Exhibit 10.4


 


ev3 Inc.


 


AMENDED AND RESTATED


2005 INCENTIVE STOCK PLAN


 


(as amended through July 25,
2005)


 





















 


TABLE OF CONTENTS


 


	
  § 1.
  BACKGROUND AND PURPOSE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  § 2. DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Affiliate

  	
   

  
	
  2.2

  	
  Board

  	
   

  
	
  2.3

  	
  Change
  Effective Date

  	
   

  
	
  2.4

  	
  Change
  in Control

  	
   

  
	
  2.5

  	
  Code

  	
   

  
	
  2.6

  	
  Committee

  	
   

  
	
  2.7

  	
  Company

  	
   

  
	
  2.8

  	
  Director

  	
   

  
	
  2.9

  	
  Eligible
  Employee

  	
   

  
	
  2.10

  	
  Fair
  Market Value

  	
   

  
	
  2.11

  	
  ISO

  	
   

  
	
  2.12

  	
  1933 Act

  	
   

  
	
  2.13

  	
  1934 Act

  	
   

  
	
  2.14

  	
  Non-ISO

  	
   

  
	
  2.15

  	
  Option

  	
   

  
	
  2.16

  	
  Option
  Certificate

  	
   

  
	
  2.17

  	
  Option
  Price

  	
   

  
	
  2.18

  	
  Parent

  	
   

  
	
  2.19

  	
  Plan

  	
   

  
	
  2.20

  	
  Rule 16b-3

  	
   

  
	
  2.21

  	
  SAR
  Value

  	
   

  
	
  2.22

  	
  Stock

  	
   

  
	
  2.23

  	
  Stock Appreciation Right

  	
   

  
	
  2.24

  	
  Stock Appreciation Right Certificate

  	
   

  
	
  2.25

  	
  Stock
  Grant

  	
   

  
	
  2.26

  	
  Stock Grant Certificate

  	
   

  
	
  2.27

  	
  Stock
  Unit Grant

  	
   

  
	
  2.28

  	
  Subsidiary

  	
   

  
	
  2.29

  	
  Ten Percent Shareholder

  	
   

  
	
   

  	
   

  	
   

  
	
  § 3.
  SHARES AND GRANT LIMITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Shares Reserved

  	
   

  
	
  3.2

  	
  Source of Shares

  	
   

  
	
  3.3

  	
  Use of Proceeds

  	
   

  
	
  3.4

  	
  Grant Limits

  	
   

  
	
   

  	
   

  	
   

  
	
  § 4. EFFECTIVE DATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  § 5. COMMITTEE

  	
   

  	
   

  
				



 





















 


	
  § 6. ELIGIBILITY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  § 7. OPTIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Committee Action

  	
   

  
	
  7.2

  	
  $100,000 Limit

  	
   

  
	
  7.3

  	
  Option Price

  	
   

  
	
  7.4

  	
  Payment

  	
   

  
	
  7.5

  	
  Exercise

  	
   

  
	
   

  	
   

  	
   

  
	
  § 8. STOCK APPRECIATION RIGHTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Committee Action

  	
   

  
	
  8.2

  	
  Terms
  and Conditions

  	
   

  
	
  8.3

  	
  Exercise

  	
   

  
	
   

  	
   

  	
   

  
	
  § 9. STOCK GRANTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Committee Action

  	
   

  
	
  9.2

  	
  Conditions

  	
   

  
	
  9.3

  	
  Dividends, Voting Rights and Creditor Status

  	
   

  
	
  9.4

  	
  Satisfaction of Forfeiture Conditions

  	
   

  
	
  9.5

  	
  Income
  Tax Deduction

  	
   

  
	
   

  	
   

  	
   

  
	
  § 10.
  NON-TRANSFERABILITY

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  General Rule

  	
   

  
	
  10.2

  	
  Transfers to Family Members

  	
   

  
	
   

  	
   

  	
   

  
	
  § 11. SECURITIES REGISTRATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  § 12. LIFE OF PLAN

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  § 13. ADJUSTMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Capital Structure

  	
   

  
	
  13.2

  	
  Available Shares

  	
   

  
	
  13.3

  	
  Transactions Described in § 424 of the Code

  	
   

  
	
  13.4

  	
  Fractional Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  § 14. CHANGE IN CONTROL

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  § 15. AMENDMENT OR TERMINATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  § 16. MISCELLANEOUS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  Shareholder Rights

  	
   

  
	
  16.2

  	
  No Contract of Employment

  	
   

  
	
  16.3

  	
  Withholding

  	
   

  
	
  16.4

  	
  Construction

  	
   

  
	
  16.5

  	
  Other Conditions

  	
   

  
	
  16.6

  	
  Rule 16b-3

  	
   

  
	
  16.7

  	
  Coordination with Employment Agreements and Other Agreements

  	
   

  
				



 





















 


§ 1.

BACKGROUND AND PURPOSE


 


The purpose of this Plan is to promote the interest of the Company by
authorizing the Committee to grant Options and Stock Appreciation Rights and to
make Stock Grants and Stock Unit Grants to Eligible Employees and Directors or
consultants in order (1) to attract and retain Eligible Employees,
Directors or consultants, (2) to provide an additional incentive to each
Eligible Employee, Director or consultant to work to increase the value of
Stock and (3) to provide each Eligible Employee, Director or consultant
with a stake in the future of the Company which corresponds to the stake of
each of the Company’s shareholders.


 


§ 2.

DEFINITIONS


 


2.1           Affiliate — means any
organization (other than a Subsidiary) that would be treated as under common
control with the Company under § 414(c) of the Code if “50 percent”
were substituted for “80 percent” in the income tax regulations under § 414(c) of
the Code.


 


2.2           Board — means the Board of
Directors of the Company.


 


2.3           Change Effective
Date — means either the date which includes the “closing” of the
transaction which makes a Change in Control effective if the Change in Control
is made effective through a transaction which has a “closing” or the date a
Change in Control is reported in accordance with applicable law as effective to
the Securities and Exchange Commission if the Change in Control is made
effective other than through a transaction which has a “closing”.


 





















 


2.4           Change in Control — means a
change in control of the Company occurring after the effective date of this
Plan of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on
any similar schedule or form) promulgated under the 1934 Act, whether or
not the Company is then subject to such reporting requirement; provided,
however, that, without limitation, a Change in Control shall
include:  (i) the acquisition (other
than from the Company) after the date hereof by any person, entity or “group”
within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934
Act (excluding, for this purpose, the Company or its subsidiaries, any employee
benefit plan of the Company or its subsidiaries which acquires beneficial
ownership of voting securities of the Company, any qualified institutional
investor who meets the requirements of Rule 13d-1(b)(1) promulgated
under the 1934 Act, Warburg Pincus LLC and its affiliates, and The Vertical
Group, L.P. and its affiliates) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 20% or more of either the then-outstanding
shares of common stock or the combined voting power of the Company’s
then-outstanding capital stock entitled to vote generally in the election of
directors; (ii) individuals who, as of the date hereof, constitute the
Board (the “Incumbent Board”) ceasing for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company’s
stockholders was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an


 


2





















 


election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent Board; or (iii) approval
by the stockholders of the Company of (A) a reorganization, merger, or
consolidation, in each case, with respect to which persons who were the
stockholders of the Company immediately prior to such reorganization, merger,
or consolidation do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged, consolidated or other surviving corporation’s
then-outstanding voting securities, (B) a liquidation or dissolution of
the Company, or (C) the sale of all or substantially all of the assets of
the Company.


 


2.5           Code — means the Internal
Revenue Code of 1986, as amended.


 


2.6           Committee — means a committee
of the Board which shall have at least 2 members, each of whom shall be
appointed by and shall serve at the pleasure of the Board and at least 2 of
whom shall come within the definition of a “non-employee director” under Rule 16b-3,
or if no such committee of the Board has been appointed, the Board as a whole.


 


2.7           Company — means ev3 Inc. and
any successor to ev3 Inc.


 


2.8           Director — means any member of
the Board who is not an employee of the Company or a Parent or Subsidiary or
affiliate (as such term is defined in Rule 405 of the 1933 Act) of the
Company.


 


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2.9           Eligible Employee
— means an employee of the Company or any Subsidiary or Parent or Affiliate to
whom the Committee decides for reasons sufficient to the Committee to make a
grant under this Plan.


 


2.10         Fair Market Value
— means either (a) the closing price on any date for a share of Stock as
reported by The Wall Street Journal or, if The Wall Street Journal
no longer reports such closing price, such closing price as reported by a
newspaper or trade journal selected by the Committee or, if no such closing
price is available on such date, (b) such closing price as so reported in
accordance with § 2.10(a) for the immediately preceding business day,
or, if no newspaper or trade journal reports such closing price or if no such
price quotation is available, (c) the price which the Committee acting in
good faith determines through any reasonable valuation method that a share of
Stock might change hands between a willing buyer and a willing seller, neither
being under any compulsion to buy or to sell and both having reasonable
knowledge of the relevant facts.


 


2.11         ISO — means an option granted
under this Plan to purchase Stock which is intended to satisfy the requirements
of § 422 of the Code.


 


2.12         1933 Act — means the Securities
Act of 1933, as amended.


 


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


 


2.14         Non-ISO — means an option
granted under this Plan to purchase Stock which is intended to fail to satisfy
the requirements of § 422 of the Code.


 


2.15         Option — means an ISO or a
Non-ISO which is granted under § 7.


 


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2.16         Option Certificate
— means the certificate (whether in electronic or written form) which sets
forth the terms and conditions of an Option granted under this Plan.


 


2.17         Option Price — means the price
which shall be paid to purchase one share of Stock upon the exercise of an
Option granted under this Plan.


 


2.18         Parent — means any corporation
which is a parent corporation (within the meaning of § 424(e) of the
Code) of the Company.


 


2.19         Plan — means this ev3 Inc. 2005
Incentive Stock Plan as effective as of the date approved by the shareholders
of the Company and as amended from time to time thereafter.  For each grant of an Option to an Eligible
Employee, Director or consultant who is a resident of France, the Plan shall
include the terms of the addendum titled, “Terms and Conditions for French
Option Grants”, which shall supercede the terms of the Plan to the extent that
the terms of such addendum conflict with the terms of the Plan.


 


2.20         Rule 16b-3 — means the
exemption under Rule 16b-3 to Section 16(b) of the 1934 Act or
any successor to such rule.


 


2.21         SAR Value — means the value
assigned by the Committee to a share of Stock in connection with the grant of a
Stock Appreciation Right under § 8.


 


2.22         Stock — means the common stock
of the Company.


 


2.23         Stock Appreciation
Right — means a right which is granted under § 8 to receive the appreciation
in a share of Stock.


 


5





















 


2.24         Stock Appreciation
Right Certificate -- means the certificate (whether in electronic or
written form) which sets forth the terms and conditions of a Stock Appreciation
Right which is not granted as part of an Option.


 


2.25         Stock Grant — means a grant
under § 9 which is designed to result in the issuance of the number of
shares of Stock described in such grant rather than a payment in cash based on
the Fair Market Value of such shares of Stock.


 


2.26         Stock Grant
Certificate — means the certificate (whether in electronic or written form)
which sets forth the terms and conditions of a Stock Grant or a Stock Unit
Grant.


 


2.27         Stock Unit Grant
— means a grant under § 9 which is designed to result in the payment of
cash based on the Fair Market Value of the number of shares of Stock described
in such grant rather than the issuance of the number of shares of Stock
described in such grant.


 


2.28         Subsidiary — means
a corporation which is a subsidiary corporation (within the meaning of § 424(f) of
the Code) of the Company.


 


2.29         Ten Percent
Shareholder — means a person who owns (after taking into account the
attribution rules of § 424(d) of the Code) more than ten percent
of the total combined voting power of all classes of stock of either the
Company, a Subsidiary or Parent.


 


6





















 


§ 3. 

SHARES AND GRANT LIMITS


 


3.1           Shares Reserved.  There shall (subject to § 13) be
reserved for issuance under this Plan 2,000,000 shares of Stock; provided,
however that no more than 2,000,000 shares of Stock may be issued in connection
with the exercise of ISOs.


 


3.2           Source of Shares.  The shares of Stock described in § 3.1
shall be reserved to the extent that the Company deems appropriate from
authorized but unissued shares of Stock and from shares of Stock which have
been reacquired by the Company.  All
shares of Stock described in § 3.1 shall remain available for issuance
under this Plan until issued pursuant to the exercise of an Option or a Stock
Appreciation Right or issued pursuant to a Stock Grant, and any such shares of
stock which are issued pursuant to an Option, a Stock Appreciation Right or a
Stock Grant which are forfeited thereafter shall again become available for
issuance under this Plan.  Finally, if
the Option Price under an Option is paid in whole or in part in shares of Stock
or if shares of Stock are tendered to the Company in satisfaction of any condition
to a Stock Grant, such shares thereafter shall become available for issuance
under this Plan and shall be treated the same as any other shares available for
issuance under this Plan.


 


3.3           Use of Proceeds.  The proceeds which the Company receives from
the sale of any shares of Stock under this Plan shall be used for general
corporate purposes and shall be added to the general funds of the Company.


 


3.4           Grant Limits.  No Eligible Employee, Director or consultant
in any calendar year shall be granted an Option to purchase (subject to § 13)
more than 250,000 shares of Stock or a Stock Appreciation Right based on the
appreciation with respect to (subject to § 13) more than 250,000 shares of
Stock, and no Stock Grant or


 


7





















 


Stock Unit Grant shall be made to any Eligible Employee, Director or
consultant in any calendar year where the Fair Market Value of the Stock
subject to such grant on the date of the grant exceeds $10,000,000.  No more than 500,000 non-forfeitable shares
of Stock shall (subject to § 13) be issued pursuant to Stock Grants under § 9.


 


§ 4. 

EFFECTIVE DATE


 


The effective date of this Plan shall be the date the shareholders of
the Company (acting at a duly called meeting of such shareholders) approve the
adoption of this Plan.


 


§ 5.

COMMITTEE


 


This Plan shall be administered by the Committee.  The Committee acting in its absolute
discretion shall exercise such powers and take such action as expressly called
for under this Plan and, further, the Committee shall have the power to
interpret this Plan and (subject to § 14 and § 15 and Rule 16b-3)
to take such other action in the administration and operation of this Plan as
the Committee deems equitable under the circumstances, which action shall be
binding on the Company, on each affected Eligible Employee, Director or
consultant and on each other person directly or indirectly affected by such
action.  Furthermore, the Committee as a
condition to making any grant under this Plan to any Eligible Employee, Director
or consultant shall have the right to require him or her to execute an
agreement which makes the Eligible Employee, Director or consultant subject to
non-competition provisions and other restrictive covenants which run in favor
of the Company.


 


8





















 


§ 6.

ELIGIBILITY


 


Only Eligible Employees who are employed by the Company or a Subsidiary
or Parent shall be eligible for the grant of ISOs under this Plan.  All Eligible Employees, Directors and
consultants shall be eligible for the grant of Non-ISOs and Stock Appreciation
Rights and for Stock Grants and Stock Unit Grants under this Plan.


 


§ 7.

OPTIONS


 


7.1           Committee Action.  The Committee acting in its absolute
discretion shall have the right to grant Options to Eligible Employees,
Directors and consultants under this Plan from time to time to purchase shares
of Stock, but the Committee shall not (subject to § 13) take any action,
whether through amendment, cancellation, replacement grants, or any other
means, to reduce the Option Price of any outstanding Options absent the
approval of the Company’s shareholders. 
Each grant of an Option to an Eligible Employee, Director or consultant
shall be evidenced by an Option Certificate, and each Option Certificate shall
set forth whether the Option is an ISO or a Non-ISO and shall set forth such
other terms and conditions of such grant as the Committee acting in its
absolute discretion deems consistent with the terms of this Plan; however, (a) if
the Committee grants an ISO and a Non-ISO to an Eligible Employee on the same
date, the right of the Eligible Employee to exercise the ISO shall not be
conditioned on his or her failure to exercise the Non-ISO and (b) if the
only condition to exercise of the Option is the completion of a period of
service, such period of service shall be no less than the one (1) year
period which starts on the date as
of which the


 


9





















 


Option is granted unless the Committee determines that a shorter period
of service (or no period of service) better serves the Company’s interest.


 


7.2           $100,000 Limit.  No Option
shall be treated as an ISO to the extent that the aggregate Fair Market Value
of the Stock subject to the Option which would first become exercisable in any
calendar year exceeds $100,000.  Any such
excess shall instead automatically be treated as a Non-ISO.  The Committee shall interpret and administer
the ISO limitation set forth in this § 7.2 in accordance with § 422(d) of
the Code, and the Committee shall treat this § 7.2 as in effect only for
those periods for which § 422(d) of the Code is in effect.


 


7.3           Option Price.  The Option Price for each share of Stock
subject to an Option shall be no less than the Fair Market Value of a share of
Stock on the date the Option is granted; provided, however, if the Option is an
ISO granted to an Eligible Employee who is a Ten Percent Shareholder, the
Option Price for each share of Stock subject to such ISO shall be no less than
110% of the Fair Market Value of a share of Stock on the date such ISO is
granted.


 


7.4           Payment.  The Option Price shall be payable in full
upon the exercise of any Option and, at the discretion of the Committee, an
Option Certificate can provide for the payment of the Option Price either in
cash, by check or in Stock which has been held for at least 6 months and which
is acceptable to the Committee, or through any cashless exercise procedure
which is effected by an unrelated broker through a sale of Stock in the open
market and which is acceptable to the Committee, or in any combination of such
forms of payment.  Any payment made in
Stock shall be treated as equal to the Fair Market Value of such Stock on the
date the certificate for


 


10





















 


such Stock (or proper evidence of such
certificate) is presented to the Committee or its delegate in such form as
acceptable to the Committee.


 


7.5           Exercise.


 


(a)                                  Exercise Period.  Each Option granted under this Plan shall be
exercisable in whole or in part at such time or times as set forth in the
related Option Certificate, but no Option Certificate shall make an Option
exercisable on or after the earlier of


 


(1)                                  the date which is the
fifth anniversary of the date the Option is granted, if the Option is an ISO
and the Eligible Employee is a Ten Percent Shareholder on the date the Option
is granted, or


 


(2)                                  the
date which is the tenth anniversary of the date the Option is granted, if the
Option is (a) a Non-ISO or (b) an ISO which is granted to an Eligible
Employee who is not a Ten Percent Shareholder on the date the Option is
granted.


 


(b)                                 Termination of
Status as Eligible Employee or Director. 
Subject to § 7.5(a), an Option Certificate may provide for the
exercise of an Option after an Eligible Employee’s, Director’s or consultant’s
status as such has terminated for any reason whatsoever, including death or
disability.


 


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§ 8.

STOCK APPRECIATION RIGHTS


 


8.1           Committee Action.  The Committee acting in its absolute
discretion shall have the right to grant Stock Appreciation Rights to Eligible
Employees, Directors and consultants under this Plan from time to time, and
each Stock Appreciation Right grant shall be evidenced by a Stock Appreciation
Right Certificate or, if such Stock Appreciation Right is granted as part of an
Option, shall be evidenced by the Option Certificate for the related Option.


 


8.2           Terms and Conditions.


 


(a)                                  Stock Appreciation
Right Certificate.  If a Stock
Appreciation Right is granted independent of an Option, such Stock Appreciation
Right shall be evidenced by a Stock Appreciation Right Certificate, and such
certificate shall set forth the number of shares of Stock on which the Eligible
Employee’s, Director’s or consultant’s right to appreciation shall be based and
the SAR Value of each share of Stock. 
Such SAR Value shall be no less than the Fair Market Value of a share of
Stock on the date that the Stock Appreciation Right is granted.  The Stock Appreciation Right Certificate
shall set forth such other terms and conditions for the exercise of the Stock
Appreciation Right as the Committee deems appropriate under the circumstances,
but no Stock Appreciation Right Certificate shall make a Stock Appreciation
Right exercisable on or after the date


 


12





















 


which is the
tenth anniversary of the date such Stock Appreciation Right is granted.


 


(b)                                 Option Certificate.  If a Stock Appreciation Right is granted
together with an Option, such Stock Appreciation Right shall be evidenced by an
Option Certificate, the number of shares of Stock on which the Eligible
Employee’s, Director’s or consultant’s right to appreciation shall be based
shall be the same as the number of shares of Stock subject to the related
Option, and the SAR Value for each such share of Stock shall be no less than
the Option Price under the related Option. 
Each such Option Certificate shall provide that the exercise of the
Stock Appreciation Right with respect to any share of Stock shall cancel the
Eligible Employee’s, Director’s or consultant’s right to exercise his or her
Option with respect to such share and, conversely, that the exercise of the
Option with respect to any share of Stock shall cancel the Eligible Employee’s,
Director’s or consultant’s right to exercise his or her Stock Appreciation
Right with respect to such share.  A
Stock Appreciation Right which is granted as part of an Option shall be
exercisable only while the related Option is exercisable.  The Option Certificate shall set forth such
other terms and conditions for the exercise of the Stock Appreciation Right as
the Committee deems appropriate under the circumstances.


 


13





















 


(c)                                  Minimum Period of
Service.  If the only condition to
exercise of a Stock Appreciation Right is the completion of a period of
service, such period of service shall be no less than the one (1) year
period which starts on the date as of which the Stock Appreciation Right is
granted unless the Committee determines that a shorter period of service (or no
period of service) better serves the Company’s interest.


 


8.3           Exercise.  A Stock Appreciation Right shall be
exercisable only when the Fair Market Value of a share of Stock on which the
right to appreciation is based exceeds the SAR Value for such share, and the
payment due on exercise shall be based on such excess with respect to the
number of shares of Stock to which the exercise relates.  An Eligible Employee, Director or consultant
upon the exercise of his or her Stock Appreciation Right shall receive a
payment from the Company in cash or in Stock issued under this Plan, or in a
combination of cash and Stock, and the number of shares of Stock issued shall
be based on the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is exercised.  The
Committee acting in its absolute discretion shall have the right to determine
the form and time of any payment under this § 8.3.


 


§ 9.

STOCK GRANTS


 


9.1           Committee Action.  The Committee acting in its absolute
discretion shall have the right to make Stock Grants and Stock Unit Grants to
Eligible Employees, Directors or consultants. 
Each Stock Grant and each Stock Unit Grant shall be


 


14





















 


evidenced by a Stock Grant Certificate, and each Stock Grant
Certificate shall set forth the conditions, if any, under which Stock will be
issued under the Stock Grant or cash will be paid under the Stock Unit Grant
and the conditions under which the Eligible Employee’s, Director’s or
consultant’s interest in any Stock which has been issued will become
non-forfeitable.


 


9.2           Conditions.


 


(a)                                        Conditions
to Issuance of Stock.  The Committee
acting in its absolute discretion may make the issuance of Stock under a Stock
Grant subject to the satisfaction of one, or more than one, condition which the
Committee deems appropriate under the circumstances for Eligible Employees,
Directors or consultants generally or for an Eligible Employee, a Director or a
consultant in particular, and the related Stock Grant Certificate shall set
forth each such condition and the deadline for satisfying each such
condition.  Stock subject to a Stock
Grant shall be issued in the name of an Eligible Employee, Director or
consultant only after each such condition, if any, has been timely satisfied,
and any Stock which is so issued shall be held by the Company pending the
satisfaction of the forfeiture conditions, if any, under § 9.2(b) for
the related Stock Grant.


 


(b)                                       Conditions on
Forfeiture of Stock or Cash Payment. 
The Committee acting in its absolute discretion may make any cash
payment due under a Stock Unit Grant or Stock issued in the


 


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name of an Eligible Employee, Director or consultant under a Stock
Grant non-forfeitable subject to the satisfaction of one, or more than one,
objective employment, performance or other condition that the Committee acting
in its absolute discretion deems appropriate under the circumstances for
Eligible Employees, Directors or consultants generally or for an Eligible
Employee, a Director or a consultant in particular, and the related Stock Grant
Certificate shall set forth each such 
condition, if any, and the deadline, if any, for satisfying each such
condition.  An Eligible Employee’s, Director’s
or consultant’s non-forfeitable interest in the shares of Stock underlying a
Stock Grant or the cash payable under a Stock Unit Grant shall depend on the
extent to which he or she timely satisfies each such condition.  If a share of Stock is issued under this § 9.2(b) before
an Eligible Employee’s, Director’s or consultant’s interest in such share of
Stock is non-forfeitable, (1) such share of Stock shall not be available
for re-issuance under § 3 until such time, if any, as such share of Stock
thereafter is forfeited as a result of a failure to timely satisfy a forfeiture
condition and (2) the Company shall have the right to condition any such
issuance on the Eligible Employee, Director or consultant first signing an
irrevocable stock power in favor of the Company with respect to the forfeitable
shares of Stock issued to such Eligible Employee, Director or consultant in


 


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order for the
Company to effect any forfeiture called for under the related Stock Grant
Certificate.


 


(c)                                        Minimum
Period of Service.  If the only
condition to the forfeiture of a Stock Grant or a Stock Unit Grant is the
completion of a period of service, such period of service shall be no less than
the three (3) year period which starts on the date as of which the Stock
Grant or Stock Unit Grant is made unless the Committee determines that a
shorter period of service (or no period of service) better serves the Company’s
interest.


 


9.3           Dividends, Voting
Rights and Creditor Status.


 


(a)                                  Cash Dividends.  Except as otherwise set forth in a Stock
Grant Certificate, if a dividend is paid in cash on a share of Stock after such
Stock has been issued under a Stock Grant but before the first date that an
Eligible Employee’s, Director’s or consultant’s interest in such Stock (1) is
forfeited completely or (2) becomes completely non-forfeitable, the
Company shall pay such cash dividend directly to such Eligible Employee,
Director or consultant.


 


(b)                                 Stock Dividends.  If a dividend is paid on a share of Stock in
Stock after such Stock has been issued under a Stock Grant but before the first
date that an Eligible Employee’s, Director’s or consultant’s interest in such
Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall hold such dividend


 


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Stock subject to the same conditions under § 9.2(b) as
the related Stock Grant.


 


(c)                                  Other.  If a dividend (other than a dividend
described in § 9.3(a) or § 9.3(b)) is paid with respect to a
share of Stock after such Stock has been issued under a Stock Grant but before
the first date that an Eligible Employee’s, Director’s or consultant’s interest
in such Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable, the Company shall distribute or hold such dividend in
accordance with such rules as the Committee shall adopt with respect to
each such dividend.


 


(d)                                 Voting.  Except as otherwise set forth in a Stock
Grant Certificate, an Eligible Employee, Director or consultant shall have the
right to vote the Stock issued under his or her Stock Grant during the period
which comes after such Stock has been issued under a Stock Grant but before the
first date that an Eligible Employee’s, Director’s or consultant’s interest in
such Stock (1) is forfeited completely or (2) becomes completely
non-forfeitable.


 


(e)                                  General Creditor
Status.  Each Eligible Employee and
each Director and each consultant to whom a Stock Unit grant is made shall be
no more than a general and unsecured creditor of the Company with respect to
any cash payable under such Stock Unit Grant.


 


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9.4           Satisfaction of
Forfeiture Conditions.  A share of
Stock shall cease to be subject to a Stock Grant at such time as an Eligible
Employee’s, Director’s or consultant’s interest in such Stock becomes
non-forfeitable under this Plan, and the certificate or other evidence of
ownership representing such share shall be transferred to the Eligible
Employee, Director or consultant as soon as practicable thereafter.


 


9.5           Income Tax Deduction.


 


(a)                                  General.  The Committee shall (where the Committee
under the circumstances deems in the Company’s best interest) either (1) make
Stock Grants and Stock Unit Grants to Eligible Employees subject to at least
one condition related to one, or more than one, performance goal based on the
performance goals described in § 9.5(b) which seems likely to result
in the Stock Grant or Stock Unit Grant qualifying as “performance-based compensation”
under § 162(m) of the Code or (2) make Stock Grants and Stock Unit
Grants to Eligible Employees under such other circumstances as the Committee
deems likely to result in an income tax deduction for the Company with respect
such Stock Grant or Stock Unit Grant.  A
performance goal may be set in any manner determined by the Committee,
including looking to achievement on an absolute or relative basis in relation
to peer groups or indexes.


 


(b)                                 Performance Goals.  A performance goal is described in this § 9.5(b) if
such goal relates to (1) the Company’s return over capital costs or
increases in return over capital costs, (2) the Company’s


 


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total earnings or the growth in such earnings, (3) the Company’s
consolidated earnings or the growth in such earnings, (4) the Company’s
earnings per share or the growth in such earnings, (5) the Company’s net
earnings or the growth in such earnings, (6) the Company’s earnings before
interest expense, taxes, depreciation, amortization and other non-cash items or
the growth in such earnings, (7) the Company’s earnings before interest
and taxes or the growth in such earnings, (8) the Company’s consolidated
net income or the growth in such income, (9) the value of the Company’s
common stock or the growth in such value, (10) the Company’s stock price
or the growth in such price, (11) the Company’s return on assets or the growth
on such return, (12) the Company’s cash flow or the growth in such cash flow,
(13) the Company’s total shareholder return or the growth in such return, (14)
the Company’s expenses or the reduction of such expenses, (15) the Company’s
sales growth, (16) the Company’s overhead ratios or changes in such ratios,
(17) the Company’s expense-to-sales ratios or the changes in such ratios, or
(18) the Company’s economic value added or changes in such value added.


 


(c)                                  Adjustments.  When the Committee determines whether a
performance goal has been satisfied for any period, the Committee may exclude
any or all “extraordinary items” as determined under U.S. generally accepted
accounting principles and any other


 


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unusual or
non-recurring items, including, without limitation, the charges or costs
associated with restructurings of the Company, discontinued operations, and the
cumulative effects of accounting changes. 
The Committee may also adjust any performance goal for a period as it
deems equitable in recognition of unusual or non-recurring events affecting the
Company, changes in applicable tax laws or accounting principles, or such other
factors as the Committee may determine (including, without limitation, any
adjustments that would result in the Company’s paying non-deductible
compensation to an Eligible Employee).


 


§ 10.

NON-TRANSFERABILITY


 


10.1         General Rule. 
Except as provided in § 10.2, no Option, Stock Grant, Stock
Unit Grant or Stock Appreciation Right shall be transferable by an Eligible
Employee, Director or consultant other than by will or by the laws of descent
and distribution, and any Option or Stock Appreciation Right shall be
exercisable during an Eligible Employee’s, Director’s or consultant’s lifetime
only by the Eligible Employee, Director or consultant.  The person or persons to whom an Option or
Stock Grant or Stock Unit Grant or Stock Appreciation Right is transferred by
will or by the laws of descent and distribution or pursuant to § 10.2,
thereafter shall be treated as the Eligible Employee, Director or consultant.


 


10.2         Transfers to Family
Members.  An Option or Stock
Grant, Stock Unit Grant or Stock Appreciation Right may be transferred by an
Eligible Employee,


 


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Director or consultant to a “family member” (as defined for purposes of
Form S-8 under the 1933 Act) of such Eligible Employee, Director or
consultant or to a trust exclusively for the benefit of one or more of such
family members of such Eligible Employee, Director or consultant; provided such
transfer is made as a gift without consideration, and such transfer complies
with applicable securities laws.


 


§ 11.

SECURITIES REGISTRATION


 


As a condition to the receipt of shares of Stock under this Plan, the
Eligible Employee, Director or consultant shall, if so requested by the
Company, agree to hold such shares of Stock for investment and not with a view
of resale or distribution to the public and, if so requested by the Company,
shall deliver to the Company a written statement satisfactory to the Company to
that effect.  Furthermore, if so
requested by the Company, the Eligible Employee, Director or consultant shall
make a written representation to the Company that he or she will not sell or
offer for sale any of such Stock unless a registration statement shall be in
effect with respect to such Stock under the 1933 Act and any applicable state
securities law or he or she shall have furnished to the Company an opinion in
form and substance satisfactory to the Company of legal counsel satisfactory to
the Company that such registration is not required.  Certificates or other evidence of ownership
representing the Stock transferred upon the exercise of an Option or Stock
Appreciation Right or upon the lapse of the forfeiture conditions, if any, on
any Stock Grant may at the discretion of the Company bear a legend to the effect  that such
Stock has not been registered under the 1933 Act or any applicable state
securities law and that such Stock cannot be sold or offered for


 


22





















 


sale in the absence of an effective
registration statement as to such Stock under the 1933 Act and any applicable
state securities law or an opinion in form and substance satisfactory to the
Company of legal counsel satisfactory to the Company that such registration is
not required.


 


§ 12.

LIFE OF PLAN


 


No Option or Stock Appreciation Right shall be granted or Stock Grant
or Stock Unit Grant made under this Plan on or after the earlier of:


 


(1)                                  the tenth anniversary
of the effective date of this Plan (as determined under § 4), in which
event this Plan otherwise thereafter shall continue in effect until all
outstanding Options and Stock Appreciation Rights have been exercised in full
or no longer are exercisable and all Stock issued under any Stock Grants under
this Plan have been forfeited or have become non-forfeitable, or


 


(2)                                  the date on which all
of the Stock reserved under § 3 has (as a result of the exercise of
Options or Stock Appreciation Rights granted under this Plan or the
satisfaction of the forfeiture conditions, if any, on Stock Grants) been issued
or no longer is available for use under this Plan, in which event this Plan
also shall terminate on such date.


 


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§ 13.

ADJUSTMENT


 


13.1         Capital Structure.  The grant caps described in § 3.4, the
number, kind or class (or any combination thereof) of shares of Stock subject
to outstanding Options and Stock Appreciation Rights granted under this Plan
and the Option Price of such Options and the SAR Value of such Stock Appreciation
Rights as well as the number, kind or class (or any combination thereof) of
shares of Stock subject to outstanding Stock Grants and Stock Unit Grants made
under this Plan shall be adjusted by the Committee in a reasonable and
equitable manner to preserve immediately after


 


(a)                                  any
equity restructuring or change in the capitalization of the Company, including,
but not limited to, spin offs, stock dividends, large non-reoccurring
dividends, rights offerings or stock splits, or


 


(b)                                 any
other transaction described in § 424(a) of the Code which does not
constitute a Change in Control of the Company


 


the aggregate intrinsic value of each such
outstanding Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant
immediately before such restructuring or recapitalization or other transaction.


 


13.2         Available Shares. 
If any adjustment is made with respect to any outstanding Option, Stock
Appreciation Right, Stock Grant or Stock Unit Grant under § 13.1, then the
Committee shall adjust the number, kind or class (or any combination thereof)
of shares of Stock reserved under § 3.1 so that there is a sufficient
number, kind and class of shares of Stock available for issuance pursuant to
each such Option, Stock Appreciation Right, Stock Grant and Stock Unit Grant as
adjusted under § 13.1 without seeking the approval of the Company’s
shareholders for such adjustment unless such approval is required under
applicable law or the rules of the stock exchange on


 


24





















 


which shares of Stock are
traded.  Furthermore, the Committee shall
have the absolute discretion to further adjust such number, kind or class (or
any combination thereof) of shares of Stock reserved under § 3.1 in light
of any of the events described in § 13.1(a) and § 13.1(b) to
the extent the Committee acting in good faith determines that a further
adjustment would be appropriate and proper under the circumstances and in
keeping with the purposes of this Plan without seeking the approval of the
Company’s shareholders for such adjustment unless such approval is required
under applicable law or the rules of the stock exchange on which shares of
Stock are traded.


 


13.3         Transactions Described in § 424 of the
Code.   If there is a  corporate transaction described in § 424(a) of
the Code which does not constitute a Change in Control of the Company, the
Committee as part of any such transaction shall have the right to make Stock
Grants, Stock Unit Grants and Option and Stock Appreciation Right grants
(without regard to any limitations set forth under 3.4 of this Plan) to effect
the assumption of, or the substitution for, outstanding stock grants, stock
unit grants and option and stock appreciation right grants previously made by
any other corporation to the extent that such corporate transaction calls for
such substitution or assumption of such outstanding stock grants, stock unit
grants and stock option and stock appreciation right grants.  Furthermore, if the Committee makes any such
grants as part of any such transaction, the Committee shall have the right to
increase the number of shares of Stock available for issuance under § 3.1
by the number of shares of Stock subject to such grants without seeking the
approval of the Company’s shareholders for such adjustment unless such approval
is required under applicable law or the rules of the stock exchange on
which shares of Stock are traded.


 


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13.4         Fractional Shares.  If any adjustment under this § 13 would
create a fractional share of Stock or a right to acquire a fractional share of
Stock under any Option, Stock Appreciation Right or Stock Grant, such
fractional share shall be disregarded and the number of shares of Stock
reserved under this Plan and the number subject to any Options or Stock
Appreciation Right grants and Stock Grants shall be the next lower number of
shares of Stock, rounding all fractions downward.  An adjustment made under this § 13 by
the Committee shall be conclusive and binding on all affected persons.


 


§ 14.

CHANGE IN CONTROL


 


If there is a Change in Control of the Company, then as of the Change
Effective Date for such Change in Control any and all conditions to the
exercise of all outstanding Options and Stock Appreciation Rights on such date
and any and all outstanding issuance and forfeiture conditions on any Stock
Grants and Stock Unit Grants on such date automatically shall be deemed 100%
satisfied as of such Change Effective Date, and the Board shall have the right
(to the extent expressly required as part of such transaction) to cancel such
Options, Stock Appreciation Rights, Stock Grants and Stock Unit Grants after
providing each Eligible Employee, Director and consultant a reasonable period
to exercise his or her Options and Stock Appreciation Rights and to take such
other action as necessary or appropriate to receive the Stock subject to any
Stock Grants and the cash payable under any Stock Unit Grants; provided, if any
issuance or forfeiture condition described in this § 14 relates to satisfying
any performance goal and there is a target for such goal, such issuance or


 


26





















 


forfeiture condition shall be deemed satisfied under this § 14
only to the extent of such target unless such target has been exceeded before
the Change Effective Date, in which event such issuance or forfeiture condition
shall be deemed satisfied to the extent such target had been so exceeded.  A Change in Control shall affect a Stock
Appreciation Right or a Stock Unit Grant which is subject to § 409A of the
Code only if the Change in Control meets the requirements for a Change in
Control under § 409A of the Code.


 


§ 15.

AMENDMENT OR TERMINATION


 


This Plan may be amended by the Board from time to time to the extent
that the Board deems necessary or appropriate; provided, however, (a) no
amendment shall be made absent the approval of the shareholders of the Company
to the extent such approval is required under applicable law or the rules of
the stock exchange on which shares of Stock are listed and (b) no
amendment shall be made to § 14 on or after the date of any Change in
Control which might adversely affect any rights which otherwise would vest on
the related Change Effective Date.  The
Board also may suspend granting Options or Stock Appreciation Rights or making
Stock Grants or Stock Unit Grants under this Plan at any time and may terminate
this Plan at any time; provided, however, the Board shall not have the right
unilaterally to modify, amend or cancel any Option or Stock Appreciation Right
granted or Stock Grant made before such suspension or termination unless (1) the
Eligible Employee, Director or consultant consents in writing to such
modification, amendment or cancellation or (2) there is a dissolution or
liquidation of the Company or a transaction described in § 13.1 or § 14.


 


27





















 


§ 16.

MISCELLANEOUS


 


16.1         Shareholder Rights.  No Eligible Employee, Director or consultant
shall have any rights as a shareholder of the Company as a result of the grant
of an Option or a Stock Appreciation Right pending the actual delivery of the
Stock subject to such Option or Stock Appreciation Right to such Eligible
Employee, Director or consultant.  An
Eligible Employee’s, Director’s or consultant’s rights as a shareholder in the
shares of Stock which remain subject to forfeiture under § 9.2(b) shall
be set forth in the related Stock Grant Certificate.


 


16.2         No Contract of
Employment.  The grant of an Option
or a Stock Appreciation Right or a Stock Grant or Stock Unit Grant to an
Eligible Employee, Director or consultant under this Plan shall not constitute
a contract of employment or a right to continue to serve on the Board and shall
not confer on an Eligible Employee, Director or consultant any rights upon his
or her termination of employment or service in addition to those rights, if
any, expressly set forth in this Plan or the related Option Certificate, Stock
Appreciation Right Certificate, or Stock Grant Certificate.


 


16.3         Withholding.  Each Option, Stock Appreciation Right, Stock
Grant and Stock Unit Grant shall be made subject to the condition that the
Eligible Employee, Director or consultant consents to whatever action the
Committee directs to satisfy the minimum statutory federal and state tax
withholding requirements, if any, which the Company determines are applicable
to the exercise of such Option or Stock Appreciation Right or to the
satisfaction of any forfeiture conditions with respect to Stock subject to a
Stock Grant or Stock Unit Grant issued in the name of the Eligible


 


28





















 


Employee, Director or consultant.  No withholding shall be effected under this
Plan which exceeds the minimum statutory federal and state withholding requirements.


 


16.4         Construction.  All references to sections (§) are to
sections (§) of this Plan unless otherwise indicated.  This Plan shall be construed under the laws
of the State of Delaware.  Each term set
forth in § 2 shall, unless otherwise stated, have the meaning set forth
opposite such term for purposes of this Plan and, for purposes of such
definitions, the singular shall include the plural and the plural shall include
the singular.  Finally, if there is any conflict
between the terms of this Plan and the terms of any Option Certificate, Stock
Appreciation Right Certificate or Stock Grant Certificate, the terms of this
Plan shall control.


 


16.5         Other Conditions.  Each Option Certificate, Stock Appreciation
Right  Certificate or Stock Grant
Certificate may require that an Eligible Employee, Director or consultant (as a
condition to the exercise of an Option or a Stock Appreciation Right or the
issuance of Stock subject to a Stock Grant) enter into any agreement or make
such representations prepared by the Company, including (without limitation)
any agreement which restricts the transfer of Stock acquired pursuant to the
exercise of an Option or a Stock Appreciation Right or a Stock Grant or
provides for the repurchase of such Stock by the Company.


 


16.6         Rule 16b-3.  The Committee shall have the right to amend
any Option, Stock Grant or Stock Appreciation Right to withhold or otherwise
restrict the transfer of any Stock or cash under this Plan to an Eligible
Employee, Director or consultant as the Committee deems appropriate in order to
satisfy any condition or


 


29





















 


requirement under Rule 16b-3 to the
extent Rule 16 of the 1934 Act might be applicable to such grant or
transfer.


 


16.7         Coordination with
Employment Agreements and Other Agreements. 
If the Company enters into an employment agreement or other agreement
with an Eligible Employee, Director or consultant which expressly provides for
the acceleration in vesting of an outstanding Option, Stock Appreciation Right,
Stock Grant or Stock Unit Grant or for the extension of the deadline to
exercise any rights under an outstanding Option, Stock Appreciation Right,
Stock Grant or Stock Unit Grant, any such acceleration or extension shall be
deemed effected pursuant to, and in accordance with, the terms of such
outstanding Option, Stock Appreciation Right, Stock Grant or Stock Unit Grant
and this Plan even if such employment agreement or other agreement is first
effective after the date the outstanding Option or Stock Appreciation Right was
granted or the Stock Grant or Stock Unit Grant was made.


 


30