**Exhibit 10.48**

 

BIG FLOWER HOLDINGS, INC.

 

1999 EQUITY AWARD PLAN

 

ARTICLE I

 

PURPOSE

 

Thepurpose of this Big Flower Holdings, Inc. 1999 Equity Award Plan is to enhancethe profitability and value of the Company for the benefit of its stockholdersby enabling the Company to offer employees, consultants and non-employeedirectors of the Company and its Affiliates who are in a position to contributematerially to the long-term success of the Company, stock-based incentives and otherequity interests in the Company, in order to attract, retain and reward suchindividuals and strengthen the mutuality of interests between such individualsand the Company’s stockholders. The Plan is effective as of the date set forthin Article XVI.

 

ARTICLE II

 

DEFINITIONS

 

Forpurposes of this Plan, the following terms shall have the following meanings:

 

2.1   “Affiliate” shall mean each of thefollowing: (i) any Subsidiary; (ii) any Parent; (iii) any other corporation,trade or business (including, without limitation, a partnership or limitedliability company) which is directly or indirectly controlled 50% or more(whether by ownership of stock, assets or an equivalent ownership interest orvoting interest) by the Company or one of its Affiliates; and (iv) any otherentity in which the Company or any of its Affiliates has a material equityinterest and which is designated as an “Affiliate” by resolution of theCommittee.

 

2.2   “Award” shall mean any award under this Planof any (i) Stock Option, (ii) Stock Appreciation Right, (iii) Restricted Stock,(iv) Performance Share, (v) Performance Unit or (vi) Other Stock-Based Award.

 

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2.3   “Award Agreement” shall mean the writtenagreement, as approved by the Committee, entered into between a Participant andthe Company setting forth the terms and conditions of an Award hereunder.

 

2.4   “Board” shall mean the Board of Directors ofthe Company.

 

2.5   “Cause” shall mean, with respect to aParticipant’s Termination of Employment or Termination of Consultancy,termination due to a Participant’s insubordination, dishonesty, incompetence,moral turpitude, other misconduct of any kind or the refusal to perform his orher duties or responsibilities for any reason other than illness or incapacity,in each case, as determined by the Committee in good faith. Notwithstanding theforegoing, in the event there is an employment agreement, consulting agreement,change in control agreement or similar agreement in effect between the Companyor an Affiliate and the Participant at the time in question that defines “cause”(or words of like import), Cause shall have the meaning ascribed to it undersuch agreement, as such agreement shall provide at the time in question;provided, however, that with regard to any agreement that conditions “cause” onoccurrence of a change in control, such definition of “cause” shall not applyuntil a change in control actually takes place and then only with regard to a terminationthereafter. With respect to a Non-Employee Director’s Termination ofDirectorship, “cause” shall mean an act or failure to act that constitutescause for removal of a director under applicable Delaware law, as in effect atthe time in question, as determined by the Board in good faith.

 

2.6   “Code” shall mean the Internal Revenue Codeof 1986, as amended. Any reference to any section of the Code shall also be areference to any successor provision.

 

2.7   “Committee” shall mean: (i) with respect tothe application of this Plan to Eligible Employees and Consultants, a committeeor subcommittee of the Board appointed from time to time by the Board; and (ii)with respect to the application of this Plan to Non-Employee Directors, the Board.If and to the extent that no Committee exists that has the authority toadminister this Plan, the functions of the Committee shall be exercised by theBoard and all references herein to the Committee shall be deemed to bereferences to the Board.

 

2.8   “Common Stock” shall mean the common stock,$.01 par value per share, of the Company.

 

2.9   “Company” shall mean Big Flower Holdings, Inc.,a Delaware corporation, and its successors and assigns.

 

2.10   “Consultant” shall mean any individual whois engaged to perform services for the Company and/or its Affiliates other thanas an employee or director of the Company or any Affiliate.

 

2.11   “Disability” shall mean the inability of a Participantto perform substantially the Participant’s duties and responsibilities to theCompany or any Affiliate by reason of a physical or mental disability orinfirmity for a continuous period of three months. The date of such Disability shallbe the earlier of (i) last day of such three-month period or (ii) the day onwhich the Participant

 

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submits,or causes to be submitted, to the Committee any medical evidence of suchDisability reasonably satisfactory to the Committee. Notwithstanding theforegoing, with respect to an Incentive Stock Option, Disability shall mean apermanent and total disability as defined in Section 22(e)(3) of the Code.

 

2.12   “Effective Date” shall mean the effectivedate of this Plan as defined in Article XVI.

 

2.13   “Eligible Employee” shall mean an employeeof the Company or an Affiliate who is eligible for Awards under the Plan, whicheligibility shall be conclusively determined by the Committee.

 

2.14   “Fair Market Value” shall mean as of anygiven date, unless otherwise required by any provision of the Code orregulations issued thereunder, fair market value as determined in good faith bythe Committee.

 

2.15   “Incentive Stock Option” shall mean anyStock Option awarded under the Plan intended to be and designated as an “incentivestock option” within the meaning of Section 422 of the Code.

 

2.16   “Limited Stock Appreciation Right” shallmean an Award of a limited Tandem Stock Appreciation Right or a limitedNon-Tandem Stock Appreciation Right made pursuant to Section 7.5 of this Plan.

 

2.17   “Management Subscription Agreement” shallmean the Management Subscription Agreement, dated as of November            , 1999, by and among the Company, ThomasH. Lee Equity Fund IV, L.P. and an Eligible Employee, if any.

 

2.18“Non-Employee Director” shall mean a director of the Company who is not anactive employee of the Company or an Affiliate.

 

2.19   “Non-Qualified Stock Option” shall mean anyStock Option awarded under this Plan that is not an Incentive Stock Option.

 

2.20   “Non-Tandem Stock Appreciation Right” shallmean a Stock Appreciation Right entitling a Participant to receive an amount incash or Common Stock (as determined by the Committee in its sole discretion)equal to the excess of (i) the Fair Market Value of a share of Common Stock asof the date such right is exercised, over (ii) the aggregate exercise price ofsuch right.

 

2.21   “Other Stock-Based Award” shall mean anAward of Common Stock and other Awards made pursuant to Article XI that arevalued in whole or in part by reference to, or are payable in or otherwisebased on, Common Stock, including, without limitation, an Award valued byreference to performance of an Affiliate.

 

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2.22   “Parent” shall mean any parent corporationof the Company within the meaning of Section 424(e) of the Code.

 

2.23   “Participant” shall mean any EligibleEmployee, Consultant or Non-Employee Director to whom an Award has been madeunder this Plan; provided, however, that a Non-Employee Director shall be aParticipant for purposes of the Plan solely with respect to awards of Stock Optionspursuant to Section 6.2(b) hereof.

 

2.24   “Performance Cycle” shall have the meaningset forth in Section 10.1.

 

2.25   “Performance Period” Shall have meaning setforth in Section 9.1.

 

2.26   “Performance Share” shall mean an Award madepursuant to Article IX of this Plan of the right to receive shares of CommonStock or, as determined by the Committee in its sole discretion, cash of anequivalent value at the end of the Performance Period or thereafter.

 

2.27   “Performance Unit” shall mean an Award madepursuant to Article X of this Plan of the right to receive a fixed dollaramount, payable in cash or Common Stock (or a combination of both) asdetermined by the Committee in its sole discretion, at the end of a specifiedPerformance Cycle or thereafter.

 

2.28   “Plan” shall mean this Big Flower Holdings, Inc.1999 Equity Award Plan, as amended from time to time.

 

2.29   “Reference Stock Option” shall have themeaning set forth in Section 7.1 hereof.

 

2.30   “Restricted Stock” shall mean shares ofCommon Stock issued pursuant to Article VIII hereof.

 

2.31   “Restriction Period” shall mean the periodset forth in Section 8.3(a) with respect to Restricted Stock.

 

2.32   “Retained Share Agreement” shall mean theRetained Share Agreement, dated as of November            , 1999, by and among the Company,Thomas H. Lee Equity Fund IV, L.P. and an Eligible Employee, if any.

 

2.33   “Retirement” shall mean a Termination ofEmployment or Termination of Consultancy without Cause by a Participant at orafter age 65 or such earlier date after age fifty-five (55) as may be approvedby the Committee without regard to whether the termination is treated as a “retirement”for any other purposes. With respect to a Participant’s Termination ofDirectorship, Retirement shall mean the failure to stand for reelection or thefailure to be reelected at or after a Participant has attained age 65 or, withthe consent of the Board, before age 65 but after age 50.

 

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2.34   “Securities Act” shall mean the SecuritiesAct of 1933, as amended. Any reference to any section of the Securities Actshall also be a reference to any successor provision.

 

2.35   “Stock Appreciation Right” or “SAR” shallmean the right pursuant to an Award granted under Article VII hereof.

 

2.36   “Stock Option” shall mean any option topurchase shares of Common Stock granted to a Participant under Article VIhereof.

 

2.37   “Subsidiary” shall mean any subsidiarycorporation of the Company within the meaning of Section 424(f) of the Code.

 

2.38  “Tandem Stock Appreciation Right” shallmean a Stock Appreciation Right entitling the holder to surrender to theCompany all (or a portion) of a Stock Option in exchange for an amount in cashor Common Stock (as determined by the Committee in its sole discretion) equalto the excess of (i) the Fair Market Value, on the date such Stock Option (orsuch portion thereof) is surrendered, of the Common Stock subject to such StockOption (or such portion thereof), over (ii) the aggregate exercise price ofsuch Stock Option (or such portion thereof).

 

2.39   “Ten Percent Stockholder” shall mean aperson owning stock possessing more than 10% of the total combined voting powerof all classes of stock of the Company, its Subsidiaries or its Parent.

 

2.40   “Termination of Consultancy” shall mean thetermination of a Consultant’s consultancy assignment with the Company and allAffiliates. In the event an entity shall cease to be an Affiliate, there shallbe deemed a Termination of Consultancy of any individual who is not otherwise aConsultant to the Company or another Affiliate at the time the entity ceases tobe an Affiliate.

 

2.41   “Termination of Directorship” shall mean thetermination of a Non-Employee Director’s term as director of the Company.

 

2.42   “Termination of Employment,” except asprovided in the next sentence, shall mean (i) a termination of a Participant’semployment with the Company and all Affiliates for any reason (including death,Disability or Retirement) other than a military or personal leave of absencegranted by the Company or any Affiliate) or (ii) when an entity that isemploying a Participant ceases to be an Affiliate, unless the Participantthereupon is or becomes employed by the Company or another Affiliate. TheCommittee may otherwise define Termination of Employment in an Award Agreementor, if no rights of the Participant are reduced, may otherwise defineTermination of Employment thereafter, including, but not limited to, definingTermination of Employment with regard to entities controlling, under commoncontrol with or controlled by the Company rather than just the Company and itsAffiliates and/or entities that provide substantial services to the Company orits Affiliates to which the Participant has transferred directly from the Companyor its Affiliates at the request of the Company.

 

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2.43   “Transfer” or “Transferred” shall meananticipate, alienate, attach, sell, assign, pledge, encumber, charge,hypothecate or otherwise transfer.

 

ARTICLE III

 

ADMINISTRATION

 

3.1   The Committee. The Plan shall beadministered and interpreted by the Committee.

 

3.2   Grants of Awards. The Committee shallhave full authority to grant pursuant to the terms of this Plan, Awards toEligible Employees, Consultants and Non-Employee Directors and to otherwiseadminister the Plan. All Awards shall be granted by, confirmed by, and subjectto the terms of an Award Agreement. The Committee’s authority shall include theability:

 

(a)   to determine the eligibilityof any individual for participation in the Plan and to select the EligibleEmployees, Consultants and Non-Employee Directors to whom Awards may from timeto time be granted hereunder;

 

(b)   to determine whether and towhat extent Awards, including any combination of two or more Awards, are to begranted hereunder to one or more Eligible Employees, Consultants orNon-Employee Directors;

 

(c)   to determine, in accordancewith the terms of this Plan, the number of shares of Common Stock to be coveredby each Award granted hereunder;

 

(d)   to determine the terms andconditions, not inconsistent with the terms of this Plan, of any Award grantedhereunder (including, but not limited to, the exercise or purchase price (ifany), any restriction or limitation, any vesting schedule or accelerationthereof and any forfeiture restrictions or waiver thereof, regarding any Awardand the shares of Common Stock relating thereto, based on such factors, if any,as the Committee shall determine, in its sole discretion);

 

(e)   to determine whether andunder what circumstances a Stock Option may be settled in cash, Common Stockand/or Restricted Stock under Section 6.3(d);

 

(f)   to determine whether, towhat extent and under what circumstances to provide loans (that shall bearinterest at the rate the Committee shall provide) to Eligible Employees. Consultantsand Non-Employee Directors in order to exercise Stock Options or to purchase Awardsunder this Plan (including shares of Common Stock);

 

(g)   to determine whether aStock Option is an Incentive Stock Option or Non-Qualified Stock Option orwhether a Stock Appreciation Right is a Tandem Stock Appreciation Right or aNon-Tandem Stock Appreciation Right;

 

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(h)   to prohibit an EligibleEmployee or Consultant, as a condition of the granting of any Award, fromselling or otherwise disposing of shares of Common Stock acquired pursuant tothe exercise of an Stock Option or any other Award for a period of time asdetermined by the Committee, in its sole discretion, following the date of theacquisition of such Stock Option or Award;

 

(i)   to modify, extend or renewan Award, subject to Article XIII herein, provided, however, that if an Awardis modified, extended or renewed and thereby deemed to be the issuance of a newAward under the Code or the applicable accounting rules, the exercise price ofan Award may continue to be the original exercise price even if less than theFair Market Value of the Common Stock at the time of such modification,extension or renewal; and

 

(j)   to offer**to buy out,cancel or otherwise redeem a Stock Option previously granted, based on suchterms and conditions as the Committee shall establish and communicate to theParticipant at the time such offer is made.

 

3.3   Guidelines. Subject to Article XIIIhereof, the Committee shall have the authority to adopt, alter and repeal suchadministrative rules, guidelines and practices governing this Plan and perform allacts, including the delegation of its administrative responsibilities, as itshall, from time to time, deem advisable; to construe and interpret the termsand provisions of this Plan and any Award issued under this Plan (and anyagreements relating thereto); and to otherwise supervise the administration ofthis Plan. The Committee may correct any defect, supply any omission or reconcileany inconsistency in this Plan or in any agreement relating thereto in themanner and to the extent it shall deem necessary to effectuate the purpose andintent of this Plan. The Committee may adopt special guidelines and provisionsfor persons who are residing in, or subject to, the taxes of, countries otherthan the United States of America to comply with applicable tax and securitieslaws.

 

3.4   Decisions Final. Any decision,interpretation or other action made or taken in good faith by or at thedirection of the Company, the Board or the Committee (or any of its members)arising out of or in connection with this Plan shall be within the absolutediscretion of all and each of them, as the case may be, and shall be final,binding and conclusive on the Company and all employees and Participants andtheir respective heirs, executors, administrators, successors and assigns.

 

3.5   Reliance on Counsel. The Company, theBoard or the Committee may consult with legal counsel, who may be counsel forthe Company or other counsel, with respect to its obligations or dutieshereunder, or with respect to any action or proceeding or any question of law,and shall not be liable with respect to any action taken or omitted by it ingood faith pursuant to the advice of such counsel.

 

3.6   Procedures. If the Committee isappointed, the Board may designate one of the members of the Committee aschairman and the Committee shall hold meetings, subject to the By-Laws of the Company,at such times and places, including, without limitation, by telephoneconference or by written consent, as the Committee shall deem advisable. Amajority of the Committee members shall constitute a quorum. All determinationsof the Committee shall be made by a majority of its

 

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members.Any decision or determination reduced to writing and signed by all theCommittee members in accordance with theBy-Laws of the Company, shall be fully as effective as if it had been made by avote at a meeting duly called and held. The Committee may keep minutes of itsmeetings and shall make such rules and regulations for the conduct of itsbusiness as it shall deem advisable.

 

3.7   Designation of Consultants/Liability.

 

(a)   The Committee may designateemployees of the Company and professional advisors to assist the Committee inthe administration of this Plan and may grant authority to officers to executeagreements or other documents on behalf of the Committee.

 

(b)   The Committee may employsuch legal counsel, consultants and agents as it may deem desirable for theadministration of this Plan and may rely upon any opinion received from anysuch counsel or consultant and any computation received from**any such consultant or agent. Expensesincurred by the Committee or the Board in the engagement of any such counsel,consultant or agent shall be paid by the Company. The Committee, its membersand any person designated pursuant to paragraph (a) above shall not be liablefor any action or determination made in good faith with respect to this Plan. Tothe maximum extent permitted by applicable law, no officer of the Company ormember or former member of the Committee or the Board shall be liable for anyaction or determination made in good faith with respect to this Plan or anyAward granted under it. To the maximum extent permitted by applicable law, theCertificate of Incorporation and By-Laws of the Company and to the extent notcovered by insurance, each officer and member or former member of the Committeeor the Board shall be indemnified and held harmless by the Company against any costor expense (including reasonable fees of counsel reasonably acceptable to theCompany) or liability (including any sum paid in settlement of a claim with theapproval of the Company), and advanced amounts necessary to pay the foregoingat the earliest time and to the fullest extent permitted, arising out of anyact or omission to act in connection with this Plan, except to the extentarising out of such officer’s, member’s or former member’s own fraud or badfaith. Such indemnification shall be in addition to any rights ofindemnification the officers, directors or members or former officers, directorsor members may have under applicable law or under the Certificate ofIncorporation or By-Laws of the Company or any Affiliate. Notwithstandinganything else herein, this indemnification will not apply to the actions ordeterminations made by an individual with regard to Awards granted to him orher under this Plan.

 

ARTICLE IV

 

SHARE AND OTHER LIMITATIONS

 

4.1   Share Limitation.

 

*General**Limitation.*The aggregate number of sharesof Common Stock that may be issued or used for reference purposes under thisPlan or with respect to which Awards may

 

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begranted shall not exceed 10,000,000 shares of Common Stock (subject toadjustment pursuant to Section 4.2), which may be either authorized andunissued Common Stock or Common Stock held in or acquired for the treasury ofthe Company. To the extent that an Incentive Stock Option is disqualified andno longer an Incentive Stock Option, the number of shares of Common Stockunderlying the Stock Option shall continue to count against the aggregate limitof 10,000,000 shares of Common Stock set forth herein. If any Stock Option orStock Appreciation Right granted under this Plan expires, terminates or iscanceled for any reason without having been exercised in full or, the Companyrepurchases any Stock Option, the number of shares of Common Stock underlyingsuch unexercised or repurchased Stock Option or any unexercised StockAppreciation Right shall again be available for the purposes of Awards underthis Plan. If any shares of Restricted Stock, Performance Shares. PerformanceUnits or Other Stock-Based Awards awarded under this Plan are forfeited orrepurchased by the Company for any reason, the number of forfeited orrepurchased shares of Restricted Stock, Performance Shares, Performance Unitsor Other Stock-Based Awards shall again be available for the purposes of Awardsunder this Plan. A Tandem Stock Appreciation Right or a Limited StockAppreciation Right that is granted in tandem with a Stock Option, shall onlyapply once against the maximum number of shares of Common Stock which may beissued under this Plan. In determining the number of shares of Common Stockavailable for Awards other than Awards of Incentive Stock Options, if Common Stockhas been exchanged by a Participant as full or partial payment to the Company,or for withholding, in connection with the exercise of a Stock Option or thenumber shares of Common Stock otherwise deliverable has been reduced forwithholding, the number of shares of Common Stock exchanged as payment inconnection with the exercise or for withholding or reduced shall again beavailable for purposes of Awards under this Plan.

 

4.2   Changes.

 

(a)   The existence of this Planand the Awards granted hereunder shall not affect in any way the right or powerof the Board or the stockholders of the Company to make or authorize anyadjustment, recapitalization, reorganization or other change in the Company’s capitalstructure or its business, any merger or consolidation of the Company or anyAffiliate, any issue of bonds, debentures, preferred or prior preference stockahead of or affecting Common Stock, the authorization or issuance of additionalshares of Common Stock, the dissolution or liquidation of the Company or anyAffiliate, any sale or transfer of all or part of the assets or business of theCompany or any Affiliate or any other corporate act or proceeding.

 

(b)   In the event of any changein the capital structure or business of the Company by reason of any stockdividend or extraordinary dividend, stock split or reverse stock split, recapitalization,reorganization, merger, consolidation, split-up, combination or exchange ofshares, non-cash distributions with respect to its outstanding Common Stock orcapital stock other than Common Stock, reclassification of its capital stock,any sale or transfer of all or part of the Company’s assets or business, or anysimilar change affecting the Company’s capital structure or business or thecapital structure of any business of any Affiliate or a change in control ofthe Company, as determined by the Committee, and the Committee

 

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determinesin good faith that an adjustment is necessary or appropriate under the Plan toprevent substantial dilution or enlargement of the rights granted to, oravailable for, Participants under the Plan or as otherwise necessary to reflectthe change, then the aggregate number and kind of shares which may be issuedunder Section 4.1 of the Plan, the number and kind of shares or other property(including cash) subject to outstanding Awards under the Plan and the purchaseor exercise price thereof shall be appropriately adjusted consistent with suchchange in such manner as the Committee may deem equitable to preventsubstantial dilution or enlargement of the rights granted to, or available for,Participants under the Plan or as otherwise necessary to reflect the change,and any such adjustment determined by the Committee in good faith shall bebinding and conclusive on the Company and all Participants and their respectiveheirs, executors, administrators, successors and assigns. In connection withany event described in this paragraph, the Committee may provide, in its solediscretion, for the cancellation of any outstanding Awards and payment in cashor other property in exchange therefor.

 

(c)   Fractional shares of Common Stock resultingfrom any adjustment to Awards pursuant to this Section 4 shall be aggregateduntil, and eliminated at, the time of exercise by rounding-down for fractionslees than one-half and rounding-up for fractions equal to or greater thanone-half. No cash settlements shall be made with respect to fractional shareseliminated by rounding. Notice of any adjustment shall be given by the Committeeto each Participant whose Award has been adjusted and such adjustment (whetheror not such notice is given) shall be effective and binding for all purposes ofthis Plan.

 

4.3   Minimum Purchase Price.Notwithstanding any provision of this Plan to the contrary, if authorized butpreviously unissued shares of Common Stock are issued under this Plan, suchshares shall not be issued for a consideration which is less than as permittedunder applicable law.

 

ARTICLE V

ELIGIBILITY

 

5.1   Eligible Employees andConsultants. All Eligible Employees and Consultants and prospectiveemployees of and consultants to the Company and its Affiliates shall beeligible to be granted Awards under this Plan; provided, however, that onlyEligible Employees of the Company, its Subsidiaries and its Parent (if any)shall be eligible for the grant of Incentive Stock Options. The vesting andexercise of Awards granted to a prospective employee or consultant shall beconditioned upon such individual actually becoming an Eligible Employee orConsultant.

 

5.2   Non-employeeDirectors. Non-employee Directors are only eligible to receiveNon-Qualified Stock Options in accordance with Section 6.2(b) of the Plan.

 

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5.3   CommitteeDetermination. Eligibility for the giant of an Award and actualparticipation in this Plan shall be determined by the Committee, in its solediscretion.

 

ARTICLE VI

STOCK OPTIONS

 

6.1   Stock Options. Stock Options grantedhereunder shall be either (i) an Incentive Stock Option intended to satisfy therequirements of Section 422 of the Code or (ii) a Non-Qualified Stock Option.

 

6.2   Grants. (a) The Committee shall havethe authority to grant to any Eligible Employee one or more Incentive StockOptions, Non-Qualified Stock Options or both types of Stock Options (in eachcase with or without Stock Appreciation Rights). To the extent that any StockOption does not qualify as an Incentive Stock Option (whether because of itsprovisions or the time or manner of its exercise or otherwise), such StockOption or the portion thereof which does not qualify, shall constitute aseparate Non-Qualified Stock Option. The Committee shall have the authority togrant any Consultant one or more Non-Qualified Stock Options (with or withoutStock Appreciation Rights). Notwithstanding any other provision of this Plan orany provision in an Award Agreement to the contrary, any Stock Option grantedto an Eligible Employee of an Affiliate that is not a Parent or a Subsidiaryshall be a Non-Qualified Stock Option.

 

(b)  The Committee shall have the authorityto grant any Non-employee Director one *or*moreNon-Qualified Stock Options.

 

6.3   Terms of Options. Stock Optionsgranted under this Article VI, shall be subject to the following terms andconditions, and shall be in such form and contain such additional terms andconditions, not inconsistent with the terms of this Plan, as the Committeeshall deem desirable:

 

(a)                                          *Exercise Price.*The exercise price per share of Common Stocksubject to a Stock Option shall be determined by the Committee at the time ofgrant, but shall not be less than 100% of the Fair Market Value of a share ofCommon Stock at the time of grant; provided, however, that if an IncentiveStock Option is granted to a Ten Percent Stockholder, the exercise price shallbe no less than 110% of the Fair Market Value of the Common Stock at the timeof grant.

 

(b)                                         *Stock Option Term.*The term of each Stock Option shall be fixedby the Committee; provided, however, that no Stock Option shall be exercisablemore than ten (10) years after the date such Stock Option is granted; andfurther provided that the term of an Incentive Stock Option granted to a TenPercent Stockholder shall not exceed five (5) years.

 

(c)                                          *Exercisability.*Stock Options shall be exercisable at suchtime or times and subject to such terms and conditions as shall be determinedby the Committee at the time of grant. If the Committee provides, in its solediscretion, that any Stock Option is exercisable

 

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subjectto certain limitations (including, without limitation, that such Stock Optionis exercisable only in installments or within certain time periods), theCommittee may waive such limitations on the exercisability at any time at orafter grant in whole or in part (including, without limitation, waiver of theinstallment exercise provisions or acceleration of the time at which such StockOptions may be exercised), based on such factors, if any, as the Committee shalldetermine, in its sole discretion.

 

(d)   *Method of Exercise.*Subject to anylimitations on the exercisability of a Stock Option under subsection (c) above,Stock Options may be exercised in whole or in part at any time and from time totime during the Stock Option term by giving written notice of exercise to theCompany specifying the number of shares to be purchased. Such notice shall beaccompanied by payment in full of the purchase price in cash or by check, bankdraft or money order payable to the order of the Company or in such other form asmay be acceptable to the Committee (including, without limitation, therelinquishment of Stock Options or by payment in full or in part in the form ofCommon Stock owned by the Participant for a period of at least 6 months, andfor which the Participant has good title free and clear of any liens andencumbrances) based on the Fair Market Value of the Common Stock on the paymentdate. No shares of Common Stock shall be issued until payment therefor, asprovided herein, has been made or provided for.

 

(e)   *Incentive Stock Option Limitations.*To theextent that the aggregate Fair Market Value (determined as of the time ofgrant) of the Common Stock with respect to which Incentive Stock Options areexercisable for the first time by an Eligible Employee during any calendar yearunder this Plan and/or any other stock option plan of the Company, anySubsidiary or any Parent exceeds $100,000, such Stock Options shall be treatedas Stock Options that are not Incentive Stock Options. Should any provision ofthis Plan not be necessary in order for the Stock Options to qualify asIncentive Stock Options, or should any additional provisions be required, theCommittee may amend this Plan accordingly, without the necessity of obtainingthe approval of the stockholders of the Company.

 

(f)   *Buy Out and Settlement Provisions.*TheCommittee may at any time on behalf of the Company offer to buy a Stock Optionpreviously granted, based on such terms and conditions as the Committee shallestablish and communicate to the Participant at the time that such offer ismade.

 

(g)   *Form, Modification, Extension and Renewal of StockOptions,*Subject to the terms and conditions and within thelimitations of this Plan, Stock Options shall be evidenced by an AwardAgreement and the Committee may (i) modify, extend or renew outstanding StockOptions granted under this Plan (provided that the rights of a Participant arenot reduced without his consent), and (ii) accept the surrender of outstanding StockOptions (up to the extent not theretofore exercised) and authorize the grantingof new Stock Options in substitution therefor (to the extent not theretoforeexercised).

 

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(h)   *Other Terms and Conditions.  *Stock Options may contain suchother provisions. which shall not be inconsistent with any of the terms of thisPlan, as the Committee shall deem appropriate.

 

ARTICLE VII

 

STOCK APPRECIATION RIGHTS

 

7.1   Tandem Stock Appreciation Rights.   Stock Appreciation Rights may be granted inconjunction with all or part of any Stock Option (a “Reference Stock Option”)granted to an Eligible Employee or Consultant under this Plan (“Tandem StockAppreciation Rights”). In the case of a Non-Qualified Stock Option, such rightsmay be granted either at or after the time of the grant of such Reference StockOption.

 

7.2   Terms and Conditions of Tandem StockAppreciation Rights.   Tandem StockAppreciation Rights shall be subject to such terms and conditions, not inconsistentwith the provisions of this Plan, as shall be determined from time to time bythe Committee, including, without limitation, Article XII hereof and thefollowing:

 

(a)   *Term.*A Tandem Stock Appreciation Right orapplicable portion thereof granted with respect to a Reference Stock Optionshall terminate and no longer be exercisable upon the termination or exerciseof the Reference Stock Option, except mat, unless otherwise determined by theCommittee, in its sole discretion, at the time of grant, a Tandem StockAppreciation Right granted with respect to less than the full number of sharescovered by the Reference Stock Option shall not be terminated until and thenonly to the extent the exercise or termination of the Reference Stock Optioncauses the number of shares covered by the Tandem Stock Appreciation Right toexceed the number of shares remaining available and unexercised under theReference Stock Option.

 

(b)   *Exercisability.*Tandem Stock AppreciationRights shall be exercisable only at such time or times and to the extent thatthe Reference Stock Options to which they relate shall be exercisable inaccordance with the provisions of Article VI and this Article VII.

 

(c)   *Method of Exercise.*A Tandem StockAppreciation Right may be exercised by a Participant by surrendering theapplicable portion of the Reference Stock Option. Upon such exercise andsurrender, the Participant shall be entitled to receive an amount determined inthe manner prescribed in this Section 7.2. Stock Options which have been sosurrendered, in whole or in part, shall no longer be exercisable to the extentthe related Tandem Stock Appreciation Rights have been exercised.

 

(d)   *Payment.*Upon the exercise of a TandemStock Appreciation Right, a Participant shall be entitled to receive up to, butno more than, an amount in cash and/or Common Stock (as determined by theCommittee in its sole discretion at the time of grant, or thereafter if norights of a Participant are reduced) equal in value to the excess of the Fair MarketValue of

 

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one share of Common Stock over the option price per share specified inthe Reference Stock Option, multiplied by the number of shares in respect ofwhich the Tandem Stock Appreciation Right shall have been exercised.

 

(e)   *Deemed Exercise of Reference Stock Option.*Uponthe exercise of a Tandem Stock Appreciation Right, the Reference Stock Optionor part thereof to which such Stock Appreciation Right is related shall bedeemed to have been exercised for the purpose of the limitation set forth in ArticleIV of this Plan on the number of shares of Common Stock to be issued under thisPlan.

 

7.3   Non-Tandem StockAppreciation Rights. Grants of Non-Tandem Stock Appreciation Rights shallbe made without reference to any Stock Option granted under this Plan.

 

7.4   Termsand Conditions of Non-Tandem Stock Appreciation Rights. Non-Tandem StockAppreciation Rights shall be subject to such terms and conditions, notinconsistent with the provisions of this Plan, as shall be determined from timeto time by the Committee, including Article XII hereof and the following:

 

(a)   *Term.*The term of each Non-Tandem StockAppreciation Right shall be fixed by the Committee, but shall not be greaterthan ten (10) years after the date the right is granted.

 

(b)   *Exercisability.*Non-Tandem StockAppreciation Rights shall be exercisable at such time or times and subject tosuch terms and conditions as shall be determined by the Committee at the timeof grant. If the Committee provides, in its sole discretion, that any suchright is exercisable subject to certain limitations (including, withoutlimitation, that it is exercisable only in installments or within certain timeperiods), the Committee may waive such limitation on the exercisability at anytime at or after grant in whole or in part (including, without limitation,waiver of the installment exercise provisions or acceleration of the time atwhich rights may be exercised), based on such factors, if any, as the Committeeshall determine, in its sole discretion.

 

(c)   *Method of Exercise.*Subject to whateverinstallment exercise and waiting period provisions apply under subsection (b) above,Non-Tandem Stock Appreciation Rights may be exercised in whole or in part atany time and from time to time during its term, by giving written notice ofexercise to the Company specifying the number of Non-Tandem Stock AppreciationRights to be exercised.

 

(d)   *Payment.*Upon the exercise of a Non-TandemStock Appreciation Right a Participant shall be entitled to receive, for eachright exercised, up to, but no more than, an amount in cash and/or Common Stock(as chosen by the Committee in its sole discretion at the time of grant, orthereafter if no rights of a Participant are reduced) equal in value to theexcess of the Fair Market Value of one share of Common Stock on the date theright is exercised over the Fair Market Value of one share of Common Stock onthe date the right was awarded to the Participant.

 

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7.5   Limited StockAppreciation Rights. The Committee may, in its sole discretion, grant aTandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right as aLimited Stock Appreciation Right. Limited Stock Appreciation Rights may beexercised only upon the occurrence of an event or events as the Committee may,in its sole discretion, designate at the time of grant or thereafter. Upon theexercise of Limited Stock Appreciation Rights, except as otherwise provided inan Award Agreement, the Participant shall receive in cash or Common Stock, (asdetermined by the Committee at the time of grant, or thereafter if no rights ofa Participant are reduced) an amount equal to the amount (i) set forth in Section7.2(d) with respect to Tandem Stock Appreciation Rights, or (ii) set forth in Section7.4(d) with respect to Non-Tandem Stock Appreciation Rights, as applicable.

 

ARTICLE VIII

 

RESTRICTED STOCK

 

8.1   Awards of RestrictedStock. Shares of Restricted Stock may be issued to Eligible Employees orConsultants either alone or in addition to other Awards granted under thisPlan. The Committee shall determine the Eligible Employees and Consultants towhom, and the time or times at which, grants of Restricted Stock will be made,the number of shares to be awarded, subject to Section 8.2, the price (if any)to be paid by the recipient, the time or times within which such Awards may besubject to forfeiture, the vesting schedule and rights to acceleration thereof,and all other terms and conditions of the Awards. The Committee may conditionthe grant or vesting of Restricted Stock upon the attainment of specifiedperformance goals or such other factors as the Committee may determine, in itssole discretion.

 

8.2   Awards and Certificates.An Eligible Employee or Consultant selected to receive Restricted Stock shallnot have any rights with respect to such Award, unless and until suchParticipant has delivered to the Company a fully executed copy of theapplicable Award Agreement relating thereto and has otherwise complied with theapplicable terms and conditions of such Award. Further, such Award shall besubject to the following conditions:

 

(a)   *Purchase Price.*The purchase price ofRestricted Stock shall be fixed by the Committee, provided that any suchpurchase price may be zero to the extent permitted by applicable law, and, tothe extent not so permitted, such purchase price may not be less than parvalue.

 

(b)   *Acceptance.*Awards of Restricted Stockmust be accepted within a period of 90 days (or such shorter period as theCommittee may specify at grant) after the Award date by executing a RestrictedStock Award Agreement and by paying whatever price (if any) the Committee hasdesignated thereunder.

 

(c)   *Legend.*Each Participant receiving sharesof Restricted Stock shall be issued a stock certificate in respect of suchshares of Restricted Stock, unless the Committee elects to use another system,such as book entries by the transfer agent, as evidencing ownership

 

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of shares of Restricted Stock. Such certificate shall be registered inthe name of such Participant, and shall bear (i) the legend set forth in Section4.5(a) of the Management Subscription Agreement and/or Section 4.4 of theRetained Share Agreement, to the extent that the Participant is a party toeither such agreement and (ii) an appropriate legend referring to the terms,conditions, and restrictions applicable to such Award, substantially in thefollowing form:

 

“The anticipation, alienation, attachment, sale, transfer, assignment,pledge, encumbrance or charge of the shares of stock represented hereby aresubject to the terms and conditions (including forfeiture) of the Big FlowerHoldings Inc. (the “Company”) 1999 Stock Equity Award Plan (the “Plan”) and an Agreement entered into betweenthe registered owner and the Company dated    .. Copies of such Plan and Agreement are on file at the principal officeof the Company.”

 

(d) *Custody.*The Committee may require that any stock certificates evidencingsuch shares be held in custody by the Company until the restrictions thereonshall have lapsed and that, as a condition to the grant of such Award ofRestricted Stock, the Participant shall have delivered a duly signed stockpower, endorsed in blank, relating to the Common Stock covered by such Award.

 

8.3   Restrictions andConditions on Restricted Stock Awards. Shares of Restricted Stock awardedpursuant to this Plan shall be subject to Article XII hereto and the followingrestrictions and conditions:

 

(a)   *Restriction Period; Vesting and Acceleration ofVesting.*(i) Shares of Restricted Stock awarded under this Plan (x)shall vest in accordance with the terms and conditions determined by theCommittee in is sole discretion (including, without limitation, any service orperformance goal criteria) and (y) may not be Transferred during the period orperiods set by the Committee (the “Restriction Period”). The Committee may, inits sole discretion, (x) provide for the lapse of any restrictions under thisPlan or an Award Agreement in installments (in whole or in part), (y)accelerate the vesting of all or any part of any Restricted Stock Award and/or(z) waive the deferral limitations for all or any part of any Restricted StockAward.

 

(ii)   *Objective Performance Goals, Formulae or Standards.*Ifthe grant of shares of Restricted Stock or the lapse of restrictions is basedon the attainment of performance goals, the Committee shall establish theperformance goals and the applicable vesting percentage of the Restricted StockAward applicable to each Participant or class of Participants in writing priorto the beginning of the applicable fiscal year or at such later date asotherwise determined by the Committee. Such performance goals may incorporateprovisions for disregarding (or adjusting for) changes in accounting methods,corporate transactions (including, without limitation, dispositions andacquisitions) and other similar type events or circumstances.

 

(b)   *Rights as Stockholder.*Except as providedin this subsection (b) and subsection (a) above and as otherwise determined bythe Committee, the Participant shall have, with

 

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respect to the shares of Restricted Stock, all of the rights of aholder of shares of Common Stock of the Company including, without limitation,the right to receive any dividends, the right to vote such shares and, subjectto and conditioned upon the full vesting of shares of Restricted Stock, theright to tender such shares. The Committee may, in its sole discretion,determine at the time of grant that the payment of dividends shall be deferreduntil, and conditioned upon, the expiration of the applicable RestrictionPeriod.

 

(c)   *Lapse of Restrictions,*Any stockcertificates representing shares of Restricted Stock awarded hereunder that (i)have not been forfeited and (ii) have not previously been delivered to aParticipant shall be delivered to the Participant upon the expiration of anyapplicable Restriction Period. All legends shall be removed from saidcertificates at the expiration of the Restriction Period except as may otherwisebe required under an applicable Management Subscription Agreement and/ orRetained Share Agreement or by applicable law.

 

ARTICLE IX

 

PERFORMANCE SHARES

 

9.1   Award of PerformanceShares. Performance Shares may be awarded either alone or in addition toother Awards granted under this Plan. The Committee shall, in its solediscretion, determine the Eligible Employees and Consultants to whom and thetime or times at which such Performance Shares shall be awarded, the durationof the period (the “Performance Period”) during which, and the conditions underwhich, a Participant’s right to Performance Shares will be vested and the otherterms and conditions of the Award in addition to those set forth in Section 9.2.

 

Each Performance Share awarded shall be referenced to one share ofCommon Stock. Except as otherwise provided herein, the Committee shallcondition the right to payment of any Performance Share Award upon theattainment of objective performance goals established pursuant to Section 9.2(c)below and such other non-performance based factors or criteria as the Committeemay determine in its sole discretion.

 

9.2   Terms and Conditions.A Participant selected to receive Performance Shares shall not have any rightswith respect to such shares, unless and until such Participant has delivered afully executed copy of a Performance Share Award Agreement evidencing the Awardto the Company and has otherwise complied with the following terms andconditions:

 

(a)   *Earning of Performance Share Award.*At theexpiration of the applicable Performance Period, the Committee shall determinethe extent to which the performance goals established pursuant to Section 9.2(c)are achieved and the percentage of each Performance Share Award that has beenearned.

 

(b)   *Payment.  *Followingthe Committee’s determination in accordance with subsection (a) above, sharesof Common Stock or, as determined by the Committee in its

 

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sole discretion, the cash equivalent of such sharesshall be delivered to the Participant, in an amount equal to such Participant’searned Performance Share Award. Notwithstanding the foregoing, except as may beset forth in the Award Agreement covering the Award, the Committee may, in itssole discretion, award an amount less than the earned Performance Share Awardand/or subject the payment of all or part of any Performance Share Award toadditional vesting and forfeiture conditions as it deems appropriate.

 

(c)   *Objective Performance Goals. Formulae or Standards.*TheCommittee shall establish the objective performance goals for the earning ofPerformance Shares based on a Performance Period applicable to each Participantor class of Participants in writing prior to the beginning of the applicablePerformance Period or at such later date as determined by the Committee. Suchperformance goals may incorporate, provisions for disregarding (or adjustingfor) changes in accounting methods, corporate transactions (including, withoutlimitation, dispositions and acquisitions) and other similar type events orcircumstances.

 

(d)   *Dividends and Other Distributions.*At thetime of any award of Performance Shares, the Committee may, in its solediscretion, award an Eligible Employee or Consultant the right to receive thecash value of any dividends and other distributions that would have beenreceived had the Eligible Employee or Consultant held each share of CommonStock referenced by the earned Performance Share Award from the last day of thefirst year of the Performance Period until the actual distribution to suchParticipant of the related share of Common Stock or cash value thereof. Suchamounts, if awarded, shall be paid to the Participant as and when the shares ofCommon Stock or cash value thereof are distributed to such Participant and, atthe discretion of the Committee, may be paid with interest from the first dayof the second year of the Performance Period until such amounts and anyearnings thereon are distributed. The applicable rate of interest shall bedetermined by the Committee in its sole discretion; provided, however, that foreach fiscal year or pan thereof, the applicable interest rate shall not begreater than a rate equal to the four-year U.S. Government Treasury rate on thefirst day of each applicable fiscal year.

 

ARTICLE X

 

PERFORMANCE UNITS

 

10.1   Awards of PerformanceUnits. Performance Units may be awarded either alone or in addition toother Awards granted under this Plan, The Committee shall, in its solediscretion, determine the Eligible Employees and Consultants to whom and thetime or times at which such Performance Units shall be awarded, the duration ofthe period (the “Performance Cycle”) during which, and the conditions underwhich, a Participant’s right to Performance Units will be vested and the otherterms and conditions of the Award in addition to those set forth in Section 10.2.

 

Performance Units shall be awarded in a dollar amount determined by theCommittee and shall be converted for purposes of calculating growth in value toa referenced number of shares of Common Stock based on the Fair Market Value ofshares of Common Stock on the date of grant.

 

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Each Performance Unit shallbe referenced to one share of Common Stock. Except as otherwise providedherein, the Committee shall condition the right to payment of any PerformanceUnit Award upon the attainment of objective performance goals establishedpursuant to Section 10.2(a) and such other non-performance based factors orcriteria as the Committee may determine in its sole discretion. The cash valueof any fractional Performance Unit Award subsequent to conversion to shares ofCommon Stock shall be treated as a dividend or other distribution under Section10.2(e) to the extent any portion of the Performance Unit Award is earned.

 

10.2   Terms and Conditions.The Performance Units awarded pursuant to this Article 10 shall be subject tothe following terms and conditions:

 

(a)   *Performance Goals.*The Committee shallestablish the objective performance goals for the earnings of Performance Unitsbased on a Performance Cycle applicable to each Participant or class ofParticipants in writing prior to the beginning of the applicable PerformanceCycle or at such later date as determined by the Committee. Such performancegoals may incorporate, provisions for disregarding (or adjusting for) changesin accounting methods, corporate transactions (including, without limitation,dispositions and acquisitions) and other similar type events or circumstances.

 

(b)   *Vesting.*At the expiration of thePerformance Cycle, the Committee shall determine and certify in writing theextent to which the performance goals have been achieved, and the percentage ofthe Performance Units of each Participant that have vested.

 

(c)   *Payment.*Subject to the applicableprovisions of the Award Agreement and this Plan, at the expiration of thePerformance Cycle, cash and/or shares of Common Stock (as the Committee may determinein its sole discretion at grant, or thereafter if no rights of a Participantare reduced) shall be delivered to the Participant in payment of the vestedPerformance Units covered by the Performance Unit Award. Notwithstanding theforegoing, except as may be set forth in the Award Agreement covering theAward, the Committee may, in its sole discretion, award an amount less than theearned Performance Unit Award and/or subject the payment of all or part of anyPerformance Unit Award to additional vesting and forfeiture conditions as itdeems appropriate.

 

(d)   *Accelerated Vesting.*Based on service,performance and/or such other factors or criteria, if any, as the Committee maydetermine, the Committee may, at or after grant, accelerate the vesting of allor any part of any Performance Unit Award and/or waive the deferral limitationsfor all or any part of such Award.

 

(e)   *Dividends and Other Distributions,*At thetime of any Award of Performance Units, the Committee may, in its solediscretion, award an Eligible Employee or Consultant the right to receive thecash value of any dividends and other distributions that would have beenreceived as though the Eligible Employee or Consultant had held each share ofCommon Stock referenced by the earned Performance Unit Award from the last dayof the first year of the Performance Cycle until the actual distribution tosuch Participant of the related share of Common Stock or cash value thereof.Such amounts, if awarded, shall be

 

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paid to the Participant as and when the shares ofCommon Stock or cash value thereof are distributed to such Participant and, atthe discretion of the Committee, may be paid with interest from the first dayof the second year of the Performance Cycle until such amounts and any earningsthereon are distributed. The applicable rate of interest shall be determined bythe Committee in its sole discretion; provided, however, that for each fiscalyear or part thereof, the applicable interest rate shall not be****greaterthan a rate equal to the four-year U.S. Government Treasury rate on the firstday of each applicable fiscal year.

 

ARTICLE XI

 

OTHER STOCK-BASED AWARDS

 

11.1   Other Awards. OtherStock-Based Awards may be granted either alone or in addition to or in tandemwith Stock Options, Stock Appreciation Rights, Restricted Stock, PerformanceShares or Performance Units.

 

Subject to the provisions of this Plan, the Committee shall haveauthority to determine the persons to whom and the time or times at which suchAwards shall be made, the number of shares of Common Stock to be awardedpursuant to such Awards, and all other conditions of the Awards. The Committee mayalso provide for the grant of Common Stock under such Awards upon thecompletion of a specified performance period.

 

11.2   Terms and Conditions.Other Stock-Based Awards made pursuant to this Article XI shall be subject tothe following terms and conditions:

 

(a)   *Non-Transferability.*Subject to theapplicable provisions of the Award agreement and this Plan, shares of CommonStock subject to Awards made under this Article XI may not be Transferred priorto the date on which the shares are issued, or, if later, the date on which anyapplicable restriction, performance or deferral period lapses.

 

(b)   *Dividends.*Unless otherwise determined bythe Committee at the time of Award, subject to the provisions of the Awardagreement and this Plan, the recipient of an Award under this Article XI shallbe entitled to receive, currently or on a deferred basis, dividends or dividendequivalents with respect to the number of shares of Common Stock covered by theAward, as determined at the time of the Award by the Committee, in its solediscretion.

 

(c)   *Vesting.*Any Award under this Article XIand any Common Stock covered by any such Award shall vest or be forfeited tothe extent so provided in the Award agreement, as determined by the Committee,in its sole discretion.

 

(d)   *Waiver of Limitation.*The Committee may,in its sole discretion, waive in whole or in part any or all of the limitationsimposed hereunder (if any) with respect to any or all of an Award under this ArticleXI.

 

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(e)   *Price.*CommonStock or Other Stock-Based Awards issued on a bonus basis under this Article XImay be issued for no cash consideration; Common Stock or Other Stock-BasedAwards purchased pursuant to a purchase right awarded under this Article XIshall be priced as determined by the Committee. Subject to Section 4.3, thepurchase price of shares of Common Stock or Other Stock-Based Awards may bezero and, to the extent not so permitted, such purchase price may not be lessthan par value. The purchase of shares of Common Stock or Other Stock-BasedAwards may be made on either an after-tax or pre-tax basis, as determined bythe Committee; provided, however, that if the purchase is made on a pre-taxbasis, such purchase shall be made pursuant to a deferred compensation programestablished by the Committee, which will be deemed a part of this Plan.

 

ARTICLE XII

 

NON-TRANSFERABILITY AND TERMINATION OF

EMPLOYMENT/CONSULTANCY

 

12.1   Non-Transferability.No Stock Option, Stock Appreciation Right, Performance Unit, Performance Shareor Other Stock-Based Award shall be Transferable by a Participant otherwisethan by will or by the laws of descent and distribution. All Stock Options andall Stock Appreciation Rights shall be exercisable, during the Participant’slifetime, only by the Participant. Tandem Stock Appreciation Rights shall beTransferable, to the extent permitted above, only with the underlying StockOption. Shares of Restricted Stock under Article VIII may not be Transferredprior to the date on which shares are issued, or, if later, the date on whichany applicable restriction, performance or deferral period lapses. No Awardshall, except as otherwise specifically provided by law or herein, beTransferable in any manner, and any attempt to Transfer any such Award shall bevoid, and no such Award shall in any manner be liable for or subject to thedebts, contracts, liabilities, engagements or torts of any person who shall beentitled to such Award, nor shall it be subject to attachment or legal processfor or against such person. Notwithstanding the foregoing, the Committee may determineat the time of grant or thereafter, that a Non-Qualified Stock Option grantedpursuant to Article VI**(other than a Non-Qualified StockOption granted to a Non-Employee Director) that is otherwise not transferablepursuant to this Article XII is transferable in whole or part and in suchcircumstances, and under such conditions, as specified by the Committee.

 

12.2   Termination ofEmployment or Termination of Consultancy. The following rules apply withrespect to a Participant’s Termination of Employment or Termination ofConsultancy unless otherwise determined by the Committee at grant or, so longas no rights of the Participant or Consultant are reduced, thereafter:

 

(a)   *Rules Applicable to Stock Options and StockAppreciation Rights.*

 

(i)  *Terminationby Reason of Death. Disability or Retirement or Otherwise Other Than for Cause.*If a Participant’s Termination of Employment or Termination ofConsultancy is for any reason other than as described in section 12.2(a)(ii) below,all Stock Options and Stock Appreciation Rights held by such Participant may beexercised, to the

 

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extent exercisable at the Participant’s Termination of Employment orTermination of Consultancy, by the Participant (or, in the case of death, bythe legal representative of the Participant’s estate) at any time within aninety (90) day period from the date of such Termination of Employment orTermination of Consultancy, but in no event beyond the expiration of the statedrespective terms of such Stock Options and Stock Appreciation Rights. Any StockOptions and Stock Appreciation Rights that are not exercisable as of the dateof any Termination of Employment or Termination of Consultancy shall terminateand become null and void upon any such termination.

 

(ii)  *Terminationfor Cause.*If a Participant’s Termination of Employment orTermination of Consultancy (A) is for Cause or (B) is a voluntary terminationat any time after an event which would be grounds for a Termination ofEmployment or Termination of Consultancy for Cause, all Stock Options and StockAppreciation Rights held by such Participant shall thereupon terminate andexpire as of the date of such Termination of Employment or Termination ofConsultancy.

 

(b)   *Rules Applicable to Restricted Stock, PerformanceShares and Performance Units.*Subject to the applicable provisionsof the applicable Award Agreement and this Plan, upon a Participant’sTermination of Employment or Termination of Consultancy for any reason during aRestriction Period, Performance Period, Performance Cycle or other period ofrestriction as may be applicable for a given Award, all Restricted StockPerformance Shares and Performance Units still subject to restriction or whichhave not yet been earned will vest or be forfeited in accordance with the termsand conditions established by the Committee at the time of grant or thereafter.

 

(c)   *Rules Applicable to Other Stock-Based Awards.*Subjectto the Award Agreement and this Plan, upon a Participant’s Termination ofEmployment or Termination of Consultancy for any reason during any period orrestriction as may be applicable for a given Award, the Other Stock-BasedAwards in question will vest or be forfeited in accordance with the terms andconditions established by the Committee at the time of grant or thereafter.

 

12.3   Termination ofDirectorship. Upon a Non-Employee Director’s Termination of Directorshipfor any reason, including, without limitation, resignation, failure to standfor reelection or failure to be reelected, all outstanding Stock Optionsexercisable and not exercised shall remain exercisable by the Participant or,in the case of death, by the Participant’s estate or by the person givenauthority to exercise such Stock Options by his or her will or by operation oflaw, at any time within a period of ninety (90) days from the date of suchTermination of Directorship, but in no event beyond the expiration of thestated term of such Stock Option. Stock Options that were not exercisable as ofthe date of Termination of Directorship shall terminate and become null andvoid upon a Termination of Directorship.

 

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ARTICLE XIII

 

TERMINATION OR AMENDMENT OF PLAN

 

Notwithstanding any other provision of this Plan, the Board or theCommittee may at any time, and from time to time, amend, in whole or in part,any or all of the provisions of this Plan (including any amendment deemednecessary to ensure that the Company may comply with any regulatory requirementreferred to in Article XV), or suspend or terminate it entirely, retroactivelyor otherwise; provided, however, that, unless otherwise required by law orspecifically provided herein, the rights of a Participant with respect toAwards granted prior to such amendment, suspension or termination, may not beimpaired without the consent of such Participant and, provided further, theBoard shall obtain shareholder approval for any amendment to the extentrequired by law.

 

The Committee may amend the terms of any Award theretofore granted,prospectively or retroactively, but, subject to Article IV above or asotherwise specifically provided herein, no such amendment or other action bythe Committee shall impair the rights of any holder without the holder’sconsent.

 

ARTICLE XIV

 

UNFUNDED PLAN

 

14.1   Unfunded Status of Plan.This Plan is intended to constitute an “unfunded” plan for incentive anddeferred compensation. With respect to any payments as to which a Participanthas a fixed and vested interest but which are not yet made to a Participant bythe Company, nothing contained herein shall give any such Participant anyrights that are greater than those of a general creditor of the Company.

 

ARTICLE XV

 

GENERAL PROVISIONS

 

15.1   Legend. TheCommittee may require each person receiving shares pursuant to an Award underthis Plan to represent to and agree with the Company in writing that theParticipant is acquiring the shares without a view to distribution thereof. Inaddition to any legend required by this Plan, the certificates for such shares mayinclude any legend which the Committee deems appropriate to reflect anyrestrictions on Transfer including, without limitation, the restrictions undera Management Subscription Agreement and/or the Retained Share Agreement.

 

All certificates for shares of Common Stock delivered under this Planshall be subject to such stock transfer orders and other restrictions as theCommittee may deem advisable under the rules, regulations and otherrequirements of the Securities and Exchange Commission, any stock exchange

 

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upon which the Stock is then listed or any national securitiesassociation system upon whose system the Stock is then quoted, any applicableFederal or state securities law, any applicable corporate law, and theapplicable Management Subscription Agreement and/or Retained Share Agreementand the Committee may cause a legend or legends to be put on any suchcertificates to make appropriate reference to such restrictions.

 

15.2   Other Plans.Nothing contained in this Plan shall prevent the Board from adopting other oradditional compensation arrangements, subject to shareholder approval if suchapproval is required; and such arrangements may be either generally applicableor applicable only in specific cases.

 

15.3   No Right toEmployment/Consultancy/Directorship. Neither this Plan nor the grant of anyAward hereunder shall give any Participant or other employee or consultant anyright with respect to continuance of employment, consultancy or directorship bythe Company or any Affiliate, nor shall they be a limitation in any way on theright of the Company or any Affiliate to terminate any such employment,consultancy or directorship at any time.

 

15.4   Withholding of Taxes.The Company shall have the right to deduct from any payment to be made to aParticipant, or to otherwise require, prior to the issuance or delivery of anyshares of Common Stock or the payment of any cash hereunder, payment by theParticipant of, any Federal, state or local taxes required by law to bewithheld.

 

Any such withholding obligation with regard to any Participant may besatisfied, subject to the consent of the Committee, by reducing the number ofshares of Common Stock otherwise deliverable or by delivering shares of CommonStock already owned. Any fraction of a share of Common Stock required tosatisfy such tax obligations shall be disregarded and the amount due shall bepaid instead in cash by the Participant.

 

15.5   Listing and OtherConditions.

 

(a)   Notwithstandinganything in this Plan to the contrary, shares of Common Stock awarded underthis Plan shall be subject to the terms of an applicable ManagementSubscription Agreement and/or Retained Share Agreement.

 

(b)   Ifat any time counsel to the Company shall be of the opinion that any sale ordelivery of shares of Common Stock pursuant to an Award is or may in the circumstancesbe unlawful or result in the imposition of excise taxes on the Company underthe statutes, rules or regulations of any applicable jurisdiction, the Companyshall have no obligation to make such sale or delivery, or to make anyapplication or to effect or to maintain any qualification or registration underthe Securities Act or otherwise with respect to shares of Common Stock orAwards, and the right to exercise any Stock Option shall be suspended until, inthe opinion of said counsel, such sale or delivery shall be lawful or will notresult in the imposition of excise taxes on the Company.

 

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(c)   Upontermination of any period of suspension under this Section 15.5, any Awardaffected by such suspension which shall not then have expired or terminatedshall be reinstated as to all shares available before such suspension and as toshares which would otherwise have become available during the period of suchsuspension, but no such suspension shall extend the term of any Stock Option.

 

15.6   Governing Law. ThisPlan shall be governed and construed in accordance with the laws of the Stateof Delaware (regardless of the law that might otherwise govern under applicableDelaware principles of conflict of laws).

 

15.7   Construction.Wherever any words are used in this Plan in the masculine gender they shall beconstrued as though they were also used in the feminine gender in all caseswhere they would so apply, and wherever any words are used herein in the singularform they shall be construed as though they were also used in the plural form inall cases where they would so apply.

 

15.8   Other Benefits. NoAward payment under this Plan shall be deemed compensation for purposes ofcomputing benefits under any retirement plan of the Company or its subsidiariesnor affect any benefits under any other benefit plan now or subsequently ineffect under which the availability or amount of benefits is related to thelevel of compensation.

 

15.9   Costs. The Companyshall bear all expenses included in administering this Plan, including expensesof issuing Common Stock pursuant to any Awards hereunder.

 

15.10   No Right to SameBenefits. The provisions of Awards need not be the same with respect toeach Participant, and such Awards to individual Participants need not be thesame in subsequent years.

 

15.11   Death/Disability.The Committee may in its discretion require the transferee of a Participant tosupply it with written notice of the Participant’s death or Disability and tosupply it with a copy of the will (in the case of the Participant’s death) orsuch other evidence as the Committee deems necessary to establish the validityof the transfer of an Award. The Committee may also require that the agreementof the transferee to be bound by all of the terms and conditions of this Plan.

 

15.12   Severability ofProvisions. If any provision of this Plan shall be held invalid orunenforceable, such invalidity or unenforceability shall not affect any otherprovisions hereof, and this Plan shall be construed and enforced as if suchprovisions had not been included.

 

15.13   Headings and Captions.The headings and captions herein are provided for reference and convenienceonly, shall not be considered part of this Plan, and shall not be employed inthe construction of this Plan.

 

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ARTICLE XVI

 

EFFECTIVE DATE OF PLAN

 

The Plan shall become effective upon adoption by the Board, subject tothe approval of this Plan by the stockholders of the Company in accordance withthe requirements of the laws of the State of Delaware or such later date asprovided in the adopting resolution.

 

ARTICLE XVII

 

TERM OF PLAN

 

No Award shall be granted pursuant to this Plan on or after the tenthanniversary of the earlier of the date this Plan is adopted or the date ofstockholder approval, but Awards granted prior to such tenth anniversary may extendbeyond that date.

 

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