     I hereby certify that the Original Plan was approved by the stockholders of Volcom, Inc. on
June 14, 2005.



     Executed on this 6th day of February, 2007.



	 	 	 	 	 
	 	 	 
	 	                                   /s/ S. Hoby Darling
 	 
	 	Assistant Corporate Secretary 	 
	 	 	 
	 




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