exv4w3






Exhibit 4.3




Exelis Inc.




2011 OMNIBUS INCENTIVE PLAN




ESTABLISHMENT, PURPOSE, AND DURATION




Article 1.



1.1 Establishment. Exelis Inc., an Indiana corporation (hereinafter referred to as the
“Company”), establishes an incentive compensation plan to be known as the Exelis Inc. 2011 Omnibus
Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document. The
Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation
Rights (SARs), Restricted Stock, Restricted Stock Units and Other Awards.



The Plan first became effective October 31, 2011 (the “Effective Date”) following the
spin-off of Exelis Inc. from ITT Corporation (the “Predecessor Corporation”) on October 31,
2011. The Predecessor Corporation maintained a similar plan prior to the spin-off (the
“Predecessor Plan”), and the Plan was created to govern the awards under the Predecessor
Plan, as revised to reflect the spin-off from the Predecessor Corporation. The Plan shall remain
in effect as provided in Section 1.3 hereof, and Participants shall receive full credit for their
service and participation with the Predecessor Corporation as provided in Section 5.3 hereof.



1.2 Purpose of the Plan. The purpose of the Plan is to promote the long-term interests of the
Company and its shareholders by strengthening the Company’s ability to attract and retain Employees
of the Company and its Affiliates and members of the Board of Directors upon whose judgment,
initiative, and efforts the financial success and growth of the business of the Company largely
depend, and to provide an additional incentive for such individuals through share ownership and
other rights that promote and recognize the financial success and growth of the Company and create
value for shareholders.



1.3 Duration of the Plan. The Plan shall commence as of the Effective Date, as described in Section
1.1 hereof, and shall remain in effect, subject to the right of the Compensation and Personnel
Committee of the Board, (the “Committee”) to amend or terminate the Plan at any time pursuant to
Article 14 hereof, until all Shares subject to it shall have been purchased or acquired according
to the Plan’s provisions.




Article 2. DEFINITIONS



Whenever used in the Plan, the following terms shall have the meanings set forth below, and when
the meaning is intended, the initial letter of the word shall be capitalized.



2.1 “Acceleration Event” shall be deemed to have occurred as of the first day that any one or more
of the following conditions have been satisfied:







 









 









     (a) a report on Schedule 13D shall be filed with the Securities and Exchange
Commission pursuant to Section 13(d) of the Exchange Act disclosing that any Person, other
than the Company or a Subsidiary or any employee benefit plan sponsored by the Company or a
Subsidiary (or related trust), is the Beneficial Owner directly or indirectly of twenty
percent (20%) or more of the outstanding Shares;




     (b) any Person, other than the Company or a Subsidiary, or any employee benefit plan
sponsored by the Company or a Subsidiary (or related trust), shall purchase shares pursuant
to a tender offer or exchange offer to acquire any Shares (or securities convertible into
Shares) for cash, securities or any other consideration, provided that after consummation
of the offer, the Person in question is the Beneficial Owner, directly or indirectly, of
twenty percent (20%) or more of the outstanding Shares (calculated as provided in paragraph
(d) of Rule 13d-3 under the Exchange Act in the case of rights to acquire Shares);




     (c) the consummation of




     (i) any consolidation, business combination or merger involving the Company, other
than a consolidation, business combination or merger involving the Company in which holders
of Shares immediately prior to the consolidation, business combination or merger (x) hold
fifty percent (50%) or more of the combined voting power of the Company (or the corporation
resulting from the consolidation, business combination or merger or the parent of such
corporation) after the merger and (y) have the same proportionate ownership of common stock
of the Company (or the corporation resulting from the consolidation, business combination
or merger or the parent of such corporation), relative to other holders of Shares
immediately prior to the consolidation, business combination or merger, immediately after
the consolidation, business combination or merger as immediately before; or




     (ii) any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company;




     (d) there shall have been a change in a majority of the members of the Board within a
12-month period unless the election or nomination for election by the Company’s
shareholders of each new director during such 12-month period was approved by the vote of
two-thirds of the directors then still in office who (x) were directors at the beginning of
such 12-month period or (y) whose nomination for election or election as directors was
recommended or approved by a majority of the directors who were directors at the beginning
of such 12-month period; or




     (e) any Person, other than the Company or a Subsidiary or any employee benefit plan
sponsored by the Company or a Subsidiary (or related trust), becomes the Beneficial Owner
of twenty percent (20%) or more of the Shares.



 









 





2.2 “Affiliate” means any Subsidiary and any other Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common control with, the Person
specified.



2.3 “Award” means, individually or collectively, a grant under this Plan of Nonqualified Stock
Options, Incentive Stock Options, SARs, Restricted Stock, Restricted Stock Units, Converted Awards
and Other Awards.



2.4 “Award Agreement” means either (i) an agreement entered into by the Company and a Participant
setting forth the terms and provisions applicable to Awards granted under this Plan, or (ii) a
statement issued by the Company to a Participant describing the terms and conditions of such Award.



2.5 “Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act.



2.6 “Benefits and Compensation Matters Agreement” means the Benefits and Compensation Matters
Agreement by and among the Company, the Predecessor Corporation and Exelis Inc.



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



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



2.9 “Committee” means the Compensation and Personnel Committee of the Board.



2.10 “Company” means Exelis Inc., an Indiana corporation, and any successor thereto as provided in
Article 16 herein; provided, however, that for purposes of grants made under the Predecessor Plan,
Company shall mean the Predecessor Corporation as the original grantor.



2.11
“Converted Award” means Nonqualified Stock Options, Incentive Stock Options, SARs,
Restricted Stock, Restricted Stock Units and Other Awards denominated in Shares that were
originally granted to a Participant under any of the Predecessor Corporation Equity Plans, as
adjusted pursuant to the terms of the Benefits and Compensation Matters Agreement.



2.13 “Covered Employee” means a Participant who is a “Covered Employee,” as defined in Code Section
162(m) and the regulations promulgated under Code Section 162(m), or any successor statute.



2.14 “Director” means any individual who is a member of the Board of Directors.



2.15 “Employee” means any employee of the Company or its Affiliates.



2.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any
successor act thereto.







 









 








2.17 “Fair Market Value” means a price that is based on the opening, closing, actual, high, low, or
average selling prices of a Share on the New York Stock Exchange (“NYSE”) or other
established stock exchange (or exchanges) on the applicable date, the preceding trading day, the
next succeeding trading day, or an average of trading days, as determined by the Committee in its
discretion.



Such definition of Fair Market Value may differ depending on whether Fair Market Value is in
reference to the grant, exercise, vesting, or settlement or payout of an Award. If, however, the
accounting standards used to account for equity awards granted to Participants are substantially
modified subsequent to the Effective Date of the Plan, the Committee shall have the ability to
determine an Award’s Fair Market Value based on the relevant facts and circumstances. If Shares are
not traded on an established stock exchange, Fair Market Value shall be determined by the Committee
based on objective criteria.



2.18 “Freestanding SAR” means a SAR that is granted independently of any Options, as described in
Article 7 herein.



2.19 “Full Value Award” means an Award other than an Option granted with an Option Price equal to
at least Fair Market Value on the date of grant or a SAR with a Grant Price equal to at least Fair
Market Value on the date of grant.



2.20 “Grant Price” means the amount to which the Fair Market Value of a Share is compared pursuant
to Section 7.6 to determine the amount of payment that should be made upon exercise of a SAR.



2.21 “Incentive Stock Option” or “ISO” means an Option that meets the requirements of Code Section
422, or any successor provision, and that is not designated as a Nonqualified Stock Option.



2.22 “Insider” means an individual who is, on the relevant date, an officer, Director, or more than
ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, as determined by the Board or the Committee
in accordance with Section 16 of the Exchange Act.



2.23 “Nonqualified Stock Option” or “NQSO” means an Option that is not intended to meet the
requirements of Code Section 422, or that otherwise does not meet such requirements.



2.24 “Option” means an Incentive Stock Option or a Nonqualified Stock Option to purchase Shares, as
described in Article 6 herein.



2.25 “Option Price” means the price at which a Share may be purchased by a Participant pursuant to
an Option.



2.26 “Other Award” means an Award granted to a Participant pursuant to Article 9 herein.







 









 







2.27 “Participant” means an Employee or Director who has been selected to receive an Award or who
has an outstanding Award granted under the Plan.



2.28 “Performance-Based Compensation” means an Award that is qualified as Performance-Based
Compensation under Code Section 162(m).



2.29 “Performance Measures” means measures as described in Article 10, the attainment of which may
determine the amount of payout and/or vesting with respect to Awards.



2.30 “Performance Period” means the period of time during which the performance goals must be met
in order to determine the amount of payout and/or vesting with respect to an Award.



2.31 “Period of Restriction” means the period when Restricted Stock or Restricted Stock Units are
subject to a substantial risk of forfeiture (based on the passage of time, the achievement of
performance goals, or upon the occurrence of other events as determined by the Committee, at its
discretion) and transfer restrictions, as provided in Article 8 herein.



2.32 “Person” shall have the meaning given in Section 3(a) (9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof.



2.33 “Plan Year” means the fiscal year of the Company.



2.34 “Plan” means the Exelis Inc. 2011 Omnibus Incentive Plan; provided, however, that for purposes of grants
made under the Predecessor Plan, Plan shall mean the Predecessor Plan as it existed on the date of
such grant.



2.35 “Predecessor Corporation Equity Plan” means any of the plans maintained by the Predecessor
Corporation under which equity or equity-based awards were granted, including the ITT 2003 Equity
Incentive Plan, ITT Corporation 1997 Long-Term Incentive Plan, 1994 ITT Incentive Stock Plan, ITT
1996 Restricted Stock Plan for Non-Employee Directors, and 2002 ITT Stock Option Plan for
Non-Employee Directors.



2.36 “Restricted Stock” means an Award granted to a Participant pursuant to Article 8 herein.



2.37 “Restricted Stock Unit” means an Award granted to a Participant pursuant to Article 8 herein.



2.38 “Share” means a share of common stock of the Company, $1.00 par value per share.



2.39 “Stock Appreciation Right” or “SAR” means an Award granted to a Participant pursuant to
Article 7 herein.







 









 







2.40 “Subsidiary” means any corporation, partnership, joint venture, limited liability company, or
other entity (other than the Company) in an unbroken chain of entities beginning with the Company
if each of the entities other than the last entity in the unbroken chain owns at least fifty
percent (50%) of the total combined voting power in one of the other entities in such chain.



2.41 “Tandem SAR” means a SAR that is granted in connection with a related Option pursuant to
Article 7.




Article 3. ADMINISTRATION



3.1 General. The Committee shall be responsible for administering the Plan. The Committee may
employ attorneys, consultants, accountants, and other persons, and the Committee, the Company, and
its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of
any such persons. All actions taken and all interpretations and determinations made by the
Committee shall be final and binding upon the Participants, the Company, and all other interested
persons.



3.2 Authority of the Committee. The Committee shall have full and exclusive discretionary power to
interpret the terms and the intent of the Plan and to determine eligibility for Awards and to adopt
such rules, regulations, and guidelines for administering the Plan as the Committee may deem
necessary or proper. Such authority shall include, but not be limited to, selecting Award
recipients, establishing all Award terms and conditions and, subject to Article 14, adopting
modifications and amendments to the Plan or any Award Agreement, including without limitation, any
that are necessary to comply with the laws of the countries in which the Company and its Affiliates
operate.



3.3 Delegation. The Committee may delegate to one or more of its members or to one or more agents
or advisors such administrative duties as it may deem advisable, and the Committee or any person to
whom it has delegated duties as aforesaid may employ one or more persons to render advice with
respect to any responsibility the Committee or such person may have under the Plan. The Committee
may, by resolution, authorize one or more officers of the Company to do one or both of the
following: (a) designate Employees and Directors to be recipients of Awards; and (b) determine the
size of the Award; provided, however, the Committee shall not delegate such
responsibilities to any such officer for Awards granted to an Employee that is considered an
elected officer of the Company, or to the extent it would unintentionally cause Performance-Based
Compensation to lose its status as such.




Article 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS



4.1 Number of Shares Available for Awards. Subject to adjustment as provided in Section 4.2 herein,
the number of Shares hereby reserved for issuance to Participants under the Plan shall be twenty
eight million (28,000,000). For purposes of the prior sentence, Shares subject to outstanding
awards under the Predecessor Plan shall not be considered available for issuance under the
Predecessor Plan. Any Shares related to Awards under the Plan or awards under the Predecessor Plan
that terminate by expiration,






 









 







forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in
lieu of Shares, or are exchanged with the Committee’s permission for Awards not involving Shares,
shall be available again for grant under the Plan. Notwithstanding the foregoing, (a) upon the
exercise of a stock-settled Stock Appreciation Right or net-settled Option, the number of Shares
subject to the Award (or portion of the Award) that is then being exercised shall be counted
against the maximum aggregate number of Shares that may be issued under the Plan as provided above,
on the basis of one Share for every Share subject thereto, regardless of the actual number of
Shares issued upon exercise and (b) any Shares withheld with respect to an Award (or, with respect
to Restricted Stock, returned) in satisfaction of tax withholding obligations shall be counted as
Shares issued.



Subject to adjustment as provided in Section 4.2 herein, the number of Shares hereby reserved for
issuance under the Plan for Full Value Awards (other than Converted Awards) shall not exceed
fourteen million (14,000,000). In addition, any Shares related to Full Value Awards under the Plan
or the Predecessor Plan that terminate by expiration, forfeiture, cancellation, or otherwise
without the issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged with
the Committee’s permission for Awards not involving Shares, shall be available again for grant of
Full Value Awards under the Plan.



All of the reserved Shares may be used as ISOs.



The Shares available for issuance under the Plan may be authorized and unissued Shares or treasury
Shares.



The following limits (“Award Limits”) shall apply to Awards (other than Converted Awards),
dividends and dividend equivalent intended to qualify as Performance-Based Compensation:





     (a) Options: The maximum aggregate number of Shares that may be granted in the form of
Options, pursuant to any Award granted in any one Plan Year to any one Participant shall be
fifteen million (15,000,000).




     (b) SARs: The maximum number of Shares that may be granted in the form of Stock
Appreciation Rights, pursuant to any Award granted in any one Plan Year to any one
Participant shall be fifteen million (15,000,000).




     (c) Restricted Stock or Restricted Stock Units: The maximum aggregate grant with
respect to Awards of Restricted Stock or Restricted Stock Units granted in any one Plan
Year to any one Participant shall be three million (3,000,000).




     (d) Other Awards: The maximum aggregate number of Shares with respect to which Other
Awards may be granted in any one Plan Year to any one Participant shall be three million
(3,000,000) and the maximum aggregate cash that may be payable with respect to Other Awards
granted in any one Plan Year to any one Participant shall be twelve million ($12,000,000)
dollars.



 









 






     (e) Dividends and Dividend Equivalents: The maximum aggregate value of cash dividends
(other than large, nonrecurring cash dividends) or dividend equivalents that any one
Participant may receive pursuant to Awards in any one Plan Year shall not exceed five
million ($5,000,000) dollars.


4.2 Adjustments in Authorized Shares. In the event of any equity restructuring (within the meaning
of FASB Accounting Standards Codification (ASC) 718 (formerly FAS 123R) that causes the per share
value of Shares to change, such as a stock dividend, stock split, spin off, rights offering, or
recapitalization through a large, nonrecurring cash dividend, the Committee shall cause there to be
made an equitable adjustment to: (a) the number and, if applicable, kind of shares that may be
issued under the Plan or pursuant to any type of Award under the Plan, (b) the Award Limits, (c)
the number and, if applicable, kind of shares subject to outstanding Awards and (d) as applicable,
the Option Price or Grant Price of any then outstanding Awards. In the event of any other change in
corporate structure or capitalization, such as a merger, consolidation, any reorganization (whether
or not such reorganization comes within the definition of such term in Section 368 of the Code) or
any partial or complete liquidation of the Company, the Committee, in its sole discretion, in order
to prevent dilution or enlargement of Participants’ rights under the Plan, shall cause there to be
made such equitable adjustments described in the foregoing sentence. Any fractional shares
resulting from adjustments made pursuant to this Section 4.2 shall be eliminated. Any adjustment
made pursuant to this Section 4.2 shall be conclusive and binding for all purposes of the Plan.



Except to the extent it would unintentionally cause Performance Based Compensation to fail to
qualify for the performance based exception to Code Section 162(m), appropriate adjustments may
also be made by the Committee in the terms of any Awards under the Plan to reflect such changes or
distributions and to modify any other terms of outstanding Awards on an equitable basis, including
modifications of performance goals and changes in the length of Performance Periods. The
determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and
binding on Participants under the Plan.



Subject to the provisions of Article 13, 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, share
exchange, amalgamation, reorganization or similar transaction upon such terms and conditions as it
may deem appropriate; provided, however, that no such issuance or assumption shall be made without
affecting the number of Shares reserved or available hereunder if it would prevent the granting of
ISOs under the Plan.




Article 5. ELIGIBILITY AND PARTICIPATION



5.1 Eligibility. Individuals eligible to participate in this Plan include all Employees and
Directors.







 









 







5.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to
time, select from all eligible individuals, those to whom Awards shall be granted and shall
determine the form and amount of each Award.



5.3 Prior Participation. Notwithstanding any other provision of the Plan to the contrary, all prior
service and participation by a Participant with the Predecessor Corporation shall be credited in
full towards a Participant’s service and participation with the Corporation.




Article 6. STOCK OPTIONS



6.1 Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to
Participants in such number, and upon such terms, and at any time and from time to time as shall be
determined by the Committee.



ISOs may not be granted following the ten-year (10) anniversary of the date the Plan was last
approved by shareholders in a manner that satisfies the shareholder approval requirements
applicable to ISOs. ISOs may be granted only to Employees.



6.2 Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify
the Option Price, the duration of the Option, the number of Shares to which the Option pertains,
the conditions upon which an Option shall become vested and exercisable, and such other provisions
as the Committee shall determine which are not inconsistent with the terms of the Plan. The Award
Agreement also shall specify whether the Option is intended to be an ISO or an NQSO.



6.3 Option Price. The Option Price for each grant of an Option under this Plan shall be as
determined by the Committee; provided, however, the Option Price shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date the Option is granted.



6.4 Duration of Options. Each Option granted to a Participant shall expire at such time as the
Committee shall determine at the time of grant; provided, however, no Option shall be exercisable
later than the tenth (10th) anniversary of its grant.



6.5 Exercise of Options. Options granted under this Article 6 shall be exercisable at such times
and be subject to such terms and conditions as the Committee shall in each instance approve, which
need not be the same for each grant or for each Participant.



6.6 Payment. Options granted under this Article 6 shall be exercised by the delivery of notice of
exercise to an agent designated by the Company or by complying with any alternative procedures
which may be authorized by the Committee, setting forth the number of Shares with respect to which
the Option is to be exercised.



A condition of the issuance of the Shares as to which an Option shall be exercised shall be the
payment of the Option Price. The Option may be exercised (and the Option Price may be satisfied) by
(a) delivering cash or its equivalent, (b) tendering (either by actual delivery or attestation)
previously acquired Shares having an aggregate Fair Market






 









 







Value at the time of exercise equal to the Option Price, (c) broker-assisted cashless exercise, (d)
net exercise, (e) a combination of the foregoing or (f) by any other method approved by the
Committee in its sole discretion. The Committee shall determine acceptable methods for tendering
Shares as payment upon exercise of an Option and may impose such limitations and prohibitions on
the use of Shares to exercise an Option as it deems appropriate.



Subject to any governing rules or regulations, as soon as practicable after receipt of written
notification of exercise and full payment (including satisfaction of any applicable tax
withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon
the Participant’s request, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).



Unless otherwise determined by the Committee, all payments under the methods indicated above shall
be paid in United States dollars.



6.7 Restrictions on Share Transferability. The Committee may impose such restrictions on any Shares
acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem
advisable, including, without limitation, restrictions under applicable federal securities laws,
under the requirements of any stock exchange or market upon which such Shares are then listed
and/or traded, and under any blue sky or state securities laws applicable to such Shares.



6.8 Termination of Employment or Service as a Director. The impact of a termination of a
Participant’s employment on an Option’s vesting and exercise period shall be determined by the
Committee, in its sole discretion, in the Participant’s Award Agreement, and need not be uniform
among Option grants or Participants. The impact of a termination on a Participant’s service as a
Director on an Option’s vesting and exercise period shall be determined by the Committee, in its
sole discretion, in the Participant’s Award Agreement, and need not be uniform among Option grants
or Participants.



6.9 Transferability of Options. During his or her lifetime, only the Participant shall have the
right to exercise the Options. After the Participant’s death, the Participant’s estate or
beneficiary shall have the right to exercise such Options.





     (a) Incentive Stock Options. No ISO granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution.




     (b) Nonqualified Stock Options. Except as otherwise provided in a Participant’s Award
Agreement, no NQSO granted under this Article 6 may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution. Under no circumstances may an NQSO be transferable for value or
consideration.


6.10 Notification of Disqualifying Disposition. If any Participant shall make any disposition of
Shares issued pursuant to the exercise of an ISO under the circumstances described in Section
421(b) of the Code (relating to certain disqualifying dispositions),






 









 







such Participant shall notify the Company of such disposition within ten (10) days thereof.




Article 7. STOCK APPRECIATION RIGHTS



7.1 Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to
Participants at any time and from time to time as shall be determined by the Committee. The
Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.



Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in
determining the number of SARs granted to each Participant and, consistent with the provisions of
the Plan, in determining the terms and conditions pertaining to such SARs.



The SAR Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and
shall be specified in the Award Agreement. The SAR Grant Price shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share on the date the SAR is granted. The Grant Price
of Tandem SARs shall be equal to the Option Price of the related Option.



7.2 SAR Agreement. Each SAR Award shall be evidenced by an Award Agreement that shall specify the
Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.



7.3 Term of SAR. The term of a SAR granted under the Plan shall be determined by the Committee, in
its sole discretion, provided that, no SAR shall be exercisable later than the tenth (10th)
anniversary of its grant.



7.4 Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever terms and
conditions the Committee, in its sole discretion, imposes upon them; provided, however, such terms
and conditions shall be subject to Section 7.1 as to grant price and Section 7.3 as to the term of
the SAR.



7.5 Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to
the related Option upon the surrender of the right to exercise the equivalent portion of the
related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related
Option is then exercisable.



Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR
granted in connection with an ISO: (a) the Tandem SAR will expire no later than the expiration of
the underlying ISO; (b) the value of the payout with respect to the Tandem SAR may be for no more
than one hundred percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the time the Tandem SAR is
exercised; and (c) the Tandem SAR may be exercised only when the Fair Market Value of the Shares
subject to the ISO exceeds the Option Price of the ISO.







 









 








7.6 Payment of SAR Amount. Upon the exercise of a SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by multiplying:





     The difference between the Fair Market Value of a Share on the date of exercise over
the Grant Price; by




     (b) The number of Shares with respect to which the SAR is exercised.


At the discretion of the Committee, the payment upon a SAR exercise may be in cash, in Shares of
equivalent value, in some combination thereof, or in any other manner approved by the Committee at
its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set
forth in the Award Agreement pertaining to the grant of the SAR.



7.7 Termination of Employment or Service as a Director. The impact of a termination of a
Participant’s employment on a SAR’s vesting and exercise period shall be determined by the
Committee, in its sole discretion, in the Participant’s Award Agreement, and need not be uniform
among SAR grants or Participants. The impact of a termination on a Participant’s service as a
Director on a SAR’s vesting and exercise period shall be determined by the Committee, in its sole
discretion, in the Participant’s Award Agreement, and need not be uniform among SAR grants or
Participants.



7.8 Nontransferability of SARs. Except as otherwise provided in a Participant’s Award Agreement, no
SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. Under no circumstances
may a SAR be transferable for value or consideration. Further, except as otherwise provided in a
Participant’s Award Agreement, all SARs granted to a Participant under the Plan shall be
exercisable during his or her lifetime only by such Participant.



7.9 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any
Shares received upon exercise of a SAR granted pursuant to the Plan as it may deem advisable. This
includes, but is not limited to, requiring the Participant to hold the Shares received upon
exercise of a SAR for a specified period of time.




Article 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS



8.1 Grant of Restricted Stock or Restricted Stock Units. Subject to the terms and conditions of the
Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or
Restricted Stock Units to Participants in such amounts as the Committee shall determine. Restricted
Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the
Participant on the date of grant.



8.2 Restricted Stock or Restricted Stock Unit Agreement. Each Restricted Stock and/or Restricted
Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of
Restriction, the number of Shares of Restricted Stock or the






 









 







number of Restricted Stock Units granted, and such other provisions as the Committee shall
determine.



8.3 Transferability. Except as provided in this Article 8, the Shares of Restricted Stock and/or
Restricted Stock Units granted herein may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction established by the
Committee and specified in the Award Agreement (and in the case of Restricted Stock Units until the
date of delivery or other payment), or upon earlier satisfaction of any other conditions, as
specified by the Committee, in its sole discretion, and set forth in the Award Agreement.



8.4 Other Restrictions. The Committee shall impose such other conditions and/or restrictions on any
Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem
advisable including, without limitation, a requirement that Participants pay a stipulated purchase
price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting following the
attainment of the performance goals, time-based restrictions, and/or restrictions under applicable
federal or state securities laws.



To the extent deemed appropriate by the Committee, the Company may retain the certificates
representing Shares of Restricted Stock in the Company’s possession until such time as all
conditions and/or restrictions applicable to such Shares have been satisfied or lapse.



Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each
Restricted Stock Award shall become freely transferable by the Participant after all conditions and
restrictions applicable to such Shares have been satisfied or lapse (including satisfaction of any
applicable tax withholding obligations), and Restricted Stock Units shall be paid in cash, Shares,
or a combination of cash and Shares as the Committee, in its sole discretion shall determine.



8.5 Voting Rights. To the extent permitted or required by law, as determined by the Committee,
Participants holding Shares of Restricted Stock granted hereunder may be granted the right to
exercise full voting rights with respect to those Shares during the Period of Restriction. A
Participant shall have no voting rights with respect to any Restricted Stock Units granted
hereunder.



8.6 Dividends and Other Distributions. During the Period of Restriction, Participants holding
Shares of Restricted Stock or Restricted Stock Units granted hereunder may, if the Committee so
determines, be credited with dividends paid with respect to the underlying Shares or dividend
equivalents while they are so held in a manner determined by the Committee in its sole discretion.
The Committee may apply any restrictions to the dividends or dividend equivalents that the
Committee deems appropriate. The Committee, in its sole discretion, may determine the time and form
of payment of dividends or dividend equivalents, including cash, Shares, Restricted Stock, or
Restricted Stock Units; provided, however, that if dividends or dividend equivalents






 









 







are granted with respect to any Shares of Restricted Stock or Restricted Share Units that are
subject to performance goals, the dividends or dividend equivalents shall be accumulated or
reinvested and paid following the time such performance goals are met, as set forth by the
Committee in the applicable Award Agreement.



8.7 Termination of Employment or Service as a Director. The impact of a termination of a
Participant’s employment on a Restricted Stock or Restricted Stock Unit’s vesting and settlement
shall be determined by the Committee, in its sole discretion, in the Participant’s Award Agreement,
and need not be uniform among Restricted Stock or Restricted Stock Unit grants or Participants. The
impact of a termination of a Participant’s service as a Director on a Restricted Stock or
Restricted Stock Unit’s vesting and settlement shall be determined by the Committee, in its sole
discretion, in the Participant’s Award Agreement, and need not be uniform among Restricted Stock or
Restricted Stock Unit grants or Participants.



8.8 Section 83(b) Election. The Committee may provide in an Award Agreement that the Award of
Restricted Stock is conditioned upon the Participant making or refraining from making an election
with respect to the Award under Section 83(b) of the Code. If a Participant makes an election
pursuant to Section 83(b) of the Code concerning a Restricted Stock Award, the Participant shall be
required to file promptly a copy of such election with the Company.




Article 9. OTHER AWARDS



The Committee may grant Other Awards, which may include, without limitation, unrestricted Shares,
the payment of Shares in lieu of cash, the payment of cash based on attainment of Performance
Goals, service conditions or other goals established by the Committee and the payment of Shares in
lieu of cash under other Company incentive or bonus programs. Payment under or settlement of any
such Other Awards shall be made in such manner, at such times and subject to such terms and
conditions as the Committee may determine.




Article 10. PERFORMANCE MEASURES



Unless and until the Committee proposes for shareholder vote and the shareholders approve a change
in the general Performance Measures set forth in this Article 10, the performance goals upon which
the payment or vesting of an Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be limited to one or more of the following Performance
Measures:





     (a) Net earnings;




     (b) Earnings per share;




     (c) Net sales growth;




     (d) Net income (before or after taxes);



 









 






     (e) Net operating profit;




     (f) Return measures (including, but not limited to, return on assets, capital, equity,
or sales);




     (g) Cash flow (including, but not limited to, operating cash flow and free cash flow);




     (h) Cash flow return on capital;




     (i) Earnings before or after taxes, interest, depreciation, and/or amortization;




     (j) Gross or operating margins;




     (k) Productivity ratios;




     (l) Share price (including, but not limited to, growth measures and total shareholder
return);




     (m) Expense targets;




     (n) Margins;




     (o) Operating efficiency;




     (p) Customer satisfaction;




     (q) Employee satisfaction metrics;




     (r) Human resources metrics;




     (s) Working capital targets; and




     (t) EVA®.


Any Performance Measure(s) may be used to measure the performance of the Company or an Affiliate as
a whole or any business unit of the Company or an Affiliate or any combination thereof, as the
Committee may deem appropriate, or any of the above 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 (l) above
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 specified in this Article 10.



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: (a) asset write—downs,
(b) litigation or claim judgments or settlements, (c) the effect of






 









 







changes in tax laws, accounting principles, or other laws or provisions affecting reported results,
(d) any reorganization and restructuring programs, (e) 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 shareholders for the applicable year, (f) acquisitions or divestitures, and (g) 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.



Awards that are designed to qualify as Performance-Based Compensation, and that are held by Covered
Employees, may not be adjusted upward. The Committee shall retain the discretion to adjust such
Awards downward.



In the event that applicable tax and/or securities laws change to permit Committee discretion to
alter the governing Performance Measures without obtaining shareholder approval of such changes,
the Committee shall have sole discretion to make such changes without obtaining shareholder
approval.




Article 11. BENEFICIARY DESIGNATION



Each Participant under the Plan may, from time to time, name any beneficiary or beneficiaries (who
may be named contingently or successively) to whom any benefit under the Plan is to be paid in case
of his or her death before he or she receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing with the Company
during the Participant’s lifetime. In the absence of any such designation, benefits remaining
unpaid at the Participant’s death shall be paid to the Participant’s estate.




Article 12. RIGHTS OF PARTICIPANTS



12.1 Employment. Nothing in the Plan or an Award Agreement shall interfere with or limit in any way
the right of the Company and/or its Affiliates to terminate any Participant’s employment or of the
Board of Directors to terminate service as a Director at any time or for any reason not prohibited
by law, nor confer upon any Participant any right to continue his or her employment or service as a
Director for any specified period of time.



Neither an Award nor any benefits arising under this Plan shall constitute an employment contract
with the Company and, accordingly, subject to Article 3 and Section 14.1, this Plan and the
benefits hereunder may be terminated at any time in the sole and exclusive discretion of the
Committee without giving rise to any liability on the part of the Company, its Affiliates, and/or
its Subsidiaries.



12.2 Participation. No individual shall have the right to be selected to receive an Award under
this Plan, or, having been so selected, to be selected to receive a future Award.







 









 







12.3 Rights as a Shareholder. Except as otherwise provided in Section 8 of the Plan or in an Award
Agreement, a Participant shall have none of the rights of a shareholder with respect to Shares
covered by any Award until the Participant becomes the record holder of such Shares.




Article 13. ACCELERATION EVENT



The Compensation Committee shall specify in each Participant’s Award Agreement the treatment of
outstanding Awards upon an Acceleration Event; provided that any Converted Award will continue to
apply the definition of “change in control” or “acceleration event” as provided in the Predecessor
Corporation Equity Plan under which such Converted Award was originally granted, as adjusted
pursuant to the terms of the Benefits and Compensation Matters Agreement.




Article 14. AMENDMENT, MODIFICATION, SUSPENSION, AND TERMINATION



14.1 Amendment, Modification, Suspension, and Termination. Subject to Section 14.3, the Committee
may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and
any Award Agreement in whole or in part; provided, however, that, except for a
change or adjustment made pursuant to Section 4.2, no Option Price of an outstanding Option or
Grant Price of an outstanding SAR shall be reduced (whether through amendment, cancellation or
replacement of Awards with other Awards or other payments of cash or property) without shareholder
approval.



14.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards
in recognition of unusual or nonrecurring events (including, without limitation, the events
described in Section 4.2 hereof) affecting the Company or the financial statements of the Company
or of changes in applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent unintended dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan. The
determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and
binding on Participants under the Plan.



14.3 Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary, no
termination, amendment, suspension, or modification of the Plan or an Award Agreement shall
adversely affect in any material way any Award previously granted under the Plan, without the
written consent of the Participant holding such Award.




Article 15. WITHHOLDING



15.1 Tax Withholding. The Company shall have the power and the right to deduct or withhold, or
require a Participant to remit to the Company, the minimum statutory amount to satisfy federal,
state, and local taxes, domestic or foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of this Plan.







 









 







15.2 Share Withholding. With respect to withholding required upon the exercise of Options, or SARs,
upon the lapse of restrictions on Restricted Stock and Restricted Stock Units, or any other taxable
event arising as a result of Awards granted hereunder, Participants may elect, subject to the
approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having
the Company withhold Shares having a Fair Market Value on the date the tax is to be determined
equal to the minimum statutory total tax that could be imposed on the transaction. All such
elections shall be irrevocable, made in writing, and signed by the Participant, and shall be
subject to any restrictions or limitations that the Committee, in its sole discretion, deems
appropriate.




Article 16. SUCCESSORS



All obligations of the Company under the Plan with respect to Awards granted hereunder shall be
binding on any successor to the Company, whether the existence of such successor is the result of a
direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.




Article 17. GENERAL PROVISIONS



17.1 Forfeiture Events. The Committee may specify in an Award Agreement that the Participant’s
rights, payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance conditions of an Award. Such events
shall include, but shall not be limited to, termination of employment for cause, violation of
material Company and/or Affiliate policies, breach of noncompetition, confidentiality, or other
restrictive covenants that may apply to the Participant, or other conduct by the Participant that
is detrimental to the business or reputation of the Company and/or its Affiliates.



17.2 Legend. The certificates for Shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer of such Shares.



17.3 Gender and Number. Except where otherwise indicated by the context, any masculine term used
herein also shall include the feminine, the plural shall include the singular, and the singular
shall include the plural.



17.4 Severability. In the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not been included.



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



17.6 Securities Law Compliance. With respect to Insiders, transactions under this Plan are intended
to comply with all applicable conditions of Rule 16b-3 or its successor






 









 







under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to
so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by
the Committee.



17.7 Registration and Listing. The Company may use reasonable endeavors to register Shares allotted
pursuant to the exercise of an Award with the United States Securities and Exchange Commission or
to effect compliance with the registration, qualification, and listing requirements of any national
securities laws, stock exchange, or automated quotation system.



17.8 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of title
for Shares issued under the Plan prior to:





     (a) Obtaining any approvals from governmental agencies that the Company determines are
necessary or advisable; and




     (b) Completion of any registration or other qualification of the Shares under any
applicable national or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable.


17.9 Inability to Obtain Authority. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.



17.10 Employees or Directors Based Outside of the United States. Notwithstanding any provision of
the Plan to the contrary, in order to comply with the laws in other countries in which the Company
and its Affiliates operate or have Employees or Directors, the Committee, in its sole discretion,
shall have the power and authority to:





     (a) Determine which Affiliates shall be covered by the Plan;




     (b) Determine which Employees and/or Directors outside the United States are eligible
to participate in the Plan;




     (c) Modify the administrative terms and conditions of any Award granted to Employees
and/or Directors outside the United States to comply with applicable foreign laws;




     (d) Establish subplans and modify exercise procedures and other terms and procedures,
to the extent such actions may be necessary or advisable. Any subplans and modifications to
Plan terms and procedures established under this Section 17.10 by the Committee shall be
attached to this Plan document as appendices; and



 









 






     (e) Take any action, before or after an Award is made, that it deems advisable to
obtain approval or comply with any necessary local government regulatory exemptions or
approvals.


Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be
granted, that would violate the Exchange Act, the Code, any securities law, or governing statute or
any other applicable law.



17.11 Uncertificated Shares. To the extent that the Plan provides for issuance of certificates to
reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated
basis, to the extent not prohibited by applicable law or the rules of any stock exchange.



17.12 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any
investments that the Company may make to aid it in meeting its obligations under the Plan. Nothing
contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed
to create a trust of any kind, or a fiduciary relationship between the Company and any Participant,
beneficiary, legal representative, or any other person. To the extent that any person acquires a
right to receive payments from the Company under the Plan, such right shall be no greater than the
right of an unsecured general creditor of the Company. All payments to be made hereunder shall be
paid from the general funds of the Company and no special or separate fund shall be established and
no segregation of assets shall be made to assure payment of such amounts except as expressly set
forth in the Plan. The Plan is not subject to ERISA.



17.13 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan
or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued
or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.



17.14 Retirement and Welfare Plans. The value of compensation paid under this Plan will not be
included as “compensation” for purposes of computing the benefits payable to any participant under
the Company’s retirement plans (both qualified and non-qualified) or welfare benefit plans unless
such other plan expressly provides that such compensation shall be taken into account in computing
a participant’s benefit.



17.15 Governing Law. The Plan and each Award Agreement shall be governed by the laws of the State
of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan to the substantive law of another jurisdiction. Unless
otherwise provided in the Award Agreement, recipients of an Award under the Plan are deemed to
submit to the exclusive jurisdiction and venue of the federal or state courts of New York, to
resolve any and all issues that may arise out of or relate to the Plan or any related Award
Agreement.