exv4w1






Exhibit 4.1




AMENDED AND RESTATED ORIENTAL FINANCIAL GROUP INC.

2007 OMNIBUS PERFORMANCE INCENTIVE PLAN




ARTICLE I

PURPOSE



     The Corporation (as defined below) has previously adopted the Oriental Financial Group Inc.
1996, 1998 and 2000 Incentive Stock Option Plans (the “Stock Option Plans”), which were intended to
provide equity-based compensation incentives through the grant of stock options. Effective upon
the adoption of the “Oriental Financial Group Inc. 2007 Omnibus Performance Incentive Plan” (the
“Plan”) by the Corporation’s shareholders, the Plan will replace and supersede the Stock Option
Plans. All outstanding stock options under the Stock Option Plans shall continue in full force and
effect, subject to their original terms, after the Plan replaces and supersedes the Stock Option
Plans under the terms and conditions noted above.



     The purpose of the Plan is to provide flexibility to the Corporation and its Affiliates (as
defined below) to attract, retain and motivate their directors, officers, and key employees through
the grant of awards based on performance and to adjust its compensation practices to the best
compensation practices and corporate governance trends as they develop from time to time. The Plan
is further intended to motivate high levels of individual performance coupled with increased
shareholder returns.



ARTICLE II

DEFINITIONS




     2.1. Definitions. Whenever used herein, the following terms shall have the respective
meanings set forth below:




     “Adjusted Net Income” means the Corporation’s consolidated net income applicable to
common shareholders as it appears on an income statement of the Corporation prepared in
accordance with generally accepted accounting principles, excluding the effects of
Extraordinary Items.




     “Adjustment Event” means any stock dividend, stock split or share combination of, or
extraordinary cash dividend on, the Common Stock or recapitalization, reorganization,
merger, consolidation, split-up, spin-off, combination, dissolution, liquidation, exchange
of shares, warrants or rights offering to purchase Common Stock at a price substantially
below Fair Market Value, or other similar event affecting the Common Stock of the
Corporation.




     “Affiliate” means any corporation or other form of entity of which the Corporation
owns, from time to time, directly or indirectly, 50% or more of the total combined voting
power of all classes of stock or other equity interests.




     “Alternative Awards” shall have the meaning set forth in Section 10.3 of the Plan.




     “Award” means the award of a Performance Unit, Option, SAR, Restricted Stock,
Restricted Unit or Performance Share, including any associated Dividend Equivalents, under
the Plan.




     “Beneficial Owner” means any “person,” as such term is used in Section 13(d) of the
Exchange Act, who, directly or indirectly, has or shares the right to vote, dispose of, or
otherwise has “beneficial ownership” of such securities (within the meaning of Rule 13d-3
and Rule 13d-5 under the Exchange Act), including pursuant to any agreement, arrangement or
understanding (whether or not in writing).




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



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     “Cause” means, with respect to a Participant, any of the following (as determined by
the Committee in its sole discretion): (i) dishonesty, fraud or misrepresentation; (ii)
inability to obtain or retain appropriate licenses; (iii) violation of any rule or
regulation of any regulatory agency or self-regulatory organization; (iv) violation of any
policy or rule of the Corporation or any Affiliate; (v) commission of a crime; (vi) breach
by a Participant of any written covenant or agreement with the Corporation or any Affiliate
not to disclose or misuse any information pertaining to, or misuse any property of, the
Corporation or any Affiliate, or (vii) any act or omission detrimental to the conduct of the
business of the Corporation or any Affiliate in any way.




     A “Change of Control” shall be deemed to have occurred if:




     (i) any Person acquires direct or indirect ownership of 50% or more of the
combined voting power of the then outstanding Common Stock of the Corporation as a
result of a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise; or




     (ii) there is consummation of (A) any consolidation or merger of the
Corporation in which the Corporation is not the surviving corporation (other than a
merger of the Corporation in which the holders of Common Stock immediately prior to
the merger have the same or substantially the same proportionate ownership of the
surviving corporation immediately after the merger), or (B) any sale, lease,
exchange or other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Corporation to an entity which is
not a wholly-owned subsidiary of the Corporation.




     “Change of Control Price” means the highest price per share of Common Stock paid in
conjunction with any transaction resulting in a Change of Control (as determined in good
faith by the Committee if any part of the offered price is payable other than in cash).




     “Committee” means the Compensation Committee of the Board or such other committee of
the Board as the Board shall designate from time to time, which committee shall consist
exclusively of two or more Board members, each of whom must be an “independent director”
under the corporate governance listing standards of the NYSE or any successor thereto.




     “Common Stock” means the common stock of the Corporation, par value $1.00 per share.




     “Corporate Event” means a merger, consolidation, recapitalization or reorganization,
share exchange, division, sale, plan of complete liquidation or dissolution, or other
disposition of all or substantially all of the assets of the Corporation, which has been
approved by the shareholders of the Corporation.




     “Corporation” means Oriental Financial Group Inc., a Puerto Rico corporation, and any
successor thereto.




     “Director” means a member of the Board of Directors of the Corporation or any
Affiliate.




     “Disability” means with respect to any Participant, long-term disability as defined
under the welfare benefit plan maintained by either the Corporation or an Affiliate and in
which the Participant participates and from which the Participant is receiving a long-term
disability benefit.




     “Dividends” means the regular cash dividends paid by the Corporation upon one share of
Common Stock from time to time.




     “Dividend Equivalents” means an amount equal to the regular cash dividends paid by the
Corporation upon one share of Common Stock in connection with the grant of Restricted Units,



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Performance Shares, Options, and/or SARs awarded to a Participant in accordance with Article
VIII of the Plan.




     “Effective Date” generally means the first date upon which the Plan shall become
effective, which will be the date the Plan has been both (a) approved by the Board and, (b)
within twelve (12) months, approved by a majority of the votes cast at a duly held meeting
of shareholders of the Corporation at which the requisite quorum, as set forth in the
Corporation’s certificate of incorporation, of outstanding voting stock of the Corporation
is, either in person or by proxy, present and voting on the Plan.




     “Eligible Individual” means (i) any individual who is an employee (including each
officer or employee who is a member of the Board) of the Corporation or of any Affiliate,
and (ii) any Non-Employee Director.




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




     “Executive Officer” means each person who is an officer of the Corporation or of any
Affiliate and who is subject to the reporting requirements under Section 16(a) of the
Exchange Act.




     “Extraordinary Items” means (i) extraordinary, unusual and/or non-recurring items of
gain or loss, including but not limited to, restructuring or restructuring-related charges,
(ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting
regulations or laws, (iv) the effect of a merger or acquisition, all of which are identified
in the Corporation’s audited financial statements or the Corporation’s annual report to
stockholders, or (v) those other items determined by the Committee.




     “Fair Market Value” means, on any date, the price of the last trade in the Common Stock
on such date on the NYSE or, if at the relevant time, the Common Stock is not listed to
trade on the NYSE, on such other national security exchange or recognized quotation system
on which the trading prices of the Common Stock are then listed or quoted (the “Applicable
Exchange”). In the event that (i) there are no Common Stock transactions on the Applicable
Exchange on any relevant date, Fair Market Value for such date shall mean the closing price
on the immediately preceding date on which Common Stock transactions were so reported, and
(ii) if the Applicable Exchange adopts a trading policy permitting trades after 4:00 P.M.
Eastern Standard Time (“EST”), Fair Market Value shall mean the last trade, regular way,
reported on or before 4:00 P.M. EST (or such earlier or later time as the Committee may
establish from time to time).




     “ISO” means an Option that is an “incentive stock option” within the meaning of U.S.
Code Section 422.




     “Non-Employee Director” means a member of the Board of Directors of the Corporation or
of any Affiliate who is not an employee of the Corporation or of any Affiliate.




     “Nonstatutory Stock Option” means an Option that is not an ISO or a QSO.




     “NYSE” means the New York Stock Exchange.




     “Option” means the right to purchase Common Stock at a stated price for a specified
period of time. For purposes of the Plan, an Option may be either (i) an ISO, (ii) a QSO or
(iii) a Nonstatutory Stock Option.




     “P.R. Code” means the Puerto Rico Internal Revenue Code of 1994, as amended, including,
for these purposes, any regulations promulgated by the Puerto Rico Department of the
Treasury with respect to the provisions of the P.R. Code, and any successor thereto.




     “Participant” shall have the meaning set forth in Article III of the Plan.



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     “Performance Cycle” means a minimum one-year period, as determined by the Committee,
during which the performance of the Corporation or any Affiliate or unit thereof or any
individual is measured for the purpose of determining the extent to which an Award subject
to Performance Goals has been earned.




     “Performance Goals” means the objectives for the Corporation, any Affiliate or business
unit thereof, or an Eligible Individual, that may be established by the Committee for a
Performance Cycle with respect to any performance based Awards contingently granted under
the Plan.




     “Performance Share Award” means an Award made pursuant to Article IX of the Plan, which
are units denominated in Common Stock, the number of such units which may be adjusted over a
Performance Cycle based upon the satisfaction of Performance Goals.




     “Performance Unit Award” means an Award made pursuant to Article IX of the Plan, which
are units valued by reference to Common Stock, the value of such units which may be adjusted
over a Performance Cycle based on the satisfaction of Performance Goals.




     “Person” means any person (within the meaning of Section 3(a)(9) of the Exchange Act),
including any group (within the meaning of Rule 13d-5(b) under the Exchange Act), but
excluding the Corporation, any Affiliate or any employee benefit plan sponsored or
maintained by the Corporation or any Affiliate.




     “Plan Year” means a period of twelve months commencing on January 1st and ending on the
next December 31st.




     “QSO” means an Option that is a “qualified stock option” within the meaning of P.R.
Code Section 1046.




     “Restricted Period” means a minimum three-year period, as determined by the Committee,
during which Restricted Units or shares of Restricted Stock are subject to forfeiture or
restrictions on transfer (if applicable) pursuant to Article VIII of the Plan.




     “Restricted Stock” means Common Stock awarded to a Participant pursuant to the Plan
that is subject to forfeiture and restrictions on transferability in accordance with Article
VIII of the Plan.




     “Restricted Unit” means a Participant’s right to receive, pursuant to the Plan, one
share of Common Stock at the end of a specified period of time, which right is subject to
forfeiture in accordance with Article VIII of the Plan.




     “SAR” means a stock appreciation right granted under Article VII in respect of one or
more shares of Common Stock that entitles the holder thereof to receive, in cash and/or
Common Stock, at the discretion of the Committee (which discretion may be exercised at or
after grant, including after exercise of the SAR), an amount per share of Common Stock equal
to the excess, if any, of the Fair Market Value on the date the SAR is exercised over the
Fair Market Value on the date the SAR is granted.




     “U.S. Code” means the U.S. Internal Revenue Code of 1986, as amended, including, for
these purposes, any regulations promulgated by the Internal Revenue Service with respect to
the provisions of the U.S. Code (“Treasury Regulations”), and any successor thereto.



     2.2. Gender and Number. Except when otherwise indicated by the context, words in the
masculine gender used in the Plan shall include the feminine gender, the singular shall include the
plural, and the plural shall include the singular.



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ARTICLE III

ELIGIBILITY AND PARTICIPATION




     3.1. Participants. Participants in the Plan shall be those Eligible Individuals
designated by the affirmative action of the Committee to participate in the Plan.



     3.2. Types of Awards. The Committee may grant any or all of the Awards specified
herein to any particular Participant (subject to the applicable limitations set forth in the Plan).
Any Award may be made for one (1) year or multiple years, without regard to whether any other type
of Award is made for the same year or years.



ARTICLE IV

POWERS OF THE COMMITTEE




     4.1. Power to Grant. The Committee shall have the authority, subject to the terms of
the Plan, to determine those Eligible Individuals to whom Awards shall be granted and the terms and
conditions of any and all Awards including, but not limited to:




	 	(a)	 	the number of shares of Common Stock to be covered by each Award;






	 	(b)	 	the time or times at which Awards shall be granted;






	 	(c)	 	the terms and provisions of the instruments by which Options may be evidenced,
including the designation of Options as ISOs, QSOs or Nonstatutory Stock Options;






	 	(d)	 	the determination of the period of time during which restrictions on Restricted
Stock or Restricted Units shall remain in effect;






	 	(e)	 	the establishment and administration of any Performance Goals applicable to
Awards granted under the Plan;






	 	(f)	 	the determination of Participants’ Performance Unit Awards or Performance Share
Awards, including any Performance Goals and Performance Cycles;






	 	(g)	 	the development and implementation of specific stock-based programs for the
Corporation and its Affiliates that are consistent with the intent and specific terms
of the framework created by the Plan; and






	 	(h)	 	the right of a Participant to defer receipt of payment of an Award, including
the establishment of a trust to hold the amounts payable pursuant to an Award,
including, but not limited to shares of Common Stock.





     Appropriate officers or consultants of the Corporation or any Affiliate may suggest to the
Committee the Eligible Individuals who should receive Awards, which the Committee may accept or
reject in its sole discretion. The Committee shall determine the terms and conditions of each
Award at the time of grant. The Committee may establish different terms and conditions for
different Participants and for the same Participant for each Award such Participant may receive,
whether or not granted at different times.



     4.2. Administration.




     (a) Rules, Interpretations and Determinations. The Committee shall administer
the Plan. Any Award granted by the Committee under the Plan may be subject to such
conditions, not inconsistent with the terms of the Plan, as the Committee shall determine.
The Committee shall have full authority to interpret and administer the Plan; to establish,
amend, and rescind rules and regulations relating to the Plan;



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to provide for conditions deemed necessary or advisable to protect the interests of the
Corporation; to construe the respective Award agreements; to amend or terminate the Plan or
any Award; and to make all other determinations necessary or advisable for the
administration and interpretation of the Plan in order to carry out its provisions and
purposes. In its interpretation and administration of the Plan, the Committee may seek the
advice of counsel, which may be counsel for the Corporation or any Affiliate.
Determinations, interpretations, or other actions made or taken by the Committee shall be
final, binding, and conclusive for all purposes and upon all persons.




     The Committee’s determinations under the Plan (including the determination of the
Eligible Individuals to receive Awards, the form, amount and timing of such Awards, the
terms and provisions of such Awards and the agreements under the Plan) may vary, and need
not be uniform, whether or not any such Eligible Individuals could be deemed to be similarly
situated.




     (b) Agents and Expenses. The Committee may appoint agents (who may be officers
or employees of the Corporation) to assist in the administration of the Plan and may grant
authority to such persons to execute agreements or other documents on its behalf. All
expenses incurred in the administration of the Plan, including, without limitation, for the
engagement of any counsel, consultant or agent, shall be paid by the Corporation. Any
proceeds received by the Corporation in connection with any Award will be used for general
corporate purposes.




     (c) Delegation of Authority. Notwithstanding anything to the contrary
contained in the Plan, the Committee may delegate, subject to such terms or conditions or
guidelines as it shall determine, to any employee of the Corporation or any group of
employees of the Corporation or its affiliates any portion of its authority and powers under
the Plan with respect to Participants who are not Directors or Executive Officers. Only the
Committee may select, grant, administer, or exercise any other discretionary authority under
the Plan in respect of Awards granted to such Participants who are Directors or Executive
Officers.



     4.3. Newly Eligible Participants. The Committee shall be entitled to make such rules,
determinations and adjustments, as it deems appropriate with respect to any Participant who becomes
eligible to receive a performance-based Award after the commencement of a Performance Cycle.



     4.4. Restrictive Covenants and Other Conditions. Without limiting the generality of
the foregoing, the Committee may condition the grant of any Award under the Plan upon the
Participant to whom such Award would be granted agreeing in writing to certain conditions in
addition to the provisions regarding exercisability of the Award (such as restrictions on the
ability to transfer the underlying shares of Common Stock) or covenants in favor of the Corporation
and/or one or more Affiliates (including, without limitation, covenants not to compete, not to
solicit employees and customers, and not to disclose confidential information) that may have effect
during or following the termination of the Participant’s employment with the Corporation and/or any
Affiliate and before or after the Award has been exercised, including, without limitation, the
requirement that the Participant disgorge any profit, gain or other benefit received in respect of
the exercise of the Award prior to any breach of any such covenant by the Participant.



     4.5. Performance Based Compensation Interpretations; U.S. Taxpayer Employer.
Notwithstanding anything to the contrary contained in the Plan, to the extent that the Committee
has required upon grant that any Performance Unit Award, Performance Share Award, Restricted Unit
or Restricted Stock must qualify as “other performance based compensation” within the meaning of
U.S. Code Section 162(m)(4)(C), the Committee shall (a) specify and approve the specific terms of
any Performance Goals with respect to such Awards in writing no later than ninety (90) days from
the commencement of the Performance Cycle to which the Performance Goal or Goals relate, and (b)
not be entitled to exercise any subsequent discretion otherwise authorized under the Plan (such as
the right to authorize payout at a level above that dictated by the achievement of the relevant
Performance Goal or Goals) with respect to such Award if the ability to exercise discretion (as
opposed to the exercise of such discretion) would cause such Award to fail to qualify as other
performance based compensation.



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     4.6. Indemnification. No member of the Committee, nor any officer or employee of the
Corporation acting on behalf of the Committee, shall be personally liable for any action,
determination or interpretation taken or made in good faith with respect to the Plan and all
members of the Committee, and each and any officer or employee of the Corporation acting on their
behalf, to the extent permitted by law, shall be entitled to full indemnification, reimbursement
and protection by the Corporation in respect of any such action, determination or interpretation.
In the performance of its functions under the Plan, the Committee and any officer or employee of
the Corporation acting on their behalf shall be entitled to rely upon information and advice
furnished to them by the Corporation’s officers, accountants, counsels and any other party they
deem necessary, and no member of the Committee, nor any officer or employee of the Corporation
acting on behalf of the Committee, shall be liable for any action taken or not taken in reliance
upon any such advice.



ARTICLE V

COMMON STOCK SUBJECT TO PLAN; OTHER LIMITATIONS




     5.1. Plan Limits; Shares Available for Awards. Subject to the provisions of Section
5.4 of the Plan, the number of shares of Common Stock issuable under the Plan for Awards shall be
550,000. The shares to be delivered under the Plan may consist, in whole or in part, of Common
Stock purchased by the Corporation for such purpose, treasury Common Stock or authorized but
unissued Common Stock, not reserved for any other purpose.



     5.2. Individual Performance Based Limitations; U.S Taxpayer Employer. Subject to the
provisions of Section 5.4 of the Plan, to the extent that the Committee has required upon grant
that any Performance Unit Award, Restricted Stock, Restricted Unit or Performance Share Award must
qualify as “other performance based compensation” within the meaning of U.S. Code Section
162(m)(4)(C), the maximum aggregate amount of such Award(s) paid or otherwise made available to
such Participant shall not exceed one-half of one percent (0.5%) of Adjusted Net Income for the
most recently reported year ending December 31st prior to the year such Award or Awards is or are
paid or otherwise made available.



     5.3. Cancelled, Terminated, or Forfeited Awards. Should an Award under the Plan for
any reason expire without having been exercised, be cancelled, repurchased by the Corporation,
terminated or forfeited, or otherwise settled without the issuance of any Common Stock (including,
but not limited to, shares tendered to exercise outstanding Options, shares tendered or withheld
for taxes on Awards, or shares issued in connection with a Restricted Stock Award that is
subsequently forfeited), any such shares of Common Stock subject to such Award shall again be
available for grants of Awards under the Plan.



     5.4. Adjustment in Capitalization. In the event of any Adjustment Event, (a) the
aggregate number of shares of Common Stock available for Awards under Section 5.1 of the Plan, (b)
the aggregate limitations on the number of shares that may be awarded as a particular type of
Award, and (c) the aggregate number of shares subject to outstanding Awards and the respective
exercise prices or base prices applicable to outstanding Awards shall be proportionately adjusted
by the Committee, in its discretion, with respect to such Adjustment Event, and the Committee’s
determination shall be conclusive. To the extent deemed equitable and appropriate by the Committee
and subject to any required action by shareholders of the Corporation, in any Adjustment Event that
is a merger, consolidation, reorganization, liquidation, dissolution or similar transaction, any
Award granted under the Plan shall be deemed to pertain to the securities and other property,
including cash, to which a holder of the number of shares of Common Stock covered by the Award
would have been entitled to receive in connection with such Adjustment Event.



     Any shares of stock (whether Common Stock, shares of stock into which shares of Common Stock
are converted or for which shares of Common Stock are exchanged, or shares of stock distributed
with respect to Common Stock) or cash or other property received with respect to any award of
Restricted Stock or Restricted Units granted under the Plan as a result of any Adjustment Event or
any distribution of property shall, except as provided in Article X or as otherwise provided by the
Committee, be subject to the same terms and conditions, including restrictions on transfer, as are
applicable to such shares of Restricted Stock or Restricted Units and any stock



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certificate(s) representing or evidencing any shares of stock so received shall be legended in such
manner as the Corporation deems appropriate.




ARTICLE VI

STOCK OPTIONS




     6.1. Grant of Options. Subject to the provisions of Section 5.1 of the Plan, Options
may be granted to Participants at such time or times as shall be determined by the Committee.
Options granted under the Plan may be of three types: (i) ISOs, (ii) QSOs and (iii) Nonstatutory
Stock Options. Except as otherwise provided herein, the Committee shall have complete discretion in
determining the number of Options, if any, to be granted to a Participant, except that ISOs and
QSOs may only be granted to Eligible Individuals who satisfy the requirements for eligibility set
forth under U.S. Code Section 424 and P.R. Code Section 1046, respectively. The date of grant of
an Option under the Plan will be the date on which the Option is awarded by the Committee or, if so
determined by the Committee, the date on which occurs any event (including, but not limited to, the
completion of an individual or corporate Performance Goal) the occurrence of which is an express
condition precedent to the grant of the Option. Subject to Section 5.4 of the Plan, the Committee
shall determine the number of Options, if any, to be granted to the Participant. Each Option grant
shall be evidenced by an Option agreement (in electronic or written form) that shall specify the
type of Option granted, the exercise price, the duration of the Option, the number of shares of
Common Stock to which the Option pertains, and such other terms and conditions as the Committee
shall determine which are not inconsistent with the provisions of the Plan. Options may be granted
in tandem with SARs (as described in more detail in Article VII of the Plan).



     6.2. Exercise Price; No Repricing or Substitution of Options. Nonstatutory Stock
Options, QSOs and ISOs granted pursuant to the Plan shall have an exercise price no less than the
Fair Market Value of a share of Common Stock on the date the Option is granted. Except as a result
of any Adjustment Event, the Committee shall not have the power or authority to reduce, whether
through amendment or otherwise, the exercise price of any outstanding Option nor to grant any new
Options or other Awards in substitution for or upon the cancellation of Options previously granted
which shall have the effect of reducing the exercise price of any outstanding Option.



     6.3. Exercise of Options. Each Option granted pursuant to the Plan shall become
exercisable as determined by the Committee at the time of grant; provided that the Committee may
establish performance-based criteria for exercisability of any Option. Options may be exercised
during the lifetime of an optionee only by that optionee. Subject to the provisions of this
Article VI, once any portion of any Option has become exercisable it shall remain exercisable for
its remaining term. Once exercisable, an Option may be exercised from time to time, in whole or in
part, up to the total number of shares of Common Stock with respect to which it is then
exercisable. The Committee shall determine the term of each Option granted, but in no event shall
any such Option be exercisable for more than 10 years after the date on which it is granted.



     6.4. Payment. The Committee shall establish procedures governing the exercise of
Options. No shares shall be delivered pursuant to any exercise of an Option unless arrangements
satisfactory to the Committee have been made to assure full payment of the exercise price of the
Option. Without limiting the generality of the foregoing, payment of the exercise price may be
made: (a) in cash or its equivalent; (b) by exchanging shares of Common Stock (which are not the
subject of any pledge or other security interest) owned by the person exercising the Option
(through actual tender or by attestation); (c) with the approval of the Committee, by authorizing
the Corporation, Oriental Financial Services Corp., or a broker-dealer approved by the Corporation,
to sell, on behalf of the Participant, the appropriate number of shares of Common Stock otherwise
issuable to the Participant upon exercise of an Option; (d) with the approval of the Committee and
at the election of the Participant, by withholding from those shares of Common Stock that would
otherwise be obtained upon exercise of the Option a number of shares having a Fair Market Value
equal to the exercise price; (e) by any combination of the foregoing; or (f) by other means that
the Committee deems appropriate; provided that the combined value of all cash and cash equivalents
paid and the Fair Market Value of any such shares of Common Stock so tendered to the Corporation,
valued as of the date of such tender, is at least equal to such exercise price. The Corporation
may not make a loan to a Participant to facilitate such Participant’s exercise of any of his
Options or payment of taxes.



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     6.5. ISOs and QSOs. Notwithstanding anything to the contrary contained in the Plan,
no Option that is intended to be an ISO or a QSO may be granted after the tenth anniversary of the
Effective Date of the Plan. Furthermore, the aggregate Fair Market Value of the Common Stock with
respect to which QSOs may be exercised for the first time by a Participant shall not exceed
$100,000. Except as may otherwise be provided for under the provisions of Article X of the Plan,
no term of the Plan relating to ISOs or QSOs shall be interpreted, amended or altered, nor shall
any discretion or authority granted under the Plan be so exercised, so as to disqualify the ISO,
QSO or the Plan under U.S. Code Section 422, or P.R. Code Section 1046, respectively, or without
the consent of any Participant affected thereby, to disqualify any ISO or QSO under such Section
422 or Section 1046.



     6.6. Termination of Employment. Unless otherwise determined by the Committee, the
following provisions of the Plan shall apply in the event of the Participant’s termination of
employment with the Corporation or any Affiliate:




     (a) Due to Death. In the event a Participant’s employment terminates by reason
of death, any Options granted to such Participant which are exercisable on the date of the
Participant’s termination may be exercised by the Participant’s estate or as may otherwise
be provided for in accordance with the requirements of Section 12.2 of the Plan, at any time
prior to the earlier to occur of the (i) expiration of the term of the Options or (ii) such
date following the Participant’s termination as the Committee shall determine at the time of
grant.




     (b) Due to Disability. In the event a Participant’s employment is terminated by
reason of Disability, any Options granted to such Participant which are exercisable on the
date of the Participant’s termination may be exercised by the Participant (or, in the event
of the Participant’s death after termination of employment when the Option is exercisable
pursuant to its terms, by the Participant’s designated beneficiary, and if none is named, by
the person determined in accordance with the requirements of Section 12.2 of the Plan), at
any time prior to the earlier to occur of the (i) expiration date of the term of the Options
or (ii) such date following the Participant’s termination as the Committee shall determine
at the time of grant.




     (c) Due to Cause. In the event a Participant’s employment is terminated by the
Corporation or any Affiliate for Cause, any Options granted to such Participant that are
then not yet exercised shall be forfeited at the time of such termination and shall not be
exercisable thereafter and the Committee may require that such Participant disgorge any
profit, gain or other benefit received in respect of the exercise of any such Award for a
period of up to twelve (12) months prior to the Participant’s termination of employment for
Cause. In the event a Participant’s employment is terminated by the Corporation or any
Affiliate for Cause, the provisions of this Section 6.6(c) will apply notwithstanding any
assertion (by the Participant or otherwise) of a termination of employment for any other
reason enumerated under this Section.




     (d) Due to Resignation. Unless otherwise determined by the Committee, in the
event a Participant’s employment ends as a result of such Participant’s resignation from the
Corporation or any Affiliate, any Options granted to such Participant that are then not yet
exercised shall be forfeited at the time of such termination and shall not be exercisable
thereafter.




     (e) Due to Any Other Reason. In the event the employment of the Participant
shall terminate for any reason other than one described in Section 6.6 (a) through (d)
hereof, any Options granted to such Participant which are exercisable on the date of the
Participant’s termination of employment may be exercised by the Participant (or, in the
event of the Participant’s death after termination of employment when the Option is
exercisable pursuant to its terms, by the Participant’s estate or as may otherwise be
provided for in accordance with the requirements of Section 12.2 of the Plan) at any time
prior to the expiration of the term of the Options or the ninetieth (90th) day following the
Participant’s termination of employment, whichever period is shorter, and any Options that
are not exercisable on the date of



9









 






termination of employment shall be forfeited at the time of such termination and not be
exercisable thereafter.



     6.7 Termination of Service as a Non-Employee Director. In the event a Participant’s
service as a Non-Employee Director shall terminate for reasons other than removal for Cause, any
Options granted to such Participant which are exercisable on the date of the Participant’s
termination may be exercised by the Participant (or, in the event of the Participant’s death after
termination as a Non-Employee Director when the Option is exercisable pursuant to its terms, by the
Participant’s designated beneficiary, and if none is named, by the person determined in accordance
with the requirements of Section 12.2 of the Plan), at any time prior to the earlier to occur of
the (i) expiration date of the term of the Options or (ii) such date following the Participant’s
termination as the Committee shall determine at the time of grant. In the event a Participant’s
service as a Non-Employee Director is terminated for Cause, any Options granted to such Participant
that are then not yet exercised shall be forfeited at the time of such termination and shall not be
exercisable thereafter and the Committee may require that such Participant disgorge any profit,
gain or other benefit received in respect of the exercise of any such Award for a period of up to
twelve (12) months prior to the Participant’s termination as a Non-Employee Director. In the event
a Participant’s service as a Non-Employee Director is terminated for Cause, the provisions of this
Section 6.7 will apply notwithstanding any assertion (by the Participant or otherwise) of a
termination for any other reason.



ARTICLE VII

STOCK APPRECIATION RIGHTS (SARs)




     7.1. Grant of SARs. SARs may be granted to any Participants, all Participants or any
class of Participants at such time or times as shall be determined by the Committee. SARs may be
granted in tandem with an Option, on a freestanding basis, not related to any other Award, and/or
with associated Dividend Equivalents. A grant of a SAR shall be evidenced in writing, whether as
part of the agreement governing the terms of the Option, if any, to which such SARs relate or
pursuant to a separate written agreement with respect to freestanding SARs, in each case containing
such provisions not inconsistent with the Plan as the Committee shall approve.



     7.2. Terms and Conditions of SARs. Notwithstanding the provisions of Section 7.1
above, unless the Committee shall otherwise determine the terms and conditions (including, without
limitation, the exercise period of the SAR, the vesting schedule applicable thereto and the impact
of any termination of service on the Participant’s rights with respect to the SAR) applicable with
respect to (i) SARs granted in tandem with an Option shall be substantially identical (to the
extent possible taking into account the differences related to the character of the SAR) to the
terms and conditions applicable to the tandem Options and (ii) freestanding SARs shall be
substantially identical (to the extent possible taking into account the differences related to the
character of the SAR) to the terms and conditions that would have been applicable under Section 6
of the Plan as if the grant of the SARs were a grant of an Option (including, but not limited to,
the application of Sections 6.6 and 6.7).



     7.3. Exercise of Tandem SARs. SARs that are granted in tandem with an Option may only
be exercised upon the surrender of the right to exercise such Option for an equivalent number of
shares and may be exercised only with respect to the shares of Common Stock for which the related
Award is then exercisable.



     7.4. Payment of SAR Amount. Upon exercise of a SAR, the holder shall be entitled to
receive payment, in cash, in shares of Common Stock or in a combination thereof, as determined by
the Committee, of an amount determined by multiplying:




     (a) the excess, if any, of the Fair Market Value of a share of Common Stock at the date
of exercise over the Fair Market Value of a share of Common Stock on the date of grant, by




     (b) the number of shares of Common Stock with respect to which the SARs are then being
exercised; provided, however, that at the time of grant with respect to any SAR payable in
cash, the Committee may establish, in its sole discretion, a maximum amount per share which
will be payable upon the exercise of such SAR.



10









 





ARTICLE VIII

RESTRICTED STOCK, RESTRICTED UNITS AND DIVIDEND EQUIVALENTS




     8.1. Grant of Restricted Stock and Restricted Units. The Committee, in its sole
discretion, may make Awards to Participants of Restricted Stock or Restricted Units. Any Award made
hereunder of Restricted Stock or Restricted Units shall be subject to the terms and conditions of
the Plan and to any other terms and conditions not inconsistent with the Plan as shall be
prescribed by the Committee in its sole discretion, either at the time of grant or thereafter. As
determined by the Committee, with respect to an Award of Restricted Stock, the Corporation shall
either (i) transfer or issue to each Participant to whom an award of Restricted Stock has been made
the number of shares of Restricted Stock specified by the Committee or (ii) hold such shares of
Restricted Stock for the benefit of the Participant for the Restricted Period. In the case of an
Award of Restricted Units, no shares of Common Stock shall be issued at the time an Award is made,
and the Company shall not be required to set aside a fund for the payment of such Award. Dividends
or Dividends Equivalents (if connected with the grant of Restricted Units) may be subject to the
same terms and conditions as the underlying Award of Restricted Stock or Restricted Units.



     8.2. Grant, Terms and Conditions of Dividend Equivalents. The Committee, in its sole
discretion, may make Awards to Participants of Dividend Equivalents in connection with the grant of
Restricted Units, Options, SARs and/or Performance Shares. Unless the Committee shall otherwise
determine, the terms and conditions (including, without limitation, the vesting schedule applicable
thereto and the impact of any termination of service on the Participant’s rights with respect to
the Dividend Equivalent) shall be substantially identical (to the extent possible taking into
account the differences related to the character of the Dividend Equivalent) to the terms and
conditions applicable to the associated Award.



     8.3. Restrictions On Transferability. Shares of Restricted Stock may not be sold,
assigned, transferred, pledged, hypothecated or otherwise encumbered by the Participant during the
Restricted Period, except as hereinafter provided. Notwithstanding the foregoing, the Committee
may permit (on such terms and conditions as it shall establish) shares of Restricted Stock and
Restricted Units to be transferred during the Restricted Periods pursuant to Section 12.1 of the
Plan, provided that any shares of Restricted Stock or Restricted Units so transferred shall remain
subject to the provisions of this Article VIII.



     8.4. Rights as a Shareholder. Except for the restrictions set forth herein and unless
otherwise determined by the Committee, the Participant shall have all the rights of a shareholder
with respect to such shares of Restricted Stock, including but not limited to, the right to vote
and the right to receive dividends. A Participant shall not have any right, in respect of
Restricted Units or Dividend Equivalents awarded pursuant to the Plan, to vote on any matter
submitted to the Corporation’s shareholders until such time as the shares of Common Stock
attributable to such Restricted Units (and, if applicable, Dividend Equivalents) have been issued.



     8.5. Restricted Period. The Restricted Period shall commence upon the date of grant by
the Committee and shall lapse with respect to the shares of Restricted Stock or Restricted Units on
such date as determined by the Committee at the date an Award of Restricted Stock or Restricted
Units (including any Dividend Equivalents issued) is made to the Participant by the Committee,
unless sooner terminated as otherwise provided herein.



     8.6. Legending or Equivalent. To the extent that certificates are issued to a
Participant in respect of shares of Restricted Stock awarded under the Plan (or in the event that
such Restricted Stock are held electronically), such shares shall be registered in the name of the
Participant and shall have such legends (or account restrictions) reflecting the restrictions of
such Awards in such manner as the Committee may deem appropriate.



     8.7. Termination of Employment. Unless the Committee shall otherwise determine at or
subsequent to the date of grant:




     (a) Due to Cause. In the event a Participant’s employment is terminated by the
Corporation or any Affiliate for Cause, any Restricted Stock or Restricted Units (including
any associated Dividend



11









 






Equivalents) granted to such Participant shall be forfeited at the time of such termination,
and the Committee may require that such Participant disgorge any profit, gain or other
benefit received in respect of the lapse of restrictions on any prior grant of Restricted
Stock or Restricted Units (including any Dividend Equivalents) for a period of up to twelve
(12) months prior to the Participant’s termination of employment for Cause. For purposes of
this Section 8.7, in the event a Participant’s employment is terminated by the Corporation
or any Affiliate for Cause, the provisions of this Section 8.7(a) will apply notwithstanding
any assertion (by the Participant or otherwise) of a termination of employment for any other
reason enumerated under this Section.




     (b) Due to Resignation. Unless otherwise determined by the Committee, in the
event a Participant’s employment ends as a result of such Participant’s resignation from the
Corporation or any Affiliate, any Restricted Stock granted to such Participant and all
Restricted Units (including any associated Dividend Equivalents) credited to such
Participant shall be forfeited upon the Participant’s termination of employment.




     (c) Due to Any Other Reason. In the event a Participant’s employment is
terminated by the Corporation or any Affiliate for any other reason during the applicable
vesting period, the Participant (or the Participant’s estate or beneficiaries, if the
participant subsequently dies) shall receive a payment calculated in the following manner:
(i) the number of shares of Restricted Stock or Restricted Units granted will be reduced by
multiplying the grant by a fraction, the numerator of which is the number of full months in
the applicable vesting period during which the Participant was an active employee and the
denominator of which is the number of months in the applicable vesting period (with a
partial month worked counted as a full month if the Participant is an active employee for 15
days or more in that month); and (ii) the resulting reduced number of Restricted Stock or
Restricted Units shall be considered vested and payment of such pro-rated Awards is to be
made to the Participant (or beneficiaries or estate, if the Participant subsequently dies)
as soon as practicable after the Participant’s termination of employment.



     8.8. Termination of Service as a Non-Employee Director. In the event a Participant’s
service as a Non-Employee Director shall terminate for reasons other than removal for Cause, the
Participant (or the Participant’s estate or beneficiaries, if the Participant subsequently dies)
shall receive a payment calculated in the following manner: (i) the number of shares of Restricted
Stock or Restricted Units granted will be reduced by multiplying the grant by a fraction, the
numerator of which is the number of full months in the applicable vesting period during which the
Participant was an active Non-Employee Director and the denominator of which is the number of
months in the applicable vesting period (with a partial month worked counted as a full month if the
Participant is an active Non-Employee Director for 15 days or more in that month); and (ii) the
resulting reduced number of Restricted Stock or Restricted Units shall be considered vested and
payment of such pro-rated Awards is to be made to the Participant (or beneficiaries or estate, if
the Participant subsequently dies) as soon as practicable after the Participant’s termination as a
Non-Employee Director. In the event a Participant’s service as a Non-Employee Director is
terminated for Cause, any Restricted Stock or Restricted Units (including any associated Dividend
Equivalents) granted to such Participant shall be forfeited at the time of such termination, and
the Committee may require that such Participant disgorge any profit, gain or other benefit received
in respect of the lapse of restrictions on any prior grant of Restricted Stock or Restricted Units
(including any Dividend Equivalents) for a period of up to twelve (12) months prior to the
Participant’s termination for Cause. For purposes of this Section 8.8, in the event a
Participant’s service as a Non-Employee Director is terminated for Cause, the provisions of this
Section 8.8 will apply notwithstanding any assertion (by the Participant or otherwise) of a
termination for any other reason.



     8.9. Issuance of New Certificate or Equivalent: Settlement of Restricted Units and
Dividend Equivalents. Upon the lapse of the Restricted Period with respect to any shares of
Restricted Stock, such shares shall no longer be subject to the restrictions imposed under Section
8.3 of the Plan and the Corporation shall issue or have issued new share certificates (or remove
any such restrictions that may have been established electronically) without the legend or
equivalent described in Section 8.6 of the Plan in exchange for those previously issued. Upon the
lapse of the Restricted Period with respect to any Restricted Units, the Corporation shall deliver
to the



12









 




Participant, or the Participant’s beneficiary or estate, as provided in Section 12.2 of the Plan,
one share of Common Stock for each Restricted Unit as to which restrictions have lapsed and any
Dividend Equivalents credited with respect to any Restricted Units, and any interest thereon. The
Committee may, in its sole discretion, elect to pay cash or part cash and part Common Stock in lieu
of delivering only Common Stock and/or Dividend Equivalents. If a cash payment is made in lieu of
delivering Common Stock for the Restricted Units, the amount of such cash payment for each share of
Common Stock to which a Participant is entitled shall be equal to the Fair Market Value of the
Common Stock on the date on which the Restricted Period lapsed with respect to the related
Restricted Unit.




ARTICLE IX

PERFORMANCE UNIT AWARDS

AND PERFORMANCE SHARE AWARDS





9.1. Performance Unit Awards.




     (a) General Description. At the discretion of the Committee, grants of
Performance Unit Awards may be made to Participants.




     (b) Requirements for Covered Employees. For any “covered employees” and to the
extent the Committee intends to comply with the requirements for performance-based Awards
described generally under U.S. Code section 162(m), the Committee must certify, prior to
payment of any such amounts, that any applicable Performance Goals and/or other requirements
have been satisfied, and that such amounts paid are consistent with the limits provided
under Section 5.2 of the Plan.




     (c) Payment of Performance Unit Awards. Performance Unit Awards shall be
payable in cash, Common Stock, or a combination of cash and Common Stock at the discretion
of the Committee. Unless the Committee shall otherwise determine at or subsequent to the
date of grant:




     (i) Due to Cause. In the event a Participant’s employment is
terminated by the Corporation or any Affiliate for Cause, any outstanding
Performance Unit Awards shall be cancelled and the Committee may require that such
Participant disgorge any profit, gain or other benefit received in respect of the
payment of any prior Performance Unit Awards received within a period of twelve (12)
months prior to the Participant’s termination of employment for Cause. For purposes
of this Section 9.1(c)(i), in the event a Participant’s employment is terminated by
the Corporation or any Affiliate for Cause, the provisions of this Section 9.1(c)(i)
will apply notwithstanding any assertion (by the Participant or otherwise) of a
termination of employment for any other reason enumerated under this Section.




     (ii) Due to Resignation. Unless otherwise determined by the Committee,
in the event a Participant’s employment ends as a result of such Participant’s
resignation from the Corporation or any Affiliate, any Performance Units credited to
such Participant shall be forfeited upon the Participant’s termination of
employment.




     (iii) Due to Any Other Reason. In the event a Participant’s employment
is terminated by the Corporation or any Affiliate for any other reason during the
applicable Performance Cycle, the Participant (or the Participant’s estate or
beneficiaries, if the Participant subsequently dies) shall receive a payment
calculated in the following manner: (A) the number of Performance Units granted will
be reduced by multiplying the grant by a fraction, the numerator of which is the
number of full months in the Performance Cycle during which the Participant was an
active employee and the denominator of which is the number of months in the
Performance Cycle (with a partial month worked counted as a full month if the
Participant is an active employee for 15 days or more in that month); and (B) the
resulting reduced number of Performance Units shall be considered vested and payment
made to the Participant of a lump sum payment as soon as



13









 






	 	 	 	practicable of such pro-rated Performance Unit Award, calculated as if the target
value or equivalent value for each Unit had, in fact, been achieved.






     (iv) Termination of Service as a Non-Employee Director. In the event a
Participant’s service as a Non-Employee Director shall terminate for reasons other
than removal for Cause, the Participant (or the Participant’s estate or
beneficiaries, if the Participant subsequently dies) shall receive a payment
calculated in the following manner: (A) the number of Performance Units granted will
be reduced by multiplying the grant by a fraction, the numerator of which is the
number of full months in the Performance Cycle during which the Participant was an
Non-Employee Director and the denominator of which is the number of months in the
Performance Cycle (with a partial month worked counted as a full month if the
Participant is an active Non-Employee Director for 15 days or more in that month);
and (B) the resulting reduced number of Performance Units shall be considered vested
and payment made to the Participant of a lump sum payment as soon as practicable of
such pro-rated Performance Unit Award, calculated as if the target value or
equivalent value for each Unit had, in fact, been achieved. In the event a
Participant’s service as a Non-Employee Director is terminated for Cause, any
outstanding Performance Unit Awards shall be cancelled and the Committee may require
that such Participant disgorge any profit, gain or other benefit received in respect
of the payment of any prior Performance Unit Awards received within a period of
twelve (12) months prior to the Participant’s termination for Cause. For purposes
of this Section 9.1(c)(iv), in the event a Participant’s service as a Non-Employee
Director is terminated for Cause, the provisions of this Section 9.1(c)(iv) will
apply notwithstanding any assertion (by the Participant or otherwise) of a
termination for any other reason.



     9.2. Performance Shares.




     (a) General Description. At the discretion of the Committee, grants of
Performance Share Awards may be made to Participants.




     (b) Requirements for Covered Employees. For any “covered employees” and to the
extent the Committee intends to comply with the requirements for performance-based Awards
described generally under U.S. Code Section 162(m), the Committee must certify, prior to
payment of any such amounts, that any applicable Performance Goals and/or other requirements
have been satisfied, and that such amounts paid are consistent with the limits provided
under Section 5.2 of the Plan.




     (c) Payment of Performance Share Awards. Performance Share Awards shall be
payable in Common Stock. Unless the Committee shall otherwise determine at or subsequent to
the date of grant:




     (i) Due to Cause. In the event a Participant’s employment is
terminated by the Corporation or any Affiliate for Cause, any outstanding
Performance Share Awards shall be cancelled and the Committee may require that such
Participant disgorge any profit, gain or other benefit received in respect of the
payment of any prior Performance Share Awards (including any Dividend Equivalents)
received within a period of twelve (12) months prior to the Participant’s
termination of employment for Cause. For purposes of this Section 9.2(c)(i), in the
event a Participant’s employment is terminated by the Corporation or any Affiliate
for Cause, the provisions of this Section 9.2(c)(i) will apply notwithstanding any
assertion (by the Participant or otherwise) of a termination of employment for any
other reason enumerated under this Section.




     (ii) Due to Resignation. Unless otherwise determined by the Committee,
in the event a Participant’s employment ends as a result of such Participant’s
resignation from the Corporation or any Affiliate, any Performance Share Awards
credited to such Participant shall be forfeited upon the Participant’s termination
of employment.



14









 






     (iii) Due to Any Other Reason. In the event a Participant’s employment
is terminated by the Corporation or an Affiliate for any other reason during the
applicable Performance Cycle, the Participant (or the Participant’s estate or
beneficiaries, if the Participant subsequently dies) shall receive a payment
calculated in the following manner: (A) the number of Performance Shares granted
will be reduced by multiplying the grant by a fraction, the numerator of which is
the number of full months in the Performance Cycle during which the Participant was
an active employee and the denominator of which is the number of months in the
Performance Cycle (with a partial month worked counted as a full month if the
Participant is an active employee for 15 days or more in that month); and (B) the
resulting reduced number of Performance Shares shall be considered vested and
payment made to the Participant of a lump sum payment as soon as practicable of such
pro-rated Performance Share Award, calculated as if the target number of Performance
Shares had, in fact, been earned.




     (iv) Termination of Service as a Non-Employee Director. In the event a
Participant’s service as a Non-Employee Director shall terminate for reasons other
than removal for Cause, the Participant (or the Participant’s estate or
beneficiaries, if the Participant subsequently dies) shall receive a payment
calculated in the following manner: (A) the number of Performance Shares granted
will be reduced by multiplying the grant by a fraction, the numerator of which is
the number of full months in the Performance Cycle during which the Participant was
an active non-Employee Director and the denominator of which is the number of months
in the Performance Cycle (with a partial month worked shall be counted as a full
month if the Participant is an active Non-Employee Director for 15 days or more in
that month); and (B) the resulting reduced number of Performance Shares shall be
considered vested and payment made to the Participant of a lump sum payment as soon
as practicable of such pro-rated Performance Share Award, calculated as if the
target number of Performance Shares had, in fact, been earned. In the event a
Participant’s service as a Non-Employee Director is terminated for Cause, any
outstanding Performance Share Awards shall be cancelled and the Committee may
require that such Participant disgorge any profit, gain or other benefit received in
respect of the payment of any prior Performance Share Awards received within a
period of twelve (12) months prior to the Participant’s termination for Cause. For
purposes of this Section 9.2(c)(iv), in the event a Participant’s service as a
Non-Employee Director is terminated for Cause, the provisions of this Section
9.2(c)(iv) will apply notwithstanding any assertion (by the Participant or
otherwise) of a termination for any other reason.



ARTICLE X

CHANGE OF CONTROL




     10.1. Accelerated Vesting and Payment of Awards. Subject to the provisions of Section
10.3 below, in the event of a Change of Control each Option and SAR then outstanding shall be fully
exercisable regardless of the exercise schedule otherwise applicable to such Option and/or SAR, and
the Restricted Period shall lapse as to each share of Restricted Stock and each Restricted Unit
then outstanding. In connection with such a Change of Control, the Committee may, in its
discretion, provide that each Option, SAR, Restricted Stock and/or Restricted Unit shall, upon the
occurrence of such Change of Control, be cancelled in exchange for a payment per share/unit (the
“Settlement Payment”) in an amount based on the Change of Control Price. Such Settlement Payment
shall be in the form of cash.



     10.2. Performance Unit Awards and Performance Share Awards. Subject to the provisions
of Section 10.3, in the event of a Change of Control, (a) any outstanding Performance Unit Awards
or Performance Share Awards relating to Performance Cycles ending prior to the Change of Control
which have been earned but not paid shall become immediately payable, (b) all then-in-progress
Performance Cycles for Performance Unit Awards or Performance Share Awards that are outstanding
shall end, and all Participants shall be deemed to have earned an award equal to the Participant’s
target award opportunity for the Performance Cycle in question, and (c) the Corporation shall pay
all such Performance Unit Awards and Performance Share Awards as a Settlement Payment



15









 




within thirty (30) days of such Change of Control, based on the Change of Control Price. Such
Settlement Payment shall be in cash.




     10.3. Alternative Awards. Notwithstanding Section 10.1 or 10.2, no cancellation,
acceleration of exercisability, vesting, cash settlement or other payment shall occur with respect
to any Option, SAR, Restricted Stock, Restricted Unit, Performance Unit and/or Performance Share if
the Committee reasonably determines in good faith prior to the occurrence of a Change of Control
that such Option, SAR, Restricted Stock, Restricted Unit, Performance Unit and/or Performance Share
shall be honored or assumed, or new rights substituted therefore (such honored, assumed or
substituted award hereinafter called an “Alternative Award”), by a Participant’s employer (or the
parent or an affiliate of such employer) immediately following the Change of Control; provided that
any such Alternative Award must:




     (a) be based on stock that is traded on an established securities market;




     (b) provide such Participant with rights and entitlements substantially equivalent to
or better than the rights, terms and conditions applicable under such Option, SAR,
Restricted Stock, Restricted Unit, Performance Unit and/or Performance Share, including, but
not limited to, an identical or better exercise or vesting schedules;




     (c) have substantially equivalent value to such Option, SAR, Restricted Stock,
Restricted Unit, Performance Unit and/or Performance Share (determined at the time of the
Change in Control); and




     (d) have terms and conditions which provide that in the event that the Participant’s
employment is involuntarily terminated for any reason other than for Cause, all of such
Participant’s Options, SARs, Restricted Stock, Performance Units and/or Performance Shares
shall be deemed immediately and fully exercisable and/or all restrictions shall lapse, and
shall be settled for a payment per each share of stock subject to the Alternative Award in
cash, in immediately transferable, publicly traded securities, or in a combination thereof,
in an amount equal to (i) the Fair Market Value of such stock on the date of the
Participant’s termination (with respect to any Restricted Stock and/or Restricted Units,
(ii) the excess of the Fair Market Value of such stock on the date of the Participant’s
termination over the corresponding exercise or base price per share, if any (with respect to
any Option and/or SARs), or (iii) the Participant’s target award opportunity for the
Performance Cycle in question (with respect to any Performance Units or Performance Shares).



ARTICLE XI

AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN




     11.1. General. The Board may, at any time and from time to time amend, modify,
suspend, or terminate the Plan, in whole or in part, without notice to or the consent of any
Participant or Eligible Individual; provided, however, that any amendment which would (i) increase
the number of shares available for issuance under the Plan, (ii) lower the minimum exercise price
at which an Option (or the base price at which a SAR) may be granted, (iii) change the individual
Award limits, or (iv) require shareholder approval under NYSE rules or the rules of any other
exchange where the Common Stock may then be traded, shall be subject to the approval of the
Corporation’s shareholders. No amendment, modification or termination of the Plan shall in any
manner adversely affect any Award theretofore granted under the Plan, without the consent of the
Participant, provided, however, that




     (a) any change pursuant to, and in accordance with the requirements of, Article X;




     (b) any acceleration of payments of amounts accrued under the Plan by action of the
Committee or by operation of the Plan’s terms; or




     (c) any decision by the Committee to limit participation (or other features of the
Plan) prospectively under the Plan shall not be deemed to violate this provision.



16









 





ARTICLE XII

MISCELLANEOUS PROVISIONS




     12.1. Transferability of Awards. No Awards granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by
the laws of descent and distribution. No transfer of an Award by will or by the laws of descent
and distribution shall be effective to bind the Corporation unless the Corporation shall have been
furnished with written notice thereof and a copy of the will and/or such other evidence as the
Board or the Committee may determine necessary to establish the validity of the transfer.



     12.2. Treatment of Any Outstanding Rights or Features Upon Participant’s Death. Any
Awards, rights or features remaining unexercised or unpaid at the Participant’s death shall be paid
to, or exercised by, the Participant’s estate except where otherwise provided by law, or when done
in accordance with other methods (including a beneficiary designation process) put in place by the
Committee or a duly appointed designee from time to time. Except as otherwise provided herein,
nothing in the Plan is intended or may be construed to give any person other than Participants any
options, rights or remedies under the Plan.



     12.3. Deferral of Payment. In the Award agreement or otherwise, the Committee may
permit a Participant to elect, upon such terms and conditions as the Committee may establish, to
defer receipt of payment of the Award. Notwithstanding anything else contained herein to the
contrary, deferrals shall not be permitted hereunder in a way that will result in the Corporation
or any Affiliate being required to recognize a financial accounting charge due to such deferral
that is substantially greater than the charge, if any, that was associated with the underlying
Award.



     12.4. Awards in Substitution for Awards Granted By Other Companies. Awards may be
granted under the Plan from time to time as replacements for awards (including, but not limited to,
options, common stock, restricted stock, performance shares or performance units) held by employees
of other companies who become employees of the Corporation or any affiliate as a result of a merger
or consolidation of the employing Corporation with the Corporation, or such Affiliate, or the
acquisition by the Corporation or an Affiliate of all or a portion of the assets of the employing
Corporation. Shares issued in connection with such substitute Awards shall not reduce the number
of shares of Common Stock issuable under Section 5.1 of the Plan.



     12.5. No Guarantee of Employment or Participation. The existence of the Plan shall
not be deemed to constitute a contract of employment between the Corporation or any Affiliate and
any Eligible Individual or Participant, nor shall it constitute a right to remain in the employ of
the Corporation or any Affiliate. The terms or existence of the Plan, as in effect at any time or
from time to time, or any Award granted under the Plan, shall not interfere with or limit in any
way the right of the Corporation or any Affiliate to terminate any Participant’s employment at any
time, nor confer upon any Participant any right to continue in the employ of the Corporation or any
Affiliate. Except to the extent expressly selected by the Committee to be a Participant, no person
(whether or not an Eligible Individual or a Participant) shall at any time have a right to be
selected for (or additional) participation in the Plan, despite having previously participated in
an incentive or bonus plan of the Corporation or an Affiliate.



     12.6. Tax Withholding. The Corporation or an Affiliate shall have the right and power
to deduct from all payments or distributions under the Plan, or require a Participant to remit to
the Corporation promptly upon notification of the amount due, an amount (which may include shares
of Common Stock) to satisfy any Puerto Rico, federal, state, local or foreign taxes or other
obligations required by law to be withheld with respect thereto with respect to any Award. The
Corporation may defer payments of cash or issuance or delivery of Common Stock until such
withholding requirements are satisfied. The Committee may, in its discretion, permit a Participant
to elect, subject to such conditions as the Committee shall impose, (a) to have shares of Common
Stock otherwise issuable under the Plan withheld by the Corporation or (b) to deliver to the
Corporation previously acquired shares of Common Stock (through actual tender or attestation), in
either case for the greatest number of whole shares having a



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Fair Market Value on the date immediately preceding the date of exercise not in excess of the
amount required to satisfy the withholding tax obligations.




     12.7. No Limitation on Compensation; Scope of Liabilities. Nothing in the Plan shall
be construed to limit the right of the Corporation to establish other plans if and to the extent
permitted by applicable law. The liability of the Corporation or any Affiliate under the Plan is
limited to the obligations expressly set forth in the Plan, and no term or provision of the Plan
may be construed to impose any further or additional duties, obligations, or costs on the
Corporation or any Affiliate not expressly set forth in the Plan.



     12.8. Requirements of Law. The granting of Awards and the issuance of shares of
Common Stock shall be subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be required.



     12.9. Term of Plan. The Plan shall be effective upon the Effective Date. The Plan
shall terminate on the earlier of (a) the termination of the Plan pursuant to Article XI, or (b)
when no more shares of Common Stock are available for issuance of Awards under the Plan.



     12.10. Governing Law. The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the Commonwealth of Puerto Rico without regard to
principles of conflict of laws.



     12.11. Securities Law Compliance. Instruments evidencing Awards may contain such
other provisions, not inconsistent with the Plan, as the Committee deems advisable, including a
requirement that the Participant represent to the Corporation in writing, when an Award is granted
or when he receives shares with respect to such Award (or at such other time as the Committee deems
appropriate) that he or she is accepting such Award, or receiving or acquiring such shares (unless
they are then covered by an effective registration statement), for his own account for investment
only and with no present intention to transfer, sell or otherwise dispose of such shares except
such disposition by a legal representative as shall be required by will or the laws of any
jurisdiction in winding up the estate of the Participant. Such shares shall be transferable, or
may be sold or otherwise disposed of only if the proposed transfer, sale or other disposition shall
be permissible pursuant to the Plan and if, in the opinion of counsel satisfactory to the
Corporation, such transfer, sale or other disposition at such time will be in compliance with
applicable securities laws.



     12.12. No Impact On Benefits. Except as may be otherwise specifically provided for
under any employee benefit plan, policy or program, Awards shall not be treated as compensation for
purposes of calculating an Eligible Individual’s right under any such plan, policy or program.



     12.13. No Constraint on Corporate Action. Except as provided in Article XI, nothing
contained in the Plan shall be construed to prevent the Corporation, or any affiliate, from taking
any corporate action (including, but not limited to, the Corporation’s right or power to make
adjustments, reclassifications, reorganizations or changes of its capital or business structure, or
to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business
or assets) which is deemed by it to be appropriate, or in its best interest, whether or not such
action would have an adverse effect on the Plan, or any Awards made under the Plan. No employee,
beneficiary, or other person, shall have any claim against the Corporation or any of its
Affiliates, as a result of any such action.



     12.14. Captions. The headings and captions appearing herein are inserted only as a
matter of convenience. They do not define, limit, construe, or describe the scope or intent of the
provisions of the Plan.




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