Exhibit 10.4


 


SCIENTIFIC GAMES CORPORATION




 





 


2003 Incentive Compensation Plan


As Amended and Restated




 





 


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SCIENTIFIC GAMES CORPORATION


 


2003 Incentive Compensation Plan,
As Amended and Restated


 


	
  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Purpose

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Administration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Authority of the Committee

  	
   

  
	
   

  	
  (b)

  	
  Manner of
  Exercise of Committee Authority

  	
   

  
	
   

  	
  (c)

  	
  Limitation of Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Shares Available
  Under the Plan

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Number of Shares
  Available for Delivery

  	
   

  
	
   

  	
  (b)

  	
  Share Counting Rules

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Eligibility;
  Per-Person Award Limitations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Grants to Eligible Persons

  	
   

  
	
   

  	
  (b)

  	
  Annual Per-Person
  Award Limitations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Specific Terms of Awards

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General

  	
   

  
	
   

  	
  (b)

  	
  Options

  	
   

  
	
   

  	
  (c)

  	
  Stock Appreciation Rights

  	
   

  
	
   

  	
  (d)

  	
  Restricted Stock

  	
   

  
	
   

  	
  (e)

  	
  Deferred Stock

  	
   

  
	
   

  	
  (f)

  	
  Bonus Stock and
  Awards in Lieu of Obligations

  	
   

  
	
   

  	
  (g)

  	
  Dividend Equivalents

  	
   

  
	
   

  	
  (h)

  	
  Other Stock-Based Awards

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Performance
  Awards, Including Annual Incentive Awards

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Performance Awards
  Generally

  	
   

  
	
   

  	
  (b)

  	
  Performance Awards
  Granted to Covered Employees

  	
   

  
	
   

  	
  (c)

  	
  Annual Incentive
  Awards Granted to Designated Covered Employees

  	
   

  
	
   

  	
  (d)

  	
  Exemptions from
  Section 16(b) Liability

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Certain
  Provisions Applicable to Awards

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Stand-Alone,
  Additional, Tandem, and Substitute Awards

  	
   

  
	
   

  	
  (b)

  	
  Term of Awards

  	
   

  
	
   

  	
  (c)

  	
  Form and
  Timing of Payment under Awards; Deferrals

  	
   

  
	
   

  	
  (d)

  	
  Additional Award
  Forfeiture Provisions

  	
   

  
	
   

  	
  (e)

  	
  Exemptions from
  Section 16(b) Liability

  	
   

  



 





















 


	
  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Change in Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Effect of “Change in
  Control”

  	
   

  
	
   

  	
  (b)

  	
  Definition of “Change
  in Control”

  	
   

  
	
   

  	
  (c)

  	
  Definition of
  “Change in Control Price”

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  General Provisions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Compliance with
  Legal and Other Requirements

  	
   

  
	
   

  	
  (b)

  	
  Limits on
  Transferability; Beneficiaries

  	
   

  
	
   

  	
  (c)

  	
  Adjustments

  	
   

  
	
   

  	
  (d)

  	
  Taxes

  	
   

  
	
   

  	
  (e)

  	
  Changes to the Plan and
  Awards

  	
   

  
	
   

  	
  (f)

  	
  Limitation on
  Rights Conferred under Plan

  	
   

  
	
   

  	
  (g)

  	
  Unfunded Status
  of Awards; Creation of Trusts

  	
   

  
	
   

  	
  (h)

  	
  Certain
  Limitations on Awards to Ensure Compliance with Section 409A

  	
   

  
	
   

  	
  (i)

  	
  Certain
  Limitations Relating to Accounting Treatment of Awards

  	
   

  
	
   

  	
  (j)

  	
  Nonexclusivity of the Plan

  	
   

  
	
   

  	
  (k)

  	
  Payments in the
  Event of Forfeitures; Fractional Shares

  	
   

  
	
   

  	
  (l)

  	
  Awards to
  Participants Outside the United States

  	
   

  
	
   

  	
  (m)

  	
  Governing Law

  	
   

  
	
   

  	
  (n)

  	
  Preexisting Plan

  	
   

  
	
   

  	
  (o)

  	
  Plan Effective
  Date and Termination

  	
   

  



 





















 


SCIENTIFIC GAMES CORPORATION


 


2003 Incentive Compensation Plan


As Amended and Restated as of June 14,
2005


 


1.                                       Purpose. 
The purpose of this 2003 Incentive Compensation Plan, as amended and
restated (the “Plan”), is to assist Scientific Games Corporation, a Delaware
corporation (the “Company”), and its subsidiaries in attracting, retaining,
motivating and rewarding executives, directors, employees, and other persons
who provide services to the Company and/or its subsidiaries, to provide for
equitable and competitive compensation opportunities, to encourage long-term
service, to recognize individual contributions and reward achievement of
Company goals, and promote the creation of long-term value for stockholders by
closely aligning the interests of participants with those of stockholders.  The Plan authorizes stock-based and
cash-based performance incentives for participants, to encourage such persons
to expend their maximum efforts in the creation of stockholder value. The Plan
is also intended to qualify certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Internal Revenue Code to the
extent deemed appropriate by the Committee which administers the Plan.


 


2.                                       Definitions. 
For purposes of the Plan, the following terms shall be defined as set
forth below, in addition to such terms defined in Section 1 hereof:


 


(a)                                  “Annual Incentive Award” means a type of
Performance Award granted to a Participant under Section 7(c) representing
a conditional right to receive cash, Stock or other Awards or payments, as
determined by the Committee, based on performance in a performance period of
one fiscal year or a portion thereof.


 


(b)                                 “Award” means any award of an Option,
SAR (including Limited SAR), Restricted Stock, Deferred Stock, Stock granted as
a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based
Award, or Performance Award (including an Annual Incentive Award) together with
any other right or interest granted to a Participant under the Plan.


 


(c)                                  “Beneficiary” means the person, persons,
trust, or trusts which have been designated by a Participant in his or her most
recent written beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant’s death or to which
Awards or other rights are transferred if and to the extent permitted under Section 10(b) hereof.  If, upon a Participant’s death, there is no
designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means person, persons, trust, or trusts entitled by will or the
laws of descent and distribution to receive such benefits.


 


(d)                                 “Beneficial Owner” shall have the
meaning ascribed to such term in Rule 13d-3 under the Exchange Act and any
successor to such Rule.


 


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


 


(f)                                    “Change in Control” means Change in
Control as defined with related terms in Section 9 of the Plan.


 


(g)                                 “Change in Control Price” means the
amount calculated in accordance with Section 9(c) of the Plan.


 


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(h)                                 “Code” means the Internal Revenue Code
of 1986, as amended from time to time, including regulations thereunder and successor
provisions and regulations, proposed regulations and other applicable guidance
or pronouncement of the Department of the Treasury and Internal Revenue
Service.


 


(i)                                     “Committee” means the Compensation
Committee of the Board of Directors, the composition and governance of which is
established in the Committee’s Charter as approved from time to time by the
Board and other corporate governance documents of the Company.  No action of the Committee shall be void or
deemed to be without authority due to the failure of any member, at the time
the action was taken, to meet any qualification standard set forth in the
Committee Charter or this Plan.


 


(j)                                     “Covered Employee” means a person
designated by the Committee as likely to be a “covered employee,” as defined
under Code Section 162(m), with respect to a specified fiscal year or
other performance period.


 


(k)                                  “Deferred Stock” means a conditional
right, granted to a Participant under Section 6(e) hereof, to receive
Stock, at the end of a specified deferral period.


 


(l)                                     “Dividend Equivalent” means a
conditional right, granted to a Participant under Section 6(g), to receive
cash, Stock, other Awards, or other property equal in value to dividends paid
with respect to a specified number of shares of Stock, or other periodic
payments.


 


(m)                               “Effective Date” means the date of
approval of the Plan by stockholders of the Company.


 


(n)                                 “Eligible Person” means each executive
officer and other officer or full-time employee of the Company or of any
subsidiary, including each such person who may also be a director of the
Company, each non-employee director of the Company, each other person who
provides substantial services to the Company and/or its subsidiaries and who is
designated as eligible by the Committee, and any person who has been offered
employment by the Company or a subsidiary or affiliate, provided that such
prospective employee may not receive any payment or exercise any right relating
to an Award until such person has commenced employment with the Company or a subsidiary.  An employee on leave of absence may be
considered as still in the employ of the Company or a subsidiary for purposes
of eligibility for participation in the Plan.


 


(o)                                 “Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time, including rules thereunder
and successor provisions and rules thereto.


 


(p)                                 “Fair Market Value” means the fair
market value of Stock, Awards, or other property as determined in good faith by
the Committee or under procedures established by the Committee.  Unless otherwise determined by the Committee,
the Fair Market Value of Stock shall be the average of the high and low sales
prices of Stock on a given date or, if there are no sales on that date, on the
latest previous date on which there were sales, reported for composite
transactions in securities listed on the principal trading market on which
Stock is then listed.  Fair Market Value
relating to the exercise price or grant price of any Non-409A Option or SAR
shall conform to requirements under Code Section 409A.


 


(q)                                 “409A Awards” means Awards that constitute a
deferral of compensation under Code Section 409A and regulations
thereunder.  “Non-409A Awards” means
Awards other than 409A Awards; an Award granted before January 1, 2005
which is eligible for “grandfathering” under Code Section 409A (generally
such an Award must be vested before January 1, 2005 in order to be
grandfathered) constitutes a Non-409A Award unless the Committee instead
designates it as a 409A Award.  Although
the Committee retains authority under the Plan to grant Options, SARs and
Restricted Stock on terms that will qualify those Awards as 409A Awards,
Options, SARs exercisable for Stock, and Restricted Stock will be Non-409A Awards


 


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(with conforming terms, as provided in Section 10(h))
unless otherwise expressly specified by the Committee.


 


(r)                                    “Incentive Stock Option” or “ISO” means
any Option intended to be and designated as an incentive stock option within
the meaning of Code Section 422 or any successor provision thereto that
may be granted to Eligible Persons who are employees.


 


(s)                                  “Limited SAR” means a conditional right
granted to a Participant under Section 6(c) hereof.


 


(t)                                    “Option” means a conditional right,
granted to a Participant under Section 6(b) hereof, to purchase Stock
or other Awards at a specified price during specified time periods.


 


(u)                                 “Other Stock-Based Awards” means Awards
granted to a Participant under Section 6(h) hereof.


 


(v)                                 “Participant” means a person who has
been granted an Award under the Plan which remains outstanding, including a
person who is no longer an Eligible Person.


 


(w)                               “Performance Award” means a conditional
right, granted to a Participant under Section 7, to receive cash, Stock or
other Awards or payments, as determined by the Committee, based upon
performance criteria specified by the Committee.


 


(x)                                   “Preexisting Plan” mean the Company’s
1997 Incentive Compensation Plan, as amended and restated.


 


(y)                                 “Restricted Stock” means Stock granted
to a Participant under Section 6(d) hereof, that is subject to
certain restrictions and to a risk of forfeiture.


 


(z)                                   “Rule 16b-3” means Rule 16b-3,
as from time to time in effect and applicable to the Plan and Participants,
promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act.


 


(aa)                            “Stock”  means the Company’s Class A
Common Stock, $.01 par value, and such other securities as may be substituted
(or resubstituted) for Stock pursuant to Section 10(c) hereof.


 


(bb)                          “Stock Appreciation Rights” or “SAR” means
a conditional right granted to a Participant under Section 6(c) hereof.


 


3.                                       Administration.


 


(a)                                  Authority of the Committee.  Except as otherwise provided below, the Plan
shall be administered by the Committee.  The Committee shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards,
determine the type, number, and other terms and conditions of, and all other
matters relating to, Awards, prescribe Award agreements (which need not be
identical for each Participant) and rules and regulations for the
administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions, or reconcile inconsistencies
therein, and to make all other decisions and determinations as the Committee
may deem necessary or advisable for the administration of the Plan.  The foregoing notwithstanding, the Board
shall perform the functions of the Committee for purposes of granting Awards
under the Plan to non-employee directors, and may perform any function of the
Committee under the Plan


 


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for any other purpose (subject to Nasdaq
Marketplace Rule 4350(c)(3)), including for the purpose of ensuring that
transactions under the Plan by Participants who are then subject to Section 16
of the Exchange Act in respect of the Company are exempt under Rule 16b-3.  In any case in which the Board is performing
a function of the Committee under the Plan, each reference to the Committee
herein shall be deemed to refer to the Board, except where the context
otherwise requires.  Any action of the
Committee shall be final, conclusive and binding on all persons, including the
Company, its subsidiaries, Participants, Beneficiaries, transferees under Section 10(b) hereof,
or other persons claiming rights from or through a Participant, and
stockholders.


 


(b)                                 Manner of Exercise of Committee
Authority.  The Committee may act through
subcommittees, including for purposes of perfecting exemptions under Rule 16b-3
or qualifying Awards under Code Section 162(m) as performance-based
compensation, in which case the subcommittee shall be subject to and have
authority under the charter applicable to the Committee, and the acts of the
subcommittee shall be deemed to be acts of the Committee hereunder. The express
grant of any specific power to the Committee, and the taking of any action by
the Committee, shall not be construed as limiting any power or authority of the
Committee.  The Committee may delegate to
officers or managers of the Company or any subsidiary or affiliate, or
committees thereof, the authority, subject to such terms as the Committee shall
determine, to perform such functions, including administrative functions, as
the Committee may determine, to the fullest extent permitted under Section 157
and other applicable provisions of the Delaware General Corporation Law.  The Committee may appoint agents to assist it
in administering the Plan.


 


(c)                                  Limitation of Liability.  The Committee and each member thereof, and
any person acting pursuant to authority delegated by the Committee, shall be
entitled, in good faith, to rely or act upon any report or other information furnished
by any executive officer, other officer or employee of the Company or a
subsidiary or affiliate, the Company’s independent auditors, consultants or any
other agents assisting in the administration of the Plan.  Members of the Committee, any person acting
pursuant to authority delegated by the Committee, and any officer or employee
of the Company or a subsidiary or affiliate acting at the direction or on
behalf of the Committee or a delegee shall not be personally liable for any
action or determination taken or made in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified and protected
by the Company with respect to any such action or determination.


 


4.                                       Shares Available Under the Plan.


 


(a)    Number of Shares Available for
Delivery.  Subject to adjustment as
provided in Section 10(c) hereof, the total number of shares of Stock
reserved and available for delivery in connection with Awards under the Plan
shall be 8.5 million plus the number of shares that, under the Preexisting
Plan, remain available at the Effective Date or thereafter would become
available under the terms of the Preexisting Plan.  Any shares of Stock delivered under the Plan
shall consist of authorized and unissued shares or treasury shares.


 


(b)    Share
Counting Rules.  The Committee may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from
the number of shares previously counted in connection with an Award.  Shares subject to an Award that is canceled,
expired, forfeited, settled in cash or terminated or settled without delivery
of the full number of shares subject to such Award to the Participant will
again be available for Awards, and shares withheld in payment of the exercise
price or taxes relating to an Award and shares equal to the number surrendered
in payment of any exercise price or taxes relating to an Award shall be deemed
to constitute shares not delivered to the Participant and shall be deemed to
again be available for Awards under the Plan; provided, however, that shares
shall not become available under this Section 4(b) in an event that
would constitute a “material amendment” of the


 


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Plan subject to shareholder approval under
Marketplace Rule 4350(i) and other applicable rules of the
Nasdaq National Market.  For purposes of
determining the number of Shares that become available as of the Effective Date
under the Preexisting Plan, the share counting rules of the Preexisting
Plan will apply, and the share counting rules of this Plan shall
thereafter apply with respect to awards that remain outstanding under the
Preexisting Plan and Awards granted under this Plan.  In addition, in the case of any Award granted
in substitution for an award of a company or business acquired by the Company
or a subsidiary or affiliate, shares issued or issuable in connection with such
substitute Award shall not be counted against the number of shares reserved
under the Plan, but shall be available under the Plan by virtue of the Company’s
assumption of the plan or arrangement of the acquired company or business.  This Section 4(b) shall apply to
the number of shares reserved and available for ISOs only to the extent
consistent with applicable regulations relating to ISOs under the Code.  Because shares will count against the number
reserved in Section 4(a) upon delivery (or later vesting) and subject
to the share counting rules under this Section 4(b), the Committee
may determine that Awards may be outstanding that relate to more shares than
the aggregate remaining available under the Plan, so long as Awards will not
result in delivery and vesting of shares in excess of the number then available
under the Plan.


 


5.                                       Eligibility; Per-Person Award Limitations.


 


(a)                                  Grants to Eligible Persons.  Awards may be granted under the Plan only to
Eligible Persons.


 


(b)                                 Annual Per-Person Award Limitations.  In each calendar year during any part of
which the Plan is in effect, an Eligible Person may be granted Awards under
each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), and 6(h) (including
Performance Awards under Section 7 based on Awards authorized by each
referenced subsection) relating to a number of shares of Stock up to his or her
Annual Limit.  A Participant’s Annual
Limit, in any year during any part of which the Participant is then eligible
under the Plan, shall equal 1.5 million shares plus the amount of the
Participant’s unused Annual Limit relating to the same type of Award as of the
close of the previous year, subject to adjustment as provided in Section 10(c).  In the case of a cash-denominated Award for
which the limitation set forth in the preceding sentence would not operate as
an effective limitation satisfying Treasury Regulation 1.162-27(e)(4) (including
a cash Performance Award under Section 7), an Eligible Person may not be
granted Awards authorizing the earning during any calendar year of an amount
that exceeds the Participant’s Annual Limit, which for this purpose shall equal
$3 million plus the amount of the Participant’s unused cash Annual Limit
as of the close of the previous year (this limitation is separate and not
affected by the number of Awards granted during such calendar year subject to
the limitation in the preceding sentence). 
For this purpose, (i) ”earning” means satisfying performance
conditions so that an amount becomes payable, without regard to whether it is
to be paid currently or on a deferred basis or continues to be subject to any
service requirement or other non-performance condition, and (ii) a
Participant’s Annual Limit is used to the extent a cash amount or number of
shares may be potentially earned or paid under an Award, regardless of whether
such amount or shares are in fact earned or paid.


 


6.                                       Specific Terms of Awards.


 


(a)                                  General. 
Awards may be granted on the terms and conditions set forth in this Section 6.  In addition, the Committee may impose on any
Award or the exercise thereof, at the date of grant or thereafter (subject to
Sections 10(e) and 10(h)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. 
The Committee shall retain full power and discretion to accelerate, waive
or modify, at any time, any term or condition of an Award that is not mandatory
under the Plan.  The Committee shall
require the payment of lawful consideration for an Award to the extent
necessary to satisfy


 


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the requirements of the Delaware General
Corporation Law, and may otherwise require payment of consideration for an
Award except as limited by the Plan.


 


(b)                                 Options. 
The Committee is authorized to grant Options to Participants on the
following terms and conditions:


 


(i)                                     Exercise Price.  The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee, provided that
such exercise price shall be not less than the Fair Market Value of a share of
Stock on the date of grant of such Option except as provided under Section 6(f) or
8(a) hereof.  In addition, in
connection with a merger, consolidation or reorganization of the Company or any
of its subsidiaries, the Committee may grant Options with an exercise price per
share less than the market value of the Common Stock on the date of grant if
such Options are granted in exchange for, or upon conversion of, options to
purchase capital stock of any other entity which is a party to such merger,
consolidation or reorganization.


 


(ii)                                  Time and Method of Exercise.  The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment (subject to Section 10(h) and
(i)), including, without limitation, cash, Stock (including Stock deliverable
upon exercise, if such withholding will not result in additional accounting
expense to the Company), other Awards or awards granted under other plans of
the Company or any subsidiary or affiliate, or other property (including
through broker-assisted “cashless exercise” arrangements, to the extent
permitted by applicable law), and the methods by or forms in which Stock will
be delivered or deemed to be delivered in satisfaction of Options to
Participants (including, to the extent permitted under Code Section 409A,
deferred delivery of shares as mandated by the Committee, with such deferred
shares subject to any vesting, forfeiture or other terms as the Committee may
specify).


 


(iii)                               ISOs.  The terms of any ISO granted under the Plan
shall comply in all respects with the provisions of Code Section 422.  Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to ISOs (including any SAR in
tandem therewith) shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be exercised, so as to
disqualify either the Plan or any ISO under Code Section 422, unless the
Participant has first consented to the change that will result in such
disqualification.  ISOs may be granted
only to employees of the Company or any of its subsidiaries.  To the extent that the aggregate Fair Market
Value (determined as of the time the Option is granted) of the Stock with
respect to which ISOs granted under this Plan and all other plans of the
Company and any subsidiary are first exercisable by any employee during any
calendar year shall exceed the maximum limit (currently, $100,000), if any,
imposed from time to time under Code Section 422, such Options shall be
treated as Options that are not ISOs.


 


(c)                                  Stock Appreciation Rights.  The Committee is authorized to grant SARs to
Participants on the following terms and conditions:


 


(i)                                     Right to Payment.  A SAR shall confer on the Participant to whom
it is granted a right to receive, upon exercise thereof, the excess of (A) the
Fair Market Value of one share of Stock on the date of exercise (or, in the
case of a “Limited SAR,” the Fair Market Value determined by reference to the
Change in Control Price, as defined under Section 9(c) hereof) over (B) the
grant price of the SAR as determined by the Committee, which grant price shall
be not less than the Fair Market Value of a share of Stock on the date of grant
of such SAR..


 


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(ii)                                  Other Terms. 
The Committee shall determine, at the date of grant or thereafter, the
term of each SAR, provided that in no event shall the term of an SAR exceed a
period of ten years from the date of grant, the time or times at which and the
circumstances under which an SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future service
requirements), the method of exercise, method of settlement, form of
consideration payable in settlement, method by or forms in which Stock will be
delivered or deemed to be delivered to Participants, whether or not an SAR
shall be in tandem or in combination with any other Award, whether or not the
SAR will be a 409A Award or Non-409A Award (cash SARs will in all cases be 409A
Awards), and any other terms and conditions of any SAR.  Limited SARs that may only be exercised in
connection with a Change in Control, termination of service following a Change
in Control, or other event as specified by the Committee may be granted on such
terms, not inconsistent with this Section 6(c), as the Committee may
determine.  SARs and Limited SARs may be
either freestanding or in tandem with other Awards.  The Committee may require that an outstanding
Option be exchanged for an SAR exercisable for Stock having vesting,
expiration, and other terms substantially the same as the Option, so long as
such exchange will not result in additional accounting expense to the Company.


 


(d)                                 Restricted Stock.  The Committee is authorized to grant
Restricted Stock to Participants on the following terms and conditions:


 


(i)                                     Grant and Restrictions.  Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant
or thereafter.  Except to the extent restricted
under the terms of the Plan and any Award agreement relating to the Restricted
Stock, a Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). 
During the restricted period applicable to the Restricted Stock, subject
to Section 10(b) below, the Restricted Stock may not be sold,
transferred, pledged, hypothecated, margined, or otherwise encumbered by the
Participant.


 


(ii)                                  Forfeiture. 
Except as otherwise determined by the Committee, upon termination of
employment during the applicable restriction period, Restricted Stock that is
at that time subject to restrictions shall be forfeited and reacquired by the
Company; provided that the Committee may provide, by rule or regulation or
in any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock shall be
waived in whole or in part in the event of terminations resulting from
specified causes, and the Committee may in other cases waive in whole or in
part the forfeiture of Restricted Stock.


 


(iii)                               Certificates for Stock.  Restricted Stock granted under the Plan may
be evidenced in such manner as the Committee shall determine.  If certificates representing Restricted Stock
are registered in the name of the Participant, the Committee may require that
such certificates bear an appropriate legend referring to the terms, conditions
and restrictions applicable to such Restricted Stock, that the Company retain
physical possession of the certificates, and/or that the Participant deliver a
stock power to the Company, endorsed in blank, relating to the Restricted
Stock.


 


(iv)                              Dividends and Splits.  As a condition to the grant of an Award of
Restricted Stock, the Committee may require that any cash dividends paid on a
share of Restricted Stock be automatically reinvested in additional shares of
Restricted Stock or applied to the purchase of additional Awards


 


7





















 


under the Plan. 
Unless otherwise determined by the Committee, Stock distributed in
connection with a Stock split or Stock dividend, and other property distributed
as a dividend, shall be subject to restrictions and a risk of forfeiture to the
same extent as the Restricted Stock with respect to which such Stock or other
property has been distributed.


 


(e)                                  Deferred Stock.  The Committee is authorized to grant Deferred
Stock to Participants, which are rights to receive Stock at the end of a
specified deferral period, subject to the following terms and conditions:


 


(i)    Award
and Restrictions.  Settlement of an Award
of Deferred Stock shall occur upon expiration of the deferral period specified
for such Deferred Stock by the Committee (or, if permitted by the Committee, as
elected by the Participant).  In
addition, Deferred Stock shall be subject to such restrictions (which may
include a risk of forfeiture) as the Committee may impose, if any, which
restrictions may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals and/or
future service requirements), separately or in combination, in installments or
otherwise, as the Committee may determine.


 


(ii)   Forfeiture. 
Except as otherwise determined by the Committee, upon termination of
employment during the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award agreement evidencing the
Deferred Stock), all Deferred Stock that is at that time subject to deferral
(other than a deferral at the election of the Participant) shall be forfeited;
provided that the Committee may provide, by rule or regulation or in any
Award agreement, or may determine in any individual case, that restrictions or
forfeiture conditions relating to Deferred Stock shall be waived in whole or in
part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part the forfeiture of
Deferred Stock.  Deferred Stock subject
to a risk of forfeiture may be called “restricted stock units” or otherwise
designated by the Committee.


 


(iii)    Dividend
Equivalents.  Unless otherwise determined
by the Committee at date of grant, Dividend Equivalents on the specified number
of shares of Stock covered by an Award of Deferred Stock shall be either (A) paid
with respect to such Deferred Stock at the dividend payment date in cash or in
shares of unrestricted Stock having a Fair Market Value equal to the amount of
such dividends, or (B) deferred with respect to such Deferred Stock and
the amount or value thereof automatically deemed reinvested in additional
Deferred Stock, other Awards or other investment vehicles, as the Committee
shall determine or permit the Participant to elect.


 


(f)                                    Bonus Stock and Awards in Lieu of
Obligations.  The Committee is authorized
to grant Stock as a bonus, or to grant Stock or other Awards in lieu of
obligations of the Company or a subsidiary or affiliate to pay cash or deliver
other property under the Plan or under other plans or compensatory
arrangements, subject to such terms as shall be determined by the Committee.


 


(g)                                 Dividend Equivalents.  The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive cash, Stock,
other Awards, or other property equivalent to all or a portion of the dividends
paid with respect to a specified number of shares of Stock.  Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award.  The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to
have been reinvested in additional Stock, Awards, or other investment vehicles,
and subject to restrictions on transferability, risks of forfeiture and such
other terms as the Committee may specify.


 


(h)                                 Other Stock-Based Awards.  The Committee is authorized, subject to
limitations under applicable law, to grant to Participants such other Awards
that may be denominated or payable in, valued in whole or in


 


8





















 


part by reference to, or otherwise based on,
or related to, Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Stock, purchase rights for Stock, Awards with value and payment contingent upon
performance of the Company or any other factors designated by the Committee,
and Awards valued by reference to the book value of Stock or the value of
securities of or the performance of specified subsidiaries.  The Committee shall determine the terms and
conditions of such Awards.  Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration, paid for
at such times, by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards, or other property, as the Committee
shall determine.


 


7.                                       Performance Awards, Including Annual
Incentive Awards


 


(a)                                  Performance Awards Generally.  The Committee is authorized to grant
Performance Awards on the terms and conditions specified in this Section 7.  Performance Awards may be denominated as a
cash amount, number of shares of Stock, or specified number of other Awards (or
a combination) which may be earned upon achievement or satisfaction of
performance conditions specified by the Committee.  In addition, the Committee may specify that
any other Award shall constitute a Performance Award by conditioning the right
of a Participant to exercise the Award or have it settled, or the timing
thereof, upon achievement or satisfaction of such performance conditions as may
be specified by the Committee.  The
Committee may use such business criteria and other measures of performance as
it may deem appropriate in establishing any performance conditions, and may
exercise its discretion to reduce or increase the amounts payable under any
Award subject to performance conditions, except as limited under Sections 7(b) and
7(c) in the case of a Performance Award intended to qualify as “performance-based
compensation” under Code Section 162(m).


 


(b)                                 Performance Awards Granted to Covered
Employees.  If the Committee determines
that a Performance Award to be granted to an Eligible Person who is designated
by the Committee as a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise
and/or settlement of such Performance Award shall be contingent upon
achievement of a preestablished performance goal and other terms set forth in
this Section 7(b).


 


(i)    Performance
Goals Generally.  The performance goal
for such Performance Awards shall consist of one or more business criteria and
a targeted level or levels of performance with respect to each of such
criteria, as specified by the Committee consistent with this Section 7(b).  The performance goal shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder (including Treasury Regulation 1.162-27 and
successor regulations thereto), including the requirement that the level or
levels of performance targeted by the Committee result in the achievement of
performance goals being “substantially uncertain.” The Committee may determine
that such Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the performance
goals must be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards.  Performance
goals may differ for Performance Awards granted to any one Participant or to
different Participants.


 


(ii)   Business Criteria.  One or more of the following business
criteria for the Company, on a consolidated basis, and/or for specified
subsidiaries or affiliates or other business units or lines of business of the
Company shall be used by the Committee in establishing performance goals for
such Performance Awards: (1) earnings per share (basic or fully diluted); (2) revenues;
(3) earnings, before or after taxes, from operations (generally or
specified operations), before or after interest expense, depreciation,
amortization, incentives, or extraordinary or special items; (4) cash
flow, free cash flow, cash flow return on investment (discounted or otherwise),
net cash provided by operations, or cash flow in excess of cost of capital; (5) return
on net assets, return on assets, return on investment, return


 


9





















 


on capital, return on equity; (6) economic
value created; (7) operating margin or operating expense; (8) net
income; (9) Stock price or total stockholder return; and (10) strategic
business criteria, consisting of one or more objectives based on meeting
specified market penetration, geographic business expansion goals, new
products, ventures or facilities, cost targets, internal controls, compliance,
customer satisfaction and services, human resources management, supervision of
litigation and information technology, and goals relating to acquisitions or
divestitures of subsidiaries, affiliates, joint ventures or facilities.  The targeted level or levels of performance
with respect to such business criteria may be established at such levels and in
such terms as the Committee may determine, in its discretion, including in
absolute terms, as a goal relative to performance in prior periods, or as a
goal compared to the performance of one or more comparable companies or an
index covering multiple companies.


 


(iii)    Performance
Period; Timing for Establishing Performance Goals; Per-Person Limit.  Achievement of performance goals in respect
of such Performance Awards shall be measured over a performance period of up to
one year or more than one year, as specified by the Committee.  A performance goal shall be established not
later than the earlier of (A) 90 days after the beginning of any
performance period applicable to such Performance Award or (B) the time
25% of such performance period has elapsed. 
In all cases, the maximum Performance Award of any Participant shall be
subject to the limitation set forth in Section 5(b).


 


(iv)  Performance
Award Pool.  The Committee may establish
a Performance Award pool, which shall be an unfunded pool, for purposes of
measuring performance of the Company or a business unit in connection with
Performance Awards.  The amount of such
Performance Award pool shall be based upon the achievement of a performance
goal or goals based on one or more of the business criteria set forth in Section 7(b)(ii) during
the given performance period, as specified by the Committee in accordance with Section 7(b)(i).  The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business criteria.


 


(v)   Settlement
of Performance Awards; Other Terms. 
Settlement of such Performance Awards shall be in cash, Stock, other
Awards or other property, in the discretion of the Committee.  The Committee may, in its discretion,
increase or reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Covered Employee in respect of a
Performance Award subject to this Section 7(b).  Any settlement which changes the form of
payment from that originally specified shall be implemented in a manner such
that the Performance Award and other related Awards do not, solely for that
reason, fail to qualify as “performance-based compensation” for purposes of
Code Section 162(m).  The Committee
shall specify the circumstances in which such Performance Awards shall be paid
or forfeited in the event of termination of employment by the Participant or
other event (including a Change in Control) prior to the end of a performance
period or settlement of such Performance Awards; any resulting payments need
not qualify as performance-based compensation under Section 162(m) if the
authorization of such non-qualifying payments would not otherwise disqualify
the Performance Award apart from the termination or change in control.


 


(c)    Annual Incentive Awards Granted to
Designated Covered Employees.  The
Committee may grant a Performance Award in the form of an Annual Incentive
Award to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee.  Such Annual
Incentive Award will be intended to qualify as “performance-based compensation”
for purposes of Code Section 162(m), and therefore its grant,


 


10





















 


exercise and/or settlement shall be
contingent upon achievement of preestablished performance goals and shall
comply with the other requirements set forth in Section 7(b).


 


(d)    Written
Determinations.  Determinations by the
Committee as to the establishment of performance goals, the amount potentially
payable in respect of Performance Awards, the level of actual achievement of
the specified performance goals relating to Performance Awards and the amount
of any final Performance Award shall be recorded in writing in the case of
Performance Awards intended to qualify under Section 162(m).  Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under Section 162(m),
prior to settlement of each such Award granted to a Covered Employee, that the
performance objective relating to the Performance Award and other material
terms of the Award upon which settlement of the Award was conditioned have been
satisfied.


 


8.                                       Certain Provisions Applicable to Awards.


 


(a)    Stand-Alone, Additional, Tandem, and
Substitute Awards.  Subject to Section 10(e),
Awards granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary or affiliate, or any business entity to be acquired by
the Company or a subsidiary or affiliate, or any other right of a Participant
to receive payment from the Company or any subsidiary or affiliate; provided,
however, that a 409A Award may not be granted in tandem with a Non-409A
Award.  Awards granted in addition to or
in tandem with other Awards or awards may be granted either as of the same time
as or a different time from the grant of such other Awards or awards.  Subject to Sections 10(h) and (i),
the Committee may determine that, in granting a new Award, the in-the-money
value or fair value of any surrendered Award or award may be applied to reduce
the exercise price of any Option, grant price of any SAR, or purchase price of
any other Award.


 


(b)    Term
of Awards.  The term of each Award shall
be for such period as may be determined by the Committee; provided that in no
event shall the term of any Option or SAR exceed a period of ten years (or, in
the case of an ISO, such shorter term as may be required under Code Section 422).


 


(c)    Form and Timing of Payment under
Awards; Deferrals.  Subject to the terms
of the Plan (including Sections 10(h) and (i)) and any applicable Award
agreement, payments to be made by the Company or a subsidiary upon the exercise
of an Option or other Award or settlement of an Award may be made in cash,
Stock, other Awards, or other property, and may be made in a single payment or
transfer, in installments, or on a deferred basis.  The settlement of any Award may be
accelerated in the discretion of the Committee or upon occurrence of one or
more specified events (in addition to a Change in Control, subject to Sections
10(h) and (i)).  Installment or
deferred payments may be required by the Committee (subject to Section 10(e) of
the Plan, including the consent provisions thereof in the case of any deferral
of an outstanding Award not provided for in the original Award agreement) or
permitted at the election of the Participant on terms and conditions
established by the Committee.  Payments
may include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock. 
Any payment deferred pursuant to this Section 8(c) shall
represent only an unfunded, unsecured promise by the Company to pay the amount
credited thereto to the Participant in the future.  In the case of any 409A Award that is vested
and no longer subject to a risk of forfeiture (within the meaning of Code Section 83)
and deferred at the election of the Participant, such Award will be distributed
to the Participant, upon application of the Participant, if the Participant has
had an unforeseeable emergency within the meaning of Code Sections
409A(a)(2)(A)(vi) and 409A(a)(2)(B)(ii), in accordance with Section 409A(a)(2)(B)(ii).


 


11





















 


(d)    Additional Award Forfeiture Provisions.  The Committee may condition a Participant’s
right to receive a grant of an Award, to exercise the Award, to retain Stock
acquired in connection with an Award, or to retain the profit or gain realized
by a Participant in connection with an Award, including cash received upon sale
of Stock acquired in connection with an Award, upon compliance by the
Participant with specified conditions relating to non-competition,
confidentiality of information relating to the Company, non-solicitation of
customers, suppliers, and employees of the Company, cooperation in litigation,
non-disparagement of the Company and its officers, directors and affiliates,
and other restrictions upon or covenants of the Participant, including during
specified periods following termination of employment or service to the
Company.


 


(e)    Exemptions from Section 16(b) Liability.  With respect to a Participant who is then
subject to the reporting requirements of Section 16(a) of the
Exchange Act in respect of the Company, the Committee shall implement
transactions under the Plan and administer the Plan in a manner that will
ensure that each transaction with respect to such a Participant is exempt from
liability under Rule 16b-3 or otherwise not subject to liability under Section 16(b),
except that this provision shall not limit sales by such a Participant, and
such a Participant may elect to engage in other non-exempt transactions under
the Plan.  The Committee may authorize
the Company to repurchase any Award or shares of Stock deliverable or delivered
in connection with any Award (subject to Section 10(i)) in order to avoid
a Participant who is subject to Section 16 of the Exchange Act incurring
liability under Section 16(b). 
Unless otherwise specified by the Participant, equity securities or
derivative securities acquired under the Plan which are disposed of by a
Participant shall be deemed to be disposed of in the order acquired by the
Participant.


 


9.                                       Change in Control.


 


(a)                                  Effect of “Change in Control.”    In
the event of a “Change in Control,” the following provisions shall apply unless
otherwise provided in the Award agreement:


 


(i)    Any
Award carrying a right to exercise that was not previously exercisable and
vested shall become fully exercisable and vested as of the time of the Change
in Control;


 


(ii)   If any
optionee holds an Option immediately prior to a Change in Control that was not
previously exercisable and vested in full throughout the 60-day period
preceding the Change in Control, he shall be entitled to elect, during the
60-day period following the Change in Control, in lieu of acquiring the shares
of Stock covered by the portion of the Option that was not vested and
exercisable within such 60-day period, to receive, and the Company shall be
obligated to pay, in cash the excess of the Change in Control Price over the
exercise price of such Option, multiplied by the number of shares of Stock
covered by such portion of the Option;


 


(iii)  The
restrictions, deferral of settlement, and forfeiture conditions applicable to
any other Award granted under the Plan shall lapse and such Awards shall be
deemed fully vested as of the time of the Change in Control, except to the
extent of any waiver by the Participant and subject to applicable restrictions
set forth in Section 10(a) hereof; and


 


(iv)  With respect
to any outstanding Award subject to achievement of performance goals and
conditions under the Plan, such performance goals and other conditions will be
deemed to be met if and to the extent so provided by the Committee in the Award
agreement relating to such Award.


 


The
foregoing notwithstanding, any benefit or right provided under this Section 9
in the case of any non-409A Award shall be limited to those benefits and rights
permitted under Code Section 409A, and any benefit or right provided under
this Section 9 that would result in a distribution of a 409A Award at a
time or


 


12





















 


in
a manner not permitted by Section 409A shall be limited to the extent
necessary so that the distribution is permitted under Section 409A.  For this purpose, the distribution of a 409A
Award (i) triggered by a Change in Control will remain authorized if the
Change in Control also constitutes a change in the ownership or effective
control of the Company, or in the ownership of a substantial portion of the
assets of the Company, within the meaning of Code Section 409A(a)(2)(A)(v),
and (ii) triggered by a termination of employment with or service to the
Company or a subsidiary following a Change in Control by a specified employee,
within the meaning of Code Section 409A(a)(2)(B)(i), will remain
authorized to occur six months after such termination.


 


(b)                                 Definition of “Change in Control.”    A
“Change in Control” shall mean the occurrence of any of the following:


 


(i)    when
any “person” as defined in Section 3(a)(9) of the Exchange Act and as
used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) of the Exchange Act but excluding the
Company and any subsidiary and any employee benefit plan sponsored or
maintained by the Company or any subsidiary (including any trustee of such plan
acting as trustee), directly or indirectly, becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act) of securities of the Company
representing at least 40% percent (or such greater percentage as the Committee
may specify in connection with the grant of any Award) of the combined voting
power of the Company’s then-outstanding securities; or


 


(ii)   the
occurrence of a transaction requiring stockholder approval for the acquisition
of the Company by an entity other than the Company or a subsidiary by merger or
otherwise or for the purchase by an entity other than the Company or a subsidiary
of substantially all of the assets of the Company.


 


(c)                                  Definition of “Change in Control Price.”    The
“Change in Control Price” means an amount in cash equal to the higher of (i) the
amount of cash and fair market value of property that is the highest price per
share paid (including extraordinary dividends) in any transaction triggering
the Change in Control, or (ii) the highest Fair Market Value per share at
any time during the 60-day period preceding the Change in Control.


 


10.                                 General Provisions.


 


(a)    Compliance with Legal and Other
Requirements.  The Company may, to the
extent deemed necessary or advisable by the Committee and subject to Section 10(h),
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule, or regulation,
listing or other required action with respect to any stock exchange or
automated quotation system upon which the Stock or other securities of the
Company are listed or quoted, or compliance with any other obligation of the
Company, as the Committee may consider appropriate, and may require any
Participant to make such representations, furnish such information and comply
with or be subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Stock or payment of other benefits
in compliance with applicable laws, rules, and regulations, listing
requirements, or other obligations.  The
foregoing notwithstanding, in connection with a Change in Control, the Company
shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits under
any Award or the imposition of any other conditions on such issuance, delivery
or payment, to the extent that such postponement or other condition would
represent a greater burden on a Participant than existed on the 90th day
preceding the Change in Control.


 


13





















 


(b)    Limits on Transferability;
Beneficiaries.  No Award or other right
or interest of a Participant under the Plan shall be pledged, hypothecated or
otherwise encumbered or subject to any lien, obligation or liability of such
Participant to any party, or assigned or transferred by such Participant
otherwise than by will or the laws of descent and distribution or to a
Beneficiary upon the death of a Participant, and such Awards or rights that may
be exercisable shall be exercised during the lifetime of the Participant only
by the Participant or his or her guardian or legal representative, except that
Awards and other rights (other than ISOs and SARs in tandem therewith) may be
transferred for estate planning purposes to one or more Beneficiaries or other
transferees during the lifetime of the Participant, and may be exercised by
such transferees in accordance with the terms of such Award, but only if and to
the extent such transfers are permitted by the Committee pursuant to the
express terms of an Award agreement (subject to any terms and conditions which
the Committee may impose thereon).  A Beneficiary,
transferee, or other person claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and
any Award agreement applicable to such Participant, except as otherwise
determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.


 


(c)    Adjustments.  In the event that any large, special and
non-recurring dividend or other distribution (whether in the form of cash or
property other than Stock), recapitalization, forward or reverse split, Stock
dividend, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, liquidation, dissolution or other similar corporate
transaction or event affects the Stock such that an adjustment is determined by
the Committee to be appropriate or, in the case of any outstanding Award,
necessary in order to prevent dilution or enlargement of the rights of the
Participant, then the Committee shall, in such equitable manner as it may
determine, adjust any or all of (A) the number and kind of shares of Stock
which may be delivered in connection with Awards granted thereafter, (B) the
number and kind of shares of Stock by which annual per-person Award limitations
are measured under Section 5(b), (C) the number and kind of shares of
Stock subject to or deliverable in respect of outstanding Awards and (D) the
exercise price, grant price or purchase price relating to any Award or, if
deemed appropriate, the Committee may make provision for a payment of cash or
property to the holder of an outstanding Option (subject to Section 10(i)).  In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals and any hypothetical
funding pool relating thereto) in recognition of unusual or nonrecurring events
(including, without limitation, events described in the preceding sentence, as
well as acquisitions and dispositions of businesses and assets) affecting the
Company, any subsidiary or affiliate or other business unit, or the financial
statements of the Company or any subsidiary or affiliate, or in response to
changes in applicable laws, regulations, accounting principles, tax rates and
regulations or business conditions or in view of the Committee’s assessment of
the business strategy of the Company, any subsidiary or affiliate or business
unit thereof, performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other circumstances
deemed relevant; provided that no such adjustment shall be authorized or made
if and to the extent that the existence of such authority (A) would cause
Options, SARs, or Performance Awards granted under Section 7 to
Participants designated by the Committee as Covered Employees and intended to
qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder to otherwise fail to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder, or (B) would
cause the Committee to be deemed to have authority to change the targets,
within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the
performance goals relating to Options or SARs granted to Covered Employees and
intended to qualify as “performance-based compensation” under Code Section 162(m)
and regulations thereunder; and provided further, that adjustments to Non-409A
Awards will be made only to the extent permitted under 409A.


 


(d)    Taxes.  The Company and any subsidiary is authorized
to withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment
to a Participant, amounts of withholding and other taxes due or potentially
payable in connection with any Award, and to take such other action as the
Committee may deem advisable to enable the Company


 


14





















 


and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to any
Award.  This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant’s tax obligations,
either on a mandatory or elective basis, in the discretion of the Committee, or
in satisfaction of other tax obligations if such withholding will not result in
additional accounting expense to the Company. 
Other provisions of the Plan notwithstanding, only the minimum amount of
Stock deliverable in connection with an Award necessary to satisfy statutory
withholding requirements will be withheld, unless withholding of any additional
amount of Stock will not result in additional accounting expense to the
Company.


 


(e)    Changes to the Plan and Awards.  The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee’s authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any amendment or alteration to the Plan shall be subject to the approval of the
Company’s stockholders not later than the annual meeting the record date for
which is at or following the date of such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Stock may then be
listed or quoted, and the Board may otherwise, in its discretion, determine to
submit other such changes to the Plan to stockholders for approval; provided
that, without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. 
(For this purpose, actions that alter the timing of federal income
taxation of a Participant will not be deemed material unless such action
results in an income tax penalty on the Participant.)  The Committee may waive any conditions or
rights under, or amend, alter, suspend, discontinue, or terminate any Award
theretofore granted and any Award agreement relating thereto; provided that the
Committee shall have no authority to waive or modify any Award term after the
Award has been granted to the extent the waived or modified term would be
mandatory under the Plan for any Award newly granted at the date of the waiver
or modification; and provided further, that, without the consent of an affected
Participant, no such Committee action may materially and adversely affect the
rights of such Participant under such Award. 
Without the prior approval of stockholders, the Committee will not amend
or replace previously granted Options in a transaction that constitutes a “repricing.”
For this purpose, a “repricing” means: (1) amending the terms of an Option
after it is granted to lower its exercise price, except pursuant to Section 10(c) hereof;
(2) any other action that is treated as a repricing under generally
accepted accounting principles; and  (3) canceling
an Option at a time when its strike price is equal to or greater than the fair
market value of the underlying Stock, in exchange for another Option,
Restricted Stock, or other equity, unless the cancellation and exchange occurs
in connection with a merger, acquisition, spin-off or other similar corporate
transaction.  A cancellation and exchange
described in clause (3) of the preceding sentence will be considered
a repricing regardless of whether the Option, Restricted Stock or other equity
is delivered simultaneously with the cancellation, regardless of whether it is
treated as a repricing under generally accepted accounting principles, and
regardless of whether it is voluntary on the part of the Option holder.


 


(f)    Limitation on Rights Conferred under
Plan.  Neither the Plan nor any action
taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in
the employ or service of the Company or a subsidiary, (ii) interfering in
any way with the right of the Company or a subsidiary to terminate any Eligible
Person’s or Participant’s employment or service at any time, (iii) giving
an Eligible Person or Participant any claim to be granted any Award under the
Plan or to be treated uniformly with other Participants and employees, or (iv) conferring
on a Participant any of the rights of a stockholder of the Company unless and
until the Participant is duly issued or transferred shares of Stock in
accordance with the terms of an Award.


 


(g)    Unfunded Status of Awards; Creation of
Trusts.  The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation.  With respect to any payments not yet made to
a Participant or


 


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obligation to deliver Stock pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
provided that the Committee may authorize the creation of trusts and deposit
therein cash, Stock, other Awards or other property, or make other arrangements
to meet the Company’s obligations under the Plan.  Such trusts or other arrangements shall be
consistent with the “unfunded” status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.  The trustee of such trusts may be authorized
to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee may specify
and in accordance with applicable law.


 


(h)    Certain Limitations on Awards to Ensure
Compliance with Section 409A.  For
purposes of this Plan, references to an Award term or event (including any
authority or right of the Company or a Participant) being “permitted” under Section 409A
mean, for a 409A Award, that the term or event will not cause the Participant
to be liable for payment of interest or a tax penalty under Section 409A
and, for a Non-409A Award, that the term or event will not cause the Award to
be treated as subject to Section 409A. 
Other provisions of the Plan notwithstanding, the terms of any 409A
Award and any Non-409A Award, including any authority of the Company and rights
of the Participant with respect to the Award, shall be limited to those terms
permitted under Section 409A, and any terms not permitted under Section 409A
shall be automatically modified and limited to the extent necessary to conform
with Section 409A.  For this
purpose, other provisions of the Plan notwithstanding, the Company shall have
no authority to accelerate distributions relating to 409A Awards in excess of
the authority permitted under Section 409A, any distribution subject to Section 409A(a)(2)(A)(i) (separation
from service) to a “key employee” as defined under Section 409A(a)(2)(B)(i),
shall not occur earlier than the earliest time permitted under Section 409A(a)(2)(B)(i),
and any authorization of payment of cash to settle a Non-409A Award shall apply
only to the extent permitted under Section 409A for such Award.  Non-409A Awards that are “grandfathered”
under Section 409A and that, but for such grandfathered status, would be
deemed 409A Awards shall be subject to the terms and conditions of the Plan as
amended and restated as of May 5, 2005 other than Sections 6(b)(ii) and
6(c)(ii), provided that if any provision adopted by amendment to the Plan or an
Award Agreement after October 3, 2004, would constitute a material
modification of a grandfathered Non-409A Award, such provision will not be
effective as to such Award unless so stated by the Committee in writing with
specific reference to this last sentence of Section 10(h).


 


(i)    Certain Limitations Relating to Accounting
Treatment of Awards.  At any time that
the Company is accounting for stock-denominated Awards (other than SARs) under
Accounting Principles Board Opinion 25 (“APB 25”), the Company intends that,
with respect to such Awards, the compensation measurement date for accounting
purposes shall occur at the date of grant or the date performance conditions
are met if an Award is fully contingent on achievement of performance goals,
unless the Committee specifically determines otherwise.  Therefore, other provisions of the Plan
notwithstanding, in order to preserve this fundamental objective of the Plan,
if any authority granted to the Committee hereunder or any provision of the
Plan or an Award agreement would result, under APB 25, in “variable” accounting
or a measurement date other than the date of grant or the date such performance
conditions are met with respect to such Awards, if the Committee was not
specifically aware of such accounting consequence at the time such Award was
granted or provision otherwise became effective, such authority shall be
limited and such provision shall be automatically modified and reformed to the
extent necessary to preserve the accounting treatment of the award intended by
the Committee, subject to Section 10(e) of the Plan.  This provision shall cease to be effective if
and at such time as the Company elects to no longer account for equity compensation
under APB 25.


 


(j)    Nonexclusivity of the Plan.  Neither the adoption of the Plan by the Board
nor its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of


 


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the Board or a committee thereof to adopt
such other incentive arrangements as it may deem desirable including incentive
arrangements and awards which do not qualify under Code Section 162(m).


 


(k)    Payments in the Event of Forfeitures;
Fractional Shares.  Unless otherwise
determined by the Committee, in the event of a forfeiture of an Award with
respect to which a Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or other
consideration.  No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash,
other Awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall
be forfeited or otherwise eliminated.


 


(l)    Awards to Participants Outside the United
States.  The Committee may modify the
terms of any Award under the Plan made to or held by a Participant who is then
resident or primarily employed outside of the United States in any manner
deemed by the Committee to be necessary or appropriate in order that such Award
shall conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States.  An Award may be modified under this Section 10(l)
in a manner that is inconsistent with the express terms of the Plan, so long as
such modifications will not contravene any applicable law or regulation or
result in actual liability under Section 16(b) for the Participant
whose Award is modified.


 


(m)    Governing
Law.  The validity, construction and
effect of the Plan, any rules and regulations under the Plan, and any
Award agreement shall be determined in accordance with the Delaware General
Corporation Law, the contract and other laws of the State of New York without
giving effect to principles of conflicts of laws, and applicable federal law.


 


(n)    Preexisting
Plan.  Upon stockholder approval of the
Plan as provided under Section 10(o), no further grants of Awards will be
made under the Preexisting Plan.


 


(o)    Plan Effective Date and Termination.  The Plan was adopted by the Board of
Directors on April 24, 2003 and became effective upon its approval by the
Company’s stockholders on June 23, 2003. 
This amendment and restatement of the Plan shall be effective upon its
approval by the Company’s stockholders by the affirmative vote of the holders
of a majority of the voting securities of the Company entitled to be cast in
person or by proxy at the Company’s 2005 annual meeting of stockholders.(1)
Unless earlier terminated by action of the Board of Directors, the Plan will
remain in effect until such time as no Stock remains available for delivery
under the Plan and the Company has no further rights or obligations under the
Plan with respect to outstanding Awards under the Plan; provided, however, that
no new Awards may be granted more then ten years after the date of the latest
approval of the Plan by stockholders of the Company.


 










(1) The amendment and restatement of the Plan was approved by the
Company’s stockholders on June 14, 2005.


 


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