Exhibit 10.1


 


OCCIDENTAL PETROLEUM CORPORATION
2005 LONG-TERM INCENTIVE PLAN


(AS AMENDED THROUGH OCTOBER 13,
2010)


 


1.      PURPOSE


 


The
purposes of this Plan are (i) to furnish a significant incentive to the
employees and non-employee Directors of the Company and its subsidiaries by
making available to them the benefits of increased ownership of Shares (ii) to
promote the alignment of the interests of employees and non-employee Directors
on the one hand and stockholders on the other hand and (iii) to assist in the
recruitment and retention of employees and non-employee Directors.


 


2.      DEFINITIONS


 


“Board”
means the Board of Directors of the Company.


 


“Business
Combination” means a merger, consolidation, or other
reorganization, with or into, or the sale of all or substantially all of the
Company’s business and/or assets as an entirety to, one or more entities that
are not subsidiaries or other affiliates of the Company.


 


“Change
in Control” means the occurrence of any of the following
events:


 


(a)     Approval by the stockholders of the Company
of the dissolution or liquidation of the Company, other than in the context of
a transaction that does not constitute a Change in Control under clause (b)
below;


 


(b)     Consummation of a Business Combination, unless
(1) as a result of the Business Combination, more than 50 percent of the
outstanding voting power of the Successor Entity immediately after the
reorganization is, or will be, owned, directly or indirectly, by persons who
were holders of the Company’s voting securities immediately before the Business
Combination; (2) no “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act),
excluding the Successor Entity or an Excluded Person, beneficially owns,
directly or indirectly, more than 20 percent of the outstanding shares or the
combined voting power of the outstanding voting securities of the Successor
Entity, after giving effect to the Business Combination, except to the extent
that such ownership existed prior to the Business Combination; and (3) at least
50 percent of the members of the board of directors of the entity resulting
from the Business Combination were Directors at the time of the execution of
the initial agreement or of the action of the Board approving the Business
Combination;


 


(c)     Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding any Excluded Person) is or becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20 percent or more of the
combined voting power of the Company’s then outstanding voting securities,
other than as a result of (1) an acquisition directly from the Company; (2) an
acquisition by the Company; or (3) an acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or a Successor
Entity; or


 


(d)     During any period not longer than two
consecutive years, individuals who at the beginning of such period constituted
the Board cease to constitute at least a majority thereof, unless the election,
or the nomination for election by the Company’s stockholders, of each new
Director was approved by a vote of at least two-thirds (2/3) of the Directors
then still in office who were Directors at the beginning of such period
(including for these purposes, new members whose election or nomination was so
approved), 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.


 


“Code” means the
Internal Revenue Code of 1986, as amended from time to time.


 


“Committee”
means the Executive Compensation and Human Resources Committee of the
Board or its successor, which shall be composed of not less than two members of
the Board, each of whom shall be a “non-employee director” within the meaning
of Rule 16b-3 and an “outside director” within the meaning of Section 162(m).


 


“Company”
means Occidental Petroleum Corporation, a Delaware corporation.


 


“Director”
means a member of the Board.


 


“Disability” means
permanent and total disability as defined in Section 22(e)(3) of the Code.


 


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“Effective
Date” means May 6, 2005, or such later date as this Plan is approved by the
stockholders of the Company.


 


“Eligible
Person” means any person who is an officer or employee of
the Company or any of its subsidiaries and any person who is a non-employee
Director; provided, however that a non-employee Director shall not be an
Eligible Person for purposes of awarding of ISOs.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.


 


“Excluded
Person” means any employee benefit plan of the Company and
any trustee or other fiduciary holding securities under a Company employee
benefit plan or any person described in and satisfying the conditions of Rule
13d-1(b)(i) of the Exchange Act.


 


“Fair
Market Value” means the last reported sale price of a share of
Common Share on the New York Stock Exchange — Composite Transactions on the
relevant date or, if there are no reported sales on such date, then the last
reported sales price on the next preceding day on which such a sale is
transacted.


 


“ISO” means an
incentive stock option qualified under Section 422 of the Code.


 


“Performance-Based
Award” means an award whose grant, vesting, exercisability or payment depends
upon on any one or more of the Performance Objectives, in each case relative to
Performance Goals, on an absolute or relative basis (including comparisons to
peer companies) or ratio with other Performance Objectives, either as reported
currency or constant currency, pre-tax or after-tax, before or after special
charges, for the Company on a consolidated basis or for one or more
subsidiaries, segments, divisions or business units, or any combination of the
foregoing.  The applicable performance
period may range from one to seven years.


 


“Performance
Goal” means a preestablished targeted level or levels of any one or more
Performance Objectives.


 


“Performance
Objectives” mean any one or more of the following business
criteria: A/R day sales outstanding, A/R to sales, debt, debt to debt plus
stockholder equity, debt to EBIT or EBITDA, EBIT, EBITDA, EPS, EVA, expense
reduction, interest coverage, inventory to sales, inventory turns, net income,
operating cash flow, pre-tax margin, return on assets, return on capital employed,
return on equity, sales, stock price appreciation, and total stockholder return
(TSR), each as defined further in Appendix A. 
These terms are used as applied under generally accepted accounting
principles (if applicable) and in the Company’s financial reporting.


 


“Plan” means this
Occidental Petroleum Corporation 2005 Long-Term Incentive Plan, as amended from
time to time.


 


“Qualifying
Options” mean options and stock appreciation rights granted
with an exercise price not less than Fair Market Value on the date of
grant.  Qualifying Options are
Performance-Based Awards.


 


“Rule
16b-3” means Rule 16b-3 under Section 16 of the Exchange Act.


 


“Section
162(m)” means Section 162(m) of the Code and the applicable
regulations and interpretations thereunder.


 


“Section
162(m) Award” means a Performance-Based Award intended to satisfy
the requirements for “performance-based compensation” within the meaning of
Section 162(m).


 


“Share
Limit” means the maximum number of Shares, as adjusted, that may be delivered
pursuant to all awards granted under this Plan.


 


“Shares”
mean the Company’s Common Stock, par value $0.20 per share.


 


“Successor
Entity” means the surviving or resulting entity or a parent
thereof of a Business Combination.


 


3.         SHARES SUBJECT TO THE
PLAN


 


3.1      AGGREGATE SHARE
LIMIT -  Subject to adjustment as
provided in or pursuant to this Section 3 or Section 7, a total of sixty-six
million (66,000,000) Shares shall be authorized for issuance pursuant to awards
granted under this Plan.  Any Shares
issued in connection with awards other than options and stock appreciation
rights shall be counted against the limit described above as three (3) Shares
for every one Share issued in connection with such award or by which the award
is valued by reference as three (3) Shares.


 


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3.2      INDIVIDUAL
LIMIT -  No individual shall be
granted options, stock appreciation rights or other awards in any 36-month
period covering more than eight million (8,000,000) Shares, and in the case of
ISOs granted to any individual who owns more than ten percent of the
outstanding stock of the Company within the meaning of Section 422 of the Code
the maximum term may not exceed five (5) years and the minimum exercise price
may not be less than 110 percent of Fair Market Value on the date of grant.


 


3.3      REISSUE OF
AWARDS AND SHARES -  Awards payable in cash or
payable in cash or Shares, including restricted shares, that are forfeited,
cancelled, or for any reason do not vest under this Plan, and Shares that are
subject to awards that expire or for any reason are terminated, cancelled or
fail to vest shall be available for subsequent awards under this Plan.  If an award under this Plan is or may be
settled only in cash, such award need not be counted against any of the share
limits under this Section 3, except as may be required to preserve the status
of an award as “performance-based compensation” under Section 162(m).  Shares subject to options or stock
appreciation rights that are exercised shall not be available for subsequent
awards.  The following transactions involving
Shares will not result in additional Shares becoming available for subsequent
awards under this Plan:  (i) Shares
tendered in payment of an option; (ii) Shares withheld for taxes; and (iii)
Shares repurchased by the Company using option proceeds.


 


4.         PLAN ADMINISTRATION


 


This
Plan shall be administered by the Committee.


 


4.1      POWERS OF THE COMMITTEE - Subject to the express
provisions of this Plan, the Committee shall be authorized and empowered to do
all things necessary or desirable in connection with the authorization of
awards and the administration of this Plan within its delegated authority,
including, without limitation, the authority to:


 


(a)     adopt, amend and rescind
rules, regulations and procedures relating to this Plan and its administration
or the awards granted under this Plan and determine the forms of awards;


 


(b)     determine who is an
Eligible Person and to which Eligible Persons, if any, awards will be granted
under this Plan;


 


(c)     grant awards to Eligible
Persons and determine the terms and conditions of such awards, including but
not limited to the number and value of Shares issuable pursuant thereto, the
times (subject to Section 5.5) at which and conditions upon which awards become
exercisable or vest or shall expire or terminate, and (subject to applicable
law) the consideration, if any, to be paid upon receipt, exercise or vesting of
awards;


 


(d)     determine the date of
grant of an award, which may be a designated date after but not before the date
of the Committee’s action;


 


(e)     determine whether, and the
extent to which, adjustments are required pursuant to Section 7 hereof;


 


(f)      interpret and construe
this Plan and the terms and conditions of any award granted hereunder, whether
before or after the date set forth in Section 5;


 


(g)     determine the
circumstances under which, consistent with the provisions of Section 8.2, any
outstanding award may be amended and make any amendments thereto that the
Committee determines are necessary or appropriate; and


 


(h)     acquire or settle rights
under options, stock appreciation rights or other awards in cash, stock of
equivalent value, or other consideration.


 


All
authority granted herein (except as provided in Section 6) shall remain in
effect so long as any award remains outstanding under this Plan.


 


4.2      SPECIFIC COMMITTEE RESPONSIBILITY AND DISCRETION REGARDING AWARDS -
Subject to the express provisions of this Plan, the Committee, in its
sole and absolute discretion, shall determine all of the terms and conditions
of each award granted under this Plan, which terms and conditions may include,
subject to such limitations as the Committee may from time to time impose,
among other things, provisions that:


 


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(a)     permit the recipient of
such award to pay the purchase price of the Shares or other property issuable
pursuant to such award, or any applicable tax withholding obligation upon such
issuance or in respect of such award or Shares, in whole or in part, by any one
or more of the following:


 


(i)    cash, cash equivalent, or
electronic funds transfer,


 


(ii)   the delivery of previously
owned shares of capital stock of the Company (including shares acquired as or
pursuant to awards) or other property,


 


(iii)  a reduction in the amount
of Shares or other property otherwise issuable pursuant to such award,


 


(iv)  a cashless exercise, or


 


(v)   any other legal
consideration the Committee deems appropriate;


 


(b)     qualify such award as an
ISO;


 


(c)     accelerate the receipt of
benefits pursuant to an award or adjust the exercisability, term (subject to
other limits) or vesting schedule of any or all outstanding awards, adjust the
number of Shares subject to any award, adjust the price of any or all
outstanding awards or otherwise change previously imposed terms and conditions,
pursuant to a termination of employment or an event referenced in Section 7 (in
which case the Committee’s discretion shall be exercised in a manner consistent
with Section 7) or in other circumstances or upon the occurrence of other
events as deemed appropriate by the Committee, by amendment of an outstanding
award, by substitution of an outstanding award, by waiver or by other legally
valid means (which may result, among other changes, in a greater or lesser
number of shares subject to the award, a shorter or longer vesting or exercise
period, or, except as provided below, an exercise or purchase price that is
higher or lower than the original or prior award), in each case subject to
Sections 3 and 8.2; provided, however, that in no case (other than an
adjustment contemplated by Section 7.2) shall the exercise price of any option or
stock appreciation right be reduced by an amendment to the award or a
cancellation and re-grant of the award to effect a repricing of the award to a
price below the Fair Market Value of the underlying Shares on the grant date of
the original option or stock appreciation right unless specific stockholder
consent is obtained;


 


(d)     authorize (subject to
Sections 7, 8, and 10) the conversion, succession or substitution of one or
more outstanding awards upon the occurrence of an event of the type described
in Section 7 or in other circumstances or upon the occurrence of other events
as deemed appropriate by the Committee; and


 


(e)     determine the value of and
acquire or otherwise settle awards upon termination of employment, upon such
terms as the Committee (subject to Sections 7, 8 and 10) deems
appropriate.


 


4.3      DELEGATION - Subject to Section 4.5, the Board may
delegate different levels of authority to different committees with
administrative and grant authority under this Plan, provided that each
designated committee granting any awards hereunder shall consist exclusively of
a member or members of the Board.  A
majority of the members of the acting committee shall constitute a quorum.  The vote of a majority of the members present
assuming the presence of a quorum or the unanimous written consent of the
Committee shall constitute action by the committee.  The Committee may delegate authority to grant
awards under this Plan for new employees to an officer of the Company who is
also a director and may delegate ministerial, non-discretionary functions to
individuals who are officers or employees of the Company or a subsidiary or to
third parties.


 


4.4      BIFURCATION -  Notwithstanding anything to
the contrary in this Plan, the provisions of this Plan may at any time be bifurcated
by the Board or the Committee in any manner so that provisions of any award
agreement (or this Plan) intended or required in order to satisfy the
applicable requirements of Rule 16b-3, Section 162(m) or other applicable law,
to the extent permitted thereby, are applicable only to persons subject to
those provisions and to those awards to those persons intended to satisfy the
requirements of the applicable legal restriction.


 


4.5      AWARDS TO NON-EMPLOYEE DIRECTORS - Notwithstanding any
provision in this Plan to the contrary and without being subject to management
discretion, the Board, acting through the non-employee Directors only, shall
have the authority, in its sole and absolute discretion, to select non-employee
Directors to receive awards other than ISOs under this Plan.  The Board, acting through the non-employee
Directors only shall set the terms of any such awards in its sole and absolute
discretion, and the Board, acting through the non-employee 


 


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Directors
only, shall be responsible for administering and construing such awards in
substantially the same manner that the Committee administers and construes
awards to other Eligible Persons.


 


5.         AWARDS


 


5.1      TYPE AND FORM OF AWARDS
- All awards shall be evidenced in writing (including
electronic form), substantially in the form approved by the Committee.  The types of awards that the Committee may
grant include, but are not limited to, any of the following, on an immediate or
deferred basis, either singly, or in tandem or in combination with or in
substitution for, other awards of the same or another type:  (i) Shares, (ii) options (ISOs or
nonqualified stock options), stock appreciation rights (including limited stock
appreciation rights), restricted stock (which shall vest over a period of not
less than three years), stock units, or similar rights to purchase or acquire
shares, whether at a fixed or variable price or ratio related to the Shares,
upon the passage of time, the occurrence of one or more events, or the
satisfaction of Performance Goals or other conditions, or any combination
thereof, (iii) any similar securities with a value derived from the value of or
related to the Shares or other securities of the Company and/or returns
thereon, or (iv) cash.  Share-based
awards may include (without limitation) stock options, stock purchase rights,
stock bonuses, stock units, stock appreciation rights, limited stock
appreciation rights, phantom stock, dividend equivalents (independently or in
tandem with any form of stock grant), dividend rights (independently or in
tandem with any form of stock grant), Shares, any of which may be payable in
Shares or cash, and may consist of one or more of such features in any
combination.


 


5.2      PERFORMANCE-BASED AWARDS
- Any of the types of awards listed in Section 5.1 may
be granted as Performance-Based Awards.


 


5.2.1           Section 162(m)
Awards. The Committee has discretion to determine if any
Performance-Based Award is intended to be a Section 162(m) Award.  The specific Performance Goals in respect of
Section 162(m) Awards, other than Qualifying Options, must be approved by the
Committee in advance of any applicable deadlines under Section 162(m) and while
the performance relating to those goals remains substantially uncertain within
the meaning thereof.  The persons
eligible for Section 162(m) Awards shall be executive officers of the Company
and its subsidiaries and, in the discretion of the Committee, other employees
of the Company or its subsidiaries who are designated by the Committee to
receive a Section 162(m) Award because they may be executive officers of the
Company or its subsidiaries by the time their awards are exercised, vested or
paid.  Except as otherwise permitted
under Section 162(m), before any Section 162(m) Award is paid, the Committee
must certify that the Performance Goal and any other material terms of the
Section 162(m) Award were in fact satisfied.


 


5.2.2           Reservation of
Discretion - The Committee shall have discretion to determine the
conditions, restrictions or other limitations, in accordance with the terms of
this Plan and, in the case of Section 162(m) Awards, the limitations of Section
162(m), on the payment of individual Performance-Based Awards under this
Section 5.2.


 


5.2.3           Adjustments - Performance Goals or other
features of an award under this Section 5.2 may be (i) adjusted to reflect a
change in corporate capitalization, a corporate transaction (such as a
reorganization, combination, separation, merger, acquisition, or any
combination of the foregoing) or a complete or partial corporate liquidation,
or (ii) calculated either without regard for or to reflect any change in
accounting policies or practices affecting the Company and/or the Performance
Objectives or Performance Goals, or (iii) adjusted for any other circumstances
or event, or (iv) any combination of (i) through (iii), but only to the extent
in each case that such adjustment or determination in respect of Section 162(m)
Awards would be consistent with the requirements of Section 162(m) to qualify
as performance-based compensation.


 


5.3      CONSIDERATION FOR SHARES
- Shares may be issued pursuant to an award for any lawful consideration
as determined by the Committee, including, without limitation, services
rendered by the recipient of such award, but shall not be issued for less than
the minimum lawful consideration.  Awards
may be payable in cash, stock or other consideration or any combination
thereof, as the Committee shall designate in or (except as required by Section
5.2) by amendment to the terms and conditions governing such award.


 


5.4      LIMITED RIGHTS - Except as
otherwise expressly authorized by the Committee or this Plan or in the
applicable award terms and conditions, a participant will not be entitled to
any privilege of stock ownership as to 


 


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any
Shares not actually delivered to and held of record by the participant.  No adjustment will be made for dividends or
other rights as a stockholder for which a record date is prior to such date of
delivery.


 


5.5      OPTION/STOCK APPRECIATION
RIGHT PRICING AND TERM LIMITS - The purchase price per share
of the Shares covered by any option or the base price of any stock appreciation
right shall be determined by the Committee at the time of the grant, but shall
not be less than 100 percent of the Fair Market Value of the Shares on the date
of grant.  Any option, stock appreciation
right, warrant or similar right shall expire and any other award shall vest not
more than 10 years after the date of grant. 
An award may be converted or convertible, notwithstanding the foregoing
limits, into or payable in, Shares or another award that otherwise satisfies
the requirements of this Plan.


 


5.6      TRANSFER RESTRICTIONS
- Unless otherwise expressly provided in or permitted
by this Section 5.6, by applicable law or by the award terms and conditions (i)
all awards are nontransferable and shall not be subject in any manner to sale,
transfer, anticipation, alienation, assignment, pledge, encumbrance or charge;
(ii) awards shall be exercised only by the holder; and (iii) amounts payable or
shares issuable pursuant to an award shall be delivered only to (or for the
account of) the holder.


 


5.6.1           Exceptions by Committee Action - The Committee, in its
sole discretion, may permit an award to be transferred for estate and/or tax
planning purposes and on a basis consistent with the Company’s lawful issue of
securities and the incentive purposes of the award and this Plan.
Notwithstanding the foregoing, awards intended as ISOs or restricted stock
awards for purposes of the Code shall be subject to any and all additional
transfer restrictions necessary to preserve their status as ISOs or restricted
shares, as the case may be, under the Code.


 


5.6.2           Exclusions - The exercise and transfer restrictions in
this Section 5.6 shall not apply to:


 


(a)               transfers to the
Company,


 


(b)               the designation
of a beneficiary to receive benefits in the event of the participant’s death
or, if the participant has died, transfers to or exercise by the participant’s
beneficiary, or, in the absence of a validly designated beneficiary, transfers
by will or the laws of descent and distribution,


 


(c)               transfers
pursuant to a domestic relations order (if approved or ratified by the
Committee), if (in the case of ISOs) permitted by the Code,


 


(d)               if the
participant has suffered a Disability, permitted transfers to or exercises on
behalf of the holder by his or her legal representative, or


 


(e)               the
authorization by the Committee of “cashless exercise” procedures with third
parties who finance or who otherwise facilitate the exercise of awards
consistent with applicable laws and the express authorization of the Committee.


 


5.7      TAX WITHHOLDING - Upon any
exercise, vesting, or payment of any award, the Company shall:


 


(a)               require the recipient (or his or
her heirs, personal representatives or beneficiaries, as the case may be) to
pay or provide for payment of the amount of any taxes which the Company or any
subsidiary may be required to withhold with respect to such transaction; or


 


(b)               deduct from any amount payable in
cash the amount of any taxes that the Company or any subsidiary may be required
to withhold with respect to such cash amount.


 


5.8      POSSIBLE SHARE OFFSET
- In any case where a tax is required to be withheld
in connection with the delivery of Shares under this Plan, the Committee may
require or may permit the holder the right to offset, pursuant to such rules
and subject to such conditions as the Committee may establish, the number of
shares to be delivered by (or otherwise reacquire) the appropriate number of
shares valued at their then Fair Market Value, to satisfy the minimum statutory
withholding taxes with respect thereto.


 


5.9      CASH AWARDS - The Committee
shall have the express authority to pay awards in cash under this Plan, whether
in lieu of, in addition to or as part of another award.


 


5.10    TERMINATION
OF EMPLOYMENT OR SERVICE - If an Eligible Person’s
employment with or service to the Company or to any parent or subsidiary
terminates for any reason, his or her outstanding awards may 


 


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thereafter
be exercised (if at all) to the extent provided in the agreement evidencing
such award, or as otherwise determined by the Committee.


 


6.         TERM OF PLAN


 


No
award shall be granted under this Plan after the tenth anniversary of the
Effective Date of this Plan.  After that
date, this Plan shall continue in effect as to then outstanding awards.  Any then outstanding award may be amended
thereafter in any manner that would have been permitted earlier, except that no
such amendment shall increase the number of Shares subject to, comprising or
referenced in the award or reduce the exercise or base price of an option or
stock appreciation right or permit cash payments in an amount that exceeds the
limits of Section 3 (as adjusted pursuant to Section 7.2).


 


7.         ADJUSTMENTS; CHANGE IN
CONTROL


 


7.1      CHANGE IN CONTROL;
ACCELERATION AND TERMINATION OF AWARDS - Unless prior to a Change in
Control, the Committee determines that, upon its occurrence, benefits under any
or all awards will not accelerate or determines that only certain or limited
benefits under any or all awards will be accelerated and the extent to which
they will be accelerated, or establishes a different time in respect of such
Change in Control for such acceleration, then upon the occurrence of a Change
in Control:


 


	
  (a)

  	
   

  	
  each
  option and stock appreciation right shall become immediately exercisable,

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  restricted
  stock shall immediately vest free of restrictions,

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  each
  award under Section 5.2 shall become payable to the participant,

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  the
  number of Shares covered by each stock unit account shall be issued to the
  participant, and

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  any
  other rights of a participant under any other award will be accelerated to
  give the participant the benefit intended under any such award.

  



 


The
Committee may override the limitations on acceleration in this Section 7.1 by
express provision in the award agreement and may accord any Eligible Person a
right to refuse any acceleration, whether pursuant to the award agreement or
otherwise, in such circumstances as the Committee may approve. Any acceleration
of awards shall comply with applicable legal and regulatory requirements.
Without limiting the generality of the foregoing, the Committee may deem an
acceleration to occur immediately prior to or up to 30 days before the
applicable event and/or reinstate the original terms of an award if an event
giving rise to an acceleration does not occur.


 


If
any option or other right to acquire Shares under this Plan has been fully
accelerated as required or permitted by this Plan but is not exercised prior to
(i) a dissolution of the Company, or (ii) an event described in this Section
7.1 that the Company does not survive, or (iii) the consummation of an event
described in Section 7.2 involving a Change in Control approved by the Board,
such option or right will terminate, subject to any provision that has been
expressly made by the Committee or the Board through a plan of reorganization
approved by the Board or otherwise for the survival, substitution, assumption,
exchange or other settlement of such option or right.


 


7.2      ADJUSTMENTS
- The following provisions will apply if any
extraordinary dividend or other extraordinary distribution occurs in respect of
the Shares (whether in the form of cash, Shares, other securities, or other
property), or any reclassification, recapitalization, stock split (including a
stock split in the form of a stock dividend), reverse stock split,
reorganization, merger, combination, consolidation, split-up, spin-off,
repurchase, or exchange of Shares or other securities of the Company, or any similar,
unusual or extraordinary corporate transaction (or event in respect of the
Shares) or a sale of substantially all the assets of the Company as an entirety
occurs. The Committee will, in such manner and to such extent (if any) as it
deems appropriate and equitable:


 


(a)     proportionately adjust any
or all of (i) the number and type of Shares (or other securities) that
thereafter may be made the subject of awards (including the specific maxima and
numbers of shares set forth elsewhere in this Plan), (ii) the number, amount
and type of shares (or other securities or property) subject to any or all
outstanding awards, (iii) the grant, purchase, or exercise price of any or all
outstanding awards, (iv) the securities, cash or other property deliverable
upon exercise of any 


 


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outstanding awards, or (v) the Performance Goals or Performance
Objectives appropriate to any outstanding awards, or


 


(b)     in the case of an
extraordinary dividend or other distribution, recapitalization,
reclassification, merger, reorganization, consolidation, combination, sale of
assets, split-up, exchange, or spin-off, make provision for a cash payment or
for the substitution or exchange of any or all outstanding awards or the cash,
securities or property deliverable to the holder of any or all outstanding
awards based upon the distribution or consideration payable to holders of the
Shares of the Company upon or in respect of such event.


 


In
each case, with respect to awards of ISOs, no such adjustment will be made that
would cause this Plan to violate Section 422 or 424 of the Code or any
successor provisions without the written consent of holders materially
adversely affected thereby. In any of such events, the Committee may take such
action sufficiently prior to such event if necessary or deemed appropriate to
permit the participant to realize the benefits intended to be conveyed with
respect to the underlying shares in the same manner as is available to
stockholders generally.


 


8.         PLAN AMENDMENT AND
TERMINATION


 


8.1      AUTHORITY OF THE BOARD -
Subject to Sections 8.2 and 8.3 and New York Stock Exchange Rules
applicable to companies listed on such Exchange, the Board may amend or
terminate this Plan at any time and in any manner.


 


8.2      RESTRICTIONS - No amendment or
termination of this Plan or change in or affecting any outstanding award shall
deprive in any material respect the holder, without the consent of the holder,
of any of his or her rights or benefits under or with respect to the award.
Adjustments contemplated by Section 7 shall not be deemed to constitute a
change requiring such consent.


 


8.3      STOCKHOLDER APPROVAL
- Stockholder approval shall be required for any
amendment to this Plan that would:


 


(a)     materially increase the
benefits accruing to participants under this Plan,


 


(b)     materially increase the
number of securities which may be issued under this Plan, or


 


(c)     materially modify the
requirements as to eligibility for participation in this Plan.


 


9.         LEGAL MATTERS


 


9.1      COMPLIANCE AND CHOICE OF
LAW; SEVERABILITY - This Plan, the granting and
vesting of awards under this Plan and the issuance and delivery of Shares
and/or the payment of money under this Plan or under awards granted hereunder
are subject to compliance with all applicable federal and state laws, rules and
regulations and to such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Company, be necessary or
advisable in connection therewith.  This
Plan, the awards, all documents evidencing awards and all other related documents
shall be governed by, and construed in accordance with the laws of the state of
Delaware. If any provision shall be held by a court of competent jurisdiction
to be invalid and unenforceable, the remaining provisions of this Plan shall
continue in effect.


 


9.2      NON-EXCLUSIVITY OF PLAN
- Nothing in this Plan shall limit or be deemed to
limit the authority of the Board or the Committee to grant awards or authorize
any other compensation, with or without reference to the Shares, under any
other plan or authority.


 


9.3      NO EMPLOYMENT CONTRACT
- Nothing contained in this Plan (or in any other
documents relating to this Plan or to any award) shall confer upon any Eligible
Person or other participant any right to continue in the employ or other
service of the Company or any subsidiary or constitute any contract or
agreement of employment or other service, nor shall interfere in any way with
the right of the Company or any subsidiary to change such person’s compensation
or other benefits or to terminate the employment of such person, with or
without cause.


 


10.      MISCELLANEOUS


 


10.1    UNFUNDED PLAN - Unless
otherwise determined by the Committee, this Plan shall be unfunded and shall
not create (or be construed to create) a trust or a separate fund or funds.
This Plan shall not establish any 


 


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fiduciary
relationship between the Company or any subsidiary and any participant or other
person. To the extent any person holds any rights by virtue of awards granted
under this Plan, such rights shall be no greater than the rights of an
unsecured general creditor of the Company.


 


10.2    AWARDS NOT COMPENSATION
- Unless otherwise determined by the Committee,
settlements of awards received by participants under this Plan shall not be deemed
a part of a participant’s regular, recurring compensation for purposes of
calculating payments or benefits from any Company benefit plan, severance
program or severance pay law of any country.


 


10.3    FRACTIONAL SHARES - The Company
shall not be required to issue any fractional Shares pursuant to this Plan. The
Committee may provide for the elimination of fractions or for the settlement
thereof in cash.


 


10.4    FOREIGN PARTICIPANTS
- No award shall be made to a participant who is a
foreign national or who is employed by the Company or any subsidiary outside
the United States of America if such award would violate applicable local law.
In order to facilitate the making of an award, the Committee may provide for
such special terms for awards to participants who are foreign nationals, or who
are employed by the Company or any subsidiary outside of the United States of
America, as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. 
Moreover, the Committee may approve such supplements to or amendments to
this Plan as it may consider necessary or appropriate for such purposes unless
stockholder approval for any such change would be required in accordance with
the provisions of Section 8.


 


APPENDIX A TO 2005 LONG-TERM
INCENTIVE PLAN


 


PERFORMANCE OBJECTIVES


 


The
Performance Objectives shall have the meanings set forth below, in each case as
reported in the financial statements of the Company or applicable subsidiary,
division, segment, or unit (“financial statements”).


 


“A/R
Day Sales Outstanding” means trade accounts receivable (A/R)(net of
reserves) divided by latest historical day Sales.


 


“A/R to
Sales” means the ratio of accounts receivable to Sales.


 


“Debt” means all
accounts classified as such in the financial statements.


 


“Debt
to Debt plus stockholder equity” means the ratio of Debt to
Debt plus stockholder equity.


 


“Debt
to EBIT or EBITDA” means the ratio of Debt to EBIT or EBITDA.


 


“EBIT” means Net
Income before interest expense and taxes, which may be adjusted for special
charges, if any.


 


“EBITDA” means Net
Income before interest expense, taxes, depreciation and amortization, which may
be adjusted for special charges, if any.


 


“EPS” means Net
Income divided by the weighted average number of Shares outstanding. The Shares
outstanding may be adjusted to include the dilutive effect of stock options,
restricted stock and other dilutive financial instruments as required by
generally accepted accounting principles.


 


“EVA” means operating
profit after tax (OPAT) (which is defined as Net Income after tax but before
tax adjusted interest income and expense and goodwill amortization), less a
charge for the use of capital (average total capital as such term is used below
under “Return on Capital Employed”). Net Income may be adjusted for special
charges and acquisition activity costs, if any. The charge for capital is the
percentage cost of capital times the average total capital. The cost of capital
is the weighted average cost of capital as calculated for the Company.


 


“Expense
Reduction” means reduction in actual expense or an improvement
in the expense to Sales ratio compared to a target or prior year actual expense
to Sales ratio, which may be adjusted for special charges, if any.


 


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“Interest
Coverage” means the ratio of EBIT or EBITDA to interest
expense. Net Income may be adjusted for special charges.


 


“Inventory
to Sales” means the ratio of total inventory to Sales.


 


“Inventory
Turns” means the ratio of total cost of goods sold on a historical basis to
average net inventory. This ratio may be adjusted for special charges, if any.


 


“Net
Income” means the difference between total Sales plus other revenues and net
total costs and expenses, including income taxes.


 


“Operating
Cash Flow” means the net cash provided by operating activities
less net cash used by operations and investing activities as shown on the
statement of cash flows. The numbers relating to the foregoing may be adjusted
for special charges, if any.


 


“Pre-Tax
Margin” means the ratio of earnings before income taxes to Sales. Earnings may
be adjusted for special charges, if any.


 


“Return
on Assets” means the ratio of Net Income to total average
assets including goodwill. Earnings may be adjusted for special charges and
goodwill amortization for comparative purposes.


 


“Return
on Capital Employed” means the ratio of Net Income plus tax-effected
interest expense to long-term Debt plus stockholder equity.


 


“Return
on Equity” means the ratio of Net Income to stockholder
equity.


 


“Sales”
means sales, service and rental income from third parties net of
discounts, returns and allowances.


 


“Stock
Price Appreciation” means an increase, or an average annualized
increase, in the stock price or market value of the Shares of the Company after
purchase of, or the date of grant of, an award or above a specified stock
price.


 


“Total
Stockholder Return or TSR” means the appreciation in
the price of a Common Share plus reinvested dividends over a specified period
of time.


 


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