2005 Incentive Compensation Plan



 






Exhibit 10(i)




 




 




 




 




CLAIRE’S STORES, INC.




2005 INCENTIVE COMPENSATION PLAN




 




 




 




 




 









 








CLAIRE’S STORES, INC.




2005 INCENTIVE COMPENSATION PLAN




	 	 	 	 	 	 	 	 	 
	 	1.	 	 	Purpose
	 	 	1	 
	 	2.	 	 	Definitions
	 	 	1	 
	 	3.	 	 	Administration
	 	 	6	 
	 	 	 	 	(a) Authority of the Committee
	 	 	6	 
	 	 	 	 	(b) Manner of Exercise of Committee Authority
	 	 	6	 
	 	 	 	 	(c) Limitation of Liability
	 	 	7	 
	 	4.	 	 	Shares Subject to Plan
	 	 	7	 
	 	 	 	 	(a) Limitation on Overall Number of Shares Available for Grant Under Plan
	 	 	7	 
	 	 	 	 	(b) Application of Limitation to Grants of Award
	 	 	7	 
	 	 	 	 	(c) Availability of Shares Not Delivered under Awards and Adjustments to Limits
	 	 	7	 
	 	 	 	 	(d) No Further Awards Under Prior Plan
	 	 	8	 
	 	5.	 	 	Eligibility; Per-Person Award Limitations
	 	 	8	 
	 	6.	 	 	Specific Terms of Awards
	 	 	8	 
	 	 	 	 	(a) General
	 	 	8	 
	 	 	 	 	(b) Options
	 	 	9	 
	 	 	 	 	(c) Stock Appreciation Rights
	 	 	10	 
	 	 	 	 	(d) Restricted Stock Awards
	 	 	11	 
	 	 	 	 	(e) Deferred Stock Award
	 	 	12	 
	 	 	 	 	(f) Bonus Stock and Awards in Lieu of Obligations
	 	 	13	 
	 	 	 	 	(g) Dividend Equivalents
	 	 	13	 
	 	 	 	 	(h) Performance Awards
	 	 	13	 
	 	 	 	 	(i) Other Stock-Based Awards
	 	 	13	 
	 	7.	 	 	Certain Provisions Applicable to Awards
	 	 	14	 
	 	 	 	 	(a) Stand-Alone, Additional, Tandem, and Substitute Awards
	 	 	14	 
	 	 	 	 	(b) Term of Awards
	 	 	14	 
	 	 	 	 	(c) Form and Timing of Payment Under Awards; Deferrals
	 	 	14	 
	 	 	 	 	(d) Exemptions from Section 16(b) Liability
	 	 	15	 
	 	8.	 	 	Code Section 162(m) Provisions
	 	 	15	 
	 	 	 	 	(a) Covered Employees
	 	 	15	 
	 	 	 	 	(b) Performance Criteria
	 	 	15	 






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	 	 	 	 	(c) Performance Period; Timing for Establishing Performance Goals
	 	 	16	 
	 	 	 	 	(d) Adjustments
	 	 	16	 
	 	9.	 	 	Change in Control
	 	 	16	 
	 	 	 	 	(a) Effect of Change in Control
	 	 	16	 
	 	 	 	 	(b) Definition of Change in Control
	 	 	16	 
	 	10.	 	 	General Provisions
	 	 	18	 
	 	 	 	 	(a) Compliance With Legal and Other Requirements.
	 	 	18	 
	 	 	 	 	(b) Limits on Transferability; Beneficiaries
	 	 	18	 
	 	 	 	 	(c) Adjustments
	 	 	18	 
	 	 	 	 	(d) Taxes
	 	 	20	 
	 	 	 	 	(e) Changes to the Plan and Awards
	 	 	20	 
	 	 	 	 	(f) Limitation on Rights Conferred Under Plan
	 	 	20	 
	 	 	 	 	(g) Unfunded Status of Awards; Creation of Trusts
	 	 	20	 
	 	 	 	 	(h) Nonexclusivity of the Plan
	 	 	21	 
	 	 	 	 	(i) Payments in the Event of Forfeitures; Fractional Shares
	 	 	21	 
	 	 	 	 	(j) Governing Law
	 	 	21	 
	 	 	 	 	(k) Non-U.S. Laws
	 	 	21	 
	 	 	 	 	(l) Plan Effective Date and Shareholder Approval; Termination of Plan
	 	 	21	 






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CLAIRE’S STORES, INC.




2005 INCENTIVE COMPENSATION PLAN




     1. Purpose. The purpose of this CLAIRE’S STORES, INC. 2005 INCENTIVE COMPENSATION PLAN
(the “Plan”) is to assist CLAIRE’S STORES, INC., a Florida corporation (the “Company”) and its
Related Entities (as hereinafter defined) in attracting, motivating, retaining and rewarding
high-quality executives and other employees, officers, directors, consultants and other persons who
provide services to the Company or its Related Entities by enabling such persons to acquire or
increase a proprietary interest in the Company in order to strengthen the mutuality of interests
between such persons and the Company’s shareholders, and providing such persons with long term
performance incentives to expend their maximum efforts in the creation of shareholder value.



     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) “Award” means any Option, Stock Appreciation Right, Restricted Stock Award, Deferred Stock
Award, Share granted as a bonus or in lieu of another award, Dividend Equivalent, Other Stock-Based
Award or Performance Award, together with any other right or interest, granted to a Participant
under the Plan.



          (b) “Award Agreement” means any written agreement, contract or other instrument or document
evidencing any Award granted by the Committee hereunder.



          (c) “Beneficiary” means the person, persons, trust or trusts that 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 the 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) “Cause” shall, with respect to any Participant have the meaning specified in the Award
Agreement. In the absence of any definition in the Award Agreement, “Cause” shall have the
equivalent meaning or the same meaning as “cause” or “for cause” set forth in any employment,
consulting, or other agreement for the performance of services between the Participant and the
Company or a Related Entity or, in the absence of any such agreement or any such definition in such
agreement, such term shall mean (i) the failure by the Participant to perform, in a reasonable
manner, his or her duties as assigned by the Company or a Related



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Entity, (ii) any violation or breach by the Participant of his or her employment, consulting
or other similar agreement with the Company or a Related Entity, if any, (iii) any violation or
breach by the Participant of any non-competition, non-solicitation, non-disclosure and/or other
similar agreement with the Company or a Related Entity, (iv) any act by the Participant of
dishonesty or bad faith with respect to the Company or a Related Entity, (v) use of alcohol, drugs
or other similar substances in a manner that adversely affects the Participant’s work performance,
or (vi) the commission by the Participant of any act, misdemeanor, or crime reflecting unfavorably
upon the Participant or the Company or any Related Entity. The good faith determination by the
Committee of whether the Participant’s Continuous Service was terminated by the Company for “Cause”
shall be final and binding for all purposes hereunder.



          (g) 

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



          (h) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations thereto.



          (i) “Committee” means a committee designated by the Board to administer the Plan; provided,
however, that if the Board fails to designate a committee or if there are no longer any members on
the committee so designated by the Board, then the Board shall serve as the Committee. The
Committee shall consist of at least two directors, and each member of the Committee shall be (i) a
“non-employee director” within the meaning of Rule 16b-3 (or any successor rule) under the
Exchange Act, unless administration of the Plan by “non-employee directors” is not then required in
order for exemptions under Rule 16b-3 to apply to transactions under the Plan, (ii) an “outside
director” within the meaning of Section 162(m) of the Code, and (iii) “Independent”.



          (j) “Consultant” means any person (other than an Employee or a Director, solely with respect
to rendering services in such person’s capacity as a director) who is engaged by the Company or any
Related Entity to render consulting or advisory services to the Company or such Related Entity.



          (k) “Continuous Service” means the uninterrupted provision of services to the Company or any
Related Entity in any capacity of Employee, Director, Consultant or other service provider.
Continuous Service shall not be considered to be interrupted in the case of (i) any approved leave
of absence, (ii) transfers among the Company, any Related Entities, or any successor entities, in
any capacity of Employee, Director, Consultant or other service provider, or (iii) any change in
status as long as the individual remains in the service of the Company or a Related Entity in any
capacity of Employee, Director, Consultant or other service provider (except as otherwise provided
in the Award Agreement). An approved leave of absence shall include sick leave, military leave, or
any other authorized personal leave.



          (l) “Covered Employee” means an Eligible Person who is a “covered employee” within the meaning
of Section 162(m)(3) of the Code, or any successor provision thereto.



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          (m) “Deferred Stock” means a right to receive Shares, including Restricted Stock, cash or a
combination thereof, at the end of a specified deferral period.



          (n) “Deferred Stock Award” means an Award of Deferred Stock granted to a Participant under
Section 6(e) hereof.



          (o) “Director” means a member of the Board or the board of directors of any Related Entity.



          (p) “Disability” means a permanent and total disability (within the meaning of Section 22(e)
of the Code), as determined by a medical doctor satisfactory to the Committee.



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



          (r) “Effective Date” means the effective date of the Plan, which shall be February 1, 2005.



          (s) “Eligible Person” means each officer, Director, Employee, Consultant and other person who
provides services to the Company or any Related Entity. The foregoing notwithstanding, only
employees of the Company, or any parent corporation or subsidiary corporation of the Company (as
those terms are defined in Sections 424(e) and (f) of the Code, respectively), shall be Eligible
Persons for purposes of receiving any Incentive Stock Options. An Employee on leave of absence may
be considered as still in the employ of the Company or a Related Entity for purposes of eligibility
for participation in the Plan.



          (t) “Employee” means any person, including an officer or Director, who is an employee of the
Company or any Related Entity. The payment of a director’s fee by the Company or a Related Entity
shall not be sufficient to constitute “employment” by the Company.



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



          (v) “Fair Market Value” means the fair market value of Shares, Awards or other property as
determined by the Committee, or under procedures established by the Committee. Unless otherwise
determined by the Committee, the Fair Market Value of a Share as of any given date shall be the
closing sale price per Share reported on a consolidated basis for stock listed on the principal
stock exchange or market on which Shares are traded on the date immediately preceding the date as
of which such value is being determined or, if there is no sale on that date, then on the last
previous day on which a sale was reported.



          (w) “Good Reason” shall, with respect to any Participant, have the meaning specified in the
Award Agreement. In the absence of any definition in the Award Agreement, “Good Reason” shall have
the equivalent meaning or the same meaning as “good reason” or “for good reason” set forth in any
employment, consulting or other agreement for the performance of services between the Participant
and the Company or a Related Entity or, in the absence of any such agreement or any such definition
in such agreement, such term shall mean (i) the



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assignment to the Participant of any duties inconsistent in any material respect with the
Participant’s position (including status, offices, titles and reporting requirements), authority,
duties or responsibilities as assigned by the Company or a Related Entity, or any other action by
the Company or a Related Entity which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and which is remedied by the Company or a Related Entity promptly
after receipt of notice thereof given by the Participant; (ii) any material failure by the Company
or a Related Entity to comply with its obligations to the Participant as agreed upon, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by
the Company or a Related Entity promptly after receipt of notice thereof given by the Participant;
or (iii) the Company’s or Related Entity’s requiring the Participant to be based at any office or
location outside of fifty miles from the location of employment or service as of the date of Award,
except for travel reasonably required in the performance of the Participant’s responsibilities.



          (x) “Incentive Stock Option” means any Option intended to be designated as an incentive stock
option within the meaning of Section 422 of the Code or any successor provision thereto.



          (y) “Independent”, when referring to either the Board or members of the Committee, shall have
the same meaning as used in the rules of the New York Stock Exchange or any national securities
exchange on which any securities of the Company are listed for trading, and if not listed for
trading, by the rules of the Nasdaq Stock Market.



          (z) “Incumbent Board” means the Incumbent Board as defined in Section 9(b)(ii) of the Plan.



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



          (bb) “Optionee” means a person to whom an Option is granted under this Plan or any person who
succeeds to the rights of such person under this Plan.



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



          (dd) “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.



          (ee) “Performance Award” shall mean any Award of Performance Shares or Performance Units
granted pursuant to Section 6(h).



          (ff) “Performance Period” means that period established by the Committee at the time any
Performance Award is granted or at any time thereafter during which any performance goals specified
by the Committee with respect to such Award are to be measured.



          (gg) “Performance Share” means any grant pursuant to Section 6(h) of a unit valued by
reference to a designated number of Shares, which value may be paid to the



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Participant by delivery of such property as the Committee shall determine, including cash,
Shares, other property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of such grant or
thereafter.



          (hh) “Performance Unit” means any grant pursuant to Section 6(h) of a unit valued by reference
to a designated amount of property (including cash) other than Shares, which value may be paid to
the Participant by delivery of such property as the Committee shall determine, including cash,
Shares, other property, or any combination thereof, upon achievement of such performance goals
during the Performance Period as the Committee shall establish at the time of such grant or
thereafter.



          (ii) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange
Act and used in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section
13(d) thereof.



          (jj) “Prior Plan” means the Claire’s Stores, Inc. 1996 Incentive Compensation Plan.



          (kk) “Related Entity” means any Subsidiary, and any business, corporation, partnership,
limited liability company or other entity designated by Board in which the Company or a Subsidiary
holds a substantial ownership interest, directly or indirectly.



          (ll) “Restricted Stock” means any Share issued with the restriction that the holder may not
sell, transfer, pledge or assign such Share and with such risks of forfeiture and other
restrictions as the Committee, in its sole discretion, may impose (including any restriction on the
right to vote such Share and the right to receive any dividends), which restrictions may lapse
separately or in combination at such time or times, in installments or otherwise, as the Committee
may deem appropriate.



          (mm) “Restricted Stock Award” means an Award granted to a Participant under Section 6(d)
hereof.



          (nn) “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.



          (oo) “Shareholder Approval Date” means the date on which this Plan is approved shareholders of
the Company eligible to vote in the election of directors, by a vote sufficient to meet the
requirements of Code Sections 162(m) (if applicable) and 422, Rule 16b-3 under the Exchange Act (if
applicable), applicable requirements under the rules of any stock exchange or automated quotation
system on which the Shares may be listed on quoted, and other laws, regulations and obligations of
the Company applicable to the Plan.



          (pp) “Shares” means the shares of common stock of the Company, par value $.05 per share, and
such other securities as may be substituted (or resubstituted) for Shares pursuant to Section 10(c)
hereof.



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          (qq) “Stock Appreciation Right” means a right granted to a Participant under Section 6(c)
hereof.



          (rr) “Subsidiary” means any corporation or other entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting power of the then
outstanding securities or interests of such corporation or other entity entitled to vote generally
in the election of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or dissolution.



          (ss) “Substitute Awards” shall mean Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, by a company acquired by the Company or any Related Entity or
with which the Company or any Related Entity combines.



     3. Administration.



          (a) Authority of the Committee. The Plan shall be administered by the Committee except to the
extent the Board elects to administer the Plan, in which case the Plan shall be administered by
only those directors who are Independent Directors, in which case references herein to the
“Committee” shall be deemed to include references to the Independent members of the Board. The
Committee shall have full and final authority, 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.
In exercising any discretion granted to the Committee under the Plan or pursuant to any Award, the
Committee shall not be required to follow past practices, act in a manner consistent with past
practices, or treat any Eligible Person or Participant in a manner consistent with the treatment of
other Eligible Persons or Participants.



          (b) Manner of Exercise of Committee Authority. The Committee, and not the Board, shall
exercise sole and exclusive discretion on any matter relating to a Participant then subject to
Section 16 of the Exchange Act with respect to the Company to the extent necessary in order that
transactions by such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee shall be final, conclusive and binding on all persons, including the
Company, its Related Entities, Participants, Beneficiaries, transferees under Section 10(b) hereof
or other persons claiming rights from or through a Participant, and shareholders. 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 Related Entity, 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 extent that such delegation will not
result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants
subject to Section 16 of the Exchange Act in



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respect of the Company and will not cause Awards intended to qualify as “performance-based
compensation” under Code Section 162(m) to fail to so qualify. The Committee may appoint agents to
assist it in administering the Plan.



          (c) Limitation of Liability. The Committee and the Board, and each member thereof, shall be
entitled to, in good faith, rely or act upon any report or other information furnished to him or
her by any officer or Employee, the Company’s independent auditors, Consultants or any other agents
assisting in the administration of the Plan. Members of the Committee and the Board, and any
officer or Employee acting at the direction or on behalf of the Committee or the Board, 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 Subject to Plan.



          (a) Limitation on Overall Number of Shares Available for Delivery Under Plan. Subject to
adjustment as provided in Section 10(c) hereof, the total number of Shares reserved and available
for delivery under the Plan shall be 2,000,000, plus any Shares remaining available for delivery
under the Prior Plan on the Effective Date of the Plan. Any Shares delivered under the Plan may
consist, in whole or in part, of authorized and unissued shares or treasury shares.



          (b) Application of Limitation to Grants of Award.. No Award may be granted if the number of
Shares to be delivered in connection with such an Award or, in the case of an Award relating to
Shares but settled only in cash (such as cash-only Stock Appreciation Rights), the number of Shares
to which such Award relates, exceeds the number of Shares remaining available for delivery under
the Plan, minus the number of Shares deliverable in settlement of or relating to then outstanding
Awards. 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 actually delivered differs from the number of Shares previously
counted in connection with an Award.



          (c) Availability of Shares Not Delivered under Awards and Adjustments to Limits..



               (i) If any Shares subject to an Award are forfeited, expire or otherwise terminate without
issuance of such Shares, or any Award is settled for cash or otherwise does not result in the
issuance of all or a portion of the Shares subject to such Award, the Shares shall, to the extent
of such forfeiture, expiration, termination, cash settlement or non-issuance, again be available
for Awards under the Plan, subject to Section 4(c)(iv) below.



               (ii) In the event that any Option or other Award granted hereunder is exercised through the
tendering of Shares (either actually or by attestation) or by the withholding of Shares by the
Company, or withholding tax liabilities arising from such option or other award are satisfied by
the tendering of Shares (either actually or by attestation) or by the withholding of Shares by the
Company, then only the number of Shares issued net of the Shares tendered or



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withheld shall be counted for purposes of determining the maximum number of Shares available
for grant under the Plan.



               (iii) Substitute Awards shall not reduce the Shares authorized for grant under the Plan or
authorized for grant to a Participant in any period. Additionally, in the event that a company
acquired by the Company or any Related Entity or with which the Company or any Related Entity
combines has shares available under a pre-existing plan approved by shareholders and not adopted in
contemplation of such acquisition or combination, the shares available for delivery pursuant to the
terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio
or other adjustment or valuation ratio or formula used in such acquisition or combination to
determine the consideration payable to the holders of common stock of the entities party to such
acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares
authorized for delivery under the Plan; provided that Awards using such available shares shall not
be made after the date awards or grants could have been made under the terms of the pre-existing
plan, absent the acquisition or combination, and shall only be made to individuals who were not
Employees or Directors prior to such acquisition or combination.



               (iv) Any Shares that again become available for delivery pursuant to this Section 4(c) shall
be added back as one (1) Share.



               (v) Notwithstanding anything in this Section 4(c) to the contrary and solely for purposes of
determining whether Shares are available for the delivery of Incentive Stock Options, the maximum
aggregate number of shares that may be granted under this Plan shall be determined without regard
to any Shares restored pursuant to this Section 4(c) that, if taken into account, would cause the
Plan to fail the requirement under Code Section 422 that the Plan designate a maximum aggregate
number of shares that may be issued.



          (d) No Further Awards Under Prior Plan. In light of the adoption of this Plan, no further
awards shall be made under the Prior Plan after the Effective Date unless this Plan is not approved
by the shareholders of the Company as set forth in Section 10(l) hereof.



     5. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to
Eligible Persons. Subject to adjustment as provided in Section 10(c), in any fiscal year of the
Company during any part of which the Plan is in effect, no Participant may be granted (i) Options
or Stock Appreciation Rights with respect to more than 500,000 Shares or (ii) Restricted Stock,
Deferred Stock, Performance Shares and/or Other Stock-Based Awards with respect to more than
500,000 Shares. In addition, the maximum dollar value payable to any one Participant with respect
to Performance Units is (x) $5,000,000 with respect to any 12 month Performance Period, and (y)
with respect to any Performance Period that is more than 12 months, $10,000,000.



     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 Section 10(e)), such additional terms and conditions,



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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 the Participant’s Continuous
Service 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. Except in cases in which the
Committee is authorized to require other forms of consideration under the Plan, or to the extent
other forms of consideration must be paid to satisfy the requirements of Florida law, no
consideration other than services may be required for the grant (but not the exercise) of any
Award.



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



               (i) Exercise Price. Other than in connection with Substitute Awards, the exercise price per
Share purchasable under an Option shall be determined by the Committee, provided that such exercise
price shall not, in the case of Incentive Stock Options, be less than 100% of the Fair Market Value
of a Share on the date of grant of the Option and shall not, in any event, be less than the par
value of a Share on the date of grant of the Option. If an Employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company (or any parent corporation or
subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) of the
Code, respectively) and an Incentive Stock Option is granted to such employee, the exercise price
of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be
no less than 110% of the Fair Market Value a Share on the date such Incentive Stock Option is
granted.



               (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 time or times at which
Options shall cease to be or become exercisable following termination of Continuous Service or upon
other conditions, the methods by which the exercise price may be paid or deemed to be paid
(including in the discretion of the Committee a cashless exercise procedure), the form of such
payment, including, without limitation, cash, Shares, other Awards or awards granted under other
plans of the Company or a Related Entity, or other property (including notes or other contractual
obligations of Participants to make payment on a deferred basis provided that such deferred
payments are not in violation of the Sarbanes-Oxley Act of 2002, or any rule or regulation adopted
thereunder or any other applicable law), and the methods by or forms in which Shares will be
delivered or deemed to be delivered to Participants.



               (iii) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan
shall comply in all respects with the provisions of Section 422 of the Code. Anything in the Plan
to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options (including
any Stock Appreciation Right issued 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 Incentive Stock Option under Section 422 of the Code, unless the Participant
has first requested, or consents to, the change that will



9









 





result in such disqualification. Thus, if and to the extent required to comply with Section
422 of the Code, Options granted as Incentive Stock Options shall be subject to the following
special terms and conditions:



                    (A) the Option shall not be exercisable more than ten years after the date such Incentive
Stock Option is granted; provided, however, that if a Participant owns or is deemed to own (by
reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company (or any parent corporation or subsidiary corporation
of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively)
and the Incentive Stock Option is granted to such Participant, the term of the Incentive Stock
Option shall be (to the extent required by the Code at the time of the grant) for no more than five
years from the date of grant; and



                    (B) The aggregate Fair Market Value (determined as of the date the Incentive Stock Option is
granted) of the Shares with respect to which Incentive Stock Options granted under the Plan and all
other option plans of the Company (and any parent corporation or subsidiary corporation of the
Company, as those terms are defined in Sections 424(e) and (f) of the Code, respectively) during
any calendar year exercisable for the first time by the Participant during any calendar year shall
not (to the extent required by the Code at the time of the grant) exceed $100,000.



          (c) Stock Appreciation Rights. The Committee may grant Stock Appreciation Rights to any
Eligible Person in conjunction with all or part of any Option granted under the Plan or at any
subsequent time during the term of such Option (a “Tandem Stock Appreciation Right”), or without
regard to any Option (a “Freestanding Stock Appreciation Right”), in each case upon such terms and
conditions as the Committee may establish in its sole discretion, not inconsistent with the
provisions of the Plan, including the following:



               (i) Right to Payment. A Stock Appreciation Right 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 on the date of exercise over (B) the grant price of the Stock Appreciation Right as
determined by the Committee. The grant price of a Stock Appreciation Right shall not be less than
the Fair Market Value of a Share on the date of grant, in the case of a Freestanding Stock
Appreciation Right, or less than the associated Option exercise price, in the case of a Tandem
Stock Appreciation Right.



               (ii) Other Terms. The Committee shall determine at the date of grant or thereafter, the time
or times at which and the circumstances under which a Stock Appreciation Right may be exercised in
whole or in part (including based on achievement of performance goals and/or future service
requirements), the time or times at which Stock Appreciation Rights shall cease to be or become
exercisable following termination of Continuous Service or upon other conditions, the method of
exercise, method of settlement, form of consideration payable in settlement, method by or forms in
which Shares will be delivered or deemed to be delivered to Participants, whether or not a Stock
Appreciation Right shall be in tandem or in combination with any other Award, and any other terms
and conditions of any Stock Appreciation Right.



10









 





               (iii) Tandem Stock Appreciation Rights. Any Tandem Stock Appreciation Right may be granted at
the same time as the related Option is granted or, for Options that are not Incentive Stock
Options, at any time thereafter before exercise or expiration of such Option. Any Tandem Stock
Appreciation Right related to an Option may be exercised only when the related Option would be
exercisable and the Fair Market Value of the Shares subject to the related Option exceeds the
exercise price at which Shares can be acquired pursuant to the Option. In addition, if a Tandem
Stock Appreciation Right exists with respect to less than the full number of Shares covered by a
related Option, then an exercise or termination of such Option shall not reduce the number of
Shares to which the Tandem Stock Appreciation Right applies until the number of Shares then
exercisable under such Option equals the number of Shares to which the Tandem Stock Appreciation
Right applies. Any Option related to a Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the Tandem Stock Appreciation Right has been exercised, and any Tandem
Stock Appreciation Right shall no longer be exercisable to the extent the related Option has been
exercised.



          (d) Restricted Stock Awards. The Committee is authorized to grant Restricted Stock Awards to
any Eligible Person on the following terms and conditions:



               (i) Grant and Restrictions. Restricted Stock Awards shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, or
as otherwise provided in this Plan, covering a period of time specified by the Committee (the
“Restriction Period”). The terms of any Restricted Stock Award granted under the Plan shall be set
forth in a written Award Agreement which shall contain provisions determined by the Committee and
not inconsistent with the Plan. The 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 a Restricted Stock Award, a Participant granted Restricted Stock shall
have all of the rights of a shareholder, 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 Restriction Period, 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 a
Participant’s Continuous Service during the applicable Restriction Period, the Participant’s
Restricted Stock that is at that time subject to a risk of forfeiture that has not lapsed or
otherwise been satisfied 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 forfeiture conditions relating to Restricted Stock Awards shall be waived in
whole or in part in the event of terminations resulting from specified causes.



               (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



11









 





certificates, and 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 a Restricted Stock Award, the
Committee may require or permit a Participant to elect 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 under the Plan. Unless otherwise determined by the Committee,
Shares 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 Shares or other property have been
distributed.



          (e) Deferred Stock Award. The Committee is authorized to grant Deferred Stock Awards to any
Eligible Person on the following terms and conditions:



               (i) Award and Restrictions. Satisfaction of a Deferred Stock Award shall occur upon
expiration of the deferral period specified for such Deferred Stock Award by the Committee (or, if
permitted by the Committee, as elected by the Participant). In addition, a Deferred Stock Award
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. A Deferred Stock Award may be satisfied by delivery of Shares, cash equal to the Fair
Market Value of the specified number of Shares covered by the Deferred Stock, or a combination
thereof, as determined by the Committee at the date of grant or thereafter. Prior to satisfaction
of a Deferred Stock Award, a Deferred Stock Award carries no voting or dividend or other rights
associated with Share ownership.



               (ii) Forfeiture. Except as otherwise determined by the Committee, upon termination of a
Participant’s Continuous Service during the applicable deferral period or portion thereof to which
forfeiture conditions apply (as provided in the Award Agreement evidencing the Deferred Stock
Award), the Participant’s Deferred Stock Award that is at that time subject to a risk of forfeiture
that has not lapsed or otherwise been satisfied 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 forfeiture conditions relating to a Deferred Stock Award 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 any Deferred Stock Award.



               (iii) Dividend Equivalents. Unless otherwise determined by the Committee at date of grant,
any Dividend Equivalents that are granted with respect to any Deferred Stock Award shall be either
(A) paid with respect to such Deferred Stock Award 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 Award 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.



12









 





          (f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to grant
Shares to any Eligible Persons as a bonus, or to grant Shares or other Awards in lieu of
obligations to pay cash or deliver other property under the Plan or under other plans or
compensatory arrangements, provided that, in the case of Eligible Persons subject to Section 16 of
the Exchange Act, the amount of such grants remains within the discretion of the Committee to the
extent necessary to ensure that acquisitions of Shares or other Awards are exempt from liability
under Section 16(b) of the Exchange Act. Shares or Awards granted hereunder shall be subject to
such other terms as shall be determined by the Committee.



          (g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to any
Eligible Person entitling the Eligible Person to receive cash, Shares, other Awards, or other
property equal in value to the dividends paid with respect to a specified number of Shares, or
other periodic payments. 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 Shares,
Awards, or other investment vehicles, and subject to such restrictions on transferability and risks
of forfeiture, as the Committee may specify.



          (h) Performance Awards. The Committee is authorized to grant Performance Awards to any
Eligible Person payable in cash, Shares, or other Awards, on terms and conditions established by
the Committee, subject to the provisions of Section 8 if and to the extent that the Committee
shall, in its sole discretion, determine that an Award shall be subject to those provisions. The
performance criteria to be achieved during any Performance Period and the length of the Performance
Period shall be determined by the Committee upon the grant of each Performance Award. Except as
provided in Section 9 or as may be provided in an Award Agreement, Performance Awards will be
distributed only after the end of the relevant Performance Period. The performance goals to be
achieved for each Performance Period shall be conclusively determined by the Committee and may be
based upon the criteria set forth in Section 8(b), or in the case of an Award that the Committee
determines shall not be subject to Section 8 hereof, any other criteria that the Committee, in its
sole discretion, shall determine should be used for that purpose. The amount of the Award to be
distributed shall be conclusively determined by the Committee. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period or, in accordance with
procedures established by the Committee, on a deferred basis.



          (i) Other Stock-Based Awards. The Committee is authorized, subject to limitations under
applicable law, to grant to any Eligible Person such other Awards that may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on, or related to,
Shares, as deemed by the Committee to be consistent with the purposes of the Plan. Other
Stock-Based Awards may be granted to Participants either alone or in addition to other Awards
granted under the Plan, and such Other Stock-Based Awards shall also be available as a form of
payment in the settlement of other Awards granted under the Plan. The Committee shall determine
the terms and conditions of such Awards. Shares delivered pursuant to an Award in the nature of a
purchase right granted under this Section 6(i) shall be purchased for such consideration,
(including without limitation loans from the Company or a Related Entity provided that such loans
are not in violation of the Sarbanes Oxley Act of 2002, or any rule or regulation adopted
thereunder or any other applicable law) paid for at such times, by such



13









 





methods, and in such forms, including, without limitation, cash, Shares, other Awards or other
property, as the Committee shall determine.



     7. Certain Provisions Applicable to Awards.



          (a) Stand-Alone, Additional, Tandem, and Substitute Awards. 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 Related Entity, or any business entity to be acquired by the Company or a Related
Entity, or any other right of a Participant to receive payment from the Company or any Related
Entity. Such additional, tandem, and substitute or exchange Awards may be granted at any time. If
an Award is granted in substitution or exchange for another Award or award, the Committee shall
require the surrender of such other Award or award in consideration for the grant of the new Award.
In addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any Related Entity, in which the value of Stock subject
to the Award is equivalent in value to the cash compensation (for example, Deferred Stock or
Restricted Stock), or in which the exercise price, grant price or purchase price of the Award in
the nature of a right that may be exercised is equal to the Fair Market Value of the underlying
Stock minus the value of the cash compensation surrendered (for example, Options or Stock
Appreciation Right granted with an exercise price or grant price “discounted” by the amount of the
cash compensation surrendered).



          (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 Stock Appreciation Right
exceed a period of ten years (or in the case of an Incentive Stock Option such shorter term as may
be required under Section 422 of the Code).



          (c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and
any applicable Award Agreement, payments to be made by the Company or a Related Entity upon the
exercise of an Option or other Award or settlement of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, Shares, other Awards or other
property, and may be made in a single payment or transfer, in installments, or on a deferred basis.
Any installment or deferral provided for in the preceding sentence shall, however, be subject to
the Company’s compliance with the provisions of the Sarbanes-Oxley Act of 2002, the rules and
regulations adopted by the Securities and Exchange Commission thereunder, and all applicable rules
of the New York Stock Exchange or any national securities exchange on which the Company’s
securities are listed for trading and, if not listed for trading on either the New York Stock
Exchange or a national securities exchange, then the rules of the Nasdaq Stock Market. The
settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such
settlement, in the discretion of the Committee or upon occurrence of one or more specified events
(in addition to a Change in Control). 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 a reasonable
interest rate on



14









 





installment or deferred payments or the grant or crediting of Dividend Equivalents or other
amounts in respect of installment or deferred payments denominated in Shares.



          (d) Exemptions from Section 16(b) Liability. It is the intent of the Company that the grant
of any Awards to or other transaction by a Participant who is subject to Section 16 of the Exchange
Act shall be exempt from Section 16 pursuant to an applicable exemption (except for transactions
acknowledged in writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award Agreement does not comply with the requirements of Rule 16b-3 then
applicable to any such transaction, such provision shall be construed or deemed amended to the
extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant
shall avoid liability under Section 16(b).



     8. Code Section 162(m) Provisions.



          (a) Covered Employees. The Committee, in its discretion, may determine at the time an Award
is granted to an Eligible Person who is, or is likely to be, as of the end of the tax year in which
the Company would claim a tax deduction in connection with such Award, a Covered Employee, that the
provisions of this Section 8 shall be applicable to such Award.



          (b) Performance Criteria. If an Award is subject to this Section 8, then the lapsing of
restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be contingent upon achievement of one or more objective performance goals.
Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) of
the Code and regulations thereunder including the requirement that the level or levels of
performance targeted by the Committee result in the achievement of performance goals being
“substantially uncertain.” One or more of the following business criteria for the Company, on a
consolidated basis, and/or for Related Entities, or for business or geographical units of the
Company and/or a Related Entity (except with respect to the total shareholder return and earnings
per share criteria), shall be used by the Committee in establishing performance goals for such
Awards: (1) earnings per share; (2) revenues or margins; (3) cash flow; (4) operating margin; (5)
return on net assets, investment, capital, or equity; (6) economic value added; (7) direct
contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense and before
extraordinary or special items; operating income; income before interest income or expense, unusual
items and income taxes, local, state or federal and excluding budgeted and actual bonuses which
might be paid under any ongoing bonus plans of the Company; (9) working capital; (10) management of
fixed costs or variable costs; (11) identification or consummation of investment opportunities or
completion of specified projects in accordance with corporate business plans, including strategic
mergers, acquisitions or divestitures; (12) total shareholder return; (13) debt reduction; (14)
comparable store sales; (15) inventory turn; (16) markdowns as a percentage of sales; and (17)
selling, general and administrative expenses as a percentage of sales. Any of the above goals may
be determined on an absolute or relative basis or as compared to the performance of a published or
special index deemed applicable by the Committee including, but not limited to, the Standard &
Poor’s 500 Stock Index or a group of companies that are comparable to the Company. The Committee
may exclude the impact of an event or occurrence which the Committee determines should
appropriately be excluded, including without limitation (i) restructurings, discontinued



15









 





operations, extraordinary items, and other unusual or non-recurring charges, (ii) an event
either not directly related to the operations of the Company or not within the reasonable control
of the Company’s management, or (iii) a change in accounting standards required by generally
accepted accounting principles.



          (c) Performance Period; Timing For Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a Performance
Period, as specified by the Committee. Performance goals shall be established not later than 90
days after the beginning of any Performance Period applicable to such Performance Awards, or at
such other date as may be required or permitted for “performance-based compensation” under Code
Section 162(m).



          (d) Adjustments. The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with Awards subject to this Section 8, but may not exercise
discretion to increase any such amount payable to a Covered Employee in respect of an Award subject
to this Section 8. The Committee shall specify the circumstances in which such Awards shall be
paid or forfeited in the event of termination of Continuous Service by the Participant prior to the
end of a Performance Period or settlement of Awards.



          (e) Committee Certification. No Participant shall receive any payment under the Plan unless
the Committee has certified, by resolution or other appropriate action in writing, that the
performance criteria and any other material terms previously established by the Committee or set
forth in the Plan, have been satisfied to the extent necessary to qualify as “performance based
compensation” under Code Section 162(m).



     9. Change in Control.



          (a) Effect of “Change in Control.” Subject to Section 9(a)(iv), and if and only to the extent
provided in the Award Agreement, or to the extent otherwise determined by the Committee, upon the
occurrence of a “Change in Control,” as defined in Section 9(b):



               (i) Any Option or Stock Appreciation Right that was not previously vested and exercisable as
of the time of the Change in Control, shall become immediately vested and exercisable, subject to
applicable restrictions set forth in Section 10(a) hereof.



               (ii) Any restrictions, deferral of settlement, and forfeiture conditions applicable to a
Restricted Stock Award, Deferred Stock Award or an Other Stock-Based Award subject only to future
service requirements 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.



               (iii) With respect to any outstanding Award subject to achievement of performance goals and
conditions under the Plan, the Committee may, in its discretion, deem such performance goals and
conditions as having been met as of the date of the Change in Control.



          (b) Definition
of “Change in Control”. Unless otherwise specified in an Award Agreement, a
“Change in Control” shall mean the occurrence of any of the following:



16









 





               (i) The acquisition by any Person of Beneficial Ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than fifty percent (50%) of either (A) the then
outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B)
the combined voting power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities) (the foregoing
Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however,
that for purposes of this Section 9(b), the following acquisitions shall not constitute or result
in a Change of Control: (v) any acquisition directly from the Company; (w) any acquisition by the
Company; (x) any acquisition by any Person that as of the Effective Date owns Beneficial Ownership
of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary; or (z) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below;
or



               (ii) During any period of two (2) consecutive years (not including any period prior to the
Effective Date) individuals who constitute the Board on the Effective Date (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or



               (iii) Consummation of a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company or any of its Subsidiaries, a sale or other
disposition of all or substantially all of the assets of the Company, or the acquisition of assets
or stock of another entity by the Company or any of its Subsidiaries (each a “Business
Combination”), in each case, unless, following such Business Combination, (A) all or substantially
all of the individuals and entities who were the Beneficial Owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%)
of the then outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination (including, without limitation,
a corporation which as a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination or any Person that as of the Effective Date owns
Beneficial Ownership of a Controlling Interest) beneficially owns, directly or indirectly, fifty
percent (50%) or more of the then outstanding shares of common stock of the corporation resulting
from such Business Combination or the combined voting power of the then outstanding voting
securities of such



17









 





corporation except to the extent that such ownership existed prior to the Business Combination
and (C) at least a majority of the members of the Board of Directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such Business Combination; or



               (iv) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.



     10. General Provisions.



          (a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed
necessary or advisable by the Committee, postpone the issuance or delivery of Shares or payment of
other benefits under any Award until completion of such registration or qualification of such
Shares 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 Shares or other Company securities 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
Shares or payment of other benefits in compliance with applicable laws, rules, and regulations,
listing requirements, or other obligations.



          (b) Limits on Transferability; Beneficiaries. No Award or other right or interest granted
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 Incentive Stock Options and Stock
Appreciation Rights in tandem therewith) may be transferred 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.



               (i) Adjustments to Awards. In the event that any extraordinary dividend or other distribution
(whether in the form of cash, Shares, or other property), recapitalization, forward or reverse
split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate



18









 





transaction or event affects the Shares and/or such other securities of the Company or any
other issuer such that a substitution, exchange, or adjustment is determined by the Committee to be
appropriate, then the Committee shall, in such manner as it may deem equitable, substitute,
exchange or adjust any or all of (A) the number and kind of Shares which may be delivered in
connection with Awards granted thereafter, (B) the number and kind of Shares by which annual
per-person Award limitations are measured under Section 5 hereof, (C) the number and kind of Shares
subject to or deliverable in respect of outstanding Awards, (D) the exercise price, grant price or
purchase price relating to any Award and/or make provision for payment of cash or other property in
respect of any outstanding Award, and (E) any other aspect of any Award that the Committee
determines to be appropriate.



               (ii) Adjustments in Case of Certain Corporate Transactions. In the event of any merger,
consolidation or other reorganization in which the Company does not survive, or in the event of any
Change in Control, any outstanding Awards may be dealt with in accordance with any of the following
approaches, as determined by the agreement effectuating the transaction or, if and to the extent
not so determined, as determined by the Committee: (a) the continuation of the outstanding Awards
by the Company, if the Company is a surviving corporation, (b) the assumption or substitution for,
as those terms are defined in Section 9(b)(iv) hereof, the outstanding Awards by the surviving
corporation or its parent or subsidiary, (c) full exercisability or vesting and accelerated
expiration of the outstanding Awards, or (d) settlement of the value of the outstanding Awards in
cash or cash equivalents or other property followed by cancellation of such Awards (which value, in
the case of Options or Stock Appreciation Rights, shall be measured by the amount, if any, by which
the Fair Market Value of a Share exceeds the exercise or grant price of the Option or Stock
Appreciation Right as of the effective date of the transaction). The Committee shall give written
notice of any proposed transaction referred to in this Section 10(c)(ii) a reasonable period of
time prior to the closing date for such transaction (which notice may be given either before or
after the approval of such transaction), in order that Participants may have a reasonable period of
time prior to the closing date of such transaction within which to exercise any Awards that are
then exercisable (including any Awards that may become exercisable upon the closing date of such
transaction). A Participant may condition his exercise of any Awards upon the consummation of the
transaction.



               (iii) Other Adjustments. The Committee (and the Board if and only to the extent such
authority is not required to be exercised by the Committee to comply with Section 162(m) of the
Code) is authorized to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including Performance Awards, or performance goals relating thereto) in recognition of
unusual or nonrecurring events (including, without limitation, acquisitions and dispositions of
businesses and assets) affecting the Company, any Related Entity or any business unit, or the
financial statements of the Company or any Related Entity, 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 Related Entity 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 such authority or the
making of such adjustment would cause Options, Stock Appreciation Rights, Performance Awards
granted pursuant to Section 8(b) hereof to Participants designated by the Committee as Covered
Employees and intended to



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qualify as “performance-based compensation” under Code Section 162(m) and the regulations
thereunder to otherwise fail to qualify as “performance-based compensation” under Code Section
162(m) and regulations thereunder.



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



          (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 shareholders or Participants, except that any amendment or alteration to the Plan shall
be subject to the approval of the Company’s shareholders not later than the annual meeting next
following such Board action if such shareholder approval is required by any federal or state law or
regulation (including, without limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any
stock exchange or automated quotation system on which the Shares may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such changes to the Plan to
shareholders 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. 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, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may materially and
adversely affect the rights of such Participant under such Award.



          (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 Related
Entity; (ii) interfering in any way with the right of the Company or a Related Entity to terminate
any Eligible Person’s or Participant’s Continuous 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
shareholder of the Company unless and until the Participant is duly issued or transferred Shares 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 obligation to deliver Shares 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



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authorize the creation of trusts and deposit therein cash, Shares, 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) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its
submission to the shareholders of the Company for approval shall be construed as creating any
limitations on the power of 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 Section 162(m) of the Code.



          (i) 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 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.



          (j) 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 laws
of the State of Florida without giving effect to principles of conflict of laws, and applicable
federal law.



          (k) Non-U.S. Laws. The Committee shall have the authority to adopt such modifications,
procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of
foreign countries in which the Company or its Subsidiaries may operate to assure the viability of
the benefits from Awards granted to Participants performing services in such countries and to meet
the objectives of the Plan.



          (l) Plan Effective Date and Shareholder Approval; Termination of Plan. The Plan shall become
effective on the Effective Date, subject to subsequent approval, within 12 months of its adoption
by the Board, by shareholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) (if applicable) and 422, Rule
16b-3 under the Exchange Act (if applicable), applicable requirements under the rules of any stock
exchange or automated quotation system on which the Shares may be listed or quoted, and other laws,
regulations, and obligations of the Company applicable to the Plan. Awards may be granted subject
to shareholder approval, but may not be exercised or otherwise settled in the event the shareholder
approval is not obtained. The Plan shall terminate at the earliest of (a) such time as no Shares
remain available for issuance under the Plan, (b) termination of this Plan by the Board, or (c) the
tenth anniversary of the Effective Date. Awards outstanding upon expiration of the Plan shall
remain in effect until they have been exercised or terminated, or have expired.




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