**Exhibit4.5**

 

**AMENDEDAND RESTATED**

**2004STOCK INCENTIVE PLANOF MAGNETEK, INC.**

**JANUARY1, 2008**

 

## **SECTION 1.         PURPOSE OF PLAN**

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The purpose of this 2004 Stock Incentive Plan ofMagnetek, Inc. (this “Plan”) is to enable Magnetek, Inc., aDelaware corporation (the “Company”), to attract, retain and motivateits officers, employees and consultants, and to further align the interests ofsuch persons with those of the stockholders of the Company by providing for orincreasing the proprietary interest of such persons in the Company.

 

## **SECTION 2.         ADMINISTRATIONOF PLAN**

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**2.1         ****Composition of Committee****.**  Subject to Section 2.4,this Plan shall be administered by the Compensation Committee of the Board ofDirectors (the “Committee”), as appointedfrom time to time by the Board of Directors, *provided*,*however*, that (a) with respect toany Award (as defined in Section 5.1) that is intended to satisfy theconditions of Rule 16b-3 under the Securities Exchange Act of 1934, asamended (the “Exchange Act”) the term “Committee” shall refer to acommittee of two or more “non-employee directors” as determined for purposes ofapplying Exchange Act Rule 16b-3; and (b) with respect to any Awardthat is intended to qualify as “performance-based compensation” within themeaning of Section 162(m) of the Internal Revenue Code of 1986, asamended (the “Code”), the term “Committee” shall refer to a committee oftwo or more “outside directors” as determined for purposes of applying Code Section 162(m).  TheBoard of Directors shall fill vacancies on and from time to time may remove oradd members to the Committee. The Committee shall act pursuant to a majorityvote or unanimous written consent.  TheCommittee may designate the Secretary of the Company or other Company employeesto assist the Committee in the administration of this Plan, and may grantauthority to such persons to execute agreements or other documents evidencingAwards made under this Plan or other documents entered into under this Plan onbehalf of the Committee or the Company.

 

**2.2          Powers of the Committee.** Subject to the express provisions of this Plan, the Committee shall beauthorized and empowered to do all things necessary or desirable, in its solediscretion, in connection with the administration of this Plan, including,without limitation, the following:

 

(a)           to prescribe, amendand rescind rules and regulations relating to this Plan and to defineterms not otherwise defined herein; *provided* that,for purposes of this Plan (i) the term “fair market value” shallmean, as of any date, the closing price for a Share (as defined in Section 3.1)reported for that date by the New York Stock Exchange (or such other stockexchange or quotation system on which Shares are then listed or quoted) or, ifno Shares are traded on the New York Stock Exchange (or such other stockexchange or quotation system) on the date in question, then for the nextpreceding date for which Shares traded on the New York Stock Exchange (or suchother stock exchange or quotation system); and (ii) the term “Company”shall mean the Company and its subsidiaries and affiliates, unless the contextotherwise requires;

 

(b)           to determine whichpersons are Eligible Persons (as defined in Section 4), to which of suchEligible Persons, if any, Awards shall be granted hereunder and the timing ofany such Awards, and to grant Awards;

 

(c)           to determine thenumber of Shares subject to Awards and the exercise or purchase price of suchShares;

 

(d)           to establish andverify the extent of satisfaction of any performance goals applicable toAwards; to prescribe and amend the terms of the agreements or other documentsevidencing Awards made under this Plan (which need not be identical); provided,however, that the Committee shall not take any action or fail to take anyaction with respect to the operation of the Plan or any documents evidencingAwards that would cause all or part of the payment under any Award to besubject to the additional tax under Code Section 409A.

 

 

 

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(e)           to prescribe andamend the terms of the agreements or other documents evidencing Awards madeunder this Plan (which need not be identical);

 

(f)            to determinewhether, and the extent to which, adjustments are required pursuant to Section 12;

 

(g)           to interpret andconstrue this Plan, any rules and regulations under this Plan and theterms and conditions of any Award granted hereunder;****and

 

(h)           to make all otherdeterminations deemed necessary or advisable for the administration of thisPlan.

 

**2.3          Determinations of the Committee.** All decisions, determinations and interpretations by the Committeeregarding this Plan, any rules and regulations adopted hereunder and anyAward granted hereunder shall be final and binding on all Eligible Persons andParticipants.  The Committee shallconsider such factors as it deems relevant to making such decisions,determinations and interpretations including, without limitation, therecommendations or advice of any director, officer or employee of the Companyand such attorneys, consultants and accountants as it may select.

 

**2.4          Authority of the Board of Directors.** The Board of Directors, in its sole discretion, may exercise anyauthority of the Committee under this Plan in lieu of the Committee’s exercisethereof.

 

## **SECTION 3.         STOCKSUBJECT TO PLAN**

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**3.1          Aggregate Limits.** At any time, the aggregate number of shares of the Company’s CommonStock, $.01 par value (“Shares”), issued and issuable pursuant to allAwards (including all ISOs (as defined in Section 5.1(a))) granted underthis Plan shall not exceed 2,100,000, plus (a) any authorized shares notissued or subject to outstanding options under either (i) the 1999 StockIncentive Plan of Magnetek, Inc., or (ii) the 2000 Employee StockPlan of Magnetek, Inc. (collectively, the “Prior Plans”) and (b) thenumber of shares subject to options granted under either of the Prior Plans,but which shares, in either case, are not issued as a result of thecancellation, expiration or forfeiture of such options; *provided*that no more than 500,000 of such Shares may be issued pursuant to all Awardsof Incentive Bonuses, Incentive Stock and Incentive Stock Units (collectivelyreferred to herein as the “Non-Option Awards”) granted under this Plan,and *provided further* that, notwithstanding Section 3.3,the aggregate number of Shares that may be issued pursuant to the exercise ofISOs granted under this Plan shall not exceed 2,100,000.  Such limits shall be subject to adjustment asprovided in Section 12.  The Sharessubject to this Plan may be either reacquired by the Company, including Sharespurchased in the open market, or authorized but unissued Shares.

 

**3.2          Code Section 162(m) Limits.** The aggregate number of Shares subject to Options and Stock AppreciationRights granted under this Plan during any calendar year to any one individualshall not exceed 500,000.  The aggregatenumber of Shares issued or issuable under all Awards granted under this Plan,other than Options or Stock Appreciation Rights, during any calendar year toany one individual shall not exceed 100,000. Notwithstanding anything to the contrary in this Plan, the foregoinglimitations shall be subject to adjustment under Section 12 only to theextent that such adjustment will not affect the status of any Award intended toqualify as “performance based compensation” under Code Section 162(m).  The foregoing limitations shall not apply tothe extent that they are no longer required in order for compensation inconnection with grants under this Plan to be treated as “performance-basedcompensation” under Code Section 162(m).

 

**3.3          Issuance of Shares.** For purposes of Section 3.1, the aggregate number of Shares issuedunder this Plan at any time shall equal only the number of Shares actuallyissued upon exercise or settlement of an Award and shall not include Sharessubject to Awards that have been canceled, expired or forfeited or Sharessubject to Awards that have been used in payment or satisfaction of thepurchase price, exercise price or tax withholding obligation of an Award.

 

 

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## **SECTION 4.         PERSONSELIGIBLE UNDER PLAN**

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Any person who is an officer, employee or consultantof the Company as determined, in its discretion and for purposes only of thisPlan, by the Committee (an “Eligible Person”), shall be eligible to beconsidered for the grant of Awards hereunder. A “Participant” is any current or former Eligible Person to whoman Award has been made and any person (including any estate) to whom an Awardhas been assigned or transferred pursuant to Section 9.1.

 

## **SECTION 5.         PLANAWARDS**

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**5.1          Award Types.** The Committee, on behalf of the Company, is authorized under this Planto enter into certain types of arrangements with Eligible Persons and to confercertain benefits on them.  The followingarrangements or benefits are authorized under this Plan if their terms andconditions are not inconsistent with the provisions of this Plan: Options,Stock Appreciation Rights, Incentive Bonuses, Incentive Stock and IncentiveStock Units.  Such arrangements and benefitsare sometimes referred to herein as “Awards.”  The authorized types of arrangements andbenefits for which Awards may be granted are defined as follows:

 

(a)           *Options:*  An “Option” is a right granted under Section 6to purchase a number of Shares at such exercise price, at such times, and on suchother terms and conditions as are specified in the agreement or terms andconditions or other document evidencing the Award (the “Option Document”).  Options intended to qualify as “incentivestock options” as such term is defined under Code Section 422 (“ISOs”)and Options not intended to qualify as ISOs (“Nonqualified Options”) maybe granted under Section 6.

 

(b)           *StockAppreciation Rights:*  A “StockAppreciation Right” is a right granted under Section 7 to receive allor some portion of the increase in the value of the Shares on such terms andconditions as are specified in the agreement or other document evidencing theAward (the “SAR Document”).

 

(c)           *IncentiveBonus:*  An “Incentive Bonus”is a bonus opportunity awarded under Section 8 pursuant to which aParticipant may become entitled to receive an amount based on satisfaction ofsuch performance criteria as are specified in the agreement or other documentevidencing the Award (the “Incentive Bonus Document”).

 

(d)           *IncentiveStock:*  “Incentive Stock”is an award or issuance of Shares made under Section 9, the grant,issuance, retention, vesting and/or transferability of which is subject duringspecified periods of time to such conditions (including continued employment orperformance conditions) and terms as are expressed in the agreement or otherdocument evidencing the Award (the “Incentive Stock Document”).

 

(e)           *IncentiveStock Units:*  An “IncentiveStock Unit” is a right granted under the Section 10 to receive aspecified number of Shares, the issuance and vesting of which is subject tosuch conditions (including continued employment or performance conditions) andterms as are expressed in the agreement or other document evidencing the Award(the “Incentive Stock Unit Document”).

 

**5.2          Grants of Awards.** An Award may consist of one such arrangement or benefit or two or moreof them in tandem or in the alternative.

 

## **SECTION 6.         OPTIONS**

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**6.1          General.**  The Committeemay grant an Option or provide for the grant of an Option, either from time totime in the discretion of the Committee or automatically upon the occurrence ofspecified events, including, without limitation, the achievement of performancegoals, the satisfaction of an event or condition within the control of therecipient of the Award or within the control of others.

 

 

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**6.2          Option Document.*** *EachOption Document shall contain provisions regarding (a) the number ofShares that may be issued upon exercise of the Option, (b) the purchaseprice of the Shares and the means of payment for the Shares, (c) the termof the Option, (d) such terms and conditions of exercisability as may bedetermined from time to time by the Committee, (e) restrictions on thetransfer of the Option and forfeiture provisions and (f) such furtherterms and conditions, in each case not inconsistent with this Plan as may bedetermined from time to time by the Committee. Option Documents evidencing ISOs shall contain such terms and conditionsas may be necessary to qualify, to the extent determined desirable by theCommittee, with the applicable provisions of Section 422 of the Code.

 

**6.3          Option Price.** The purchase price per share of the Shares subject to each Optiongranted under this Plan shall equal or exceed 100% of the fair market value ofsuch Stock on the date the Option is granted, except that the exercise price ofan Option may be higher or lower in the case of Options granted to an employeeof a company acquired by the Company in assumption and substitution of options heldby such employee at the time such company is acquired.

 

**6.4          Option Term.*** *The “Term” of each Optiongranted under this Plan, including any ISOs, shall be 10 years from the date ofits grant, or such shorter term provided in the Option Document.

 

**6.5          Option Vesting.** Options granted under this Plan shall be exercisable at such time and insuch installments during the period prior to the expiration of the Option’sTerm as determined by the Committee; provided, however, the period of continuedemployment upon which vesting of the Shares is dependent (except in the eventof death or disability of the Participant or upon a Change of Control (asdefined in Section 13.2)) shall be not less than one year.  The Committee shall have the right to makethe timing of the ability to exercise any Option granted under this Plansubject to such performance requirements as deemed appropriate by theCommittee.  At any time after the grantof an Option the Committee may reduce or eliminate any restrictions surroundingany Participant’s right to exercise all or part of the Option.

 

**6.6          Termination of Employment.****Subject to Section 13, upon a termination ofemployment by a Participant prior to the full exercise of an Option, theunexercised portion of the Option shall be subject to such procedures as theCommittee may establish, as set forth in the Option Document.

 

**6.7          Payment of Exercise Price.** The exercise price of an Option shall be paid in the form of one of moreof the following, as the Committee shall specify, either through the terms ofthe Option Document or at the time of exercise of an Option: (a) cash orcertified or cashiers’ check, (b) shares of capital stock of the Companythat have been held by the Participant for such period of time as the Committeemay specify, (c) other property deemed acceptable by the Committee, (d) areduction in the number of Shares or other property otherwise issuable pursuantto such Option or (e) any combination of (a) through (d).

 

**6.8          No Option Repricing; No ReloadOptions.**  Without the approval of stockholders, theCompany shall not (a) reprice any Options or (b) provide for “reloadoptions.”  For purposes of this Plan, theterm “reprice” means amending, canceling or replacing Options within themeaning of Item 402(i) under Securities and Exchange CommissionRegulation S-K including by (i) reducing the exercise price ofoutstanding Options and (ii) canceling outstanding Options and grantingnew Options to the holders of canceled Options. For the purposes of this Plan, “reload options” are Optionsautomatically granted in connection with and to the extent of the exercise ofother Options.

 

## **SECTION 7.         STOCKAPPRECIATION RIGHTS**

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**7.1          General.**  The Committeemay grant a Stock Appreciation Right or provide for the grant of a StockAppreciation Right, either from time to time in the discretion of the Committeeor automatically upon the occurrence of specified events, including, withoutlimitation, the achievement of performance goals, the satisfaction of an eventor condition within the control of the recipient of the Award or within thecontrol of others.  Stock AppreciationRights may be granted either alone or in connection with the grant of anOption.

 

 

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**7.2          SAR Document.*** *Each SARDocument shall contain provisions regarding (a) the number of Shares withrespect to which the Stock Appreciation Right is related, (b) the perShare exercise price of the Shares subject to the Stock Appreciation Right, (c) theterm of the Stock Appreciation Right, (d) such terms and conditions ofexercisability as may be determined from time to time by the Committee, (e) restrictionson the transfer of the Stock Appreciation Right and forfeiture provisions and (f) suchfurther terms and conditions, in each case not inconsistent with this Plan asmay be determined from time to time by the Committee.  If granted in connection with an Option, aStock Appreciation Right shall relate to the same Shares covered by the Option(or such lesser number of Shares as the Committee may determine) and shall besubject to the same terms and conditions as the related Option.

 

**7.3         ****Stock Appreciation Rights Related toan Option****.**

 

(a)           *Exercise*. A Stock Appreciation Right granted in connection with an Option shall beexercisable at such time or times and only to the extent that the relatedOptions are exercisable, and will not be transferable except to the extent therelated Option may be transferable.

 

(b)           *Amount Payable Upon Exercise*.  Upon the exercise of a Stock AppreciationRight related to an Option, the recipient of the Award shall be entitled toreceive an amount determined by multiplying (i) the excess of the fairmarket value of a Share on the date of exercise of such Stock AppreciationRight over the per Share purchase price under the related Option, by (ii) thenumber of Shares as to which such Stock Appreciation Right is beingexercised.  Notwithstanding theforegoing, the Committee may limit in any manner the amount payable withrespect to any Stock Appreciation Right by including such a limit in the SARDocument.

 

(c)           *Effect of Exercise*.  Upon the exercise of a Stock AppreciationRight granted in connection with an Option, the Option shall be canceled to theextent of the number of Shares as to which the Stock Appreciation Right isexercised, and upon the exercise of an Option granted in connection with aStock Appreciation Right, the Stock Appreciation Right shall be canceled to theextent of the number of Shares as to which the Option is exercised orsurrendered.

 

**7.4         ****Stock Appreciation Rights Unrelatedto an Option****.**

 

(a)           *Amount Payable Upon Exercise*.  Upon exercise of a Stock Appreciation Rightunrelated to an Option, the recipient of the Award shall be entitled to receivean amount determined by multiplying (i) the excess of the fair marketvalue of a Share on the date of exercise of such Stock Appreciation Right overthe per Share exercise price of the Stock Appreciation Right, by (ii) thenumber of Shares as to which the Stock Appreciation Right is beingexercised.  Notwithstanding theforegoing, the Committee may limit in any manner the amount payable withrespect to any Stock Appreciation Right by including such a limit in the SARDocument.

 

(b)           *Exercise Price*.  The per share exercise price of a StockAppreciation right unrelated to an Option shall equal or exceed 100% of thefair market value of a Share on the date the Stock Appreciation Right isgranted, except that the exercise price of a Stock Appreciation Right may behigher or lower in the case of Stock Appreciation Rights granted to an employeeof a company acquired by the Company in assumption and substitution of stockappreciation rights held by such employee at the time such company is acquired.

 

(c)           *Term**.** *The “Term”of each Stock Appreciation Right unrelated to an Option granted under this Planshall be 10 years from the date of its grant, or such shorter term provided inthe SAR Document.

 

 

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(d)           *Vesting*. Stock Appreciation Rights unrelated to an Option granted underthis Plan shall be exercisable at such time and in such installments during theperiod prior to the expiration of the Stock Appreciation Right’s Term asdetermined by the Committee; provided, however, the period of continuedemployment upon which vesting of the Stock Appreciation Right is dependent(except in the event of death or disability of the Participant or upon a Changeof Control (as defined in Section 13.2)) shall be not less than oneyear.  The Committee shall have the rightto make the timing of the ability to exercise any Stock Appreciation Rightgranted under this Plan subject to such performance requirements as deemedappropriate by the Committee.  At anytime after the grant of a Stock Appreciation Right the Committee may reduce oreliminate any restrictions surrounding any Participant’s right to exercise allor part of the Stock Appreciation Right.

 

**7.5          Termination of Employment.****Subject to Section 13, upon a termination ofemployment by a Participant prior to the full exercise of a Stock AppreciationRight, the unexercised portion of the Stock Appreciation Right shall be subjectto such procedures as the Committee may establish, as set forth in the SARDocument.

 

**7.6          No Stock Appreciation RightRepricing.**  Without the approval of stockholders, theCompany shall not reprice any Stock Appreciation Rights.  For purposes of this Plan, the term “reprice”with respect to Stock Appreciation Rights has the same meaning as such term haswith respect to Options.

 

## **SECTION 8.         INCENTIVEBONUSES**

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**8.1          General.**  Each Award ofan Incentive Bonus will confer upon the Participant the opportunity to earn afuture payment tied to the level of achievement with respect to one or moreperformance criteria established for a performance period of not less than oneyear.

 

**8.2          Incentive Bonus Document.****Each Incentive Bonus Document shall contain provisionsregarding (a) the target and maximum amount payable to the Participant asan Incentive Bonus, (b) the performance criteria and level of achievementversus these criteria that shall determine the amount of such payment, (c) theterm of the performance period as to which performance shall be measured fordetermining the amount of any payment, (d) the timing of any paymentearned by virtue of performance, (e) restrictions on the alienation ortransfer of the Incentive Bonus prior to actual payment, (f) forfeitureprovisions and (g) such further terms and conditions, in each case notinconsistent with this Plan as may be determined from time to time by theCommittee.  The maximum amount payable asan Incentive Bonus may be a multiple of the target amount payable, but themaximum amount payable pursuant to that portion of an Award of an IncentiveBonus granted under this Plan for any fiscal year to any Participant that is intendedto satisfy the requirements for “performance based compensation” under Code Section 162(m) shallnot exceed $1,000,000.

 

**8.3          Performance Criteria.** The Committee shall establish the performance criteria and level ofachievement versus these criteria that shall determine the target and maximumamount payable under an Award of an Incentive Bonus, which criteria may bebased on financial performance and/or personal performance evaluations.  The Committee may specify the percentage ofthe target Incentive Bonus that is intended to satisfy the requirements for “performance-basedcompensation” under Code Section 162(m). Notwithstanding anything to the contrary herein, the performancecriteria for any portion of an Incentive Bonus that is intended by the Committeeto satisfy the requirements for “performance-based compensation” under Code Section 162(m) shallbe a measure based on one or more Qualifying Performance Criteria (as definedin Section 9.2) selected by the Committee and specified at the time the Awardof an Incentive Bonus is granted.  TheCommittee shall certify the extent to which any Qualifying Performance Criteriahas been satisfied, and the amount payable as a result thereof, prior topayment of any Incentive Bonus that is intended to satisfy the requirements for“performance-based compensation” under Code Section 162(m).

 

**8.4          Timing and Form of Payment.****The Committee shall determine the timing of payment ofany Incentive Bonus, provided that the timing of such payment shall satisfy anexception to Code Section 409A or, if no such exception is available, thetiming of such payment shall comply with the requirements of Code Section 409A.

 

 

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**8.5          Discretionary Adjustments.** Notwithstanding satisfaction of any performance goals, the amount paidunder an Award of an Incentive Bonus on account of either financial performanceor personal performance evaluations may be reduced by the Committee on thebasis of such further considerations as the Committee shall determine.

 

## **SECTION 9.         INCENTIVESTOCK**

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**9.1          General.**  IncentiveStock is an award or issuance of Shares the grant, issuance, retention, vestingand/or transferability of which is subject during specified periods of time tosuch conditions (including continued employment or performance conditions) andterms as the Committee deems appropriate.

 

**9.2          Incentive Stock Document.*** *EachIncentive Stock Document shall contain provisions regarding (a) the numberof Shares subject to such Award or a formula for determining such, (b) theperformance criteria, if any, and level of achievement versus these criteriathat shall determine the number of Shares granted, issued, retainable and/orvested, (c) the period, if any, as to which performance shall be measuredfor determining achievement of performance, which period in any case (except inthe event of death or disability of the Participant or upon a Change of Control(as defined in Section 13.2)) shall be not less than one year, (d) ifthe Award is not subject to performance criteria, the period of continuedemployment upon which vesting of the Shares is subject, which period in anycase (except in the event of death or disability of the Participant or upon aChange of Control (as defined in Section 13.2)) shall be not less thanthree years; provided, however, that shares of Incentive Stock vesting solelyon the basis of continued employment may vest in installments so long as thevesting schedule, at any point in time, does not exceed the rate of a monthlypro rata installment schedule (i.e., 1/36 per month for 3 years), (e) forfeiture,(f) transferability and (g) such further terms and conditions notinconsistent with this Plan as may be determined from time to time by theCommittee.

 

**9.3          Sale Price.** Subject to the requirements of applicable law, the Committee shalldetermine the price, if any, at which Shares of Incentive Stock shall be soldor awarded to an Eligible Person, which may vary from time to time and amongEligible Persons and which may be below the fair market value of such Shares atthe date of grant or issuance.

 

**9.4          Performance Criteria.** The grant, issuance, retention and/or vesting of each Incentive Sharemay but need not be subject to such performance criteria and level ofachievement versus these criteria as the Committee shall determine, whichcriteria may be based on financial performance and/or personal performanceevaluations.  Notwithstanding anything tothe contrary herein, the performance criteria for any Incentive Stock that isintended to satisfy the requirements for “performance-based compensation” underCode Section 162(m) shall be a measure based on one or moreQualifying Performance Criteria selected by the Committee and specified at thetime the Award of Incentive Stock is granted.

 

**9.5          Discretionary Adjustments.** Notwithstanding satisfaction of any performance goals, the number ofShares granted, issued, retainable and/or vested under an Award of IncentiveStock on account of either financial performance or personal performanceevaluations may be reduced by the Committee on the basis of such furtherconsiderations as the Committee shall determine.

 

**9.6          Termination of Employment.*** *Subject to Section 13,**upon a termination of employment by a Participant prior tothe vesting of or the lapsing of restrictions on Incentive Stock, the Awards ofIncentive Stock granted to such Participant shall be subject to such proceduresas determined by the Committee, as set forth in the Incentive Stock Document.

 

## **SECTION 10.       INCENTIVESTOCK UNITS**

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**10.1        General.**  An IncentiveStock Unit represents the right of the recipient of the Award of an IncentiveStock Unit to receive, either (a) upon vesting of the Incentive Stock Unitor (b) on any later date specified by the Committee in the Incentive StockUnit Document, a number of Shares as specified in the Incentive Stock UnitDocument.

 

 

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**10.2        Incentive Stock Unit Document.*** *EachIncentive Stock Unit Document shall contain provisions regarding (a) thenumber of Shares subject to such Award or a formula for determining such, (b) theperformance criteria, if any, and level of achievement versus these criteriathat shall determine the number of Shares granted, issued, retainable and/orvested, (c) the period, if any, as to which performance shall be measuredfor determining achievement of performance, which period in any case (except inthe event of death or disability of the Participant or upon a Change of Control(as defined in Section 13.2)) shall be not less than one year, (d) ifthe Award is not subject to performance criteria, the period of continuedemployment upon which vesting of the Shares is subject, which period in anycase (except in the event of death or disability of the Participant or upon aChange of Control (as defined in Section 13.2)) shall be not less thanthree years; *provided, however,*that Incentive Stock Units vesting solely on the basis of continued employmentmay vest in installments so long as the vesting schedule, at any point in time,is not more favorable than what would be vested under a monthly pro-ratainstallment schedule (i.e., 1/36 per month for 3 years), (e) forfeiture, (f) transferabilityand (g) such further terms and conditions not inconsistent with this Planas may be determined from time to time by the Committee.

 

**10.3        Performance Criteria.** The grant of an Incentive Stock Unit and the issuance and/or vesting ofeach Share subject to an Incentive Share Unit may but need not be subject tosuch performance criteria and level of achievement versus these criteria as theCommittee shall determine, which criteria may be based on financial performanceand/or personal performance evaluations. Notwithstanding anything to the contrary herein, the performancecriteria for any Incentive Stock that is intended to satisfy the requirementsfor “performance-based compensation” under Code Section 162(m) shallbe a measure based on one or more Qualifying Performance Criteria selected bythe Committee and specified at the time the Incentive Stock Unit is granted.

 

**10.4        Discretionary Adjustments.** Notwithstanding satisfaction of any performance goals, the number ofShares issued and/or vested under an Incentive Stock Unit on account of eitherfinancial performance or personal performance evaluations may be reduced by theCommittee on the basis of such further considerations as the Committee shalldetermine.

 

**10.5        Termination of Employment.*** *Subject to Section 13,**upon a termination of employment by a Participant prior tothe vesting of or issuance of Shares under an Incentive Stock Unit, theIncentive Stock Units granted to such Participant shall be subject to suchprocedures as determined by the Committee, as set forth in the Incentive StockUnit Document.

 

## **SECTION 11.       OTHERPROVISIONS APPLICABLE TO AWARDS**

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**11.1        Transferability.** Unless the agreement or other document evidencing an Award (or anamendment thereto authorized by the Committee) expressly states that the Awardis transferable as provided hereunder, no Award granted under this Plan, norany interest in such Award, may be sold, assigned, conveyed, gifted, pledged,hypothecated or otherwise transferred in any manner prior to the vesting orlapse of any and all restrictions applicable thereto, other than by will or thelaws of descent and distribution or pursuant to a “domestic relations order,”as defined in the Code.  The Committeemay grant an Award or amend an outstanding Award to provide that the Award istransferable or assignable to a member or members of the Participant’s “immediatefamily,” as such term is defined in Rule 16a-1(e) under theSecurities Exchange Act of 1934, as amended (the “Exchange Act”), or toa trust for the benefit solely of a member or members of the Participant’simmediate family, or to a partnership or other entity whose only owners aremembers of the Participant’s immediate family, *provided*that following any such transfer or assignment the Award will remain subject tosubstantially the same terms applicable to the Award while held by theParticipant, as modified as the Committee shall determine appropriate, and thetransferee shall execute an agreement agreeing to be bound by such terms.

 

**11.2        Qualifying Performance Criteria.** For purposes of this Plan, the term “Qualifying Performance Criteria”shall mean any one or more of the following performance criteria, eitherindividually, alternatively or in any combination, applied to either theCompany as a whole or to a business unit or subsidiary, either individually,alternatively or in any combination, and measured either annually orcumulatively over a period of years, on an absolute basis or relative to apre-established target, to previous years’ results or to a designatedcomparison group, in each case as specified by the Committee in the Award:  (a) cash flow, (b) earnings pershare, (c) earnings before 

 

 

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interest, taxes andamortization), (d) return on equity, (e) total stockholder return, (f) returnon capital, (g) return on assets or net assets, (h) revenue, (i) incomeor net income, (j) operating income or net operating income, (k) operatingprofit or net operating profit, (l) operating margin, (m) return onoperating revenue, (n) market share and (o) overhead or other expensereduction.  The Committee shall appropriatelyadjust any evaluation of performance under a Qualifying Performance Criteria toexclude any of the following events that occurs during a performanceperiod:  (i) asset write-downs, (ii) litigationor claim judgments or settlements, (iii) the effect of changes in tax law,accounting principles or other such laws or provisions affecting reportedresults, (iv) accruals for reorganization and restructuring programs and (v) anyextraordinary non-recurring items as described in Accounting Principles BoardOpinion No. 30 and/or in management’s discussion and analysis of financialcondition and results of operations appearing in the Company’s annual report tostockholders for the applicable year.

 

**11.3        Dividends.** Unless otherwise provided by the Committee, no adjustment shall be madein Shares issuable under Awards on account of cash dividends that may be paidor other rights that may be issued to the holders of Shares prior to theirissuance under any Award.  The Committeeshall specify whether dividends or dividend equivalent amounts shall be paid toany Participant with respect to the Shares subject to any Award that have notvested or been issued or that are subject to any restrictions or conditions onthe record date for dividends. Notwithstanding any provision of this Section 11.3to the contrary, the Committee shall not condition the right to receivedividends or dividend equivalent amounts, directly or indirectly, upon theexercise of any Option or Stock Appreciation Right.  In addition, the Committee will ensure thatany right to dividend or dividend equivalent amounts that may be paid inconnection with the Shares subject to any Award granted hereunder******complies with the requirements ofCode Section 409A.

 

**11.4        Documents Evidencing Awards.** The Committee shall, subject to applicable law, determine the date anAward is deemed to be granted, which for purposes of this Plan shall not beaffected by the fact that an Award is contingent on subsequent stockholderapproval of this Plan.  The Committee or,except to the extent prohibited under applicable law, its delegate(s) mayestablish the terms of agreements or other documents evidencing Awards underthis Plan and may, but need not, require as a condition to any such agreement’sor document’s effectiveness that such agreement or document be executed by theParticipant and that such Participant agree to such further terms andconditions as specified in such agreement or document.  The grant of an Award under this Plan shallnot confer any rights upon the Participant holding such Award other than suchterms, and subject to such conditions, as are specified in this Plan as beingapplicable to such type of Award (or to all Awards) or as are expressly setforth in the agreement or other document evidencing such Award.

 

**11.5        Tandem Stock or Cash Rights.** Either at the time an Award is granted or by subsequent action, theCommittee may, but need not, provide that an Award shall contain as a termthereof, a right, either in tandem with the other rights under the Award or asan alternative thereto, of the Participant to receive, without payment to theCompany, a number of Shares, cash or a combination thereof, the amount of whichis determined by reference to the value of the Award.

 

**11.6        Financing.** The Committee may not provide financing to a Participant to pay thepurchase price of any Award or to pay the amount of taxes required by law to bewithheld with respect to any Award.

 

**11.7        Compliance with Code Section 409A.** Some of the Awards that may be granted pursuant to the Plan (including,but not necessarily limited to, Incentive Bonus, Incentive Stock and IncentiveStock Unit Awards) may be considered to be “non-qualified deferred compensation”subject to Code Section 409A.  If anAward is subject to Code Section 409A, the document evidencing such Awardand this Plan are intended to comply fully with and meet all of therequirements of Code Section 409A. The document evidencing such Award shall include such provisions as maybe necessary to assure compliance with Code Section 409A.  An Award subject to Code Section 409Aalso shall be administered in good faith compliance with the provisions of CodeSection 409A as well as applicable guidance issued by the Internal RevenueService and the Department of Treasury. To the extent necessary to comply with Code Section 409A, any Awardthat is subject to Code Section 409A may be modified, replaced orterminated in the discretion of the Committee. Notwithstanding any provision of this Plan or any document evidencing anAward to the contrary, in the event that the Committee determines that anyAward is or may become subject to Code Section 409A, the Company may adoptsuch amendments to the Plan and the related 

 

 

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documents evidencing anyAwards, without the consent of the Participant, or adopt other policies andprocedures (including amendments, policies and procedures with retroactiveeffective dates), or take any other action that the Committee determines to benecessary or appropriate to either comply with Code Section 409A or toexclude or exempt the Plan or any Award from the requirements of Code Section 409A.

 

## **SECTION 12.       CHANGESIN CAPITAL STRUCTURE**

## ** **

If the outstanding securities of the class thensubject to this Plan are increased, decreased or exchanged for or convertedinto cash, property or a different number or kind of shares or securities, orif cash, property or shares or securities are distributed in respect of suchoutstanding securities, in either case as a result of a reorganization, merger,consolidation, recapitalization, restructuring, reclassification, dividend(other than a regular, quarterly cash dividend) or other distribution, stocksplit, reverse stock split, spin-off or the like, or if substantially all ofthe property and assets of the Company are sold, then, unless the terms of suchtransaction shall provide otherwise, the Committee shall make appropriate andproportionate adjustments in (a) the number and type of shares or othersecurities or cash or other property that may be acquired pursuant to Awardstheretofore granted under this Plan and the exercise or settlement price ofsuch Awards, *provided*, *however*,that such adjustment shall be made in such a manner that is consistent with therequirements of Code Section 409A and that will not affect the status ofany Award intended to qualify as an ISO under Code Section 422 or as “performancebased compensation” under Code Section 162(m) and (b) themaximum number and type of shares or other securities that may be issuedpursuant to such Awards thereafter granted under this Plan.

 

## **SECTION 13.       CHANGEOF CONTROL**

## ** **

**13.1        Effect of Change of Control.** The Committee may, through the terms of the Award or otherwise, providethat any or all of the following shall occur, in connection with a Change ofControl or a Change of Control Transaction (as defined in Section 13.2),or upon termination of the Participant’s employment following a Change ofControl or a Change of Control Transaction: (a) in the case of an Option orStock Appreciation Right, the acceleration of the Participant’s ability toexercise any portion of such Award not previously exercisable and/or thepayment to the Participant of cash equal to the difference between the exerciseprice and the price being paid to the holders of Shares in connection with theChange of Control or Change of Control Transaction, (b) in the case of anIncentive Bonus, the acceleration of the Participant’s right to receive apayment equal to the target amount payable or a payment based on performancethrough a date determined by the Committee prior to the Change of Control, (c) inthe case of Shares issued in payment of any Incentive Bonus, and/or in the caseof Incentive Stock, the lapse and expiration of any conditions to the grant,issuance, retention, vesting or transferability of, or any other restrictionsapplicable to, such Award, and (d) in the case of Incentive Stock Units,the acceleration of and expiration of any conditions on the grant, vesting andissuance of the Shares subject to the Incentive Stock Unit.  The Committee also may, through the terms ofthe Award or otherwise, provide for an absolute or conditional exercise,payment acceleration or lapse of conditions or restrictions on an Award thatshall only be effective if, upon the announcement of a Change of ControlTransaction, no provision is made in such Change of Control Transaction for theexercise, payment or lapse of conditions or restrictions on the Award, or otherprocedure whereby the Participant may realize the full benefit of theAward.  In the case of an acceleration ofpayment of any Award hereunder on a Change of Control or Change of ControlTransaction, the payment shall be made on or before March 15 of the yearfollowing the year in which the Change of Control or Change of ControlTransaction occurs in order to satisfy the “short-term deferral exception” toCode Section 409A.

 

**13.2        Definitions.**

 

“Change ofControl” means the first to occur of the following:

 

(a)           the merger orconsolidation of the Company with or into another corporation;

 

(b)           the acquisition,directly or indirectly, by another corporation person or group of all orsubstantially all of the Company’s assets or 40% or more of the Company’s thenoutstanding voting stock;

 

 

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(c)           the liquidation ordissolution of the Company; or

 

(d)           during any period of12 consecutive months, individuals who at the beginning of such 12-month periodconstituted the Board of Directors (together with any new directors whoseelection by the Board of Directors or whose nomination for election by thestockholders of the Company was approved by a vote of a majority of thedirectors then still in office who were either directors at the beginning ofsuch period or whose election or nomination for election was previously soapproved) cease for any reason to constitute a majority of the Board ofDirectors then in office,

 

*provided,however*, that aChange of Control will not be deemed to have occurred in respect of a merger inwhich (x) the Company is the surviving corporation, (y) no person orgroup acquires, directly or indirectly, 40% or more of the Company’soutstanding voting stock and (z) the Shares outstanding prior to themerger remain outstanding thereafter; and *provided further*,that a merger or consolidation will not be considered a Change of Control ifsuch transaction results only in the reincorporation of the Company in anotherjurisdiction or its restructuring into holding company form.

 

“Change ofControl Transaction” shall mean any tender offer, offer, exchange offer,solicitation, merger, consolidation, reorganization or other transaction thatis intended to or reasonably expected to result in a Change of Control.  For any Award subject to the requirements ofCode Section 409A, the document evidencing such Award may prescribe adifferent definition of the term “Change of Control” or “Change of ControlTransaction” that will apply for purposes of such document and that complieswith the requirements of Code Section 409A.

 

## **SECTION 14.       TAXES**

## ** **

**14.1        Withholding Requirements.** The Committee may make such provisions or impose such conditions as itmay deem appropriate for the withholding or payment by a Participant of anytaxes that the Committee determines are required in connection with any Award grantedunder this Plan, and a Participant’s rights in any Award are subject tosatisfaction of such conditions.

 

**14.2        Payment of Withholding Taxes.** Notwithstanding the terms of Section 14.1, the Committee mayprovide in the agreement or other document evidencing an Award or otherwisethat all or any portion of the taxes required to be withheld by the Company or,if permitted by the Committee, desired to be paid by the Participant, inconnection with the exercise of a Stock Appreciation Right or NonqualifiedOption or the exercise, vesting, settlement or transfer of any other Awardshall be paid or, at the election of the Participant, may be paid by theCompany by withholding shares of the Company’s capital stock otherwise issuableor subject to such Award, or by the Participant delivering previously ownedshares of the Company’s capital stock, in each case having a fair market valueequal to the amount required or elected to be withheld or paid.  Any such election is subject to suchconditions or procedures as may be established by the Committee and may besubject to disapproval by the Committee.

 

## **SECTION 15.       AMENDMENTSOR TERMINATION**

## ** **

The Board mayamend, alter or discontinue this Plan or any agreement or other documentevidencing an Award made under this Plan, but no such amendment shall, withoutthe approval of the stockholders of the Company:

 

(a)           increasethe maximum number of shares of Common Stock for which Awards may be grantedunder this Plan;

 

(b)           reduce the price atwhich Options may be granted below the price provided for in Section 6.2;

 

(c)           reduce the price atwhich Stock Appreciation Rights may be granted below the price provided for in Section 7.4(b);

 

 

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(d)           reduce the exerciseprice of outstanding Options or Stock Appreciation Rights;

 

(e)           after any Change ofControl, impair the rights of any Award holder without such holder’s consent;

 

(f)            extend the term ofthis Plan;

 

(g)           change the class ofpersons eligible to be Participants;

 

(h)           provide for theautomatic grant of Options based upon the exercise of Options by holders ofOptions; or

 

(i)            increase the numberof shares that are eligible for Non-Option Awards.

 

Notwithstanding theforegoing, no amendment, alteration or discontinuance of this Plan or any otherdocument evidencing an Award under the Plan shall cause all or a part of thepayment under any Award to be subject to additional tax under Code Section 409A.

 

## **SECTION 16.       COMPLIANCEWITH OTHER LAWS AND REGULATIONS.**

## ** **

This Plan, thegrant and exercise of Awards thereunder, and the obligation of the Company tosell, issue or deliver Shares under such Awards, shall be subject to allapplicable federal, state and foreign laws, rules and regulations and tosuch approvals by any governmental or regulatory agency as may berequired.  The Company shall not berequired to register in a Participant’s name or deliver any Shares prior to thecompletion of any registration or qualification of such Shares under anyfederal, state or foreign law or any ruling or regulation of any governmentbody which the Committee shall determine to be necessary or advisable.  This Plan is intended to constitute anunfunded arrangement for a select group of management or other key employees,directors and consultants.

 

No Option shall beexercisable unless a registration statement with respect to the Option iseffective or the Company has determined that such registration isunnecessary.  Unless the Awards andShares covered by this Plan have been registered under the Securities Act of1933, as amended, or the Company has determined that such registration isunnecessary, each person receiving an Award and/or Shares pursuant to any Awardmay be required by the Company to give a representation in writing that suchperson is acquiring such Shares for his or her own account for investment andnot with a view to, or for sale in connection with, the distribution of anypart thereof.

 

## **SECTION 17.       NORIGHT TO COMPANY EMPLOYMENT**

## ** **

Nothing in thisPlan or as a result of any Award granted pursuant to this Plan shall confer onany individual any right to continue in the employ of the Company or interferein any way with the right of the Company to terminate an individual’semployment at any time.  The agreementsor other documents evidencing Awards may contain such provisions as theCommittee may approve with reference to the effect of approved leaves ofabsence.

 

## **SECTION 18.       EFFECTIVENESSAND EXPIRATION OF PLAN**

## ** **

This Plan shall beeffective on the date the Company’s stockholders adopt this Plan.  All Awards granted under this Plan aresubject to, and may not be exercised before, the approval of this Plan by thestockholders prior to the first anniversary date of the effective date of thisPlan, by the affirmative vote of the holders of a majority of the outstandingshares of the Company present, or represented by proxy, and entitled to vote,at a meeting of the Company’s stockholders or by written consent in accordancewith the laws of the State of Delaware; *provided* thatif such approval by the stockholders of the Company is not forthcoming, allAwards previously granted under this Plan shall be void.  No Awards shall be granted pursuant to thisPlan more than 10 years after the effective date of this Plan.

 

 

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## **SECTION 19.       NON-EXCLUSIVITYOF PLAN**

## ** **

Neither theadoption of this Plan by the Board nor the submission of this Plan to thestockholders of the Company for approval shall be construed as creating anylimitations on the power of the Board or the Committee to adopt such otherincentive arrangements as either may deem desirable, including withoutlimitation, the granting of restricted stock, restricted stock units, stockoptions or stock appreciation rights otherwise than under this Plan, and sucharrangements may be either generally applicable or applicable only in specificcases.

 

## **SECTION 20.       GOVERNINGLAW**

## ** **

This Plan and any agreements or other documentshereunder shall be interpreted and construed in accordance with the laws of theState of Delaware and applicable federal law. The Committee may provide that any dispute as to any Award shall bepresented and determined in such forum as the Committee may specify, includingthrough binding arbitration.  Anyreference in this Plan or in the agreement or other document evidencing anyAward to a provision of law or to a rule or regulation shall be deemed toinclude any successor law, rule or regulation of similar effect orapplicability.

 

 

 

 

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