Exhibit
10.2


 


As amended
November 8, 2007


 


 


LEHMAN
BROTHERS HOLDINGS INC.


 


2005 STOCK
INCENTIVE PLAN


 


1)              Purpose of the Plan


 


The purpose of the Plan is
to aid the Company and its Affiliates in recruiting and retaining employees,
directors and consultants and to motivate such employees, directors and
consultants to exert their best efforts on behalf of the Company and its
Affiliates by providing incentives through the granting of Awards. The Company
expects that it will benefit from the added interest which such employees,
directors and consultants will have in the welfare of the Company as a result
of their proprietary interest in the Company’s success.


 


2)              Definitions


 


The following capitalized terms used in the Plan
have the respective meanings set forth in this Section:


 


(a)          “Act” means The Securities Exchange Act of 1934, as amended, or any
successor thereto.


 


(b)         “Affiliate” means any entity that is consolidated with
the Company for financial reporting purposes or any other entity designated by
the Board in which the Company or an Affiliate has a direct or indirect
interest of at least twenty-five percent (25%).


 


(c)          “Award” means an Option, Stock Appreciation Right or
Other Stock-Based Award granted pursuant to the Plan.


 


(d)         “Award Agreement”
means the written document or documents by which each Award is evidenced.


 


(e)          “Board” means the Board of Directors of the Company.


 


(f)            “Change in Control” means, with respect to any Award granted on
or prior to November 8, 2007, the occurrence of any of the following events:


 


(i)             The occurrence of an event described in
paragraph (ii), (iii), (iv), (v) or (vi) below involving any entity (or an
affiliate thereof) which had previously commenced (within the meaning of Rule
14d-2 under the Act), without the approval of the Board, a tender offer for
shares having more than 20% of the combined voting power of the Company’s
outstanding shares of capital stock having ordinary voting power in the
election of directors of the Company (the “Voting Securities”);


 


(ii)          An acquisition (other than directly from
the Company) of any Voting Securities by any “Person” (as the term “person” is
used for purposes of Section 13(d) or 14(d) of the Act) immediately after which
such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3
promulgated under the Act) of 20% or more of the combined voting power of the
Company’s then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Voting Securities which are acquired
in a “Non-Control Acquisition” (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A “Non-Control Acquisition”
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof or a trustee thereof acting solely in its capacity as trustee)
maintained by (I) the Company or (II) any corporation or other Person of which
a majority of its voting power or its voting equity securities or equity
interest is owned, directly or indirectly, by the Company (for purposes of this
definition, a “Subsidiary Entity”), (B) the Company or any of its Subsidiary
Entities, or (C) any Person who files in connection with such acquisition a
Schedule 13D which expressly disclaims any intention to seek control of the Company
and does not expressly reserve the right to seek such control; provided, 


 

















 


however, that any
amendment to such statement of intent which either indicates an intention or
reserves the right to seek control shall be deemed an “acquisition” of the securities
of the Company reported in such filing as beneficially owned by such Person for
purposes of this paragraph (ii);


 


(iii) The individuals who, as of the Effective
Date, are members of the Board (the “Incumbent Board”), ceasing for any reason
to constitute at least a majority of the members of the Board; provided,
however, that if the election, or nomination for election by the Company’s
common stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes of
this Plan, be considered as a member of the Incumbent Board; provided further,
however, that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of either an actual or
threatened election contest or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board (in each
case, a “Proxy Contest”) including by reason of any agreement intended to avoid
or settle any Proxy Contest; 


 


(iv) A merger, consolidation, recapitalization or
reorganization involving the Company, unless such merger, consolidation or
reorganization is a “Non-Control Transaction”; i.e., meets each of the
requirements described in subparagraphs (A), (B) and (C) below:


 


(A) the stockholders of the Company, immediately before
such merger, consolidation, recapitalization or reorganization, own, directly
or indirectly, immediately following such merger, consolidation,
recapitalization or reorganization, at least 50% of the combined voting power
of the outstanding voting securities of the Company, the corporation resulting
from such merger or consolidation, recapitalization or reorganization, or any
parent thereof (the “Surviving Corporation”) in substantially the same
proportion as their ownership of the Voting Securities immediately before such
merger, consolidation, recapitalization or reorganization;


 


(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement providing for such
merger, consolidation, recapitalization or reorganization constitute at least
50% of the members of the board of directors of the Surviving Corporation
immediately following the consummation of such merger, consolidation,
recapitalization or reorganization; and


 


(C) no Person other than the Company, any Subsidiary
Entity, any employee benefit plan (or any trust forming a part thereof or a
trustee thereof acting solely in its capacity as trustee) maintained by the
Company, the Surviving Corporation, or any Subsidiary Entity, or any Person
who, immediately prior to such merger, consolidation, recapitalization or
reorganization had Beneficial Ownership of 20% or more of the then outstanding
Voting Securities has Beneficial Ownership of 20% or more of the combined
voting power of the Surviving Corporation’s then outstanding voting securities
immediately following the consummation of such merger, consolidation,
recapitalization or reorganization;


 


(v)         A complete liquidation or dissolution of
the Company;


 


(vi)      Sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary Entity); or


 


(vii)   An event
that would constitute a “Change in Control” within the meaning of Section 2(g).


 


Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the “Subject Person”)
acquired Beneficial Ownership of more than the permitted percentage set forth
in paragraph (ii) or subparagraph (iv)(A) or (C) above, as applicable, of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Voting 


 


2

















 


Securities by the Company, and thereafter such
Beneficial Owner acquires any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.


 


A “Hostile Change in Control” shall mean the
occurrence of an event as contemplated in paragraph (i) above. A “Friendly
Change in Control” shall mean any Change in Control that is not a Hostile
Change in Control.


 


(g)         “Change in Control” means, with respect to any Award granted
after November 8, 2007, the occurrence of any of the following events:


 


(i)             An acquisition (other than directly from
the Company, but including any acquisition in connection with any merger,
consolidation, recapitalization or reorganization involving the Company) of the
Company’s outstanding shares of capital stock having ordinary voting power in
the election of directors (“Voting Securities”) by any “Person” (as the term “person”
is used for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately
after which such Person has “Beneficial Ownership” (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 70% or more of the combined voting
power of the Company’s then outstanding Voting Securities; provided, however,
in determining whether a Change in Control has occurred, Voting Securities that
are acquired in a “Non-Control Acquisition” (as hereinafter defined) shall not
constitute an acquisition that would cause a Change in Control. A “Non-Control
Acquisition” shall mean an acquisition by (A) an employee benefit plan (or a
trust forming a part thereof or a trustee thereof acting solely in its capacity
as trustee) maintained by (I) the Company or (II) any corporation or other
Person of which a majority of its voting power or its voting equity securities
or equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a “Subsidiary Entity”), (B) the Company or any of
its Subsidiary Entities, or (C) any Person who files in connection with such
acquisition a Schedule 13D that expressly disclaims any intention to seek
control of the Company and does not expressly reserve the right to seek such
control; provided, however, that any amendment to such statement of intent that
either indicates an intention or reserves the right to seek control shall be
deemed an “acquisition” of the securities of the Company reported in such
filing as beneficially owned by such Person for purposes of this paragraph (i);


 


(ii)          Any merger, consolidation,
recapitalization or reorganization involving the Company, unless such
merger, consolidation, recapitalization or reorganization is a “Non-Control
Transaction”; i.e., meets each of the requirements described in subparagraphs
(A), (B) and (C) below:


 


(A)      the stockholders of the Company,
immediately before such merger, consolidation, recapitalization or
reorganization, own, directly or indirectly, immediately following such merger,
consolidation, recapitalization or reorganization, at least 30% of the combined
voting power of the outstanding voting securities of the Company, the
corporation resulting from such merger, consolidation, recapitalization or
reorganization, or any parent thereof (the “Surviving Corporation”) in
substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, recapitalization or
reorganization;


 


(B)        the individuals who were members of the
Board immediately prior to the execution of the agreement providing for such
merger, consolidation, recapitalization or reorganization constitute at least
50% of the members of the board of directors of the Surviving Corporation
immediately following the consummation of such merger, consolidation,
recapitalization or reorganization; and


 


(C)        no Person other than the Company, any
Subsidiary Entity, any employee benefit plan (or any trust forming a part
thereof or a trustee thereof acting solely in its capacity as trustee)
maintained by the Company, the Surviving Corporation, or any Subsidiary Entity,
or any Person who, immediately prior to such merger, consolidation,
recapitalization or 


 


3

















 


reorganization had
Beneficial Ownership of 70% or more of the then outstanding Voting Securities
has Beneficial Ownership of 70% or more of the combined voting power of the
Surviving Corporation’s then outstanding voting securities immediately
following the consummation of such merger, consolidation, recapitalization or
reorganization;


 


(iii) Replacement within a consecutive twelve month
period of a majority of the individuals who are members of the Board with
individuals (“Replacement Board Members”) who do not receive endorsement by a
majority of the Board before the date of the appointment or election of such
Replacement Board Member; or


 


(iv) Sale or other disposition (other than a transfer
to a Subsidiary Entity) of all or substantially all of the assets of the
Company to any Person, or any Person acquires such amount of assets in any
consecutive twelve-month period ending on the most recent acquisition by such
Person.


 


Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the “Subject Person”)
acquired Beneficial Ownership of more than the permitted percentage set forth
in paragraph (i) of the outstanding Voting Securities as a result of the
acquisition of Voting Securities by the Company that, by reducing the number of
Voting Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and thereafter such Subject
Person acquires any additional Voting Securities which increases the percentage
of the then outstanding Voting Securities Beneficially Owned by the Subject
Person, then a Change in Control shall occur. In addition, notwithstanding the
foregoing a Change in Control shall not be deemed to occur unless such
transaction or occurrence constitutes a change in ownership or effective
control within the meaning of Section 409A(a)(2)(A)(v) of the Code.


 


(h)         “Code” means the Internal Revenue Code of 1986, as
amended, or any successor thereto.


 


(i)             “Committee” means the Compensation and Benefits
Committee of the Board.


 


(j)             “Company” means Lehman Brothers Holdings Inc.


 


(k)          “Dividend
Equivalent Right” means
a dividend equivalent right granted under the Plan, which represents an
unfunded and unsecured promise to pay to the Participant amounts equal to all
or any portion of the regular cash dividends that would be paid on Shares
covered by an Award if such shares were delivered pursuant to an Award.


 


(l)             “Effective
Date” means May 1,
2005.


 


(m) “Employment” means (i) a Participant’s employment if
the Participant is an employee of the Company or any of its Affiliates,
(ii) a Participant’s services as a consultant, if the Participant is
consultant to the Company or any of its Affiliates and (iii) a Participant’s
services as a Non-Employee Director, if the Participant is a non-employee
member of the Board; provided however that unless otherwise determined by the
Committee, a change in a Participant’s status from employee to non-employee
(other than a director of the Company or an Affiliate) shall constitute a
termination of employment hereunder. For purposes of the Plan, unless the
Committee determines otherwise: (a) a transfer of a Participant’s
employment, without an intervening period of separation, between the Company
and any Affiliate shall not be deemed a termination of employment, and
(b) a Participant who is granted in writing a leave of absence shall be
deemed to have remained in the employ of the Company during such leave of
absence.


 


(n)         “Fair
Market Value” means, on
a given date, (i) if there should be a public market for the Shares on
such date, the closing price of the Shares on the New York Stock Exchange, or,
if the Shares are not listed or admitted on any national securities exchange,
the arithmetic mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association of Securities
Dealers Automated Quotation System (or such market in which such 


 


4

















 


prices
are regularly quoted) (the “NASDAQ”), or, if no sale of Shares shall have been
reported on the New York Stock Exchange or quoted on the NASDAQ on such date,
then the immediately preceding date on which sales of the Shares have been so
reported or quoted shall be used, and (ii) if there should not be a public
market for the Shares on such date, the Fair Market Value shall be the value
established by the Committee in good faith and, in the case of an ISO, in
accordance with Section 422 of the Code.


 


(o)         “ISO” means an Option that is also an incentive
stock option granted pursuant to Section 5(d).


 


(p)         “Non-Employee
Director” means a
director of the Company who is not an employee of the Company or a Subsidiary.


 


(q)         “Option” means (i) a non-qualified stock option or
(ii) an ISO, as applicable,  granted
pursuant to Section 5.


 


(r)            “Option
Price” means the
purchase price per Share of an Option, as determined pursuant to
Section 5(a).


 


(s)          “Other
Stock-Based Award” means
an award granted pursuant to Section 7.


 


(t)            “Participant” means an employee, prospective employee,
director or consultant of the Company or an Affiliate who is selected by the
Committee to participate in the Plan.


 


(u)         “Performance-Based
Award” means an Other
Stock-Based Award granted pursuant to Section 7(c).


 


(v)         “Plan” means the Lehman Brothers Holdings Inc.
2005 Stock Incentive Plan, as amended from time to time.


 


(w)       “Shares” means shares of common stock of the Company.


 


(x)           “Stock
Appreciation Right”
means a stock appreciation right granted pursuant to Section 6.


 


(y)         “Subsidiary” means a subsidiary corporation, as defined
in Section 424(f) of the Code (or any successor section thereto), of the
Company.


 


3)              Shares Subject to the Plan


 


(a)          The
total number of Shares that may be issued under the Plan is ninety-five (95)
million, plus the number of Shares calculated as set forth in subsection
(c) below, subject to adjustment as provided in Section 9. Shares of
Common Stock issued under the Plan may be authorized but unissued shares or
authorized and issued shares held in the Company’s treasury, or any combination
thereof. No participant may be granted Options, Stock Appreciation Rights or
Other Stock-Based Awards covering in excess of four million Shares in any
fiscal year of the Company, and the maximum number of Shares that may be
subject to Awards that are ISOs is twenty (20) million, subject to
adjustment as provided in Section 9.


 


(b)         In
calculating the number of Shares remaining available for grants of Awards at
any given time during the term of the Plan, the following rules shall apply:


 


(i)             the
number of Shares remaining for issuance shall be reduced by the number of
outstanding Awards that consist of, or that are payable in Shares;


 


(ii)          the
number of Shares remaining for issuance shall be increased by the number of
Shares withheld or tendered (by actual delivery or attestation) to pay the
exercise price of an Option 


 


5

















 


and
by the number of shares withheld from any grant of Awards to satisfy tax
withholding obligations;


 


(iii) the number of Shares remaining for issuance shall be increased by the
number of Shares that have been granted, or reserved for distribution in
satisfaction of Awards, that are later forfeited, or that expire or terminate
or, for any other reason, are not payable or distributable under the Plan; and


 


(iv) the number of Shares remaining for issuance shall be increased by the
number of Shares that have been granted in respect of Awards that are settled
in cash under the Plan.


 


(c)          The
following numbers of Shares shall be added to the ninety-five (95) million
Shares expressly identified in subsection (a) above: the number of Shares
that, on the date that is immediately prior to the applicable date of
expiration of each of the Lehman Brothers Holdings Inc. Employee Incentive
Plan and the Lehman Brothers Holdings Inc. 1996 Management Ownership Plan
(each, a “Prior Plan”), are available for issuance and not otherwise subject to
outstanding Awards granted under the Prior Plans, increased by the number of
Shares that, as of each such applicable expiration date, were subject to Awards
granted and outstanding under the Prior Plans (the “Prior Awards”) but which
are subsequently not payable or distributable under the Prior Awards under any
of the circumstances described in paragraph (ii), (iii) or
(iv) of subsection (b) above.


 


4)              Administration


 


(a)          The
Plan shall be administered by the Committee, the members of which shall be “independent”
in accordance with all applicable stock exchange or market listing requirements.
The Committee may delegate its duties and powers in whole or in part to any
subcommittee thereof consisting solely of at least two individuals who are
intended to qualify as “non-employee directors” within the meaning of
Rule 16b-3 under the Act (or any successor rule thereto) and, to the
extent required by Section 162(m) of the Code (or any successor section
thereto), “outside directors” within the meaning thereof. In addition, to the
extent consistent with Rule 16b-3 under the Act, the Committee may
delegate the authority to grant Awards under the Plan to officers or employees
of the Company.


 


(b)         The
Committee is authorized to construe, interpret, implement and administer the
Plan and any Award, to establish, amend and rescind any rules and regulations
relating to the Plan and each Award, and to make any other determinations that
it deems necessary or desirable for the administration of the Plan or with
respect to any Award. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Award in the
manner and to the extent the Committee deems necessary or desirable. Any
decision of the Committee in the construction, interpretation, implementation
and administration of the Plan or any Award, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to, Participants
and their beneficiaries or successors). The Committee shall have the full and
exclusive power and authority to make, and establish the terms and conditions
of, any Award to any person eligible to be a Participant, consistent with
the provisions of the Plan and  to amend
or waive any such terms and conditions at any time (including, without
limitation, accelerating or waiving any conditions on vesting), provided,
however, the Committee shall not have such power and authority to accelerate or
otherwise provide for the times at which Shares with respect to any Award are
delivered if any Award is subject to Section 409A of the Code in a manner that
would result in  the imposition upon any
Participant of an additional tax under Section 409A of the Code, and provided
further, in the event that it is reasonably determined by the Committee that,
as a result of Section 409A of the Code, a Participant is deemed to be a “specified
employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code),  payments and/or deliveries of Shares in
respect of any Award subject to Section 409A of the Code shall not be made
prior to the date which is six (6) months after the date of such Participant’s
separation from service from the Company and all Subsidiaries, determined in
accordance with Section 409A of the Code and the regulations promulgated 


 


6

















 


thereunder.
None of Committee’s determinations under the Plan and under any Award Agreement
need be uniform and any such determinations may be made by it selectively among
persons who receive, or are eligible to receive, Awards under the Plan (whether
or not such persons are similarly situated). Without limiting the foregoing,
the Committee shall be entitled, among other things, to make non-uniform and
selective determinations under Award Agreements, and to enter into non-uniform
and selective Award Agreements, as to (i) the persons to receive Awards, (ii)
the terms and provisions of Awards, (iii) whether a Participant’s Employment
has been terminated for purposes of the Plan and (iv) any adjustments to be made
to Awards pursuant to Section 9 or otherwise.


 


(c)          The
Committee shall require payment of any amount it may determine to be necessary
to withhold for federal, state, local or other taxes or to otherwise satisfy
any tax obligations due as a result of the exercise, grant, vesting of, or
payment pursuant to, an Award. Unless the Committee specifies otherwise, the
Participant may elect to pay a portion or all of such withholding or other
taxes by (i) delivery, in cash or by check, (ii) delivery in Shares
or (iii) having Shares withheld by the Company with a market value equal
to the minimum statutory withholding rate from any Shares that would have
otherwise been received by the Participant.


 


(d)         Deliveries
of Shares may be rounded to avoid fractional shares. In addition, the Company
may pay cash in lieu of fractional shares.


 


5)              Terms and Conditions of
Options


 


Options granted under the
Plan shall be, as determined by the Committee, non-qualified or ISOs for
federal income tax purposes, as evidenced by the related Award agreements, and
shall be subject to the foregoing and the following terms and conditions and to
such other terms and conditions, not inconsistent therewith, as the Committee
shall determine:


 


(a)          Option Price. The Option Price per Share shall be determined by the Committee, but
shall not be less than 100% of the Fair Market Value of the Shares on the date
an Option is granted.


 


(b)         Exercisability. Options granted under the Plan shall be exercisable at such time and
upon such terms and conditions as may be determined by the Committee, but in no
event shall an Option be exercisable more than ten years after the date it is
granted.


 


(c)          Exercise of Options. Except as otherwise provided in the Plan or in an Award Agreement, an
Option may be exercised for all, or from time to time any part, of the Shares
for which it is then exercisable. For purposes of this Section 5, the
exercise date of an Option shall be the date a notice of exercise is received
by the Company, together with provision for payment of the full purchase price
in accordance with this subsection (c). The Option Price for the Shares as to
which an Option is exercised shall be paid to the Company, at the election of
the Committee, pursuant to one or more of the following methods: (i) in cash;
(ii) in Shares having a market value equal to the aggregate Option Price
for the Shares being purchased and satisfying such other requirements as may be
imposed by the Committee; provided, that such Shares have been held by the
Participant for no less than six months (or such other period as established
from time to time by the Committee in order to avoid adverse accounting
treatment applying generally accepted accounting principles); (iii) partly
in cash and partly in such Shares; (iv) if there is a public market for
the Shares at such time, through the delivery of irrevocable instructions to a
broker to sell Shares obtained upon the exercise of the Option and to deliver
promptly to the Company an amount out of the proceeds of such Sale equal to the
aggregate Option Price for the Shares being purchased or (v) by such other
means as the Committee deems appropriate. No Participant shall have any rights
to dividends or other rights of a stockholder with respect to Shares subject to
an Option, and shall not otherwise be entitled to delivery of any Shares (or
cash or other property in lieu thereof) underlying any such Option, until the
Participant has given written notice of exercise of the Option, paid in full
for such Shares and, if applicable, has satisfied any other conditions imposed
by the Committee pursuant to the Plan, and such Shares have been issued
hereunder.


 


7

















 


(d)         ISOs. The
Committee may grant Options under the Plan that are intended to be ISOs. Such
ISOs shall comply with the requirements of Section 422 of the Code (or any
successor section thereto). No ISO may be granted to any Participant who, at
the time of such grant, owns more than ten percent of the total combined voting
power of all classes of stock of the Company or of any Subsidiary, unless
(i) the Option Price for such ISO is at least 110% of the Fair Market
Value of a Share on the date the ISO is granted and (ii) the date on which
such ISO terminates is a date not later than the day preceding the fifth
anniversary of the date on which the ISO is granted. Any Participant who
disposes of Shares acquired upon the exercise of an ISO either (i) within
two years after the date of grant of such ISO or (ii) within one year
after the transfer of such Shares to the Participant, shall notify the Company
immediately of such disposition and of the amount realized upon such
disposition. All Options granted under the Plan are intended to be nonqualified
stock options, unless the applicable Award Agreement expressly states that the
Option is intended to be an ISO. If an Option is intended to be an ISO, and if
for any reason such Option (or portion thereof) shall not qualify as an ISO,
then, to the extent of such nonqualification, such Option (or portion thereof)
shall be regarded as a nonqualified stock option granted under the Plan,
provided that such Option (or portion thereof) otherwise complies with the Plan’s
requirements relating to nonqualified stock options. In no event shall any
member of the Committee, the Company or any of its Affiliates (or their
respective employees, officers or directors) have any liability to any
Participant (or any other Person) due to the failure of an Option to qualify
for any reason as an ISO.


 


(e)          Attestation. Wherever in this Plan or any agreement evidencing an Award a
Participant is permitted to pay the exercise price of an Option or withholding
taxes relating to the exercise of an Option or delivery of Shares pursuant to
an Award by delivering Shares, the Participant may, subject to procedures
satisfactory to the Committee, satisfy such delivery requirement by presenting
proof of beneficial ownership of such Shares, in which case the Company shall
treat the Option as exercised without further payment and shall withhold such
number of Shares from the Shares acquired by the exercise of the Option or
pursuant to the other Award.


 


(f)            Section
409A Restrictions on Option Awards. Options shall only be granted to employees, independent contractors
or Non-Employee Directors providing direct services to any corporation in a
chain of corporations or other entities in which each corporation or other
entity, starting with the Company, has a controlling interest in another
corporation or other entity in the chain, ending with the corporation or other
entity for which the service provider provides direct services on the date of
grant of the Option. For this purpose, the term controlling interest has the
same meaning as provided in Treas. Reg. Section 1.414(c)-2(b)(2)(i) of the
Code, provided that the language “at least 50 percent” is used instead of “at
least 80 percent” each place it appears in Treas. Reg. Section
1.414(c)-2(b)(2)(i). In addition, where the use of such stock with respect to
the grant of an option to such service provider is based upon legitimate
business criteria, the term controlling interest has the same meaning as
provided in Treas. Reg. Section 1.414(c)-2(b)(2)(i), provided that the language
“at least 20 percent” is used instead of “at least 80 percent” each place it
appears in Treas. Reg. Section 1.414(c)-2(b)(2)(i). For purposes of determining
ownership of an interest in an organization, the rules of Treas. Reg. Section
1.414(c)-3 and 1.414(c)-4 of the Code apply.


 


6)              Terms and Conditions of
Stock Appreciation Rights


 


(a)          Grants. The
Committee may grant (i) a Stock Appreciation Right independent of an
Option or (ii) a Stock Appreciation Right in connection with an Option, or
a portion thereof. A Stock Appreciation Right granted pursuant to
clause (ii) of the preceding sentence (A) may be granted at the time
the related Option is granted or at any time prior to the exercise or
cancellation of the related Option, (B) shall cover the same number of
Shares covered by an Option (or such lesser number of Shares as the Committee
may determine) and (C) shall be subject to the same terms and conditions
as such Option except for such additional limitations as are contemplated by
this Section 6 (or such additional limitations as may be included in an
Award agreement).


 


8

















 


(b)         Terms. The
exercise price per Share of a Stock Appreciation Right shall be an amount
determined by the Committee but in no event shall such amount be less than the
Fair Market Value of a Share on the date the Stock Appreciation Right is
granted; provided, however, that notwithstanding the foregoing in the case of a
Stock Appreciation Right granted in conjunction with an Option, or a portion
thereof, the exercise price may not be less than the Option Price of the related
Option. Each Stock Appreciation Right granted independent of an Option shall
entitle a Participant upon exercise to an amount, in cash and/or Shares, equal
to (i) the excess of (A) the market value on the exercise date of one
Share over (B) the exercise price per Share, times (ii) the number of
Shares covered by the Stock Appreciation Right. Each Stock Appreciation Right
granted in conjunction with an Option, or a portion thereof, shall entitle a
Participant to surrender to the Company the unexercised Option, or any portion
thereof, and to receive from the Company in exchange therefor an amount equal
to (i) the excess of (A) the market value on the exercise date of one
Share over (B) the Option Price per Share, times (ii) the number of
Shares covered by the Option, or portion thereof, which is surrendered. Payment
shall be made in Shares or in cash, or partly in Shares and partly in cash (any
such Shares valued at such market value), as shall be determined by the
Committee. Stock Appreciation Rights may be exercised from time to time upon
actual receipt by the Company of written notice of exercise stating the number
of Shares with respect to which the Stock Appreciation Right is being
exercised. The date a notice of exercise is received by the Company shall be
the exercise date. No fractional Shares will be issued in payment for Stock
Appreciation Rights, but instead cash will be paid for a fraction or, if the
Committee should so determine, the number of Shares will be rounded downward to
the next whole Share.


 


(c)          Limitations. The Committee may impose, in its discretion, such conditions upon the
exercisability or transferability of Stock Appreciation Rights as it may deem
fit.


 


(d)         Section 409A Restrictions on Stock Appreciation Right Awards. Stock Appreciation Rights shall only be
granted to employees, independent contractors or Non-Employee Directors
providing direct services to any corporation in a chain of corporations or
other entities in which each corporation or other entity, starting with the
Company, has a controlling interest in another corporation or other entity in
the chain, ending with the corporation or other entity for which the service
provider provides direct services on the date of grant of the Stock
Appreciation Right. For this purpose, the term controlling interest has the
same meaning as provided in Treas. Reg. Section 1.414(c)-2(b)(2)(i) of the
Code, provided that the language “at least 50 percent” is used instead of “at
least 80 percent” each place it appears in Treas. Reg. Section 1.414(c)-2(b)(2)(i).
In addition, where the use of such stock with respect to the grant of a Stock
Appreciation Right to such service provider is based upon legitimate business
criteria, the term controlling interest has the same meaning as provided in
Treas. Reg. Section 1.414(c)-2(b)(2)(i), provided that the language “at least
20 percent” is used instead of “at least 80 percent” each place it appears in
Treas. Reg. Section 1.414(c)-2(b)(2)(i). For purposes of determining ownership
of an interest in an organization, the rules of Treas. Reg. Section 1.414(c)-3
and 1.414(c)-4 of the Code apply.


 


7)              Other Stock-Based Awards


 


(a)          The
Committee, in its sole discretion, may grant or sell Awards of Shares and
Awards that are valued in whole or in part by reference to, or otherwise based
on the Fair Market Value of, Shares (all such Awards being referred to herein
as “Other Stock-Based Awards”). Other Stock-Based Awards shall be in such form,
and be subject to such terms and conditions, as the Committee shall determine,
including without limitation, the following forms: (i) the right to
purchase Shares, (ii) Shares subject to restrictions on transfer until the
completion of a specified period of service, the occurrence of an event or the
attainment of performance objectives, each as specified by the Committee, and
(iii) Shares issuable upon the completion of a specified period of
service, the occurrence of an event or the attainment of performance
objectives, each as specified by the Committee. Other Stock-Based Awards may be
granted alone or in addition to any other Awards made under the Plan. All
references in the preceding sentence to “specified period of service,” in the
case of Other Stock-Based Awards which (i) are not in lieu of cash
compensation to employees generally, (ii) are not paid to recruit a new
employee in an amount of less than 5% of the total 


 


9

















 


awards
available for grant under the Plan or (iii) are not subject to the
attainment of performance objectives, shall provide that vesting, restrictions
on transfer or some other comparable restriction which incents continued
performance of the Participant, will be for a period of not less than three
years (although vesting or lapsing may occur in tranches over the three years),
unless there is a Change in Control or the Participant retires, becomes
disabled or dies. Subject to the provisions of the Plan, the Committee shall
have sole and absolute discretion to determine to whom and when such Other
Stock-Based Awards will be made, the number of shares of Common Stock to be
awarded under (or otherwise related to) such Other Stock-Based Awards and all
other terms and conditions of such Awards. The Committee shall determine
whether Other Stock-Based Awards shall be settled in cash, Common Stock or a
combination of cash and Common Stock.


 


(b)         With
respect to any restricted stock units granted under the Plan, the obligations
of the Company or any Subsidiary are limited solely to the delivery of Shares
(or, at the discretion of the Committee, cash in lieu thereof to the extent
necessary to comply with applicable law, regulation or other local practice, as
determined by the Committee) on the date when such Shares are due to be
delivered under each Award Agreement. The Company or any Subsidiary may deliver
cash to Participants for dividends paid to a holder of shares of Common Stock,
for fractional shares or for any amounts payable in cash upon the occurrence of
a Change in Control.


 


(c)          The
Committee may establish performance objectives that must be attained in order
for the Company to make payments pursuant to Other Stock-Based Awards. The
performance objectives for Awards will be based upon one or more of the
following criteria: (i) before-tax income and/or net income; (ii) earnings
per share; (iii) book value per share; (iv) stock price;
(v) return on equity; (vi) expense management; (vii) return on
investment; (viii) improvements in capitalization; (ix) profitability
of an identifiable business unit or product; (x) profit margins;
(xi) budget comparisons; (xii) total return to Stockholders;
(xiii) net revenue; and (xiv) economic value added. The foregoing
criteria may relate to the Company, one or more of its Subsidiaries or one or
more of its divisions or units, or any combination of the foregoing, and may be
applied on an absolute basis and/or be relative to one or more peer group
companies or indices, or any combination thereof, as the Committee shall
determine. In addition, to the degree consistent with Section 162(m) of the
Code (or any successor section thereto), the performance goals may be
calculated without regard to extraordinary items. The Committee shall determine
whether, with respect to a performance period, the applicable performance goals
have been met with respect to a given Participant and, if they have, shall so
certify and ascertain the amount of the applicable Performance-Based Award. No
Performance-Based Awards will be paid for such performance period until such
certification is made by the Committee. The amount of the Performance-Based
Award actually paid to a given Participant may be less than the amount
determined by the applicable performance goal formula, at the discretion of the
Committee. The amount of the Performance-Based Award determined by the Committee
for a performance period shall be paid to the Participant at such time as
determined by the Committee in its sole discretion after the end of such
performance period; provided, however, that a Participant may, if and to the
extent permitted by the Committee and consistent with the provisions of
Sections 162(m) and 409A of the Code, elect to defer payment of a
Performance-Based Award. The maximum amount of Other Stock-Based Awards that
may be granted during a fiscal year of the Company to any Participant shall be
(x) with respect to Other Stock-Based Awards that are denominated or
payable in Shares, four million Shares, and (y) with respect to Other
Stock-Based Awards that are not denominated or payable in Shares,
$50 million.


 


(d)         The Committee may grant Participants Dividend Equivalent Rights with
respect to any Common Stock subject to any Award. The Committee shall specify
at the time of grant of any Dividend Equivalent Right whether dividends shall
be paid at the time dividends in respect of Common Stock are paid to other
shareholders or accumulated and paid out at the time payment is called for
under the Awards to which the Dividend Equivalent Right relates. Other
Stock-Based Awards may, at the discretion of the Committee, provide the
Participant with dividends or dividend equivalents and voting rights prior to
either vesting or earnout.


 


10

















 


8)              Unfunded Status of Plan; No
Rights as a Shareholder.


 


The Plan is intended to
constitute an “unfunded” plan for long-term incentive compensation. With
respect to any payments not yet made to a Participant, including any
Participant-optionee, by the Company, nothing herein contained shall give any
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Shares or payments in lieu thereof or with respect to Options, Stock
Appreciation Rights and Other Stock-Based Awards under the Plan; provided,
however, that the existence of such trusts or other arrangements is consistent
with the unfunded status of the Plan. Except as otherwise provided in a
Participant’s Award Agreement, no Participant (or other person having rights
pursuant to an Award) shall have any of the rights of a shareholder of the
Company with respect to Shares subject to an Award until the delivery of such
Shares. Except as otherwise provided in Section 9,  no adjustments shall be made for dividends or
distributions on (whether ordinary or extraordinary, and whether in cash,
Shares, other securities or other property), or other events relating to,
Shares subject to an Award for which the record date is prior to the date such
Shares are delivered.


 


9)              Adjustments Upon Certain
Events


 


Notwithstanding any other
provisions in the Plan to the contrary, the following provisions shall apply to
all Awards granted under the Plan:


 


(a)          Generally. In
the event of any change in the outstanding Shares after the Effective Date by
reason of any Share dividend or split, reorganization, recapitalization,
merger, consolidation, spin-off, combination or transaction or exchange of
Shares or other corporate exchange, or any distribution to shareholders of
Shares other than regular cash dividends, or any transaction similar to
the  foregoing, the Committee in its sole
discretion and without liability to any person may make such substitution or
adjustment, if any, as it deems to be equitable, as to (i) the number or
kind of Shares or other securities issued or reserved for issuance pursuant to
the Plan or pursuant to outstanding Awards, (ii) the maximum number of
Shares for which Awards may be granted during a fiscal year of the Company to
any Participant, (iii) the Option Price or exercise price of any Stock
Appreciation Right and/or (iv) any other affected terms of such Awards.


 


(b)         Change in Control. If a Change in Control occurs after the Effective Date, at any time
before such Change in Control the Committee may, but shall not be obligated to,
(i) accelerate, vest or cause the restrictions to lapse with respect to,
all or any portion of an Award, (ii) cancel Awards for fair value (as
determined in the sole discretion of the Committee) which, in the case of
Options and Stock Appreciation Rights, may equal the excess, if any, of value
of the consideration to be paid in the Change in Control transaction to holders
of the same number of Shares subject to such Options or Stock Appreciation
Rights (or, if no consideration is paid in any such transaction, the Fair
Market Value of the Shares subject to such Options or Stock Appreciation
Rights) over the aggregate exercise price of such Options or Stock Appreciation
Rights, (iii) provide for the issuance of substitute Awards that will
substantially preserve the otherwise applicable terms of any affected Awards
previously granted hereunder as determined by the Committee in its sole
discretion or (iv) provide that for a period of at least 30 days prior
to the Change in Control, such Options shall be exercisable as to all shares
subject thereto and that upon the occurrence of the Change in Control, such
Options shall terminate and be of no further force and effect, provided in any
such case the Committee shall not have such power and authority to accelerate
the times at which Shares with respect to any Award are delivered if any Award
is subject to Section 409A of the Code in a manner that would result in  the imposition upon any Participant of an
additional tax under Section 409A of the Code.


 


10)        No Right to Employment or Awards


 


The granting of an Award
under the Plan shall impose no obligation on the Company or any Affiliate to
continue the Employment of a Participant and shall not lessen or affect the
Company’s or 


 


11

















 


Subsidiary’s right to
terminate the Employment of such Participant. No Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of Awards.
The terms and conditions of Awards and the Committee’s determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).


 


11)        Successors and Assigns


 


The Plan and any Award
Agreement shall be binding on all successors and assigns of the Company and a
Participant, including without limitation, the estate of such Participant and
the executor, administrator or trustee of such estate, or any receiver or
trustee in bankruptcy or representative of the Participant’s creditors.


 


12)        Transferability of Awards


 


Unless otherwise determined
by the Committee or as otherwise set forth in any Award Agreement, an Award
shall not be sold, transferred, assigned, pledged, hypothecated or otherwise
disposed of  by the Participant otherwise
than by will or by the laws of descent and distribution. An Award exercisable
after the death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant. Any sale, transfer,
assignment, pledge, hypothecation or other disposition in violation of the
provisions of this Section 12 shall be void.


 


13)        Amendments or Termination


 


The Board may amend or
terminate the Plan, but no amendment or termination shall be made,
(a) without the approval of the shareholders of the Company, if such
action would (i) (except as is provided in Section 9), increase the
total number of Shares reserved for the purposes of the Plan or increase the
maximum number of Shares that may be issued hereunder, or the maximum number of
Shares for which Awards may be granted to any Participant, (ii) change the
class of persons eligible to be Participants; or (iii) extend the date
after which Awards cannot be granted under the Plan; or (b) without the
consent of a Participant, if such action would diminish any of the rights of
the Participant under any Award theretofore granted to such Participant under
the Plan; provided, however, that the Committee may amend the Plan and/or any
outstanding Awards in such manner as it deems necessary to permit the Plan
and/or any outstanding Awards to satisfy applicable requirements of the Code or
other applicable laws.


 


14)        Treatment of Awards


 


Absent express provisions to
the contrary, an Award under this Plan shall not be deemed compensation for
purposes of computing benefits or contributions under any retirement plan of
the Company or its Affiliates and shall not affect any benefits under any other
benefit plan of any kind now or subsequently in effect under which the
availability or amount of benefits is related to level of compensation. This
Plan is not a “Pension Plan” or “Welfare Plan” under the Employee Retirement
Income Security Act of 1974, as amended.


 


15)        Choice of Law


 


The Plan shall be governed
by and construed in accordance with the laws of the State of Delaware without
regard to conflicts of laws.


 


16)        Effectiveness of the Plan


 


The Plan shall be effective
as of the Effective Date and shall terminate immediately prior to the tenth
anniversary of the Effective Date, subject to earlier termination by the Board
pursuant to Section 13.


 


12