EX-10.1






Exhibit 10.1




JOHN B. SANFILIPPO & SON, INC.

2008 EQUITY INCENTIVE PLAN




PREAMBLE




John B. Sanfilippo & Son, Inc., a Delaware corporation (together with its successors and assigns,
the “Company”), hereby establishes the John B. Sanfilippo & Son, Inc. 2008 Equity Incentive Plan
(the “Plan”) to provide the Company with an effective means of attracting, retaining, and
motivating directors, officers, key employees and other service providers, and to provide them with
incentives to enhance the growth and profitability of the Company.



ARTICLE 1 DEFINITIONS




In this Plan, except where the context otherwise indicates, the following definitions and rules
apply:




	1.1	 	Agreement means either (i) a written agreement entered into by the Company and a
Participant setting forth the terms and provisions applicable to an Award granted under this
Plan, or (ii) a written or electronic statement issued by the Company to a Participant
describing the terms and provisions of such Award, in each case, including any amendment or
modification thereof. The Committee may provide for the use of electronic, internet or other
non-paper Award Agreements, and the use of electronic, internet or other non-paper means for
the acceptance thereof and actions thereunder by a Participant.
	 
	1.2	 	Approval Date shall mean the date the Plan is approved by the holders of a majority
of the combined voting power of the Common Stock and Class A Stock of the Company present, or
represented, and entitled to vote at a meeting duly called and held.
	 
	1.3	 	Award means any award or benefit granted under the Plan, including, without
limitation, a grant of Common Stock, Options, Restricted Stock, Stock Appreciation Rights or
Restricted Stock Units.
	 
	1.4	 	Board means the Board of Directors of the Company.
	 
	1.5	 	Change in Control shall have the meaning set forth in Section 10.1.
	 
	1.6	 	Class A Stock means the Class A Common Stock, $.01 par value per share, of the
Company.




1









 






	1.7	 	Code means the Internal Revenue Code of 1986, as amended, including any regulations
promulgated thereunder. A reference to any provision of the Code shall include reference to
any successor provision of the Code.
	 
	1.8	 	Committee means the Compensation Committee of the Board, or any successor thereto
(references herein to the Committee shall be deemed to include the Subcommittee, as
applicable). In the event there is no valid Committee, the entire Board shall be the
Committee.
	 
	1.9	 	Common Stock means the Common Stock, par value $.01 per share, of the Company, and
any other shares into which such Common Stock shall thereafter be exchanged by reason of a
recapitalization, merger, consolidation, split-up, combination, exchange of shares or the
like.
	 
	1.10	 	Company shall have the meaning set forth in the Preamble.
	 
	1.11	 	Covered Employee means a Participant who, as of the date of vesting and/or payout
of an Award, as applicable, is a “covered employee” as defined by Code Section 162(m).
	 
	1.12	 	Date of Exercise means the date on which the Company receives notice of the
exercise of an Option or a Stock Appreciation Right in accordance with the terms hereof.
	 
	1.13	 	Date of Grant means the date on which an Award is granted by the Committee (or such
later date as specified in advance by the Committee) or, in the case of an Award granted to
an Non-Employee Director, the date on which such Award is approved by the Board (or such
later date as specified in advance by the Board).
	 
	1.14	 	Effective Date shall have the meaning set forth in Section 2.1.
	 
	1.15	 	Employee means any individual classified or treated as an employee of the Company
and/or its Subsidiaries on the payroll records thereof. An Employee shall not include any
individual during any period he or she is classified or treated by the Company and/or its
Subsidiaries as an independent contractor, a consultant, or any employee of an employment,
consulting, or temporary agency or any other entity other than the Company and/or its
Subsidiaries, without regard to whether such individual is subsequently determined to have
been, or is subsequently retroactively reclassified as a common-law employee of the Company
and/or its Subsidiary during such period.
	 
	1.16	 	Exchange Act means the Securities Exchange Act of 1934, as amended.
	 
	1.17	 	Exercise Price shall have the meaning set forth in Section 6.2.
	 
	1.18	 	Fair Market Value of a Share means:






	 	(a)	 	If on the applicable date the Common Stock is listed for trading on a
national securities exchange, including the NASDAQ Global Market, the closing price




2









 






	 	 	 	of the Common Stock on such exchange on the applicable date, or if no sales of
Common Stock shall have occurred on such exchange on the applicable date, the
closing price of the Common Stock on such exchange on the next preceding date on
which there were such sales;






	 	(b)	 	If on the applicable date the Common Stock is not listed for trading on
a national securities exchange, including the NASDAQ Global Market, the mean
between the closing bid price and the closing ask price of the Common Stock as
otherwise reported by the NASDAQ Stock Market LLC or its successors or assigns with
respect to the applicable date or, if the closing bid and ask prices for the Common
Stock shall not have been so reported with respect to the applicable date, on the
next preceding date with respect to which such bid and ask prices were so reported;
or
	 
	 	(c)	 	If on the applicable date the Common Stock is not listed for trading on
a national securities exchange, including the NASDAQ Global Market, or otherwise
reported by the NASDAQ Stock Market LLC or its successors or assigns, the fair
market value of a Share as determined by the Committee.






	1.19	 	Family Members shall have the meaning set forth in Section 1.32(a).
	 
	1.20	 	For Cause shall have the meaning set forth in Section 9.3.
	 
	1.21	 	Insider means a director, officer or beneficial owner of more than 10% of the
Common Stock for purposes of Section 16 of the Exchange Act.
	 
	1.22	 	Non-Employee Director means any individual who is a director of the Company and who
is not also an employee of either the Company, any Subsidiary or any of their respective
affiliates.
	 
	1.23	 	Nonstatutory Stock Option means an Option granted under the Plan that does not
qualify as an incentive stock option under Section 422 of the Code.
	 
	1.24	 	Option means a right to purchase Common Stock granted under the Plan.
	 
	1.25	 	Option Period means the period during which an Option may be exercised.
	 
	1.26	 	Option Price means the price per Share at which an Option may be exercised.
	 
	1.27	 	Original Directors shall have the meaning set forth in Section 10.1(c).
	 
	1.28	 	Participant means an individual with an outstanding Award.
	 
	1.29	 	Performance-Based Compensation means “performance-based compensation” as that term
is used in Code Section 162(m).
	 
	1.30	 	Performance Measures shall have the meaning set forth in Section 6.6(b).




3









 






	1.31	 	Permanent Disability means a mental or physical condition which, in the opinion of
the Committee, renders a Participant unable or incompetent to carry out the job
responsibilities which such Participant held or tasks to which such Participant was assigned
at the time the disability was incurred and which is expected to be permanent or for an
indefinite period. With respect to any Award subject to Code Section 409A, the Committee may
not find that a Permanent Disability exists with respect to the applicable Participant
unless, in the Committee’s opinion, such Participant is also “disabled” within the meaning of
Code Section 409A.
	 
	1.32	 	Permitted Holder means:






	 	(a)	 	Jasper B. Sanfilippo (“Jasper”), Mathias A. Valentine, (“Mathias”), a
spouse of Jasper, a spouse of Mathias, any lineal descendant of Jasper or any
lineal descendant of Mathias (collectively referred to as the “Family Members”);
	 
	 	(b)	 	a legal representative of a deceased or disabled Family Member’s
estate, provided that such legal representative is a Family Member;
	 
	 	(c)	 	a trustee of any trust of which all the beneficiaries (and any donees
and appointees of any powers of appointment held thereunder) are Family Members and
the trustee of which is a Family Member;
	 
	 	(d)	 	a custodian under the Uniform Gifts to Minors Act or Uniform Transfers
to Minors Act for the exclusive benefit of a Family Member, provided that such
custodian is a Family Member;
	 
	 	(e)	 	any corporation, partnership or other entity, provided that at least
75% of the equity interests in such entity (by vote and by value) are owned, either
directly or indirectly, in the aggregate by Family Members;
	 
	 	(f)	 	any bank or other financial institution, solely as a bona fide pledgee
of shares of Class A Stock by the owner thereof as collateral security for
indebtedness due to the pledgee; or
	 
	 	(g)	 	any employee benefit plan, or trust or account held thereunder, or any
savings or retirement account (including an individual retirement account), held
for the exclusive benefit of a Family Member.






	1.33	 	Plan shall have the meaning set forth in the Preamble.
	 
	1.34	 	Prior Plan means the John B. Sanfilippo & Son, Inc. 1998 Equity Incentive Plan.
	 
	1.35	 	Restricted Stock means any grant of Shares, with such Shares subject to a risk of
forfeiture or other restrictions as determined pursuant to the Plan.
	 
	1.36	 	Restricted Stock Unit means the grant of a right to receive Shares (or a derivative
thereof) in the future, with such right to future delivery of Shares (or other rights)
subject to a risk of forfeiture or other restrictions as determined pursuant to the Plan.




4









 






	1.37	 	Retirement for an Employee means a Termination of Service, other than For Cause, to
the extent the Employee has attained, as of the effective date of such Termination of
Service, either (i) age 65 or, (ii) age 55 and 10 completed years of service with the Company
or any Subsidiary. Retirement for a Non-Employee Director means a Termination of Service on
or after the attainment of age 60.
	 
	1.38	 	Share means a share of Common Stock.
	 
	1.39	 	Share Withholding shall have the meaning set forth in Section 8.4.
	 
	1.40	 	Stock Appreciation Right means any such right granted under Section 6.2.
	 
	1.41	 	Subcommittee shall have the meaning set forth in Section 3.3.
	 
	1.42	 	Subsidiary means a corporation of which at least 50% of the total combined voting
power of all classes of stock is owned by the Company either directly or through one or more
Subsidiaries.
	 
	1.43	 	Termination of Service shall have the following meanings:






	 	(a)	 	for an Employee, the date on which the Employee is no longer an
Employee;
	 
	 	(b)	 	for a Non-Employee Director, the date on which the Non-Employee
Director is no longer a member of the Committee;
	 
	 	(c)	 	for any other eligible individual, the date on which such individual no
longer provides substantial services on a regular basis.






	 	 	With respect to any Award subject to Code Section 409A, a Termination of Service shall
mean a “separation from service” within the meaning of Code Section 409A.





ARTICLE 2 EFFECTIVE DATE AND AVAILABLE SHARES





	2.1	 	Effective Date, Approval Date and effect on Prior Plan. The Board and the
Committee adopted the Plan on September 4, 2008 (the “Effective Date”); provided, however,
that Awards granted under the Plan prior to the Approval Date are contingent on approval of
the Plan by the Company’s stockholders. The Plan shall be unlimited in duration and, in the
event of Plan termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that no Awards may be granted under the Plan after the
ten-year anniversary of the Effective Date (except for Awards granted pursuant to commitments
entered into prior to such ten-year anniversary). Upon the Effective Date, no further awards
will be made under the Prior Plan. If there is no Approval Date within 12 months of the
Effective Date, Awards granted pursuant to the Plan shall be deemed cancelled.
	 
	2.2	 	Share authorization.




5









 












	 	(a)	 	The maximum number of Shares available for grants of Awards (including
the Shares underlying such Awards) pursuant to the Plan is 1,000,000.
	 
	 	(b)	 	The maximum number of Shares available for Awards of Common Stock,
Restricted Stock and Restricted Stock Units is 500,000.
	 
	 	(c)	 	Shares issued pursuant to the Plan may come from authorized and
unissued Shares, treasury Shares or Shares purchased by the Company in the open
market.






	2.3	 	Share usage. The limits of Sections 2.2(a) and (b) are governed by the rules
contained in this Section 2.3. Any Shares related to Awards which (i) terminate by
expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, (ii)
are settled in cash in lieu of Shares, or (iii) are exchanged with the Committee’s
permission, prior to the issuance of Shares, shall be available again for grant under this
Plan. Moreover, if the Option Price of any Option or the tax withholding requirements with
respect to any Award are satisfied by tendering Shares to the Company (by either actual
delivery or by attestation) or through the surrender of all or a portion of an Option, or if
a Stock Appreciation Right is exercised, only the number of Shares issued, net of the Shares
tendered, if any, will be deemed delivered for purposes of determining the maximum number of
Shares available for delivery under this Plan.





ARTICLE 3 ADMINISTRATION





	3.1	 	The Committee. The Plan shall be administered by the Committee in accordance with
the following:






	 	(a)	 	The Committee shall have the authority in its sole discretion, at any
time, and from time to time, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or as it deems
necessary or advisable in administration of the Plan, including without limitation,
(i) the authority to grant Awards; (ii) to determine the individuals to whom and
the time or times at which Awards shall be granted; (iii) to determine the type and
number of Awards to be granted, as applicable, the number of Shares to which an
Award may relate and the terms, conditions, restrictions and performance criteria
relating to any Award; (iv) to determine whether, to what extent, and under what
circumstances and the manner in which an Award may be settled, cancelled,
forfeited, exchanged or surrendered; (v) to construe and interpret the Plan and any
Award; (vi) to prescribe, amend, and rescind rules and regulations relating to the
Plan, including but not limited to, rules and regulations relating to leaves of
absence and changes from an employee to a service provider or consultant; and (vii)
to make all other determinations deemed necessary or advisable for the
administration and implementation of the Plan. The determination of the Committee
on all matters relating to the Plan or any Agreement shall be final




6









 






	 	 	 	and conclusive and binding on the Company and all Participants and
beneficiaries.






	 	(b)	 	Except to the extent prohibited by applicable law or the applicable
rules of a securities exchange, or inconsistent with the Company’s Bylaws or
Committee charters, the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate all
or any part of its responsibilities and powers to any person or persons selected by
it. Such delegation shall include, unless limited by its terms, all of the
responsibility and authority held by the Committee hereunder, and any such
allocation or delegation may be revoked by the Committee at any time.






	3.2	 	Prohibition on Option Repricing. Notwithstanding any other provision of the Plan,
the Committee may not reprice, replace or regrant any Option granted under the Plan or any
other plan of the Company, (i) through cancellation and replacement or regrant with lower
priced options or (ii) by lowering the Option Price of a previously granted Award, without
the prior approval of Company stockholders.
	 
	3.3	 	Code Section 162(m) Subcommittee. Notwithstanding anything to the contrary
contained herein, the Committee has the authority to designate, if desirable, a subcommittee
(the “Subcommittee”) to administer the Plan with respect to Covered Employees. If a
Subcommittee is designated, the Subcommittee shall be composed of two or more members of the
Committee appointed by the Committee, all of whom shall be “outside directors” as that term
is used in Code Section 162(m). With respect to such Covered Employees, the Subcommittee
shall have all of the powers, rights, and duties granted to the Committee under this Plan.
	 
	3.4	 	Periodic Committee review and meetings with management. The Committee may from
time to time review the implementation and results of the Plan to determine the extent to
which the Plan’s purpose is being accomplished. In addition, the Committee may periodically
meet with senior management of the Company to review their suggestions regarding grants under
the Plan, including the individuals who are proposed to receive grants and the amount and
terms of such grants; provided, however, that unless otherwise delegated, all such grants
shall be determined solely by the Committee in its discretion.





ARTICLE 4 AWARDS





	4.1	 	Eligibility. Awards may be granted to any Employee, any consultant or other person
providing services to the Company or a Subsidiary and any member of the Board.
	 
	4.2	 	Award Agreements. Awards under the Plan shall be evidenced by Agreements which
shall not be inconsistent with the terms and provisions of the Plan, and which shall contain
such provisions as the Committee may in its sole discretion determine. A copy of such
Agreement shall be provided to the Participant, and the Committee may, but need not, require
that the Participant sign a copy of such Agreement. Without limiting the generality of the
foregoing, the Committee may in any Agreement impose




7









 






	 	 	such restrictions or conditions upon the exercise or settlement of any Award or upon the
sale or other disposition of any Shares issuable pursuant to the Plan as the Committee
may in its sole discretion determine. Awards and related Agreements may, but need not,
be uniform among Participants. By accepting an Award pursuant to the Plan each
Participant shall thereby agree that each such Award shall be subject to all of the
terms and provisions of the Plan. In the event of any inconsistency between an
Agreement and the Plan, the terms of the Plan shall prevail.





ARTICLE 5 OPTIONS





	5.1	 	General. The Committee is authorized to grant Options with the terms and
conditions set forth in this Article and with such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine in its sole
discretion.
	 
	5.2	 	Type of Options. All Options granted pursuant to the Plan shall be Nonstatutory
Stock Options.
	 
	5.3	 	General terms and conditions. The Committee shall determine all terms and
conditions of the Options not inconsistent with the Plan, provided that, the following terms
and conditions shall apply to all Options:






	 	(a)	 	Options may not be exercised after ten years have elapsed from the Date
of Grant;
	 
	 	(b)	 	The Option Price shall be determined by the Committee in accordance
with the terms and conditions of the Plan, except that, in no event shall the
Option Price be less than 100% of the Fair Market Value per Share determined as of
the Date of Grant;
	 
	 	(c)	 	Except as otherwise provided by the Committee and set forth in the
Award Agreement, each Option shall become exercisable in equal installments of 25%
of the total number of Shares subject to being purchased thereunder on each of the
first, second, third and fourth anniversaries of the Option’s Date of Grant;
provided, however, that the Participant remains an Employee (or a Non-Employee
Director or continues to provide services as a consultant, as applicable) on a
regular and continuous basis through each such anniversary of the Date of Grant;
and
	 
	 	(d)	 	Options shall not contain any provision entitling a Participant to the
automatic grant of additional Options in connection with any exercise of the
original Option.






	5.4	 	Annual individual limit. The maximum number of Shares subject to Options which may
be awarded to any individual in any one calendar year shall not exceed 100,000 Shares.




8









 






	5.5	 	 Exercise of Options. Subject to the provisions hereof and the provisions of the
Agreement under which it was granted, each Option shall be exercised by delivery to the
Company’s treasurer of written notice (or by such other method determined by the Committee
and communicated in writing to a Participant) of intent to purchase a specific whole number
of Shares subject to the Option or by such other method as may be provided by the Committee.
Except as otherwise provided in an Agreement or determined by the Committee, a payment to
exercise an Option may, at the election of the Participant, be made in (i) cash, (ii) Shares
valued at their Fair Market Value on the Date of Exercise, (iii) surrender of an exercisable
Option covering Shares with an aggregate Fair Market Value as of the date of exercise in
excess of the aggregate dollar amount of the Option Prices of such Shares under such Option
equal to the Option Price of the Options sought to be exercised, (iv) through the delivery of
irrevocable instructions to a broker to deliver promptly to the Company an amount in cash
equal to the Option Price, (v) any combination of the foregoing, or (vi) in accordance with
the terms of the Agreement under which the Options sought to be exercised were granted, or
(vii) in accordance with other methods as the Committee may from time to time permit. A
Participant may surrender to the Company an Option (or a portion thereof) that has become
exercisable and receive upon such surrender, without any payment to the Company or a
Subsidiary (other than required tax withholding amounts), that number of Shares (equal to the
highest whole number of Shares) having an aggregate Fair Market Value as of the date of
surrender equal to that number of Shares subject to the Option (or portion thereof) being
surrendered multiplied by an amount equal to the excess of (i) the Fair Market Value of a
Share on the date of surrender, over (ii) the Option Price, plus an amount of cash equal to
the Fair Market Value of any fractional Share to which the Participant might be entitled.
Any such surrender shall be treated as the exercise of the Option (or portion thereof).





ARTICLE 6 OTHER AWARDS





	6.1	 	Restricted Stock and Restricted Stock Units. The Committee is authorized to grant
Awards of Common Stock, Restricted Stock and Restricted Stock Units. Any such Award shall be
subject to such conditions, restrictions and contingencies as the Committee may impose
(including, without limitation, any limitation on the right to vote Restricted Stock or the
right to receive any dividend or other right or property), which may lapse separately or in
combination and at such time or times as the Committee may deem appropriate. Awards of
Restricted Stock Units may be subject to such terms and conditions deemed necessary and
desirable by the Committee to permit such Awards to comply with the provisions of Code
Section 409A.
	 
	6.2	 	Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation
Rights, which may, but need not, relate to a specific Option granted under the Plan. Subject
to the terms of the Plan and any applicable Agreement, each Stock Appreciation Right shall
confer on the holder thereof a right to receive, upon exercise thereof, the excess of (a) the
Fair Market Value of one Share on the Date of Exercise over (ii) the exercise price (the
“Exercise Price”) of the right as specified by the Committee, which shall not be less than
the Fair Market Value of one Share on the Date of Grant of the Stock Appreciation Right.
Subject to the terms of the Plan and




9









 






	 	 	any applicable Agreement, the Exercise Price, term, methods of exercise, methods of
payment or settlement, including whether such Stock Appreciation Right shall be settled
in cash or Shares, and any other terms and conditions of any Stock Appreciation Right
shall be as determined by the Committee, but in no event shall the term of a Stock
Appreciation Right exceed a period of ten years from the date of its grant.






	6.3	 	Dividends and Dividend Equivalents. Any Award of Restricted Stock or Restricted
Stock Units may provide the Participant with the right to receive dividend payments or
dividend equivalent payments with respect to Shares underlying the Award (both before and/or
after the Shares subject to the Award are earned, vested, or acquired), which payments may be
either made currently or credited to an account for the Participant (the Agreement shall
specify whether such amounts are paid currently or credited to an account, and any such
account shall be intended to comply with applicable provisions of Code Section 409A), and may
be settled in cash or Shares as determined by the Committee. Any such settlements, and any
such crediting of dividends or dividend equivalents or reinvestments in Shares, may be
subject to such conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Share equivalents.
	 
	6.4	 	Share certificates and distributions. At the time Restricted Stock is granted to a
Participant, share certificates representing the appropriate number of Shares of Restricted
Stock shall be registered in the name of the Participant but shall be held by the Company in
custody for the account of such person. The Committee (and the Company) may take whatever
actions it determines necessary or desirable to restrict the transferability of the unvested
Restricted Stock including providing that the certificates bear a legend restricting their
transferability. Any Shares or other securities of the Company received by a Participant to
whom Restricted Stock has been granted as a result of a stock distribution to stockholders or
as a stock dividend on Common Stock shall be subject to the same terms, conditions and
restrictions as such Restricted Stock.
	 
	6.5	 	Annual individual limits.






	 	(a)	 	The maximum number of Shares subject to Stock Appreciation Rights which
may be awarded to any individual in any one calendar year shall not exceed 100,000
Shares.
	 
	 	(b)	 	The maximum number of Shares, shares of Restricted Stock or Restricted
Stock Units which may be awarded to any individual in any one calendar year shall
not exceed 50,000 (for the avoidance of doubt, this limit applies separately to
each type of Award).






	6.6	 	Performance-Based Compensation.




10









 












	 	(a)	 	An Award of Restricted Stock or Restricted Stock Units that is intended
to qualify as Performance-Based Compensation shall be governed by this Section 6.6.
	 
	 	(b)	 	The performance goals upon which the payment or vesting of an Award of
Restricted Stock and Restricted Stock Units to a Covered Employee that is intended
to qualify as Performance-Based Compensation shall be limited to one or more of the
performance measures listed in Appendix A hereto (the “Performance Measures”).
	 
	 	(c)	 	Any Performance Measure(s) may be used to measure the performance of
the Company and its Subsidiaries as a whole or any business unit of the Company or
its Subsidiaries or any combination thereof, as the Committee may deem appropriate,
or any of the Performance Measures as compared to the performance of a group of
comparator companies, or published or special index that the Committee, in its sole
discretion, deems appropriate, or the Company may select Performance Measure (j) on
Appendix A as compared to various stock market indices. The Committee also has the
authority to provide for accelerated vesting of any Award based on the achievement
of performance goals pursuant to the Performance Measures set forth at Appendix A.
	 
	 	(d)	 	The Committee may provide in any such Award that any evaluation of
performance may include or exclude any of the following events that occurs during a
Performance Period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax laws, accounting principles, or
other laws or provisions affecting reported results, (iv) any reorganization and
restructuring programs, (v) extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s annual report to stockholders for the applicable year or other applicable
periodic filings with the Securities and Exchange Commission, (vi) acquisitions or
divestitures, and (vii) foreign exchange gains and losses. To the extent such
inclusions or exclusions affect Awards to Covered Employees, they shall be
prescribed in a form that meets the requirements of Code Section 162(m) for
deductibility.
	 
	 	(e)	 	Awards that are intended to qualify as Performance-Based Compensation
may not be adjusted upward. The Committee may retain the discretion to adjust such
Awards downward, either on a formula or discretionary basis or any combination, as
the Committee determines.
	 
	 	(f)	 	In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the governing Performance Measures without
obtaining stockholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining stockholder approval. In
addition, in the event that the Committee determines that it is advisable to




11









 






	 	 	 	grant Awards that shall not qualify as Performance-Based Compensation, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m) and base vesting on Performance Measures other than those set
forth herein.






	 	(g)	 	In all events, determinations under this section shall be made in a
manner which is consistent with Code Section 162(m).





ARTICLE 7 NON-EMPLOYEE DIRECTORS




The Committee, subject to approval by the full Board, shall determine all Awards to Non-Employee
Directors. The terms and conditions of any Award to any such Non-Employee Director shall be set
forth in an Agreement and, except as otherwise provided for in such Agreement, such Award shall
vest or become exercisable, as the case may be, on the first anniversary of the Award’s Date of
Grant.



ARTICLE 8 TAXES





	8.1	 	Notification under Section 83(b). Provided that the Committee has not prohibited
such Participant from making the following election, if a Participant shall, in connection
with the receipt of any Award, make the election permitted under Section 83(b) of the Code
(i.e., an election to include in such Participant’s gross income in the year of transfer the
amounts specified in Section 83(b) of the Code), such Participant shall notify the Committee
or its designee of such election within ten (10) days of filing notice of the election with
the Internal Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b) of the Code.
	 
	8.2	 	Remittance of Tax as Condition of Delivery. The Company shall be entitled to
require as a condition of delivery of Shares hereunder that the Participant remit an amount
of cash sufficient to satisfy all federal, state and other governmental withholding tax
requirements related thereto.
	 
	8.3	 	Mandatory Withholding on Insiders. In the case of a Participant who is an Insider,
whenever under the Plan Shares are to be delivered, the Company shall withhold an amount
sufficient to satisfy all minimum federal, state and other governmental withholding tax
requirements related thereto.
	 
	8.4	 	Elective Share Withholding. Provided that the Committee has not prohibited such
Participant from making the following election, a Participant, other than an Insider, may
elect the withholding (“Share Withholding”) by the Company of a portion of the Shares
otherwise deliverable to such Participant upon the settlement of an Award having a Fair
Market Value equal to the amount necessary to satisfy such Participant’s minimum required
federal, state or other governmental withholding tax liability with respect thereto.
	 
	8.5	 	Share withholding is subject to Committee approval. Each Share Withholding
election by a Participant shall also be subject to the following restrictions:




12









 












	 	(a)	 	the election must be made prior to the date on which the amount of tax
to be withheld is determined; and
	 
	 	(b)	 	the election shall be irrevocable.





ARTICLE 9 TERMINATION OF SERVICE





	9.1	 	Unexercisable Options. Except as otherwise determined by the Committee, upon a
Participant’s Termination of Service, all unexercisable and/or unvested Options shall be
forfeited and cancelled without further action by the Committee.
	 
	9.2	 	Exercisable Options. Except as otherwise determined by the Committee, this Section
9.2 shall apply to exercisable Options held by an Employee. An unexercised Option shall
terminate and/or be forfeited upon Termination of Service if the Termination of Service was
the result of the resignation of the Participant or the Participant was terminated For Cause
or otherwise, except that:






	 	(a)	 	Death. If the Participant’s Termination of Service is as a result of
his or her death, unexercised Options to the extent exercisable on the date of the
Participant’s death, may be exercised, in whole or in part, at any time within one
(1) year after the date of death by the Participant’s personal representative or by
the person to whom the Options are transferred by will or the applicable laws of
descent and distribution.
	 
	 	(b)	 	Retirement. If the Termination of Service of an Employee or a
Non-Employee Director is as a result of Retirement, any unexercised Option, to the
extent exercisable at the date of such Termination of Service, may be exercised, in
whole or in part, at any time within one (1) year after the date of such
Termination of Service; provided that, if the Participant dies after such
Termination of Service and before the expiration of such one (1) year period,
unexercised Options held by such deceased Participant may be exercised by his or
her personal representative or by the person to whom the Option is transferred by
will or the applicable laws of descent and distribution within one (1) year after
the Participant’s Termination of Service.
	 
	 	(c)	 	Permanent Disability. If the Participant’s Termination of Service is a
result of his or her Permanent Disability, any unexercised Option, to the extent
exercisable at the date of such Termination of Service, may be exercised, in whole
or in part, at any time within one (1) year after the date of such Termination of
Service; provided that, if a Participant dies after such Termination of Service and
before the expiration of such one (1) year period, the unexercised Options may be
exercised by the deceased Participant’s personal representative or by the person to
whom the unexercised Options are transferred by will or the applicable laws of
descent and distribution within one (1) year after the Participant’s Termination of
Service, or, if later, within 180 days after the Participant’s death.




13









 






	 	(d)	 	Other Reasons for Termination. If the Participant has a Termination of
Service for any reason other than by death, Retirement, Permanent Disability,
resignation or For Cause, any unexercised Option, to the extent exercisable on the
date of such Termination of Service, may be exercised, in whole or in part, at any
time within ninety (90) days from the date of such Termination of Service.






	 	 	When Options are no longer exercisable pursuant to the provisions of Section 9.2(a) through
(d), such Options shall be forfeited and cancelled without further action by the Committee.
	 
	9.3	 	For Cause. A Termination of Service “For Cause” shall mean a Termination of
Service that, in the judgment of the Committee, is the result of (a) the breach by the
Employee of any employment agreement, employment arrangement or any other agreement with the
Company or a Subsidiary, (b) the Employee engaging in a business that competes with the
Company or a Subsidiary, (c) the Employee disclosing business secrets, trade secrets or
confidential information of the Company or a Subsidiary to any party, (d) dishonesty,
misconduct, fraud or disloyalty by the Employee, (e) misappropriation of corporate funds, or
(f) such other conduct by the Employee of an incompetent, insubordinate, immoral or criminal
nature as to have rendered the continued employment of the Employee incompatible with the
best interests of the Company and its Subsidiaries.
	 
	9.4	 	Other Awards. Except as otherwise determined by the Committee:






	 	(a)	 	Stock Appreciation Rights shall be treated similar to Options as set
forth in Sections 9.1 and 9.2;
	 
	 	(b)	 	Upon Termination of Service except as a result of death or Permanent
Disability, all Restricted Stock Units and shares of Restricted Stock still subject
to restriction and/or unvested shall be forfeited without further action by the
Committee and cancelled or reacquired without payment of consideration by the
Company; and
	 
	 	(c)	 	Upon Termination of Service as a result of death or Permanent
Disability, any Award of Restricted Stock Units or shares of Restricted Stock shall
be immediately vested to the extent the Participant would have become vested in
such Award had he or she not experienced a Termination of Service until immediately
after the next following anniversary of such Award’s Date of Grant, and the
remainder of the Award still subject to restriction and/or unvested shall be
forfeited without further action by the Committee and cancelled or reacquired
without payment of consideration by the Company.






	9.5	 	Term. Any of the provisions herein to the contrary notwithstanding, no Option or
Stock Appreciation Right shall be exercisable beyond the term specified in the related
Agreement thereof.




14









 






	9.6	 	Non-Employee Directors and Other Service Providers. Awards granted to Non-Employee
Directors and other service providers shall be treated in accordance with the principles set
forth in this Article 9, as applicable, provided that service providers who are not
Non-Employee Directors or Employees shall not be eligible for Retirement treatment.





ARTICLE 10 CHANGE IN CONTROL





	10.1	 	Definition. For the purposes of this Plan, a “Change in Control” means,
except as may otherwise be provided in an Agreement, the first date on which one of the
following events occurs:






	 	(a)	 	the consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if more than 50% of the
combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other reorganization is
owned by persons who were not stockholders of the Company immediately prior to such
merger, consolidation or other reorganization;
	 
	 	(b)	 	the sale, transfer or other disposition of all or substantially all of
the Company’s assets;
	 
	 	(c)	 	a change in the composition of the Board, as a result of which fewer
than one-half of the directors following such change in composition of the Board
are directors who either (i) had been directors of the Company on the date 24
months prior to the date of the event that may constitute a Change in Control (the
“Original Directors”) or (ii) were elected, or nominated for election, to the Board
with the affirmative votes of at least a majority of the aggregate of (A) the
Original Directors who were still in office at the time of the election or
nomination and (B) the directors whose election or nomination was previously
approved pursuant to this Clause (ii); or
	 
	 	(d)	 	any transaction as a result of which any “person” or “group” (as such
terms are used in Section 13(d) and 14(d) of the Exchange Act), other than one or
more Permitted Holders, or any group that is controlled by Permitted Holders, is or
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, of the voting securities of the Company
representing at least 30% of the total voting power of the Company (with respect to
all matters other than the election of directors) represented by the Company’s then
outstanding voting securities. For purposes of this Clause (d), the term
“transaction” shall include any conversion of the Class A Stock, whether or not
such conversion occurs in connection with a sale, transfer or other disposition of
such Class A Stock.






	 	 	For purposes of this definition, (i) the term “person” shall exclude: (A) a trustee or
other fiduciary holding securities under an employee benefit plan of the Company or




15









 






	 	 	a Subsidiary; and (B) a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of the Common Stock
(it being understood that for purposes of subsequently determining whether a Change in
Control has occurred, all references to the “Company” in the definition of Change in
Control shall be deemed to be references to the Company and/or such corporation, as
applicable); (ii) the term “group” shall exclude any group controlled by any person
identified in Clause (i)(A) above and (iii) the term “control” shall mean the
possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of voting securities,
by contract, or otherwise, and the terms “controlling” and “controlled” have meanings
correlative thereto.






	10.2	 	Certain Rules. The following rules shall apply to the determination of a Change in
Control.






	 	(a)	 	Except as otherwise determined by the Committee, any spin-off of a
division or subsidiary of the Company to its stockholders will not constitute a
Change in Control of the Company.
	 
	 	(b)	 	Any event listed in Section 10.1 that the Committee elects to not treat
as a Change in Control of the Company prior to the occurrence of a Change in
Control, shall not constitute a Change in Control.
	 
	 	(c)	 	Upon a determination by the Committee in its discretion, any other
event substantially similar to an event described in Section 10.1 shall be a Change
in Control .






	10.3	 	Discretionary Treatment; Default Provisions. The Committee shall determine the
treatment of outstanding Awards prior to a Change in Control, except that to the extent the
Committee takes no action (and except as otherwise expressly provided for in an Agreement):






	 	(a)	 	all Options and Stock Appreciation Rights then outstanding shall become
immediately and fully exercisable, notwithstanding any provision therein for the
exercise in installments;
	 
	 	(b)	 	all restrictions and conditions of all Restricted Stock then
outstanding shall be deemed satisfied as of the date of the Change in Control; and
	 
	 	(c)	 	all Restricted Stock Units, Dividend Equivalents and any Award subject
to performance goals shall become vested and deemed earned or satisfied in full,
notwithstanding that the applicable performance cycle, retention cycle or
restriction conditions shall not have been completed or met, and shall be paid or
otherwise settled within 30 days of the Change in Control (except to the extent
that payment must be made pursuant to its original schedule in order to comply with
Code Section 409A).










16









 












	10.4	 	Potential Treatment. Without limitation, except as expressly provided for in an
Agreement, the Committee may elect prior to a Change in Control, that in the event of a
Change in Control, that all or any portion of an Award, with no requirement of uniform
treatment:






	 	(a)	 	Shall be assumed or an equivalent award be substituted by the successor
corporation in any Change in Control transaction, or a parent or subsidiary of such
successor corporation;
	 
	 	(b)	 	Shall be cancelled or forfeited and settled in cash;
	 
	 	(c)	 	To the extent unvested or unexercisable, shall be cancelled or
forfeited without settlement, payment or other consideration; or
	 
	 	(d)	 	With respect to any unexercised portion of an Option or Stock
Appreciation Right, shall be cancelled following the time permitted to exercise
said Award.






	10.5	 	Following a Change in Control, no action shall be taken under the Plan that will cause any
Award that has previously been determined to be (or is determined to be) subject to Code
Section 409A to fail to comply in any respect with Code Section 409A without the written
consent of the Participant.





ARTICLE 11 SECURITIES LAW MATTERS





	11.1	 	Investment Intent Representation: Restrictive Legend. Where an investment intent
representation or restrictive legend is deemed necessary to comply with the Securities Act of
1933, as amended, the Committee may require a written representation to that effect by the
Participant, or may require that such legend be affixed to certificates for Shares at the
time the Option is exercised or an Award is granted.
	 
	11.2	 	Company’s right to postpone exercise or settlement. If based upon the opinion of
counsel to the Company, the Committee determines that the exercise or settlement of any
Awards would violate any applicable provision of (i) state or federal securities law, (ii)
the listing requirements of any securities exchange registered under the Exchange Act on
which are listed any of the Company’s equity securities, (iii) the listing requirements of
the NASDAQ Global Market if any of the Company’s equity securities are listed thereon, or
(iv) the listing requirements of The NASDAQ Capital Market if any of the Company’s equity
securities are listed thereon, then the Committee may postpone any such exercise or
settlement; provided, however, that the Company shall use its best efforts to cause such
exercise to comply with all such provisions at the earliest practicable date; and provided
further, that the Committee’s authority under this Section 11.2 shall expire from and after
the date of any Change in Control.
	 
	11.3	 	Rule 16b-3 Compliance. With respect to Insiders, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the




17









 






	 	 	Board or the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Board or the Committee.





ARTICLE 12 MISCELLANEOUS





	12.1	 	Funding. Benefits payable under the Plan to any person shall be paid directly by
the Company. The Company shall not be required to fund, or otherwise segregate assets to be
used for payment of, benefits under the Plan.
	 
	12.2	 	No Employment Rights. Neither the establishment of the Plan, nor the granting of
any rights under the Plan, shall be construed to (a) give any Participant the right to remain
employed by the Company, any Subsidiary or any of their affiliates or to any benefits not
specifically provided by the Plan, or (b) in any manner modify the right of the Company, any
Subsidiary or any of their affiliates to modify, amend or terminate any of its employee
benefit plans.
	 
	12.3	 	Stockholder Rights. A Participant shall not, by reason of any right granted
hereunder, have any right as a stockholder of the Company with respect to the Shares which
may be deliverable upon exercise of such Option until such Shares have been delivered to him
or her.
	 
	12.4	 	Nature of Payments. Any and all grants or deliveries of Shares hereunder shall
constitute special incentive payments to the Participant and shall not be taken into account
in computing the amount of salary or compensation of the Participant for the purposes of
determining any pension, retirement, death or other benefits under (a) any pension,
retirement, profit-sharing, bonus, life insurance or other employee benefit plan of the
Company, any Subsidiary or any of their affiliates, or (b) any agreement between the Company,
any Subsidiary or any of their affiliates, on the one hand, and the Participant, on the other
hand, except as such plan or agreement shall otherwise expressly provide.
	 
	12.5	 	Non-Uniform Determinations. The Committee’s determinations under the Plan need not
be uniform and may be made by the Committee selectively among persons who receive, or are
eligible to receive, grants under the Plan (whether or not such persons are similarly
situated). Without limiting the generality of the foregoing, the Committee shall be
entitled, among other things, to make non-uniform and selective determinations, and to enter
into non-uniform and selective Agreements as to (a) the persons to receive grants under the
Plan, (b) the terms and provisions of Awards under the Plan, and (c) the treatment, under
Section 3.1, of leaves of absence.
	 
	12.6	 	Adjustments. In the event of any corporate event or transaction (including, but
not limited to, a change in the Shares of the Company or the capitalization of the Company)
such as a merger, consolidation, reorganization, recapitalization, separation, partial or
complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off,
or other distribution of stock or property of the Company, combination of Shares, exchange of
Shares, dividend in kind, or other like change in capital structure, number of outstanding
Shares or distribution (other than normal




18









 






	 	 	cash dividends) to stockholders of the Company, or any similar corporate event or
transaction, the Committee, in order to prevent dilution or enlargement of Participants’
rights under this Plan, shall substitute or adjust, as applicable, the number and kind
of Shares that may be issued under this Plan (Section 2.2(a)) or under particular forms
of Awards (Section 2.2(b)), the number and kind of Shares subject to outstanding Awards,
the Option Price or Exercise Price applicable to outstanding Awards, the annual Award
limits (Sections 5.4 and 6.5), and other value determinations applicable to outstanding
Awards. The Committee, in its sole discretion, may also make appropriate adjustments in
the terms of any Awards under this Plan to reflect such changes or distributions,
including modifications of performance goals and changes in the length of performance
periods, if any. The determination of the Committee as to the foregoing adjustments, if
any, shall be at the discretion of the Committee and shall be conclusive and binding on
Participants under this Plan.






	12.7	 	Conversion. Notwithstanding anything else herein to the contrary, without
affecting the number of Shares reserved or available hereunder, the Committee may authorize
the issuance or assumption of benefits under this Plan in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such terms and
conditions as it may deem appropriate (including, but not limited to, a conversion of equity
awards into Awards under this Plan), subject to compliance with the rules under Code Sections
409A, 422 and 424, as and where applicable.
	 
	12.8	 	Amendment of the Plan. The Committee may amend the Plan and any Agreement in its
sole discretion; provided, however, no modifications shall be made which would materially
impair the rights of any Award theretofore granted without the Participant’s consent; and
provided further, the Committee may not, without further approval of the stockholders of the
Company, either:






	 	(a)	 	materially increase the number of Shares reserved for issuance under
the Plan (except as provided for in Section 12.6);
	 
	 	(b)	 	materially modify the requirements as to eligibility for participation
in the Plan; or
	 
	 	(c)	 	extend the date of termination of the Plan.






	12.9	 	Termination of the Plan. The Plan shall terminate on the tenth (10th) anniversary
of the Effective Date or at such earlier time as the Committee may determine. Any
termination, whether in whole or in part, shall not affect any rights then outstanding under
the Plan.
	 
	12.10	 	Controlling Law. The Plan shall be governed, construed and administered in
accordance with the laws of the State of Delaware, except its laws with respect to choice of
law.
	 
	12.11	 	Action by the Company. Any action required by the Company under the Plan shall be
by resolution of the Committee.




19









 






	12.12	 	Non-transferability. Each Award granted hereunder shall by its terms not be
assignable or transferable other than by will or the laws of descent and distribution.
During the life of the Participant, all rights granted to the Participant under the Plan or
under any Agreement shall be exercisable only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative.
	 
	12.13	 	No Lien or Security Interest. No Award, and no right under any such Award, may be
pledged, attached or otherwise encumbered other than in favor of the Company, and any
purported pledge, attachment, or encumbrance thereof other than in favor of the Company shall
be void and unenforceable against the Company or any Subsidiary.
	 
	12.14	 	No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between
the Company or any Subsidiary and a Participant or any other person. To the extent that any
person acquires a right to receive payments from the Company or any Subsidiary pursuant to an
Award, such right shall be no greater than the right of any unsecured general creditor of the
Company or any Subsidiary.
	 
	12.15	 	No Fractional Shares. No fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and the Committee shall determine whether cash, other securities or
other property shall be paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.
	 
	12.16	 	Settlement of Awards. The obligation to make payments and distributions with
respect to Awards of Restricted Stock Units and Stock Appreciation Rights may be satisfied
through cash payments, the delivery of Shares, or any combination thereof as the Committee
shall determine in its sole discretion. Satisfaction of any obligations to make payments or
distributions under an Award, which is sometimes referred to as “settlement” of the Award,
may be subject to such conditions, restrictions and contingencies as the Committee shall
determine. Each Subsidiary shall be liable for payment of cash due under the Plan with
respect to any Participant to the extent that such benefits are attributable to the services
rendered for that Subsidiary by the Participant. Any disputes relating to liability of a
Subsidiary for cash payments shall be resolved by the Committee.




20









 











APPENDIX A




Performance Measures





	(a)	 	Net earnings or net income (before or after taxes);
	 
	(b)	 	Earnings per share;
	 
	(c)	 	Net sales or revenue growth;
	 
	(d)	 	Net operating profit;
	 
	(e)	 	Return measures (including, but not limited to, return
on assets, capital, invested capital, equity, sales, or revenue);
	 
	(f)	 	Cash flow (including, but not limited to, operating
cash flow, free cash flow, cash flow return on equity, and cash flow return
on investment);
	 
	(g)	 	Earnings before or after taxes, interest, depreciation,
and/or amortization;
	 
	(h)	 	Gross or operating margins;
	 
	(i)	 	Productivity ratios;
	 
	(j)	 	Share price (including, but not limited to, growth
measures and total stockholder return);
	 
	(k)	 	Expense targets;
	 
	(l)	 	Margins;
	 
	(m)	 	Operating efficiency;
	 
	(n)	 	Market share;
	 
	(o)	 	Customer satisfaction;
	 
	(p)	 	Working capital targets and change in working capital;
and
	 
	(q)	 	Stockholder value added which is equal to (i) the net operating profit after
tax minus (ii) the sum of capital multiplied by the cost of capital.






21