J. C. Penney Company, Inc. 2005 Equity Compensation Plan


    Exhibit
      10.3


    


    


    


    


    


    


    


    


    


    J.
      C. Penney Company, Inc. 

    2005
      Equity Compensation Plan 

    


    


    


    


    As
      Amended to December 31, 2007

     

     

     

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    


    J.
      C. PENNEY COMPANY, INC. 

    2005
      EQUITY COMPENSATION PLAN 

    


    INTRODUCTION 

    


    1.     Purposes
      of Plan.
      The
      general purposes of this 2005 Equity Compensation Plan (“Plan”) are to provide
      associates and non-associate directors of J. C. Penney Company, Inc., its
      subsidiaries and affiliates, or any unit thereof (together referred to herein
      as
“Company”), an opportunity to increase their proprietary interests as
      stockholders in order to motivate them to continue and increase their efforts
      on
      the Company’s behalf to sustain its progress, growth, and profitability, and to
      assist the Company in continuing to attract and retain associates and
      non-associate directors capable of assuring the Company’s future success. Terms
      and conditions of awards shall be governed by the terms of this Plan along
      with
      the Plan Determinations (“Determinations”) as approved by the Human Resource and
      Compensation Committee of the Company, and the Notice of Grant of the particular
      award. This Plan permits the grant of stock options, stock appreciation rights,
      restricted stock and stock units, stock, and cash incentive awards, each as
      will
      be subject to such conditions based upon continued employment, passage of time
      or satisfaction of performance criteria as shall be specified pursuant to the
      Plan or set by the Committee (as defined in Section 5 below). 

    


    2.     Shares
      Subject to Plan. 

         
        

    (a) Reserved
      Shares.
      The
      maximum number of shares of J. C. Penney Company, Inc. Common Stock of 50¢ par
      value (“Common Stock”) upon which options to purchase shares of Common Stock
      (“Stock Options”), stock appreciation rights (“SARs”), or awards of Common Stock
      or share units (“Stock Awards”), (“Stock Options,” “SARs,” and “Stock Awards”
herein collectively called “Equity Awards”), may be issued under the Plan is
      14,400,000 shares, plus up to 2,800,000 shares which on May 31,
      2005 are reserved but not then subject to awards under the Company’s 2001 Equity
      Compensation Plan (referred to herein as the “Prior Plan”). In no event may more
      than: (i) 30% of the shares reserved for issuance under the Plan be issued
      as Stock Awards over the term of the Plan; (ii) 5,000,000 shares of
      Common Stock be issued pursuant to incentive stock options (“ISOs”) within the
      meaning of Section 422 of the Internal Revenue Code of 1986, and any
      regulations promulgated thereunder, or any similar successor statute or
      regulation, as in effect from time to time (“Code”) over the term of the Plan;
      or (iii) 1,000,000 shares of Common Stock be issued as Stock Awards
      that are intended to qualify as performance-based compensation for purposes
      of
      Section 162(m) of the Code in any one year for any one Associate
      Participant. Notwithstanding anything contained herein to the contrary, the
      number of Equity Awards, singly (as defined in Section 4 below) or in
      combination, granted to any associate or non-associate director in any two
      consecutive fiscal years shall not in the aggregate exceed 3,000,000.


         
        

    (b) Share
      Accounting.
      Common
      Stock issuable under the Plan may be, in whole or in part, as determined by
      the
      J. C. Penney Company, Inc. Board of Directors (“Board of Directors” or “Board”),
      authorized but unissued shares, reacquired or treasury shares, or shares
      available from prior plans. If any Stock Option or SAR granted under the Plan
      (or any prior Plan) expires or terminates for any reason without having been
      exercised in full, or if any Stock Award is not earned in full, the unpurchased
      or unearned shares will again be available for use under the Plan. Also, the
      pool of shares available under the Plan will not be reduced if any Equity Award
      is paid in cash rather than shares of Common Stock. “Common Stock” includes any
      security issued in substitution, exchange, or in lieu thereof. Also, any option
      to purchase securities assumed in an acquisition of another company will not
      be
      included in the pool of shares available under the Plan. 

    


    3.  Cash
      Incentive Awards.
      The
      Committee may grant cash incentive awards (“Cash Incentive Awards”) to Associate
      Participants on such terms and conditions as the Committee may determine, but
      in
      all instances in compliance with Section 409A of the Code or any exemptions
      thereto. Cash Incentive Awards are performance-based (see Section 9 below),
      annual or long-term awards that are expressed in U.S. currency. Cash
      Incentive Awards to any individual associate may not exceed the product
      of $1,500,000 and the number of years in the Performance Cycle (as defined
      in
      Section 9 below). (Equity Awards and Cash Incentive Awards are herein
      collectively referred to as “Awards”.) 

    


    4.     Eligibility
      and Bases of Participation.
      Under
      the Plan: (i) Awards may be made to such associates, including officers and
      associate directors of the Company, as the Committee (as hereinafter defined)
      may determine (“Associate Participants”); and (ii) Equity Awards will be
      made pursuant to Section 13 below, to individuals who serve as
      non-associate directors of the Company (“Non-Associate Director Participants”
and,


    
      
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    together
      with Associate Participants, “Participants”). In determining the Associate
      Participants who are to receive Awards and the number of shares covered by
      any
      Award, the Committee may take into account the nature of the services rendered
      by the Associate Participants, their contributions to the Company’s success,
      their position levels and salaries, and such other factors as the Committee,
      in
      its discretion, may deem relevant in light of the purposes of the Plan.


    


    5.     Administration
      of Plan.
      The
      Plan will be administered by, or under the direction of, a committee
      (“Committee”) of the Board of Directors constituted in such a manner as to
      comply at all times with Rule 16b-3 or any successor rule
      (“Rule 16b-3”) promulgated by the Securities and Exchange Commission
      (“SEC”) under the Securities Exchange Act of 1934, as in effect from time to
      time (“Exchange Act”) and Section 162(m) of the Code. The Committee shall
      administer the Plan so as to comply at all times with the Exchange Act and
      the
      Code, and shall otherwise have plenary authority to interpret the Plan and
      to
      make all determinations specified in or permitted by the Plan or deemed
      necessary or desirable for its administration or for the conduct of the
      Committee’s business. All interpretations and determinations of the Committee
      may be made on an individual or group basis, and shall be final, conclusive,
      and
      binding on all interested parties. The Committee may delegate, to the fullest
      extent permitted by law, its responsibilities under the Plan to persons other
      than its members, subject to such terms and conditions as it may determine,
      other than: (i) the making of grants and awards under the Plan to
      individuals subject to Section 16 of the Exchange Act; and
      (ii) regarding performance-based Awards intended to be qualified under
      Section 162(m) of the Code. With respect to Participants subject to
      Section 16 of the Exchange Act, transactions under the Plan are intended to
      comply with all applicable conditions of Rule 16b-3. To the extent any
      provision of the Plan or any action by the Committee or its delagatee fails
      to
      so comply, such provision or action will, without further action by any person,
      be deemed to be automatically amended to the extent necessary to effect
      compliance with Rule 16b-3, provided that if such provision or action
      cannot be amended to effect such compliance, such provision or action will
      be
      deemed null and void, to the extent permitted by law and deemed advisable by
      the
      relevant authority. Each Award to a Participant subject to Section 16 of
      the Exchange Act under this Plan will be deemed issued subject to the foregoing
      qualification. Further,
      except as otherwise specifically provided in the Notice of Grant, Awards under
      this Plan are intended to be exempt from Section 409A of the Code and the Plan
      shall be interpreted accordingly. 


    


    ASSOCIATE
      PARTICIPANT AWARDS 

    


    
      	6.  	
              Stock
                Options. 

            


    

    


         
       (a) Grants.
      The
      Committee may grant Stock Options to Associate Participants on such terms and
      conditions as the Committee may determine. These Stock Options may be ISOs
      within the meaning of Section 422 or any successor provision of the Code,
      or non-qualified stock options within the meaning of the Code (“NSOs”), or a
      combination of both; provided, however, that an Associate Participant must
      be an
      associate of the Company or its subsidiaries in order to receive an ISO grant.
      In no event, however, may an Associate Participant be given an ISO grant which
      first becomes exercisable in any calendar year which, when added to all other
      ISO grants held by such Associate Participant that first become exercisable
      in
      that calendar year, causes the aggregate dollar amount of such ISO grants to
      exceed $100,000. The date of grant of each Stock Option will be the date
      specified by the Committee; provided, however, that such date of grant may
      not
      be prior to the date of such action by the Committee. 

    


          
      (b) Payment
      Methods.
      The
      option price (and, as provided in Section 15 of the Plan, any applicable
      taxes thereon) of the shares as to which a Stock Option is exercised will be
      paid in such manner as the Committee may determine in accordance with the Plan’s
      purposes, including: (i) in cash; (ii) in
      shares of Common Stock that have been held for a period of at least six months
      and a day; or (iii) in any combination of (i) or (ii) above. Each
      Stock Option will have such terms and conditions for its exercise, including
      the
      manner and effective date of such exercise, as the Committee may determine,
      except as otherwise specifically provided herein. However, a Stock Option grant
      or its equivalent may not vest in whole in less than three years from the date
      of grant (although individual options may vest in equal annual installments
      over
      a period of not less than three years) except in certain limited situations
      such
      as for new hires, retirement and similar situations warranting a shorter or
      no
      vesting period, as may be determined by the Committee, and, if the grant is
      performance-based, the restriction must be for at least one year. 

    


          
      (c)     Option
      Price/Repricing.
      The
      option price per share of Common Stock purchasable under a Stock Option will
      be
      determined by the Committee (or, for Associate Participants not subject to
      Section 16 of the


    
      
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    Exchange
      Act, its delagatee, pursuant to Section 5 above) at the time of grant;
      provided, however, no such price may be less than 100% of the “fair market
      value” of the shares of Common Stock covered by the grant on such date. Also, in
      no event may any Stock Option exercise price be reset from its original grant
      price. 

    


          "Fair
      market value” of the Common Stock on any date will be the closing price on such
      date as reported in the composite transaction table covering transactions of
      New
      York Stock Exchange listed securities, or if such Exchange is closed, or if
      the
      Common Stock does not trade on such date, the closing price reported in the
      composite transaction table on the last trading date immediately preceding
      such
      date, or such other amount as the Committee may ascertain reasonably to
      represent such fair market value; provided however, that such determination
      shall be in accordance with the requirements of Treasury Regulation section
      1.409A-1(b)(5)(iv), or its successor.

    


          
      (d) Exercise
      of Stock Options.
      Each
      Stock Option will become exercisable upon such date as the Committee may
      determine, or as provided in Sections 10 or 11 of the Plan, and may be
      exercised thereafter at any time during its term, as to any or all full shares
      which have become purchasable under the provisions of the Stock Option. The
      term
      of each Stock Option may not exceed: (i) 10 years in the case of an
      ISO or such other term as may be required for the Stock Option to constitute
      an
      ISO under the Code; and (ii) in the case of a NSO, 10 years or such
      shorter period of time as determined by the Committee on the date of grant
      (“exercise period”), in each case measured from the date of its grant. Except as
      provided in Section 11 or 14 of the Plan, a Stock Option may be exercised
      only by the Associate Participant, and only if the Associate Participant is
      then
      an associate of the Company, or of a subsidiary or affiliate of the Company.
      

    


    7.     Stock
      Awards.
      The
      Committee may grant a Stock Award (including any associated dividend equivalent
      right or share unit equal in value to such Stock Award) to Associate
      Participants on such terms and conditions as the Committee may determine. The
      Committee may determine the types of Stock Awards made, the number of shares,
      share units, or dividend equivalent rights covered by such awards, and any
      other
      terms and conditions relating to the Stock Awards as it deems appropriate,
      including any vesting conditions necessary to comply with the laws of the State
      of Delaware. However, a Stock Award or its equivalent that is restricted may
      not
      vest in whole in less than three years from the date of grant (although
      individual Stock Award shares may vest in equal annual installments over a
      period of not less than three years) except in certain limited situations such
      as for new hires, retirement and similar situations warranting a shorter or
      no
      vesting period, as may be determined by the Committee. 

      

        
      Any dividend equivalent paid as part of a restricted stock unit award will
      be
      reinvested in additional restricted stock units that will accumulate over the
      vesting period of the underlying restricted stock units and vest, if ever,
      concurrently with the underlying restricted stock units. Subject to Section
      22,
      payment of a restricted stock unit award and any dividend equivalents thereto
      will be made no later than 2 1⁄2 months following the end of the Company’s fiscal
      year in which the restricted stock unit award vests. 

    


    8.     Stock
      Appreciation Rights.
      The
      Committee may grant SARs covering shares of Common Stock to Associate
      Participants on such terms and conditions as the Committee may determine. The
      Committee may cancel or place limits on the term of or amount payable by the
      Company upon exercise of any SAR at any time prior to exercise. SARs may be
      granted independently or in tandem with any other
      Award under the Plan. Tandem SARs may be granted concurrently with or subsequent
      to the grant of the related Award. An SAR will entitle an Associate Participant
      to receive an amount no greater than the excess of the fair market value of
      a
      share of Common Stock on the date of exercise over the SAR exercise price,
      multiplied by the number of shares of Common Stock with respect to which the
      SAR
      will have been exercised. Such payment may be made by the Company only in shares
      of Common Stock. The SAR exercise price will be determined by the Committee
      at
      the time of grant; provided, however, that no such price may be less than 100%
      of the fair market value of the shares of Common Stock covered by the grant
      on
      such date. Upon exercise of a tandem SAR, in whole or in part, the related
      Award
      will be canceled or forfeited automatically to the extent of the number of
      shares covered by such exercise and, conversely, if a tandem Award is exercised,
      forfeited, or terminated, as the case may be, for any reason, in whole or in
      part, the related SAR will be canceled automatically to the extent of the number
      of shares covered by such exercise, forfeiture, or termination. 

    


    9.     Performance-Based
      Awards.
      Any
      Award granted pursuant to the Plan may be in the form of a performance-based
      award made through the application of Performance Goals and Performance Cycles,
      which are defined as follows: 


    
      
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        (a) “Performance
      Cycle”
      means
      the period selected by the Committee during which the performance of the Company
      or any Associate Participant is measured for the purpose of determining the
      extent to which an Award subject to Performance Goals has been earned. A
      Performance Cycle may not be less than one year. 

    


         
       (b) “Performance
      Goals”
      means
      the objectives for the Company or any Associate Participant that may be
      established by the Committee for a Performance Cycle with respect to any
      Performance-Based Award contingently awarded under the Plan. The Performance
      Goals for Awards that are intended to constitute “performance-based”
compensation within the meaning of Section 162(m) of the Code shall be
      based on one or more of the following criteria: earnings per share, total
      stockholder return, operating income, net income, cash flow, gross profit,
      gross
      profit return on investment, return on equity, return on capital, sales,
      revenue, gross margin, and gross margin return on investment. 

    


         
        (c) Vesting.
      A
      Performance-Based Award, other than a restricted Equity Award, may not vest,
      or
      be deemed to be earned, in whole in less than three years from the date of
      grant
      (though portions of an individual award may vest or be deemed to be earned
      in
      equal annual installments over a period of not less than three years). A
      Performance-Based Award to be paid out as a restricted Equity Award may not
      have
      a vesting period of less than one year. Subject to Section 22, payment of any
      portion of a Cash Incentive Award and all earnings will be made no later than
      2
1⁄2 months following the end of the Company’s fiscal year.

    


    10.     Change
      in Control.
      For
      purposes of this Section 10, all references to “Company” are to
      J. C. Penney Company, Inc. Upon a Change in Control of the Company,
      each Associate Participant will have the right to exercise any and all Stock
      Options and SARs held by the Associate Participant, and all Stock Awards will
      immediately vest, be deemed to have been earned and any Performance Goal for
      the
      then applicable Performance Cycle met, on such terms and conditions as may
      be
      determined by the Committee at the time of the grant or award provided, further,
      that any vested Stock Awards that are restricted stock units or vested Cash
      Incentive Awards, shall be distributed no later than the deadline for
      distribution specified in Sections 7 and 9 above. The Committee may exercise
      discretion to terminate the Plan upon a Change in Control event and distribute
      amounts within 12 months of the Change of Control event. 

         

    For
      purposes of the Plan, a “Change in Control” is defined by Section 409A of
      the Code, and any regulations and guidance promulgated under this Section as
      set
      forth in the Committee’s determinations for the applicable grants under the
      Plan. 

    


    11.     Changes
      in Employment Status, Death.
      In the
      event of an Associate Participant’s termination of employment, layoff,
      incapacity or death (regardless of whether the deceased was employed at death),
      the Committee may determine the terms and conditions applicable to any Award
      previously granted to the Associate Participant and not then exercised or earned
      in full, as the case may be, including, without limitation: (i) the
      duration of any exercise period following such event (which may not exceed
      the original exercise period for a Stock Option or SAR, or if shorter, the
      tenth
      anniversary of the original date of grant); (ii) any necessary or
      appropriate authorization to the Associate Participant’s legatee, distributee,
      guardian, legal representative, or other third party, as the Committee may
      determine; or (iii) the circumstances under which all or part of such Stock
      Options and SARs may be terminated and any unearned Stock Awards forfeited
      or
      Cash Incentive Awards paid. All determinations by the Committee with respect
      to
      the foregoing shall be final, conclusive, and binding on all interested parties.
      

    


    12.     Right
      to Continued Employment.
      Nothing in the Plan shall confer on an Associate Participant any right to
      continue in the employ of the Company or any of its subsidiaries or affiliates
      or affect in any way the right of the Company or any of its subsidiaries or
      affiliates to terminate such Associate Participant’s employment without prior
      notice at any time for any reason or for no reason. 

    


    NON-ASSOCIATE
      DIRECTOR PARTICIPANT AWARDS 

    


    13.     Annual
      Awards 

          

    (a) General
      Provisions.
      Subject to the terms and conditions of this section, each person who is serving
      as a non-associate director of the Company on the date of grant of an Equity
      Award (including any former Associate Participant) (“Non-Associate Director
      Participant”) will automatically be awarded an Annual Equity Award in an amount
      which the Board of Directors determines, based upon the advice of outside
      consultants, to be competitive by industry standards, and pursuant to such
      terms, conditions, and restrictions as determined by the Board
      of


    
      
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    Directors
      (the “Annual Equity Award”). These Annual Equity Awards will begin in 2006
      (except for any pro
      rata award
      for a newly elected director which may occur at any time on or after the
      effective date of the Plan) and continue through May 31, 2010, unless
      earlier terminated by the Board of Directors. The date of each Annual Equity
      Award will be the third full trading date following the later of: (i) the
      date on which the Annual Meeting of the Company’s stockholders, or any
      adjournment thereof, is held (“Annual Meeting”); or (ii) the date on which
      the Company’s earnings for the fiscal quarter immediately preceding such Annual
      Meeting date are released to the public. Also, Equity Awards in a pro
      rata amount
      of the Annual Equity Award for that year, based on the date of election, will
      automatically be granted to each individual (other than a former Company
      Associate Participant) who is first elected a Non-Associate Director after
      May 31, 2005, on the third full trading date following the effective date
      of such election. 

    


       (b) Right
      to Tender, Exchange.
      A
      Non-Associate Director Participant (including for purposes of this paragraph
      a
      Non-Associate Director Participant’s guardian or legal representative) will
      have, with respect to any shares covered by an Annual Equity Award and any
      shares already received pursuant to an Annual Equity Award under this Plan,
      the
      right to: (i) tender or exchange any such shares in the event of any tender
      offer or exchange within the meaning of Section 14(d) of the Exchange Act
      or any plan of merger approved by the Board; and (ii) sell or exercise any
      option, right, warrant, or similar property derived from or attributable to
      such
      shares after such option, right, warrant, or similar property becomes
      transferable or exercisable. If any shares covered by an Annual Equity Award
      are
      tendered or exchanged or any option, right, warrant, or similar property
      attributable thereto is sold, exercised, or redeemed for value, the cash and/or
      property received will be delivered to the Company (or its successor) and held
      subject to the restrictions of the Plan as if it were the stock itself.


         
       

    (c) Non-Transferability.
      A
      Non-Associate Director Participant may not transfer, sell, assign, pledge,
      or
      otherwise encumber or dispose of any shares of Common Stock received in
      connection with an Annual Equity Award prior to the time his or her service
      as a
      director expires or is terminated, other than
      by
      will or the laws of descent and distribution or by such other means as the
      Committee, in its discretion, may approve from time to time and any attempt
      to
      do so will be void. 

         
      

    (d) Non-Associate
      Director Participant’s Termination.
      If a
      Non-Associate Director Participant’s service as a director of the Company
      terminates on account of any act of: (i) fraud or intentional
      misrepresentation; or (ii) embezzlement, misappropriation, or conversion of
      assets or opportunities of the Company or any subsidiary of the Company, such
      termination will be considered a “Non-Qualifying Termination.” All other
      terminations, including termination by reason of death, will be considered
      “Qualifying Terminations”. In the event of a Non-Qualifying Termination, all
      outstanding restricted Awards made pursuant to this Section will be forfeited
      or
      canceled, as the case may be. 

         
      

    (e) Stock
      In Lieu of Cash.
      A
      Non-Associate Director Participant may also elect to receive Common Stock in
      lieu of the cash compensation payable for services rendered as a director,
      so
      long as such election is made in accordance with Section 16 of the Exchange
      Act and on such other terms and conditions as may be determined from time to
      time by the Board of Directors. Any such Common Stock issued to a Non-Associate
      Director Participant in lieu of cash compensation will automatically vest
      (become non-forfeitable and freely transferable) in the Non-Associate Director
      Participant on the date of issuance. 

    


    GENERAL 

    


    14.     Transferability.
      No
      unearned Award, or any portion thereof, granted under the Plan may be assigned
      or transferred other than by will or the laws of descent and distribution or
      by
      such other means as the Committee, in its discretion, may approve from time
      to
      time and any attempt to do so will be void. No Stock Option or SAR will be
      exercisable during the Associate Participant’s lifetime except by the Associate
      Participant or the Associate Participant’s guardian or legal representative, or
      other third party, as the Committee may determine. 

    


    15.     Taxes.
      The
      Company has the right to deduct from any cash payment made under the Plan,
      or
      otherwise, to any Associate Participant, including an Associate Participant
      subject to Section 16 of the Exchange Act, any federal, state, or local
      taxes of any kind required by law to be withheld by it (“Withholding
      Obligation”) with respect to such payment. The Withholding Obligation will be
      limited to the minimum statutory rate. The Company’s obligation to deliver
      shares of Common Stock pursuant to any Award under the Plan is conditioned
      on
      the payment by the Associate Participant to the Company of any Withholding
      Obligation arising therefrom. The Company may withhold, in satisfaction of
      all
      or a portion of such Withholding Obligation referred to in the preceding
      sentence, that


    
      
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    number
      of shares of Common Stock having an aggregate fair market value sufficient
      to
      satisfy the amount of such obligation. 

    


    16.    
      Changes
      in Capitalization and Similar Changes.
      In the
      event of any change in the number of shares of Common Stock outstanding, or
      the
      assumption and conversion of outstanding Awards, by reason of a stock dividend,
      stock split, acquisition, recapitalization, reclassification, merger,
      consolidation, combination or exchange of shares, spin-off, distribution to
      holders of Common Stock (other than normal cash dividends), an equitable and
      proportionate adjustment shall be made to: (1) the option price under each
      unexercised Stock Option; (2) the exercise price under each unexercised SAR;
      and
      (3) the number and class of shares which may be issued on exercise of Stock
      Options and SARs granted and for Stock Awards, including restricted stock units,
      and any remaining shares reserved under the Plan. Any such adjustment with
      respect to each Stock Option or SAR shall be consistent with the requirements
      applicable to exempt stock rights under Treasury Regulations section
      1.409A-1(b)(5) or its successor. Any adjustment with respect to ISOs shall
      also
      conform to the requirements of Section 422 of the Code. 

    


    17.     Stockholder
      Rights.
      A
      Participant (including for purposes of this Section, a Participant’s legatee,
      distributee, guardian, legal representative, or other third party, as the
      Committee may determine) will have no stockholder rights with respect to any
      shares subject to an Award until such shares are issued to such Participant.
      Shares will be deemed issued on the date on which they are registered
      in the Participant’s (as this term is defined in the preceding sentence) name on
      the Company stock records. 

    


    18.     Effective
      Date.
      The
      Plan will become effective on June 1, 2005, subject to approval by the
      affirmative vote of the holders of a majority of the outstanding stock of the
      Company having general voting power at the Company’s 2005 Annual Meeting of
      Stockholders. 

    


    19.     Termination
      and Amendment.
      No
      Award may be made under the Plan after May 31, 2010. The Board of Directors
      may terminate the Plan or make such amendments as it deems advisable, including,
      but not limited to, any amendments to conform to or reflect any change in any
      law, regulation, or ruling applicable to an Award or the Plan, provided,
      however, that the Board of Directors may not, without approval by affirmative
      vote of the holders of a majority of the outstanding stock of the Company having
      general voting power: (i) take any action which will increase the aggregate
      number of shares of Common Stock which may be issued under the Plan (except
      for
      adjustments pursuant to Sections 2 and 16 of the Plan); (ii) decrease
      the grant or exercise price of any Award to less than fair market value of
      its
      underlying Common Stock on the date of grant; (iii) change the individual
      award limits found in Sections 2 and 3 or any other maximum limit included
      in the Plan to comply with requirements for performance-based compensation
      under
      Section 162(m) of the Code; (iv) change the separate limit for ISOs
      set forth in Section 2; (v) change the class of Associate Participants
      eligible for Awards under Section 4; or (vi) change the performance
      criteria applicable to Performance-Based Awards under Section 9. Except as
      otherwise provided in or permitted by the Plan or by the terms, if any, of
      an
      Award under the Plan, no termination or amendment of the Plan or change in
      the
      terms of an outstanding Award may adversely affect the rights of the holder
      of
      any Award without the consent of the holder. 

    


    20.     Severability
      of Provisions.
      If any
      provision of this Plan becomes or is deemed invalid, illegal, or unenforceable
      in any jurisdiction, or if any such provision would, in the sole determination
      of the Committee, disqualify the Plan or any Award under any law deemed
      applicable by the Committee, such provision will be construed or deemed amended
      to conform to applicable law or if, in the sole determination of the Committee,
      such provision cannot be so construed or so deemed amended without materially
      altering the intent of the Plan, such provision will be stricken and the
      remainder of the Plan will remain in full force and effect. 

    


    21.     Governing
      Law.
      This
      Plan will be governed by the internal laws of the State of Delaware, regardless
      of the dictates of Delaware conflict of laws provisions. 

    


    22. Deferred
      Payments.
      Unless
      specifically provided for in the Notice of Grant, no Equity Award shall provide
      any feature for the deferral of compensation as defined by Treasury Regulation
      section 1.409A-1(b). ). Any
      deferral will be for such period and in accordance with the terms and conditions
      as the Committee may determine and must be in compliance with Code
      Section 409A. The terms and conditions applicable to such deferral and the
      terms and conditions evidencing compliance with Code Section 409A shall be
      set
      forth in the Notice of Grant. The method of payment for, and type and character
      of, any Award may not be altered by any deferral permitted under this Section
      unless specifically permitted under Code Section 409A and the Treasury
      Regulations thereunder. 


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