exv10w4



 





Exhibit 10.4




QUANEX BUILDING PRODUCTS CORPORATION

2008 OMNIBUS INCENTIVE PLAN




 









 





	 	 	 	 	 	 	 	 	 
	ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Establishment	 	 	1	 
	 
	 	1.2	 	Purpose of the Plan	 	 	1	 
	 
	 	1.3	 	Duration of Plan	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II DEFINITIONS	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Affiliate	 	 	2	 
	 
	 	2.2	 	Annual Incentive Award	 	 	2	 
	 
	 	2.3	 	Award	 	 	2	 
	 
	 	2.4	 	Award Agreement	 	 	2	 
	 
	 	2.5	 	Board	 	 	2	 
	 
	 	2.6	 	Cash-Based Award	 	 	2	 
	 
	 	2.7	 	Change in Control of the Company	 	 	2	 
	 
	 	2.8	 	Code	 	 	3	 
	 
	 	2.9	 	Committee	 	 	3	 
	 
	 	2.10	 	Company	 	 	3	 
	 
	 	2.11	 	Corporate Change	 	 	3	 
	 
	 	2.12	 	Covered Employee	 	 	3	 
	 
	 	2.13	 	Director	 	 	3	 
	 
	 	2.14	 	Disability	 	 	3	 
	 
	 	2.15	 	Dividend Equivalent	 	 	4	 
	 
	 	2.16	 	Effective Date	 	 	4	 
	 
	 	2.17	 	Employee	 	 	4	 
	 
	 	2.18	 	Fair Market Value	 	 	4	 
	 
	 	2.19	 	Fiscal Year	 	 	4	 
	 
	 	2.20	 	Full Value Award	 	 	4	 
	 
	 	2.21	 	Holder	 	 	4	 
	 
	 	2.22	 	Minimum Statutory Tax Withholding Obligation	 	 	4	 
	 
	 	2.23	 	Option	 	 	4	 
	 
	 	2.24	 	Option Price	 	 	4	 
	 
	 	2.25	 	Other Stock-Based Award	 	 	4	 
	 
	 	2.26	 	Performance-Based Compensation	 	 	4	 
	 
	 	2.27	 	Performance Goals	 	 	4	 
	 
	 	2.28	 	Performance Stock Award	 	 	4	 
	 
	 	2.29	 	Performance Unit Award	 	 	5	 
	 
	 	2.30	 	Period of Restriction	 	 	5	 
	 
	 	2.31	 	Permissible under Section 409A	 	 	5	 
	 
	 	2.32	 	Plan	 	 	5	 
	 
	 	2.33	 	Restricted Stock	 	 	5	 
	 
	 	2.34	 	Restricted Stock Award	 	 	5	 
	 
	 	2.35	 	RSU	 	 	5	 
	 
	 	2.36	 	RSU Award	 	 	5	 
	 
	 	2.37	 	SAR	 	 	5	 
	 
	 	2.38	 	Section 409A	 	 	5	 
	 
	 	2.39	 	Stock	 	 	5	 
	 
	 	2.40	 	Substantial Risk of Forfeiture	 	 	5	 
	 
	 	2.41	 	Termination of Employment	 	 	5	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III ELIGIBILITY AND PARTICIPATION	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Eligibility	 	 	6	 
	 
	 	3.2	 	Participation	 	 	6	 






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	ARTICLE IV GENERAL PROVISIONS RELATING TO AWARDS	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Authority to Grant Awards	 	 	7	 
	 
	 	4.2	 	Dedicated Shares; Maximum Awards	 	 	7	 
	 
	 	4.3	 	Non-Transferability	 	 	8	 
	 
	 	4.4	 	Requirements of Law	 	 	8	 
	 
	 	4.5	 	Changes in the Company’s Capital Structure	 	 	8	 
	 
	 	4.6	 	Election Under Section 83(b) of the Code	 	 	11	 
	 
	 	4.7	 	Forfeiture for Cause	 	 	11	 
	 
	 	4.8	 	Forfeiture Events	 	 	11	 
	 
	 	4.9	 	Award Agreements	 	 	11	 
	 
	 	4.10	 	Amendments of Award Agreements	 	 	11	 
	 
	 	4.11	 	Rights as Stockholder	 	 	12	 
	 
	 	4.12	 	Issuance of Shares of Stock	 	 	12	 
	 
	 	4.13	 	Restrictions on Stock Received	 	 	12	 
	 
	 	4.14	 	Compliance With Section 409A	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V OPTIONS	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Authority to Grant Options	 	 	13	 
	 
	 	5.2	 	Option Agreement	 	 	13	 
	 
	 	5.3	 	Option Price	 	 	13	 
	 
	 	5.4	 	Duration of Option	 	 	13	 
	 
	 	5.5	 	Amount Exercisable	 	 	13	 
	 
	 	5.6	 	Exercise of Option	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI STOCK APPRECIATION RIGHTS	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Authority to Grant SAR Awards	 	 	13	 
	 
	 	6.2	 	General Terms	 	 	14	 
	 
	 	6.3	 	SAR Agreement	 	 	14	 
	 
	 	6.4	 	Term of SAR	 	 	14	 
	 
	 	6.5	 	Exercise of SAR	 	 	14	 
	 
	 	6.6	 	Payment of SAR Amount	 	 	14	 
	 
	 	6.7	 	Termination of Employment	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII RESTRICTED STOCK AWARDS	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	Restricted Stock Awards	 	 	15	 
	 
	 	7.2	 	Restricted Stock Award Agreement	 	 	15	 
	 
	 	7.3	 	Holder’s Rights as Stockholder	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII RESTRICTED STOCK UNIT AWARDS	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Authority to Grant RSU Awards	 	 	16	 
	 
	 	8.2	 	RSU Award	 	 	16	 
	 
	 	8.3	 	RSU Award Agreement	 	 	16	 
	 
	 	8.4	 	Dividend Equivalents	 	 	16	 
	 
	 	8.5	 	Form of Payment Under RSU Award	 	 	16	 
	 
	 	8.6	 	Time of Payment Under RSU Award	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS	 	 	17	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Authority to Grant Performance Stock Awards and Performance Unit Awards	 	 	17	 
	 
	 	9.2	 	Performance Goals	 	 	17	 
	 
	 	9.3	 	Time of Establishment of Performance Goals	 	 	17	 






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	 	9.4	 	Written Agreement	 	 	17	 
	 
	 	9.5	 	Form of Payment Under Performance Unit Award	 	 	18	 
	 
	 	9.6	 	Time of Payment Under Performance Unit Award	 	 	18	 
	 
	 	9.7	 	Holder’s Rights as Stockholder With Respect to a Performance Stock Award	 	 	18	 
	 
	 	9.8	 	Increases Prohibited	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X ANNUAL INCENTIVE AWARDS	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Authority to Grant Annual Incentive Awards	 	 	19	 
	 
	 	10.2	 	Covered Employees	 	 	19	 
	 
	 	10.3	 	Written Agreement	 	 	19	 
	 
	 	10.4	 	Form of Payment Under Annual Incentive Award	 	 	19	 
	 
	 	10.5	 	Time of Payment Under Annual Incentive Award	 	 	19	 
	 
	 	10.6	 	Increases Prohibited	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XI OTHER STOCK-BASED AWARDS	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	Authority to Grant Other Stock-Based Awards	 	 	20	 
	 
	 	11.2	 	Value of Other Stock-Based Award	 	 	20	 
	 
	 	11.3	 	Payment of Other Stock-Based Award	 	 	20	 
	 
	 	11.4	 	Termination of Employment	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XII CASH-BASED AWARDS	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 
	 	12.1	 	Authority to Grant Cash-Based Awards	 	 	21	 
	 
	 	12.2	 	Value of Cash-Based Award	 	 	21	 
	 
	 	12.3	 	Payment of Cash-Based Award	 	 	21	 
	 
	 	12.4	 	Termination of Employment	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XIII SUBSTITUTION AWARDS	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XIV ADMINISTRATION	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	 
	 	14.1	 	Awards	 	 	23	 
	 
	 	14.2	 	Authority of the Committee	 	 	23	 
	 
	 	14.3	 	Decisions Binding	 	 	23	 
	 
	 	14.4	 	No Liability	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XV AMENDMENT OR TERMINATION OF PLAN	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 
	 	15.1	 	Amendment, Modification, Suspension, and Termination	 	 	25	 
	 
	 	15.2	 	Awards Previously Granted	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE XVI MISCELLANEOUS	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	 
	 	16.1	 	Unfunded Plan/No Establishment of a Trust Fund	 	 	26	 
	 
	 	16.2	 	No Employment Obligation	 	 	26	 
	 
	 	16.3	 	Tax Withholding	 	 	26	 
	 
	 	16.4	 	Gender and Number	 	 	27	 
	 
	 	16.5	 	Severability	 	 	27	 
	 
	 	16.6	 	Headings	 	 	27	 
	 
	 	16.7	 	Other Compensation Plans	 	 	27	 
	 
	 	16.8	 	Retirement and Welfare Plans	 	 	27	 
	 
	 	16.9	 	Other Awards	 	 	27	 
	 
	 	16.10	 	Successors	 	 	27	 
	 
	 	16.11	 	Law Limitations/Governmental Approvals	 	 	27	 






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	 	16.12	 	Delivery of Title	 	 	27	 
	 
	 	16.13	 	Inability to Obtain Authority	 	 	27	 
	 
	 	16.14	 	Investment Representations	 	 	28	 
	 
	 	16.15	 	Persons Residing Outside of the United States	 	 	28	 
	 
	 	16.16	 	Arbitration of Disputes	 	 	28	 
	 
	 	16.17	 	Governing Law	 	 	28	 
	 
	 	16.18	 	Section 162(m) Stockholder Approval	 	 	28	 






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ARTICLE I




ESTABLISHMENT, PURPOSE AND DURATION




     1.1 Establishment. The Company hereby establishes an incentive compensation plan, to be known
as the “Quanex Building Products Corporation 2008 Omnibus Incentive Plan,” as set forth in this
document. The Plan permits the grant of Options, SARs, Restricted Stock, RSUs, Performance Stock
Awards, Performance Unit Awards, Annual Incentive Awards, Cash-Based Awards and Other Stock-Based
Awards. The Plan shall become effective as of the Effective Date.



     1.2 Purpose of the Plan. The Plan is intended to advance the best interests of the Company,
its Affiliates and its stockholders by providing those persons who have substantial responsibility
for the management and growth of the Company and its Affiliates with additional performance
incentives and an opportunity to obtain or increase their proprietary interest in the Company,
thereby encouraging them to continue in their employment or affiliation with the Company or its
Affiliates.



     1.3 Duration of Plan. The Plan shall continue indefinitely until it is terminated pursuant to
Section 15.1. The applicable provisions of the Plan will continue in effect with respect to an
Award granted under the Plan for as long as such Award remains outstanding.



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ARTICLE II




DEFINITIONS




     The words and phrases defined in this Article shall have the meaning set out below throughout
the Plan, unless the context in which any such word or phrase appears reasonably requires a
broader, narrower or different meaning.



     2.1 “Affiliate” means any corporation, partnership, limited liability company or association,
trust or other entity or organization which, directly or indirectly, controls, is controlled by, or
is under common control with, the Company. For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any entity or organization, shall mean the possession, directly or
indirectly, of the power (i) to vote more than fifty percent (50%) of the securities having
ordinary voting power for the election of directors of the controlled entity or organization, or
(ii) to direct or cause the direction of the management and policies of the controlled entity or
organization, whether through the ownership of voting securities or by contract or otherwise.



     2.2 “Annual Incentive Award” means an Award granted to a Holder pursuant to Article X.



     2.3 “Award” means, individually or collectively, a grant under the Plan of Options, SARs,
Restricted Stock, RSUs, Performance Stock Awards, Performance Unit Awards, Annual Incentive Awards,
Other Stock-Based Awards and Cash-Based Awards, in each case subject to the terms and provisions of
the Plan.



     2.4 “Award Agreement” means an agreement that sets forth the terms and conditions applicable
to an Award granted under the Plan.



     2.5 “Board” means the board of directors of the Company.



     2.6 “Cash-Based Award” means an Award granted pursuant to Article XII.



     2.7 “Change in Control of the Company” means the occurrence of any of the following after the
Effective Date:




     (a) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a “ Covered Person”) of beneficial ownership
(within the meaning of rule 13d-3 promulgated under the Exchange Act) of 20 percent or more
of either (i) the then outstanding shares of the common stock of the Company (the
“Outstanding Company Common Stock”), or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however,
that for purposes of this subsection (a) of this Section 2.7, the following acquisitions
shall not constitute a Change in Control of the Company: (i) any acquisition directly from
the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any entity
controlled by the Company, or (iv) any acquisition by any corporation pursuant to a
transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this
Section 2.7; or




     (b) individuals who, as of the Effective Date, constitute the Board of Directors (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board of
Directors; provided, however, that any individual becoming a director
subsequent to the Effective Date whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such



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individual were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a Covered Person
other than the Board; or




     (c) the consummation of (xx) a reorganization, merger or consolidation or sale of the
Company, or (yy) a disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business Combination, (i) all
or substantially all of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own, direct or
indirectly, more than 80 percent of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may
be, (ii) no Covered Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20 percent or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation, except to the
extent that such ownership existed prior to the Business Combination, and (iii) at least a
majority of the members of the board of directors of the corporation resulting from such
Business Combination, were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board of Directors, providing for such
Business Combination; or




     (d) the approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.



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



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



     2.10 “Company” means Quanex Building Products Corporation, a Delaware corporation, or any
successor (by reincorporation, merger or otherwise).



     2.11 “Corporate Change” shall have the meaning ascribed to that term in Section 4.5(c).



     2.12 “Covered Employee” means an Employee who is a “covered employee,” as defined in
section 162(m) of the Code and the regulations or other guidance promulgated by the Internal
Revenue Service under section 162(m) of the Code, or any successor statute.



     2.13 “Director” means a director of the Company who is not an Employee.



     2.14 “Disability” means as determined by the Committee in its discretion exercised in good
faith, a physical or mental condition of the Holder that would entitle him to payment of disability
income payments under the Company’s long-term disability insurance policy or plan for Employees as
then in effect; or in the event that the Holder is not covered, for whatever reason, under the
Company’s long-term disability insurance policy or plan for Employees or in the event the Company
does not maintain such a long-term
disability insurance policy, “Disability” means a permanent and total disability as defined in
section 22(e)(3) of the Code.



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A determination of Disability may be made by a physician selected or
approved by the Committee and, in this respect, the Holder shall submit to an examination by such
physician upon request by the Committee.



     2.15 “Dividend Equivalent” means a payment equivalent in amount to dividends paid to the
Company’s stockholders.



     2.16 “Effective Date” means the later of (a) the date the Plan is approved by the Board, (b)
the date the Plan is approved by the stockholder(s) of the Company and (c) the effective date of
the Company’s first effective registration statement filed under the Securities Act of 1933, as
amended.



     2.17 “Employee” means a person employed by the Company or any Affiliate as a common law
employee.



     2.18 “Fair Market Value” of the Stock as of any particular date means (1) if the Stock is
traded on a stock exchange, the closing sale price of the Stock on that date as reported on the
principal securities exchange on which the Stock is traded, or (2) if the Stock is traded in the
over-the-counter market, the average between the high bid and low asked price on that date as
reported in such over-the-counter market; provided that (a) if the Stock is not so traded, (b) if
no closing price or bid and asked prices for the stock was so reported on that date or (c) if, in
the discretion of the Committee, another means of determining the fair market value of a share of
Stock at such date shall be necessary or advisable, the Committee may provide for another means for
determining such fair market value.



     2.19 “Fiscal Year” means the Company’s fiscal year.



     2.20 “Full Value Award” means an Award other than in the form of an Option or SAR, and which
is settled by the issuance of shares of stock.



     2.21 “Holder” means a person who has been granted an Award or any person who is entitled to
receive shares of Stock or cash under an Award.



     2.22 “Minimum Statutory Tax Withholding Obligation” means, with respect to an Award, the
amount the Company or an Affiliate is required to withhold for federal, state and local taxes based
upon the applicable minimum statutory withholding rates required by the relevant tax authorities.



     2.23 “Option” means a “nonqualified stock option” to purchase Stock granted pursuant to
Article V that does not satisfy the requirements of section 422 of the Code.



     2.24 “Option Price” shall have the meaning ascribed to that term in Section 5.3.



     2.25 “Other Stock-Based Award” means an equity-based or equity-related Award not otherwise
described by the terms and provisions of the Plan that is granted pursuant to Article XI.



     2.26 “Performance-Based Compensation” means compensation under an Award that satisfies the
requirements of section 162(m) of the Code for deductibility of remuneration paid to Covered
Employees.



     2.27 “Performance Goals” means one or more of the criteria described in Section 9.2 on which
the performance goals applicable to an Award are based.



     2.28 “Performance Stock Award” means an Award designated as a performance stock award granted
to a Holder pursuant to Article IX.



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     2.29 “Performance Unit Award” means an Award designated as a performance unit award granted to
a Holder pursuant to Article IX.



     2.30 “Period of Restriction” means the period during which Restricted Stock is 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, in its discretion), as
provided in Article VII.



     2.31 “Permissible under Section 409A” means with respect to a particular action (such as, the
grant, payment, vesting, settlement or deferral of an amount or award under the Plan) that such
action shall not subject the compensation at issue to be subject to the additional tax or interest
applicable under Section 409A.



     2.32 “Plan” means the Quanex Building Products Corporation 2008 Omnibus Incentive Plan, as set
forth in this document as it may be amended from time to time.



     2.33 “Restricted Stock” means shares of restricted Stock issued or granted under the Plan
pursuant to Article VII.



     2.34 “Restricted Stock Award” means an authorization by the Committee to issue or transfer
Restricted Stock to a Holder.



     2.35 “RSU” means a restricted stock unit credited to a Holder’s ledger account maintained by
the Company pursuant to Article VIII.



     2.36 “RSU Award” means an Award granted pursuant to Article VIII.



     2.37 “SAR” means a stock appreciation right granted under the Plan pursuant to Article VI.



     2.38 “Section 409A” means section 409A of the Code and Department of Treasury rules and
regulations issued thereunder.



     2.39 “Stock” means the common stock of the Company, $0.01 par value per share (or such other
par value as may be designated by act of the Company’s stockholders). In addition, for purposes of
the Plan and the Awards, the term Stock shall also be deemed to include any rights to purchase
(“Rights”) any junior participating preferred stock of the Company that may then be trading
together with the Stock as provided in any agreement entered into by the Company relating to the
Rights.



     2.40 “Substantial Risk of Forfeiture” shall have the meaning ascribed to that term in Section
409A.



     2.41 “Termination of Employment” means the termination of the Award recipient’s employment
relationship with the Company and all Affiliates.



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ARTICLE III




ELIGIBILITY AND PARTICIPATION




     3.1 Eligibility. The persons who are eligible to receive Awards under the Plan other than
Annual Incentive Awards are key Employees and Directors. The persons who are eligible to receive
Annual Incentive Awards under the Plan are key executive Employees who, by the nature and scope of
their positions, regularly directly make or influence policy decisions which significantly impact
the overall results or success of the Company.



     3.2 Participation. Subject to the terms and provisions of the Plan, the Committee may, from
time to time, select the Employees and Directors to whom Awards shall be granted and shall
determine the nature and amount of each Award.



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ARTICLE IV




GENERAL PROVISIONS RELATING TO AWARDS




     4.1 Authority to Grant Awards. The Committee may grant Awards to those key Employees and
Directors as the Committee shall from time to time determine, under the terms and conditions of the
Plan. Subject only to any applicable limitations set out in the Plan, the number of shares of
Stock or other value to be covered by any Award to be granted under the Plan shall be as determined
by the Committee in its sole discretion.



     4.2 Dedicated Shares; Maximum Awards.




     (a) Number of Shares of Stock Dedicated under the Plan for Awards.




     (i) The aggregate number of shares of Stock with respect to which Awards may be
granted under the Plan is 2,900,000.




     (ii) The aggregate number of shares of Stock with respect to which Full Value
Awards may be granted under the Plan is 1,450,000.




     (b) Annual Award Limits. Unless and until the Committee determines that an Award to a
Covered Employee shall not be designed to qualify as Performance-Based Compensation, the
following limits (each an “Annual Award Limit” and, collectively, “Annual Award Limits”)
shall apply to grants of such Awards under the Plan:




     (i) The maximum number of shares of Stock with respect to which Options may be
granted to an Employee during a Fiscal Year is 350,000.




     (ii) The maximum number of shares with respect to which SARs may be granted to
an Employee during a Fiscal Year is 350,000.




     (iii) The maximum aggregate number of shares of Stock with respect to which
Restricted Stock and Performance Stock Awards may be granted to a Participant during
a Fiscal Year is 175,000.




     (iv) The maximum number of shares of Stock with respect to which Performance
Unit Awards payable in Stock may be granted to an Employee during a Fiscal Year is
175,000.




     (v) The maximum value of cash with respect to which Performance Unit Awards
payable in cash may be granted to an Employee during a Fiscal Year, determined as of
the dates of Grants of the Performance Unit Awards, is $2,500,000.




     (vi) The maximum amount that may be paid to an Employee under Annual Incentive
Award(s) granted to an Employee during a Fiscal Year is $2,500,000.




     (c) Share Usage. Each of the foregoing numerical limits stated in this Section 4.2
shall be subject to adjustment in accordance with the provisions of Section 4.5. The number
of shares of Stock stated in this Section 4.2 shall also be increased by such number of
shares of Stock as become subject to substitute Awards granted pursuant to Article XIII;
provided, however, that such increase shall be conditioned upon the approval of the
stockholders of the Company to the extent stockholder approval is required by law or
applicable stock exchange rules. If shares of Stock are withheld from payment of an



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Award to satisfy tax obligations with respect to the Award, such shares of Stock will
count against the aggregate number of shares of Stock with respect to which Awards may be
granted under the Plan. If shares of Stock are tendered in payment of an Option Price of an
Option, such shares of Stock will not be added to the aggregate number of shares of Stock
with respect to which Awards may be granted under the Plan. To the extent that any
outstanding Award is forfeited or cancelled for any reason or is settled in cash in lieu of
shares of Stock, the shares of Stock allocable to such portion of the Award may again be
subject to an Award granted under the Plan. When a SAR is settled in shares of Stock, the
number of shares of Stock subject to the SAR under the SAR Award Agreement will be counted
against the aggregate number of shares of Stock with respect to which Awards may be granted
under the Plan as one share for every share subject to the SAR, regardless of the number of
shares used to settle the SAR upon exercise.



     4.3 Non-Transferability. Except as specified in the applicable Award Agreements or in
domestic relations court orders, an Award shall not be transferable by the Holder other than by
will or under the laws of descent and distribution, and shall be exercisable, during the Holder’s
lifetime, only by him or her. Any attempted assignment of an Award in violation of this Section
4.3 shall be null and void. In the discretion of the Committee, any attempt to transfer an Award
other than under the terms of the Plan and the applicable Award Agreement may terminate the Award.



     4.4 Requirements of Law. The Company shall not be required to sell or issue any shares of
Stock under any Award if issuing those shares of Stock would constitute or result in a violation by
the Holder or the Company of any provision of any law, statute or regulation of any governmental
authority. Specifically, in connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any other Award, the Company
shall not be required to issue any shares of Stock unless the Committee has received evidence
satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in
accordance with applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law. The determination
by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall
in no event be obligated to, register any shares of Stock covered by the Plan pursuant to
applicable securities laws of any country or any political subdivision. In the event the shares of
Stock issuable on exercise of an Option or pursuant to any other Award are not registered, the
Company may imprint on the certificate evidencing the shares of Stock any legend that counsel for
the Company considers necessary or advisable to comply with applicable law, or, should the shares
of Stock be represented by book or electronic entry rather than a certificate, the Company may take
such steps to restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law. The Company shall not be obligated to take
any other affirmative action in order to cause or enable the exercise of an Option or any other
Award, or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of
any governmental authority.



     4.5 Changes in the Company’s Capital Structure.




     (a) The existence of outstanding Awards shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital structure or
its business, any merger or consolidation of the Company, any issue of bonds, debentures,
preferred or prior preference shares ahead of or affecting the Stock or Stock rights, the
dissolution or liquidation of the Company, any sale or transfer of all or any part of its
assets or business or any other corporate act or proceeding, whether of a similar character
or otherwise.




     (b) If the Company shall effect a subdivision or consolidation of Stock or other
capital readjustment, the payment of a Stock dividend, or other increase or reduction of the
number of shares of Stock outstanding, without receiving compensation therefor in money,
services or property, then (1) the



8









 







number, class or series and per share price of Stock subject to outstanding Options or
other Awards under the Plan shall be appropriately adjusted in such a manner as to entitle a
Holder to receive upon exercise of an Option or other Award, for the same aggregate cash
consideration, the equivalent total number and class or series of Stock the Holder would
have received had the Holder exercised his or her Option or other Award in full immediately
prior to the event requiring the adjustment, and (2) the number and class or series of Stock
then reserved to be issued under the Plan shall be adjusted by substituting for the total
number and class or series of Stock then reserved, that number and class or series of Stock
that would have been received by the owner of an equal number of outstanding shares of Stock
of each class or series of Stock as the result of the event requiring the adjustment.




     (c) If while unexercised Options or other Awards remain outstanding under the Plan
(1) the Company shall not be the surviving entity in any merger, consolidation or other
reorganization (or survives only as a subsidiary of an entity other than an entity that was
wholly-owned by the Company immediately prior to such merger, consolidation or other
reorganization), (2) the Company sells, leases or exchanges or agrees to sell, lease or
exchange all or substantially all of its assets to any other person or entity (other than an
entity wholly-owned by the Company), (3) the Company is to be dissolved or (4) the Company
is a party to any other corporate transaction (as defined under section 424(a) of the Code
and applicable Department of Treasury regulations) that is not described in clauses (1), (2)
or (3) of this sentence (each such event is referred to herein as a “Corporate Change”),
then, except as otherwise provided in an Award Agreement or another agreement between the
Holder and the Company (provided that such exceptions shall not apply in the case of a
reincorporation merger), or as a result of the Committee’s effectuation of one or more of
the alternatives described below, there shall be no acceleration of the time at which any
Award then outstanding may be exercised, and no later than ten days after the approval by
the stockholders of the Company of such Corporate Change, the Committee, acting in its sole
and absolute discretion without the consent or approval of any Holder, shall act to effect
one or more of the following alternatives, which may vary among individual Holders and which
may vary among Awards held by any individual Holder (provided that, with respect to a
reincorporation merger in which Holders of the Company’s ordinary shares will receive one
ordinary share of the successor corporation for each ordinary share of the Company, none of
such alternatives shall apply and, without Committee action, each Award shall automatically
convert into a similar award of the successor corporation exercisable for the same number of
ordinary shares of the successor as the Award was exercisable for ordinary shares of Stock
of the Company):




     (1) accelerate the time at which some or all of the Awards then
outstanding may be exercised so that such Awards may be exercised in full for
a limited period of time on or before a specified date (before or after such
Corporate Change) fixed by the Committee, after which specified date all such
Awards that remain unexercised and all rights of Holders thereunder shall
terminate;




     (2) require the mandatory surrender to the Company by all or selected
Holders of some or all of the then outstanding Awards held by such Holders
(irrespective of whether such Awards are then exercisable under the
provisions of the Plan or the applicable Award Agreement evidencing such
Award) as of a date, before or after such Corporate Change, specified by the
Committee, in which event the Committee shall thereupon cancel such Award and
the Company shall pay to each such Holder an amount of cash per share equal
to the excess, if any, of the per share price offered to stockholders of the
Company in connection with such Corporate Change over the exercise prices
under such Award for such shares;




     (3) with respect to all or selected Holders, have some or all of their
then outstanding Awards (whether vested or unvested) assumed or have a new
award of a



9









 







similar nature substituted for some or all of their then outstanding
Awards under the Plan (whether vested or unvested) by an entity which is a
party to the transaction resulting in such Corporate Change and which is then
employing such Holder or which is affiliated or associated with such Holder
in the same or a substantially similar manner as the Company prior to the
Corporate Change, or a parent or subsidiary of such entity, provided that
(A) such assumption or substitution is on a basis where the excess of the
aggregate fair market value of the Stock subject to the Award immediately
after the assumption or substitution over the aggregate exercise price of
such Stock is equal to the excess of the aggregate fair market value of all
Stock subject to the Award immediately before such assumption or substitution
over the aggregate exercise price of such Stock, and (B) the assumed rights
under such existing Award or the substituted rights under such new Award, as
the case may be, will have the same terms and conditions as the rights under
the existing Award assumed or substituted for, as the case may be;




     (4) provide that the number and class or series of Stock covered by an
Award (whether vested or unvested) theretofore granted shall be adjusted so
that such Award when exercised shall thereafter cover the number and class or
series of Stock or other securities or property (including, without
limitation, cash) to which the Holder would have been entitled pursuant to
the terms of the agreement or plan relating to such Corporate Change if,
immediately prior to such Corporate Change, the Holder had been the holder of
record of the number of shares of Stock then covered by such Award; or




     (5) make such adjustments to Awards then outstanding as the Committee
deems appropriate to reflect such Corporate Change (provided, however, that
the Committee may determine in its sole and absolute discretion that no such
adjustment is necessary).




     Any adjustment effected by the Committee under Section 4.5 shall be designed to provide
the Holder with the intrinsic value of his or her Award, as determined prior to the
Corporate Change, or, if applicable, equalize the Fair Market Value of the Award before and
after the Corporate Change.




     In effecting one or more of the alternatives set out in paragraphs (3), (4) or (5)
immediately above, and except as otherwise may be provided in an Award Agreement, the
Committee, in its sole and absolute discretion and without the consent or approval of any
Holder, may accelerate the time at which some or all Awards then outstanding may be
exercised.




     (d) In the event of changes in the outstanding Stock by reason of recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes
in capitalization occurring after the date of the grant of any Award and not otherwise
provided for by this Section 4.5, any outstanding Award and any Award Agreement evidencing
such Award shall be subject to adjustment by the Committee in its sole and absolute
discretion as to the number and price of Stock or other consideration subject to such Award.
In the event of any such change in the outstanding Stock, the aggregate number of shares of
Stock available under the Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.




     (e) After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company shall be the
surviving corporation, each Holder shall be entitled to have his Restricted Stock
appropriately adjusted based on the manner in which the shares of Stock were adjusted under
the terms of the agreement of merger or consolidation.



10









 






     (f) The issuance by the Company of stock of any class or series, or securities
convertible into, or exchangeable for, stock of any class or series, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights or warrants
to subscribe for them, or upon conversion or exchange of stock or obligations of the Company
convertible into, or exchangeable for, stock or other securities, shall not affect, and no
adjustment by reason of such issuance shall be made with respect to, the number, class or
series, or price of shares of Stock then subject to outstanding Options or other Awards.



     4.6 Election Under Section 83(b) of the Code. No Holder shall exercise the election permitted
under section 83(b) of the Code with respect to any Award without the written approval of the Chief
Financial Officer or General Counsel of the Company. Any Holder who makes an election under
section 83(b) of the Code with respect to any Award without the written approval of the Chief
Financial Officer or General Counsel of the Company may, in the discretion of the Committee,
forfeit any or all Awards granted to him or her under the Plan.



     4.7 Forfeiture for Cause. Notwithstanding any other provision of the Plan or an Award
Agreement, if the Committee finds by a majority vote that a Holder, before or after his Termination
of Employment (a) committed fraud, embezzlement, theft, felony or an act of dishonesty in the
course of his employment by the Company or an Affiliate which conduct damaged the Company or an
Affiliate or (b) disclosed trade secrets of the Company or an Affiliate, then as of the date the
Committee makes its finding, any Awards awarded to the Holder that have not been exercised by the
Holder (including all Awards that have not yet vested) will be forfeited to the Company. The
findings and decision of the Committee with respect to such matter, including those regarding the
acts of the Holder and the damage done to the Company, will be final for all purposes. No decision
of the Committee, however, will affect the finality of the discharge of the individual by the
Company or an Affiliate.



     4.8 Forfeiture Events. The Committee may specify in an Award Agreement that the Holder’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
may include, but shall not be limited to, Termination of Employment for cause, termination of the
Holder’s provision of services to the Company or its Affiliates, violation of material policies of
the Company and its Affiliates, breach of noncompetition, confidentiality, or other restrictive
covenants that may apply to the Holder, or other conduct by the Holder that is detrimental to the
business or reputation of the Company and its Affiliates.



     4.9 Award Agreements. Each Award shall be embodied in a written agreement that shall be
subject to the terms and conditions of the Plan. The Award Agreement shall be signed by an
executive officer of the Company, other than the Holder, on behalf of the Company, and may be
signed by the Holder to the extent required by the Committee. The Award Agreement may specify the
effect of a Change in Control of the Company on the Award. The Award Agreement may contain any
other provisions that the Committee in its discretion shall deem advisable which are not
inconsistent with the terms and provisions of the Plan.



     4.10 Amendments of Award Agreements. The terms of any outstanding Award under the Plan may be
amended from time to time by the Committee in its discretion in any manner that it deems
appropriate and that is consistent with the terms of the Plan. However, no such amendment shall
adversely affect in a material manner any right of a Holder without his or her written consent.
Except as specified in Section 4.5(b), the Committee may not directly or indirectly lower the
exercise price of a previously granted Option or the grant price of a previously granted SAR.



     4.11 Rights as Stockholder. A Holder shall not have any rights as a stockholder with respect
to Stock covered by an Option, a SAR, an RSU, a Performance Stock Unit, or an Other Stock-Based
Award until the date,



11









 







if any, such Stock is issued by the Company; and, except as otherwise provided in Section 4.5,
no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to
the date of issuance of such Stock.



     4.12 Issuance of Shares of Stock. Shares of Stock, when issued, may be represented by a
certificate or by book or electronic entry.



     4.13 Restrictions on Stock Received. The Committee may impose such conditions and/or
restrictions on any shares of Stock issued pursuant to an Award as it may deem advisable or
desirable. These restrictions may include, but shall not be limited to, a requirement that the
Holder hold the shares of Stock for a specified period of time.



     4.14 Compliance With Section 409A. Awards shall be designed and operated in such a manner
that they are either exempt from the application of, or comply with, the requirements of Section
409A.



12









 





ARTICLE V




OPTIONS




     5.1 Authority to Grant Options. Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons
in such number and upon such terms as the Committee shall determine.



     5.2 Option Agreement. Each Option grant under the Plan shall be evidenced by an Award
Agreement that shall specify (a) the Option Price, (b) the duration of the Option, (c) the number
of shares of Stock to which the Option pertains, (d) the exercise restrictions, if any, applicable
to the Option and (e) such other provisions as the Committee shall determine that are not
inconsistent with the terms and provisions of the Plan.



     5.3 Option Price. The price at which shares of Stock may be purchased under an Option (the
“Option Price”) shall not be less than one hundred percent (100%) of the Fair Market Value of the
shares of Stock on the date the Option is granted. Subject to the limitations set forth in the
preceding sentences of this Section 5.3, the Committee shall determine the Option Price for each
grant of an Option under the Plan.



     5.4 Duration of Option. An Option shall not be exercisable after the earlier of (i) the
general term of the Option specified in the applicable Award Agreement (which shall not exceed ten
years) or (ii) the period of time specified in the applicable Award Agreement that follows the
Holder’s Termination of Employment or severance of affiliation relationship with the Company.



     5.5 Amount Exercisable. Each Option may be exercised at the time, in the manner and subject
to the conditions the Committee specifies in the Award Agreement in its sole discretion.



     5.6 Exercise of Option. Subject to the terms and provisions of the Plan and the applicable
Award Agreement, Options may be exercised in whole or in part from time to time by the delivery of
written or electronic notice in the manner designated by the Committee stating (1) that the Holder
wishes to exercise such Option on the date such notice is so delivered, (2) the number of shares of
Stock with respect to which the Option is to be exercised and (3) the address to which any
certificate representing such shares of Stock should be mailed. For the notice to be effective the
notice must be accompanied by payment of the Option Price by any combination of the following:
(a) cash, certified check, bank draft or postal or express money order for an amount equal to the
Option Price under the Option, (b) an election to make a cashless or net exercise (if approved in
advance by the Committee or an executive officer of the Company, and in such form as permitted by
the Committee) or (c) any other form of payment which is acceptable to the Committee and permitted
by applicable law.



ARTICLE VI




STOCK APPRECIATION RIGHTS




     6.1 Authority to Grant SAR Awards. Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant SARs under the Plan to eligible persons in
such number and upon such terms as the Committee shall determine. Subject to the terms and
conditions of the Plan, the Committee shall have complete discretion in determining the number of
SARs granted to each Holder and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.



13









 





     6.2 General Terms. Subject to the terms and conditions of the Plan, a SAR granted under the
Plan shall confer on the recipient a right to receive, upon exercise thereof, an amount equal to
the excess of (a) the Fair Market Value of one share of the Stock on the date of exercise over
(b) the grant price of the SAR, which shall not be less than one hundred percent (100%) of the Fair
Market Value of one share of the Stock on the date of grant of the SAR.



     6.3 SAR Agreement. Each Award of SARs granted under the Plan shall be evidenced by an Award
Agreement that shall specify (a) the grant price of the SAR, (b) the term of the SAR, (c) the
vesting and termination provisions of the SAR and (d) such other provisions as the Committee shall
determine that are not inconsistent with the terms and provisions of the Plan. The Committee may
impose such additional conditions or restrictions on the exercise of any SAR as it may deem
appropriate.



     6.4 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 on or after the tenth
anniversary date of its grant.



     6.5 Exercise of SAR. A SAR may be exercised upon whatever terms and conditions the Committee,
in its sole discretion, imposes.



     6.6 Payment of SAR Amount. Upon the exercise of a SAR, a Holder shall be entitled to receive
payment from the Company in an amount determined by multiplying the excess of the Fair Market Value
of a share of Stock on the date of exercise over the grant price of the SAR by the number of shares
of Stock with respect to which the SAR is exercised. At the discretion of the Committee, the
payment upon SAR exercise may be in cash, in Stock of equivalent value, in some combination thereof
or in any other manner approved by the Committee in 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.



     6.7 Termination of Employment. Each Award Agreement shall set forth the extent to which the
Holder of a SAR shall have the right to exercise the SAR following the Holder’s Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee, may be
included in the Award Agreement entered into with the Holder, need not be uniform among all SARs
issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.



14









 





ARTICLE VII




RESTRICTED STOCK AWARDS




     7.1 Restricted Stock Awards. The Committee may make Awards of Restricted Stock to eligible
persons selected by it. The amount of, the vesting and the transferability restrictions applicable
to any Restricted Stock Award shall be determined by the Committee in its sole discretion. If the
Committee imposes vesting or transferability restrictions on a Holder’s rights with respect to
Restricted Stock, the Committee may issue such instructions to the Company’s share transfer agent
in connection therewith as it deems appropriate. The Committee may also cause the certificate for
shares of Stock issued pursuant to a Restricted Stock Award to be imprinted with any legend which
counsel for the Company considers advisable with respect to the restrictions or, should the shares
of Stock be represented by book or electronic entry rather than a certificate, the Company may take
such steps to restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law.



     7.2 Restricted Stock Award Agreement. Each Restricted Stock Award shall be evidenced by an
Award Agreement that contains any vesting, transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.



     7.3 Holder’s Rights as Stockholder. Subject to the terms and conditions of the Plan, each
recipient of a Restricted Stock Award shall have all the rights of a stockholder with respect to
the shares of Restricted Stock included in the Restricted Stock Award during the Period of
Restriction established for the Restricted Stock Award. Dividends paid with respect to Restricted
Stock in cash or property other than shares of Stock or rights to acquire shares of Stock shall be
paid to the recipient of the Restricted Stock Award currently. Dividends paid in shares of Stock
or rights to acquire shares of Stock shall be added to and become a part of the Restricted Stock.
During the Period of Restriction, certificates representing the Restricted Stock shall be
registered in the Holder’s name and bear a restrictive legend to the effect that ownership of such
Restricted Stock, and the enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms, and conditions provided in the Plan and the applicable Award Agreement. Such
certificates shall be deposited by the recipient with the Secretary of the Company or such other
officer of the Company as may be designated by the Committee, together with all stock powers or
other instruments of assignment, each endorsed in blank, which will permit transfer to the Company
of all or any portion of the Restricted Stock which shall be forfeited in accordance with the Plan
and the applicable Award Agreement.



15









 





ARTICLE VIII




RESTRICTED STOCK UNIT AWARDS




     8.1 Authority to Grant RSU Awards. Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant RSU Awards under the Plan to eligible
persons in such amounts and upon such terms as the Committee shall determine. The amount of, the
vesting and the transferability restrictions applicable to any RSU Award shall be determined by the
Committee in its sole discretion. The Committee shall maintain a bookkeeping ledger account which
reflects the number of RSUs credited under the Plan for the benefit of a Holder.



     8.2 RSU Award. An RSU Award shall be similar in nature to a Restricted Stock Award except
that no shares of Stock are actually transferred to the Holder until a later date specified in the
applicable Award Agreement. Each RSU shall have a value equal to the Fair Market Value of a share
of Stock.



     8.3 RSU Award Agreement. Each RSU Award shall be evidenced by an Award Agreement that
contains any Substantial Risk of Forfeiture, transferability restrictions, form and time of payment
provisions and other provisions not inconsistent with the Plan as the Committee may specify.



     8.4 Dividend Equivalents. An Award Agreement for an RSU Award may specify that the Holder
shall be entitled to the payment of Dividend Equivalents under the Award.



     8.5 Form of Payment Under RSU Award. Payment under an RSU Award shall be made in either cash
or shares of Stock as specified in the applicable Award Agreement.



     8.6 Time of Payment Under RSU Award. A Holder’s payment under an RSU Award shall be made at
such time as is specified in the applicable Award Agreement. The Award Agreement shall specify
that the payment will be made (1) by a date that is no later than the date that is two and one-half
(2 1/2) months after the end of the Fiscal Year in which the RSU Award payment is no longer subject
to a Substantial Risk of Forfeiture or (2) at a time that is permissible under Section 409A.



16









 





ARTICLE IX




PERFORMANCE STOCK AWARDS AND PERFORMANCE UNIT AWARDS




     9.1 Authority to Grant Performance Stock Awards and Performance Unit Awards. Subject to the
terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant
Performance Stock Awards and Performance Unit Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine. The amount of, the vesting and the
transferability restrictions applicable to any Performance Stock Award or Performance Unit Award
shall be based upon the attainment of such Performance Goals as the Committee may determine. If
the Committee imposes vesting or transferability restrictions on a Holder’s rights with respect to
Performance Stock or Performance Unit Awards, the Committee may issue such instructions to the
Company’s share transfer agent in connection therewith as it deems appropriate. The Committee may
also cause the certificate for shares of Stock issued pursuant to a Performance Stock or
Performance Unit Award to be imprinted with any legend which counsel for the Company considers
advisable with respect to the restrictions or, should the shares of Stock be represented by book or
electronic entry rather than a certificate, the Company may take such steps to restrict transfer of
the shares of Stock as counsel for the Company considers necessary or advisable to comply with
applicable law.



     9.2 Performance Goals. A Performance Goal must be objective such that a third party having
knowledge of the relevant facts could determine whether the goal is met. 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 Goals,
which may be based on one or more business criteria that apply to the Holder, one or more business
units of the Company, or the Company as a whole, with reference to one or more of the following:
earnings per share, total stockholder return, cash return on capitalization, increased revenue,
revenue ratios (per employee or per customer), net income, stock price, market share, return on
equity, return on assets, return on capital, return on capital compared to cost of capital, return
on capital employed, return on invested capital, stockholder value, net cash flow, operating
income, earnings before interest and taxes, cash flow, cash flow from operations, cost reductions
and cost ratios (per employee or per customer), or the achievement of specified milestones or the
completion of specified projects identified as contributing substantially to the Company’s success
or value or the attainment of the Company’s strategic goals. Goals may also be based on
performance relative to a peer group of companies. Unless otherwise stated, such a Performance
Goal need not be based upon an increase or positive result under a particular business criterion
and could include, for example, maintaining the status quo or limiting economic losses (measured,
in each case, by reference to specific business criteria). In interpreting Plan provisions
applicable to Performance Goals and Performance Stock or Performance Unit Awards, it is intended
that the Plan will conform with the standards of section 162(m) of the Code and Treasury
Regulations § 1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the
Plan shall be guided by such provisions. Prior to the payment of any compensation based on the
achievement of Performance Goals, the Committee must certify in writing that applicable Performance
Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms, conditions and limitations applicable to any Performance Stock or
Performance Unit Awards made pursuant to the Plan shall be determined by the Committee.



     9.3 Time of Establishment of Performance Goals. With respect to an Award to a Covered
Employee that is intended to qualify as Performance-Based Compensation, a Performance Goal for a
particular Performance Stock Award or Performance Unit Award must be established by the Committee
prior to the earlier to occur of (a) 90 days after the commencement of the period of service to
which the Performance Goal relates or (b) the lapse of 25 percent of the period of service, and in
any event while the outcome is substantially uncertain.



     9.4 Written Agreement. Each Performance Stock Award or Performance Unit Award shall be
evidenced by an Award Agreement that contains any vesting, transferability restrictions and other
provisions not inconsistent with the Plan as the Committee may specify.



17









 





     9.5 Form of Payment Under Performance Unit Award. Payment under a Performance Unit Award
shall be made in cash and/or shares of Stock as specified in the Holder’s Award Agreement.



     9.6 Time of Payment Under Performance Unit Award. A Holder’s payment under a Performance Unit
Award shall be made at such time as is specified in the applicable Award Agreement. The Award
Agreement shall specify that the payment will be made (1) by a date that is no later than the date
that is two and one-half (2 1/2) months after the end of the calendar year in which the Performance
Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) at a time that
is permissible under Section 409A.



     9.7 Holder’s Rights as Stockholder With Respect to a Performance Stock Award. Subject to the
terms and conditions of the Plan, each Holder of a Performance Stock Award shall have all the
rights of a stockholder with respect to the shares of Stock issued to the Holder pursuant to the
Award during any period in which such issued shares of Stock are subject to forfeiture and
restrictions on transfer, including without limitation, the right to vote such shares of Stock.



     9.8 Increases Prohibited. None of the Committee or the Board may increase the amount of
compensation payable under a Performance Stock or Performance Unit Award. If the time at which a
Performance Stock or Performance Unit Award will vest or be paid is accelerated for any reason, the
number of shares of Stock subject to, or the amount payable under, the Performance Stock or
Performance Unit Award shall be reduced pursuant to Department of Treasury Regulation section
1.162-27(e)(2)(iii) to reasonably reflect the time value of money.



18









 





ARTICLE X




ANNUAL INCENTIVE AWARDS




     10.1 Authority to Grant Annual Incentive Awards. Subject to the terms and provisions of the
Plan, the Committee, at any time, and from time to time, may grant Annual Incentive Awards under
the Plan to key executive Employees who, by the nature and scope of their positions, regularly
directly make or influence policy decisions which significantly impact the overall results or
success of the Company in such amounts and upon such terms as the Committee shall determine. The
amount of any Annual Incentive Awards shall be based on the attainment of such Performance Goals as
the Committee may determine.



     10.2 Covered Employees. The Performance Goals upon which the payment or vesting of an Annual
Incentive Award to a Covered Employee that is intended to qualify as Performance-Based Compensation
must meet the requirements of Sections 9.2, 9.3, 9.8 and 9.9 as applied to such Annual Incentive
Award. In interpreting Plan provisions applicable to Performance Goals with respect to Covered
Employees, it is intended that the Plan will generally conform with the standards of section 162(m)
of the Code and Treasury Regulations section 1.162-27(e)(2)(i), and the Committee in establishing
such goals and interpreting the Plan shall be guided by such provisions to the extent the Award is
intended to qualify as Performance-Based Compensation as described under section 162(m) of the
Code. Prior to the payment of any compensation to a Covered Employee based on the achievement of
Performance Goals, the Committee must certify in writing that applicable Performance Goals and any
of the material terms thereof were, in fact, satisfied.



     10.3 Written Agreement. Each Annual Incentive Award shall be evidenced by an Award Agreement
that contains any vesting, transferability restrictions and other provisions not inconsistent with
the Plan as the Committee may specify.



     10.4 Form of Payment Under Annual Incentive Award. Payment under an Annual Incentive Award
shall be made in cash.



     10.5 Time of Payment Under Annual Incentive Award. A Holder’s payment under an Annual
Incentive Award shall be made at such time as is specified in the applicable Award Agreement. The
Award Agreement shall specify that the payment will be made (1) by a date that is no later than the
date that is two and one-half (2 1/2) months after the end of the calendar year in which the Annual
Incentive Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) at a time
that is permissible under Section 409A.



     10.6 Increases Prohibited. None of the Committee or the Board may increase the amount of
compensation payable under an Annual Incentive Award. If the time at which an Annual Incentive
Award will be paid is accelerated for any reason, the amount payable under the Annual Incentive
Award shall be reduced pursuant to Department of Treasury Regulation section 1.162-27(e)(2)(iii) to
reasonably reflect the time value of money.



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ARTICLE XI




OTHER STOCK-BASED AWARDS




     11.1 Authority to Grant Other Stock-Based Awards. The Committee may grant to eligible persons
other types of equity-based or equity-related Awards not otherwise described by the terms and
provisions of the Plan (including the grant or offer for sale of unrestricted shares of Stock) in
such amounts and subject to such terms and conditions, as the Committee shall determine. Such
Awards may involve the transfer of actual shares of Stock to Holders, or payment in cash or
otherwise of amounts based on the value of shares of Stock and may include, without limitation,
Awards designed to comply with or take advantage of the applicable local laws of jurisdictions
other than the United States.



     11.2 Value of Other Stock-Based Award. Each Other Stock-Based Award shall be expressed in
terms of shares of Stock or units based on shares of Stock, as determined by the Committee.



     11.3 Payment of Other Stock-Based Award. Payment, if any, with respect to an Other
Stock-Based Award shall be made in accordance with the terms of the Award, in cash or shares of
Stock as the Committee determines.



     11.4 Termination of Employment. The Committee shall determine the extent to which a Holder’s
rights with respect to Other Stock-Based Awards shall be affected by the Holder’s Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Other Stock-Based Awards issued pursuant to the Plan



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ARTICLE XII




CASH-BASED AWARDS




     12.1 Authority to Grant Cash-Based Awards. Subject to the terms and provisions of the Plan,
the Committee, at any time, and from time to time, may grant Cash-Based Awards under the Plan to
eligible persons in such amounts and upon such terms as the Committee shall determine.



     12.2 Value of Cash-Based Award. Each Cash-Based Award shall specify a payment amount or
payment range as determined by the Committee.



     12.3 Payment of Cash-Based Award. Payment, if any, with respect to a Cash-Based Award shall
be made in accordance with the terms of the Award, in cash.



     12.4 Termination of Employment. The Committee shall determine the extent to which a Holder’s
rights with respect to Cash-Based Awards shall be affected by the Holder’s Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Cash-Based Awards issued pursuant to the Plan.



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ARTICLE XIII




SUBSTITUTION AWARDS




     Awards may be granted under the Plan from time to time in substitution for stock options and
other awards held by employees of other entities who are about to become Employees, or whose
employer is about to become an Affiliate as the result of a merger or consolidation of the Company
with another corporation, or the acquisition by the Company of substantially all the assets of
another corporation, or the acquisition by the Company of at least fifty percent (50%) of the
issued and outstanding stock of another corporation as the result of which such other corporation
will become a subsidiary of the Company. The terms and conditions of the substitute Awards so
granted may vary from the terms and conditions set forth in the Plan to such extent as the Board at
the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the
Award in substitution for which they are granted.



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ARTICLE XIV




ADMINISTRATION




     14.1 Awards. The Plan shall be administered by the Committee or, in the absence of the
Committee, the Plan shall be administered by the Board. The members of the Committee shall serve
at the discretion of the Board. The Committee shall have full and exclusive power and authority to
administer the Plan and to take all actions that the Plan expressly contemplates or are necessary
or appropriate in connection with the administration of the Plan with respect to Awards granted
under the Plan.



     14.2 Authority of the Committee. The Committee shall have full and exclusive power to
interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to
adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem
necessary or proper, all of which powers shall be exercised in the best interests of the Company
and in keeping with the objectives of the Plan. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority of those members
present at any meeting shall decide any question brought before that meeting. Any decision or
determination reduced to writing and signed by a majority of the members shall be as effective as
if it had been made by a majority vote at a meeting properly called and held. All questions of
interpretation and application of the Plan, or as to Awards granted under the Plan, shall be
subject to the determination, which shall be final and binding, of a majority of the whole
Committee. No member of the Committee shall be liable for any act or omission of any other member
of the Committee or for any act or omission on his own part, including but not limited to the
exercise of any power or discretion given to him under the Plan, except those resulting from his
own gross negligence or willful misconduct. In carrying out its authority under the Plan, the
Committee shall have full and final authority and discretion, including but not limited to the
following rights, powers and authorities to (a) determine the persons to whom and the time or times
at which Awards will be made; (b) determine the number and exercise price of shares of Stock
covered in each Award subject to the terms and provisions of the Plan; (c) determine the terms,
provisions and conditions of each Award, which need not be identical and need not match the default
terms set forth in the Plan; (d) accelerate the time at which any outstanding Award will vest; (e)
prescribe, amend and rescind rules and regulations relating to administration of the Plan; and (f)
make all other determinations and take all other actions deemed necessary, appropriate or advisable
for the proper administration of the Plan.



     The Committee may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary
or desirable to further the Plan’s objectives. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the Plan. As permitted
by law and the terms and provisions of the Plan, the Committee may delegate its authority as
identified in this Section 14.2. The Committee may employ attorneys, consultants, accountants,
agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its
officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such
persons.



     14.3 Decisions Binding. All determinations and decisions made by the Committee or the Board,
as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions
of the Committee or the Board, as the case may be, shall be final, conclusive and binding on all
persons, including the Company, its stockholders, its Affiliates, Holders and the estates and
beneficiaries of Holders.



     14.4 No Liability. Under no circumstances shall the Company, its Affiliates, the Board or the
Committee incur liability for any indirect, incidental, consequential or special damages (including
lost profits) of any form incurred by any person, whether or not foreseeable and regardless of the
form of the act in which such a



23









 







claim may be brought, with respect to the Plan or the Company’s, an Affiliate’s, the
Committee’s or the Board’s roles in connection with the Plan.



24









 





ARTICLE XV




AMENDMENT OR TERMINATION OF PLAN




     15.1 Amendment, Modification, Suspension, and Termination. Subject to Section 15.2, 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, without the prior
approval of the Company’s stockholders and except as provided in Section 4.5, the Committee shall
not directly or indirectly lower the Option Price of a previously granted Option, and no amendment
of the Plan shall be made without stockholder approval if stockholder approval is required by
applicable law or stock exchange rules.



     15.2 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 Holder holding such Award.



25









 





ARTICLE XVI




MISCELLANEOUS




     16.1 Unfunded Plan/No Establishment of a Trust Fund. Holders shall have no right, title, or
interest whatsoever in or to any investments that the Company or any of its Affiliates may make to
aid in meeting 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 Holder, 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. No property
shall be set aside nor shall a trust fund of any kind be established to secure the rights of any
Holder under the Plan. The Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended.



     16.2 No Employment Obligation. The granting of any Award shall not constitute an employment
contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder. The right of the Company or any
Affiliate to terminate the employment of any person shall not be diminished or affected by reason
of the fact that an Award has been granted to him, and nothing in the Plan or an Award Agreement
shall interfere with or limit in any way the right of the Company or its Affiliates to terminate
any Holder’s employment at any time or for any reason not prohibited by law.



     16.3 Tax Withholding. The Company or any Affiliate shall be entitled to deduct from other
compensation payable to each Holder any sums required by federal, state, local or foreign tax law
to be withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an
Award. In the alternative, the Company may require the Holder (or other person validly exercising
the Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check
within one day after the date of vesting, exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company may reduce the number of shares of
Stock issued to the Holder upon such Holder’s exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of
Stock held back shall not exceed the Company’s or the Affiliate’s Minimum Statutory Tax Withholding
Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory
Tax Withholding Obligation arising upon the vesting of an Award by delivering to the Holder a
reduced number of shares of Stock in the manner specified herein. If permitted by the Committee
and acceptable to the Holder, at the time of vesting of shares under the Award, the Company shall
(a) calculate the amount of the Company’s or an Affiliate’s Minimum Statutory Tax Withholding
Obligation on the assumption that all such shares of Stock vested under the Award are made
available for delivery, (b) reduce the number of such shares of Stock made available for delivery
so that the Fair Market Value of the shares of Stock withheld on the vesting date approximates the
Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation and (c) in lieu of the
withheld shares of Stock, remit cash to the United States Treasury and/or other applicable
governmental authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax
Withholding Obligation. The Company shall withhold only whole shares of Stock to satisfy its
Minimum Statutory Tax Withholding Obligation. Where the Fair Market Value of the withheld shares
of Stock does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company
shall withhold shares of Stock with a Fair Market Value slightly less than the amount of the
Minimum Statutory Tax Withholding Obligation and the Holder must satisfy the remaining minimum
withholding obligation in some other manner permitted under this Section 16.3. The withheld shares
of Stock not made available for delivery by the Company shall be retained as treasury shares or
will be cancelled and the Holder’s right, title and interest in such shares of Stock shall
terminate. The Company shall have no obligation upon vesting or exercise of any Award or lapse of
restrictions on an Award until the Company or an



26









 







Affiliate has received payment sufficient to cover the Minimum Statutory Tax Withholding
Obligation with respect to that vesting, exercise or lapse of restrictions. Neither the Company
nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the amount
which it will be required to withhold.



     16.4 Gender and Number. If the context requires, words of one gender when used in the Plan
shall include the other and words used in the singular or plural shall include the other.



     16.5 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.



     16.6 Headings. Headings of Articles and Sections are included for convenience of reference
only and do not constitute part of the Plan and shall not be used in construing the terms and
provisions of the Plan.



     16.7 Other Compensation Plans. The adoption of the Plan shall not affect any other option,
incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor
shall the Plan preclude the Company from establishing any other forms of incentive compensation
arrangements for Employees or Directors.



     16.8 Retirement and Welfare Plans. Neither Awards made under the Plan nor shares of Stock or
cash paid pursuant to such Awards, may be included as “compensation” for purposes of computing the
benefits payable to any Participant under the Company’s or any Affiliate’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.



     16.9 Other Awards. The grant of an Award shall not confer upon the Holder the right to
receive any future or other Awards under the Plan, whether or not Awards may be granted to
similarly situated Holders, or the right to receive future Awards upon the same terms or conditions
as previously granted.



     16.10 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.



     16.11 Law Limitations/Governmental Approvals. The granting of Awards and the issuance of
shares of Stock 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.



     16.12 Delivery of Title. The Company shall have no obligation to issue or deliver evidence of
title for shares of Stock 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 Stock under any applicable national or foreign law
or ruling of any governmental body that the Company determines to be necessary or advisable.



     16.13 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 of Stock hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such shares of Stock as to
which such requisite authority shall not have been obtained.



27









 





     16.14 Investment Representations. The Committee may require any person receiving Stock
pursuant to an Award under the Plan to represent and warrant in writing that the person is
acquiring the shares of Stock for investment and without any present intention to sell or
distribute such Stock.



     16.15 Persons Residing 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 or
any of its Affiliates operates or has Employees, 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 persons employed outside the United States are eligible to participate in the Plan; (c)amend
or vary the terms and provisions of the Plan and the terms and conditions of any Award granted to
persons who reside outside the United States; (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 16.15 by the
Committee shall be attached to the Plan document as Appendices; and (e)take any action, before or
after an Award is made, that it deems advisable to obtain 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 Securities
Exchange Act of 1934, as amended, the Code, any securities law or governing statute or any other
applicable law.



     16.16 Arbitration of Disputes. Any controversy arising out of or relating to the Plan or an
Award Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of the
American Arbitration Association. The arbitration shall be final and binding on the parties.



     16.17 Governing Law. The provisions of the Plan and the rights of all persons claiming
thereunder shall be construed, administered and governed under the laws of the State of Texas.
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 Texas, to
resolve any and all issues that may arise out of or relate to the Plan or any related Award
Agreement.



     16.18 Section 162(m) Stockholder Approval. Payments of cash or Stock under the Plan are
generally intended to meet the requirements of section 162(m) of the Code. Accordingly, the Plan
shall be put before the stockholders of the Company for its approval, solely for purposes of
meeting the requirements of section 162(m) of the Code, at or before the first regularly scheduled
meeting of the stockholders of the Company that occurs more than 12 months after the date the
Company becomes a separate publicly held corporation. However, if the Plan is not approved for
purposes of section 162(m) of the Code at or before the first regularly scheduled meeting of the
stockholders of the Company that occurs more than 12 months after the date the Company becomes a
separate publicly held corporation, the Plan shall remain in effect and payments made under the
Plan shall be subject to the limitations under section 162(m) of the Code. In such case, if the
Company determines that section 162(m) of the Code may not allow the Company to take a deduction
for part or all of any Performance-Based Compensation payable under the Plan, then, unless a Change
in Control has occurred after the Effective Date, the payment of such Performance-Based
Compensation otherwise payable hereunder will be delayed (or deferred under the Company’s Deferred
Compensation Plan, if the Holder is a participant in such plan) to the extent any such payment
would not be deductible by the Company by reason of section 162(m) of the Code. The Committee may
waive the mandatory delay (or deferral) required by this Section 16.18 with respect to a Holder who
is not a member of the Committee but such waiver shall only be made on an individual basis. If the
Plan is approved at or before the first regularly scheduled meeting of the stockholders of the
Company that occurs more than 12 months after the date the Company becomes a separate publicly held
corporation, this Section 16.18 automatically shall be deleted from the Plan.




28