exv4w1



 




EXHIBIT 4.1




Williams-Sonoma, Inc.



2001 Long-Term Incentive Plan



amending and restating the 2001 Stock Option
Plan effective as of May 19, 2004



SECTION 1.



PURPOSES AND DEFINITIONS



(a) Purposes. The purposes of the
Plan are (i) to attract, retain and incent talented
personnel with respect to positions of substantial
responsibility at the Company and any Subsidiary; and
(ii) to enable the officers, key employees and Non-employee
Directors, upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its
business, to acquire a proprietary interest in the Company.




(b) Effect of Amendment and
Restatement. The Plan, as hereby amended and restated,
applies to Awards made on or after the Effective Date. With
respect to Awards made prior to the Effective Date, the 2004
amendment and restatement of the Plan only applies to the extent
that it (i) does not impair the rights of an optionee,
unless otherwise agreed in writing by any such optionee and the
Company, and (ii) does not enlarge the rights of an
optionee to the extent such enlargement would disqualify an
outstanding Incentive Stock Option or give rise to a
compensation expense for financial accounting purposes.




(c) Definitions. The following terms
are defined as set forth below:




“Administrator” means the Committee
described in Section 2.




“Annual Revenue” means the
Company’s or a business unit’s net sales for the
Fiscal Year, determined in accordance with generally accepted
accounting principles; provided, however, that prior to the
Fiscal Year, the Administrator shall determine whether any
significant item(s) shall be excluded or included from the
calculation of Annual Revenue with respect to one or more
Participants.




“Applicable Laws” means the
requirements relating to the administration of equity
compensation plans under U.S. state corporate laws, U.S. federal
and state securities laws, the Code, any stock exchange or
quotation system on which the Common Stock is listed or quoted
and the applicable laws of any foreign country or jurisdiction
where Awards are granted under the Plan.




“Award” or “Awards,” except
where referring to a particular category of grant under the
Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock Awards and Deferred Stock Awards.




“Award Agreement” means a written
agreement between the Company and the recipient of an Award
specifying the terms and conditions of the Award. Each Award
Agreement is subject to the terms and conditions of this Plan.




“Awarded Stock” means the Common Stock
subject to an Award.




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




“Cash Position” means the
Company’s level of cash and cash equivalents.




“Code” means the Internal Revenue Code
of 1986, as amended, and any successor tax code, along with
related rules and regulations.




“Committee” means the Committee of the
Board referred to in Section 2.




“Company” means Williams-Sonoma, Inc.,
a California corporation, and any successor thereto.




“Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code.









[EXHIBITS TAG]









 








 




“Deferred Stock Award” means an Award
granted pursuant to Section 7.




“Earnings Per Share” means as to any
Fiscal Year, the Company’s or a business unit’s Net
Income, divided by a weighted average number of common shares
outstanding and dilutive common equivalent shares deemed
outstanding, determined in accordance with generally accepted
accounting principles.




“Effective Date” means the date of the
Company’s 2004 annual shareholders meeting.




“Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time.




“Fair Market Value” means, as of any
date, the closing sales price for a share of Stock (or the
closing bid, if no sales are reported) as quoted on the New York
Stock Exchange on the last market trading day prior to the day
of determination, as reported in the Wall Street Journal or any
other source the Administrator considers reliable, or, if the
shares of Stock cease to be traded on the New York Stock
Exchange, the value which the Administrator determines most
closely reflects the fair market value of the shares.




“Fiscal Year” means a fiscal year of
the Company.




“Incentive Stock Option” means any
Stock Option that is intended to qualify as, and is designated
in writing in the related Option Award agreement as intending to
constitute, an “incentive stock option” as defined in
Section 422 of the Code.




“Net Income” means as to any Fiscal
Year, the income after taxes of the Company or a business unit
for the Fiscal Year determined in accordance with generally
accepted accounting principles, provided that prior to the
Fiscal Year, the Administrator shall determine whether any
significant item(s) shall be included or excluded from the
calculation of Net Income with respect to one or more
Participants.




“Non-employee Director” means a member
of the Board who is not also an employee of the Company or any
Subsidiary.




“Non-Qualified Stock Option” means any
Stock Option that is not an Incentive Stock Option.




“Operating Cash Flow” means the
Company’s or a business unit’s sum of Net Income plus
depreciation and amortization less capital expenditures plus
changes in working capital comprised of accounts receivable,
inventories, other current assets, trade accounts payable,
accrued expenses, product warranty, advance payments from
customers and long-term accrued expenses, determined in
accordance with generally acceptable accounting principles.




“Operating Income” means the
Company’s or a business unit’s income from operations
but excluding any unusual items, determined in accordance with
generally accepted accounting principles.




“Parent” means a “parent
corporation,” whether now or hereafter existing, as defined
in Section 424(e) of the Code.




“Participant” means the holder of an
outstanding Award granted under the Plan.




“Performance Goals” means the goal(s)
(or combined goal(s)) determined by the Administrator (in its
discretion) to be applicable to a Participant with respect to an
Award. As determined by the Administrator, the Performance Goals
applicable to an Award may provide for a targeted level or
levels of achievement using one or more of the following
measures: (a) Annual Revenue, (b) Cash Position,
(c) Earnings Per Share, (d) Net Income,
(e) Operating Cash Flow, (f) Operating Income,
(g) Return on Assets, (h) Return on Equity, (i) Return
on Sales, and (j) Total Shareholder Return. The Performance
Goals may differ from Participant to Participant and from award
to award.




“Plan” means this 2001 Long-Term
Incentive Plan, as amended and restated on the Effective Date.




“Restricted Stock Award” means an Award
granted pursuant to Section 6.




“Return on Assets” means the percentage
equal to the Company’s or a business unit’s Operating
Income before incentive compensation, divided by average net
Company or business unit, as applicable, assets, determined in
accordance with generally accepted accounting principles.



 








 




“Return on Equity” means the percentage
equal to the Company’s Net Income divided by average
shareholder’s equity, determined in accordance with
generally accepted accounting principles.




“Return on Sales” means the percentage
equal to the Company’s or a business unit’s Operating
Income before incentive compensation, divided by the
Company’s or the business unit’s, as applicable,
revenue, determined in accordance with generally accepted
accounting principles.




“Rule 16b-3” means Rule 16b-3
promulgated under the Exchange Act, and any future regulation
amending, supplementing or superseding such regulation.




“Stock” means the common stock, $.01
par value per share, of the Company, subject to adjustments
pursuant to Section 3.




“Stock Option” means any option to
purchase shares of Stock granted pursuant to Section 5 or
previously granted under this Plan prior to its 2004 amendment
and restatement.




“Subsidiary” means a “subsidiary
corporation,” whether now or hereafter existing, as defined
in Section 424(f) of the Code.




“Total Shareholder Return” means the
total return (change in share price plus reinvestment of any
dividends) of a share of Stock.




SECTION 2.



ADMINISTRATION OF PLAN; ADMINISTRATOR
AUTHORITY TO SELECT



PARTICIPANTS AND DETERMINE AWARDS




(a) Committee. The Plan shall be
administered by a committee of not fewer than two
(2) Non-employee Directors (the “Administrator”).
To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, each member of the Committee shall
be a “non-employee director” within the meaning of
Rule 16b-3(b)(3)(i) promulgated under the Exchange Act, or
any successor definition. To the extent that the Administrator
determines it to be desirable to qualify Options granted
hereunder as “performance-based compensation” within
the meaning of Section 162(m) of the Code, each member of
the Committee shall also be an “outside director”
within the meaning of Section 162(m) of the Code and the
regulations (including temporary and proposed regulations)
promulgated thereunder. In addition, each member of the
Committee shall meet the then applicable requirements and
criteria of the New York Stock Exchange (or other market on
which the Stock then trades) for qualification as an
“independent director.”




(b) Delegation by the Administrator.
The Administrator, in its sole discretion and on such terms and
conditions as it may provide, may delegate all or any part of
its authority and powers under the Plan to two or more Directors
of the Company; provided, however, that the Administrator may
not delegate its authority and powers (a) with respect to
any person who, with respect to the Stock, is subject to
Section 16 of the Exchange Act, or (b) in any way
which would jeopardize the Plan’s qualification under
Applicable Laws.




(c) Powers of Administrator. The
Administrator shall have the power and authority to grant Awards
consistent with the terms of the Plan, including the power and
authority:




		
	 	
    (i) to select the individuals to whom Awards
    may from time to time be granted;
    
	 
	 	
    (ii) to determine the time or times of
    grant, and the extent, if any, of Incentive Stock Options,
    Non-Qualified Stock Options, Restricted Stock Awards and
    Deferred Stock Awards, or any combination of the foregoing,
    granted to any one or more Participants;
    
	 
	 	
    (iii) to determine the number of shares of
    Stock to be covered by any Award;
    
	 
	 	
    (iv) to determine and modify from time to
    time the terms and conditions, including restrictions,
    consistent with the terms of the Plan, of any Award, which terms
    and conditions may differ among
    










[EXHIBITS TAG]









 








 


		
	 	
    individual Awards and Participants, and to
    approve the form of written instruments evidencing
    the Awards;
    
	 
	 	
    (v) to accelerate at any time the
    exercisability or vesting of all or any portion of any Award;
    
	 
	 	
    (vi) subject to the provisions of
    Section 5(a)(iii), to extend at any time the
    post-termination period in which Stock Options may be exercised;
    
	 
	 	
    (vii) to determine at any time whether, to
    what extent, and under what circumstances Stock and other
    amounts payable with respect to an Award shall be deferred
    either automatically or at the election of the Participant and
    whether and to what extent the Company shall pay or credit
    amounts constituting deemed interest (at rates determined by the
    Administrator) or dividends or deemed dividends on such
    deferrals;
    
	 
	 	
    (viii) to develop, approve and utilize forms
    of notices, Award Agreements and similar materials for
    administration and operation of the Plan; and
    
	 
	 	
    (ix) at any time to adopt, alter and repeal
    such rules, guidelines and practices for administration of the
    Plan and for its own acts and proceedings as the Administrator
    shall deem advisable; to interpret the terms and provisions of
    the Plan and any Award (including related written instruments);
    to make all determinations it deems necessary or advisable for
    the administration of the Plan; to decide all disputes arising
    in connection with the Plan; and to otherwise supervise the
    administration of the Plan.
    





All decisions and interpretations of the
Administrator shall be made in the Administrator’s sole and
absolute discretion and shall be final and binding on all
persons, including the Company and Plan Participants.




SECTION 3.



STOCK ISSUABLE UNDER THE PLAN; TERM OF
PLAN;



RECAPITALIZATIONS; MERGERS; SUBSTITUTE
AWARDS




(a) Stock Issuable. Subject to the
provisions of Section 3(c), 8,500,000 shares of Stock are
reserved and available for issuance under the Plan provided,
however, that in no event shall more than 30% of the Stock
remaining issuable under the Plan as of the date of obtaining
shareholder approval in 2004 be granted pursuant to Awards with
an exercise price or purchase price that is less than 100%
of Fair Market Value on the date of grant. The shares available
for issuance under the Plan may be authorized but unissued
shares of Stock or shares of Stock reacquired by the Company. If
any portion of an Award is forfeited, cancelled, satisfied
without the issuance of Stock or otherwise terminated, the
shares of Stock underlying such portion of the Award shall be
added back to the shares of Stock available for issuance under
the Plan.




(b) Term of Plan. No Awards shall be
made more than ten (10) years after the date upon which the
Board approved the amended and restated Plan in 2004.
Notwithstanding the foregoing, Stock Options granted hereunder
may, except as otherwise expressly provided herein, be
exercisable for up to ten (10) years after the date they
become exercisable.




(c) Impact of Transactions. Subject
to the provisions of Section 13, if, through or as a result
of any merger, consolidation, sale of all or substantially all
of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, the outstanding shares of
Stock are increased or decreased or are exchanged for a
different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or
other securities of the Company or other non-cash assets are
distributed with respect to such shares of Stock or other
securities, the Administrator may make an appropriate or
proportionate adjustment in (i) the maximum number of
shares reserved for issuance under the Plan, (ii) the
number of Awards that can be granted to any one individual
Participant in any calendar year, (iii) the number and kind
of shares or other securities subject to any then outstanding
Awards under the Plan, and (iv) the price for each share



 







 




subject to any then outstanding Stock Options
under the Plan, without changing the aggregate exercise price.
The adjustment by the Administrator shall be final, binding and
conclusive. No fractional shares of Stock shall be issued under
the Plan resulting from any such adjustment, but the
Administrator in its discretion may make a cash payment in lieu
of fractional shares.





(d) Substitute Awards. The
Administrator may grant Awards under the Plan in substitution
for stock and stock based awards held by employees of another
corporation who become employees of the Company or a Subsidiary
as the result of a merger or consolidation of the employing
corporation with the Company or a Subsidiary or the acquisition
by the Company or a Subsidiary of property or stock of the
employing corporation. The Administrator may direct that the
substitute Awards be granted with such terms and conditions as
the Administrator considers appropriate in the circumstances.




SECTION 4.



ELIGIBILITY



Those persons eligible to participate in the Plan
shall be officers, employees and Non-employee Directors of the
Company, its Parent and any Subsidiaries. Selection of
Participants shall be made from time to time by the
Administrator, in its sole discretion.




SECTION 5.



STOCK OPTIONS



Any Stock Option granted under the Plan shall be
in such form as the Administrator may from time to time approve.
Stock Options granted under the Plan may be either Incentive
Stock Options or Non-Qualified Stock Options. Incentive Stock
Options may be granted only to employees of the Company, its
Parent or any Subsidiary. To the extent that any Option does not
qualify as an Incentive Stock Option, it shall be a
Non-Qualified Stock Option.




(a) Stock Option Grants. The
Administrator, in its discretion, may grant Stock Options to
eligible officers and key employees of the Company, its Parent
or any Subsidiary. Stock Options granted pursuant to this
Section 5(a) shall be subject to the following terms and
conditions and each Stock Option Award Agreement shall contain
such additional terms and conditions, consistent with the terms
of the Plan, as the Administrator deems desirable.




		
	 	
    (i) Exercise Price. The exercise
    price per share shall be determined by the Administrator at the
    time of grant and set forth in an Award Agreement, but it shall
    not be less than 100% of the Fair Market Value on the date
    of grant. If an employee owns or is deemed to own (by reason of
    the attribution rules of Section 424(d) of the Code) more
    than 10% of the combined voting power of all classes of
    stock of the Company or any parent or subsidiary corporation and
    an Incentive Stock Option is granted to such employee, the
    option price of such Incentive Stock Option shall be not less
    than 110% of the Fair Market Value on the grant date. The
    exercise price for the Stock to be issued pursuant to an already
    granted Stock Option may not be lowered without the prior
    consent of the Company’s shareholders. This shall include,
    without limitation, a repricing of the Stock Option as well as a
    Stock Option exchange program whereby the Participant agrees to
    cancel an existing Stock Option in exchange for an Option or
    other Award.
    
	 
	 	
    (ii) Option Term. The term of each
    Stock Option shall be fixed by the Administrator in an Award
    Agreement, but no Incentive Stock Option shall be exercisable
    more than ten (10) years after the date the option is
    granted. If an employee owns or is deemed to own more
    than 10% of the combined voting power of all classes of
    stock of the Company or any Parent or Subsidiary and an
    Incentive Stock Option is granted to such employee, the term of
    such option shall be no more than five (5) years from the
    date of grant.
    










[EXHIBITS TAG]









 








 




		
	 	
    (iii) Exercisability; Rights of a
    Shareholder. Stock Options shall become exercisable at such
    time or times, whether or not in installments, as shall be
    determined by the Administrator in an Award Agreement;
    provided, however, that all Stock Options must be
    exercised within ten (10) years of the date they become
    exercisable or they shall automatically expire. The
    Administrator may, at any time, accelerate the exercisability of
    all or any portion of any Stock Option. An optionee shall have
    the rights of a shareholder only as to shares acquired upon the
    exercise of a Stock Option and not as to unexercised Stock
    Options.
    
	 
	 	
    (iv) Method of Exercise. Stock
    Options may be exercised in whole or in part, by giving written
    notice of exercise to the Company, specifying the number of
    shares to be purchased. To the extent permitted by Applicable
    Law, payment of the purchase price may be made by one or more of
    the following methods to the extent provided in the Award
    Agreement:
    





		
	 	
    (A) In cash, by certified or bank check or
    other instrument acceptable to the Administrator;
    
	 
	 	
    (B) In the form of shares of Stock that are
    not then subject to restrictions under any Company plan and that
    have been beneficially owned by the optionee for at least six
    months, if permitted by the Administrator in its discretion.
    Such surrendered shares shall be valued at Fair Market Value on
    the exercise date;
    
	 
	 	
    (C) By the optionee delivering to the
    Company a properly executed exercise notice together with
    irrevocable instructions to a broker to promptly deliver to the
    Company cash or a check payable and acceptable to the Company to
    pay the purchase price; provided that the payment method
    described in this Section 5(a)(iv)(C) shall not be
    available to an optionee who is subject to the reporting and
    other provisions of Section 16 of the Exchange Act unless
    the optionee and the broker comply with such procedures and
    enter into such agreements as the Administrator shall prescribe
    as a condition of such payment procedure; or
    
	 
	 	
    (D) By a net exercise procedure.
    





The actual or constructive delivery of
certificates (as described in Section 14(b)) representing the
shares of Stock to be purchased pursuant to the exercise of a
Stock Option will be contingent upon receipt from the optionee
(or a purchaser acting in his or her stead in accordance with
the provisions of the Stock Option) by the Company of the full
purchase price for such shares and the fulfillment of any other
requirements contained in the Stock Option or Applicable Laws.




(b) Annual Limit on Incentive Stock
Options. To the extent that the aggregate Fair Market Value
(determined as of the time of grant) of the shares of Stock with
respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an
optionee during any calendar year in excess of $100,000, it
shall constitute a Non-Qualified Stock Option.




(c) Non-Transferability of Options.
Except as otherwise set forth in the following sentence, no
Stock Option shall be transferable by the optionee other than by
will or by the laws of descent and distribution and all Stock
Options shall be exercisable, during the optionee’s
lifetime, only by the optionee. Notwithstanding the foregoing,
an optionee may transfer his or her Non-Qualified Stock Options,
without consideration for the transfer, to members of his or her
family or to trusts for the benefit of such family members,
provided that the transferee agrees in writing with the
Company to be bound by all of the terms and conditions of this
Plan and the applicable Award Agreement.




(d) Termination. Except as may
otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section 11 below, in writing after
the Award Agreement is issued, an optionee’s rights in all
Stock Options shall automatically terminate ninety
(90) days following optionee’s termination of
employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason. Notwithstanding the
foregoing, if an optionee ceases to be employed by the Company
and the Company’s Subsidiaries by reason of his or her
death, or if the employee dies within the thirty (30) day
period after the employee ceases to be employed by the Company
and the Company’s Subsidiaries, any



 








 




Stock Options of such optionee may be exercised,
to the extent of the number of shares with respect to which he
or she could have exercised it on the date of his or her death,
by his or her estate, personal representative or beneficiary who
has acquired the Stock Options by will or by the laws of descent
and distribution, at any time prior to the earlier of the
specified expiration date of the Options or one hundred eighty
(180) days from the date of such optionee’s death.
Additionally, if an optionee ceases to be employed by the
Company and the Company’s Subsidiaries by reason of his or
her Disability, he or she shall have the right to exercise any
Stock Options held by the optionee on the date of termination of
employment, to the extent of the number of shares with respect
to which he or she could have exercised it on that date, at any
time prior to the earlier of the specified expiration date of
the Stock Options or one hundred eighty (180) days from the
date of the termination of the optionee’s employment.





(e) 162(m) Limits. A Participant can
receive no more than one million shares of Stock covered by
Stock Options during any one calendar year, subject to
adjustment under Section 3(c).




(f) Notice to Company of Disqualifying
Disposition. Each employee who receives an Incentive Stock
Option must agree to notify the Company in writing immediately
after the employee makes a Disqualifying Disposition of any
Stock acquired pursuant to the exercise of an Incentive Stock
Option. A “Disqualifying Disposition” is any
disposition (including any sale) of such Stock before the later
of:




		
	 	
    (i) two years after the date the employee
    was granted the Incentive Stock Option, or
    
	 
	 	
    (ii) one year after the date the employee
    acquired Stock by exercising the Incentive Stock Option. If the
    employee has died before such stock is sold, these holding
    period requirements do not apply and no Disqualifying
    Disposition can occur thereafter.
    





SECTION 6.



RESTRICTED STOCK AWARDS



(a) Nature of Restricted Stock
Awards. A Restricted Stock Award is an Award entitling the
recipient to acquire shares of Stock subject to such
restrictions and conditions as the Administrator may determine
at the time of grant (“Restricted Stock”). A
Restricted Stock Award can be made without any required payment,
upon payment of par value or upon any other such payment, all as
determined by the Administrator in its discretion and in
compliance with Applicable Law. Conditions may be based on
continuing employment (or service as a Non-employee Director)
and/or achievement of pre-established performance goals and
objectives. The grant of a Restricted Stock Award is contingent
on the Participant executing the Restricted Stock Award
Agreement. The terms and conditions of each such Award Agreement
shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and Participants.




(b) Rights as a Shareholder. Upon
execution of the Restricted Stock Award Agreement and paying any
applicable purchase price, a Participant shall have the rights
of a shareholder with respect to the voting of the Restricted
Stock, subject to such terms and conditions as may be contained
in the Restricted Stock Award Agreement. Unless the
Administrator shall otherwise determine, certificates (as
described in Section 14(b)) evidencing the Restricted Stock
shall remain in the possession of the Company until such
Restricted Stock is vested as provided in Section 6(d)
below, and the Participant may be required, as a condition of
the grant, to deliver to the Company a stock power endorsed in
blank.




(c) Restrictions. Restricted Stock
may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as specifically provided herein
or in the Restricted Stock Award Agreement. Except as may
otherwise be provided by the Administrator either in the Award
Agreement or, subject to Section 13 below, in writing after
the Award Agreement is issued, if a Participant’s
employment (or service as a Non-employee Director) with the
Company and its Subsidiaries terminates for any reason, the
Company shall have the right to repurchase Restricted Stock that
has not vested at the time of termination at its original
purchase price (which may be zero), from the Participant or the
Participant’s legal representative.









[EXHIBITS TAG]









 








 




(d) Vesting of Restricted Stock. The
Administrator at the time of grant shall specify the date or
dates and/or the attainment of pre-established performance
goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the
Company’s right of repurchase or forfeiture shall lapse,
provided, however, that any Awards of Restricted Stock
that vest solely on the basis of continuing employment (or
service as a Non-employee Director) shall be subject to a period
of vesting determined by the Administrator, subject,
however, at the Administrator’s discretion, to accelerated
vesting upon the achievement of specified performance goals.
Except as may otherwise be provided by the Administrator either
in the Award Agreement or, subject to Section 13 below, in
writing after the Award Agreement is issued, a
Participant’s rights in any shares of Restricted Stock that
have not vested shall automatically terminate upon the
Participant’s termination of employment (or service as a
Non-employee Director) with the Company and its Subsidiaries and
such shares shall be subject to the Company’s right of
repurchase as provided in Section 6(c) above.




(e) Waiver, Deferral and Reinvestment of
Dividends. The Restricted Stock Award Agreement may require
or permit the immediate payment, waiver, deferral or
reinvestment (in the form of additional Restricted Stock) of
dividends paid on the Restricted Stock.




(f) 162(m) Limit on Restricted Stock
Awards. A Participant can receive grants covering no more
than two hundred thousand shares of Restricted Stock during any
one calendar year, subject to adjustment under Section 3(c).




(g) Section 162(m) Performance
Restrictions. For purposes of qualifying grants of
Restricted Stock as “performance-based compensation”
under Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals shall be set by the
Administrator on or before the latest date permissible to enable
the Restricted Stock to qualify as “performance-based
compensation” under Section 162(m) of the Code. In
granting Restricted Stock which is intended to qualify under
Section 162(m) of the Code, the Administrator shall follow
any procedures determined by it from time to time to be
necessary or appropriate to ensure qualification of the
Restricted Stock under Section 162(m) of the Code
(e.g., in determining the Performance Goals).




SECTION 7.



DEFERRED STOCK AWARDS



(a) Nature of Deferred Stock Awards.
A Deferred Stock Award is an Award of a right to receive shares
of Stock at the end of a specified deferral period. The
Administrator in its sole discretion shall determine the persons
to whom and the time or times at which Deferred Stock Awards
will be made, the number of shares of Stock covered by any
Deferred Stock Award, the duration of the period (the
“Deferral Period”) prior to which the Stock will be
delivered, and the restrictions and other conditions under which
receipt of the Stock will be deferred and any other terms and
conditions of the Deferred Stock Awards. The Administrator may
condition a Deferred Stock Award upon the attainment of
specified performance goals by the Participant or by the Company
or a Subsidiary, including a division or department of the
Company or a Subsidiary for or within which the Participant is
primarily employed, or upon such other factors or criteria as
the Administrator shall determine. The provisions of Deferred
Stock Awards need not be the same with respect to any
Participant. The Administrator may make Deferred Stock Awards
independent of or in connection with the granting of any other
Award under the Plan.




(b) Terms and Conditions. Deferred
Stock Awards shall be subject to the following terms
and conditions:




		
	 	
    (1) Limitations on Transferability.
    Except as otherwise provided in an agreement with a Participant,
    Deferred Stock Awards, or any interest therein, may not be sold,
    assigned, transferred, pledged or otherwise encumbered during
    the Deferral Period. At the expiration of the Deferral Period
    (or Elective Deferral Period as defined in Section 7(b)(4),
    where applicable), the Administrator shall deliver Stock to the
    Participant for the shares of Stock covered by the Deferred
    Stock Award.
    




 








 




		
	 	
    (2) Rights. Unless otherwise
    determined by the Administrator and the applicable Award
    Agreement with a Participant, cash dividends on the Stock that
    is the subject of the Deferred Stock Award shall be
    automatically deferred and reinvested in an additional Deferred
    Stock Award with respect to the same class as the Stock on which
    such dividend was payable, and dividends on the Stock that is
    the subject of the Deferred Stock Award payable in Stock shall
    be awarded in the form of a Deferred Stock Award with respect to
    the same class as the Stock on which such dividend was payable.
    
	 
	 	
    (3) Acceleration and Waiver. Based on
    such factors or criteria as the Administrator may determine, the
    Administrator may provide in the Award Agreement for the lapse
    of restrictions, conditions or deferral limitations in
    installments and may accelerate the vesting of all or any part
    of any Deferred Stock Award and waive such remaining
    restrictions, conditions or deferral limitations for all or any
    part of such Deferred Stock Award.
    
	 
	 	
    (4) Election. A Participant may elect
    further to defer receipt of the shares of Stock payable under a
    Deferred Stock Award (or an installment thereof) for a specified
    period or until a specified event (an “Elective Deferral
    Period”), subject in each case to the Administrator’s
    approval and to such terms as are determined by the
    Administrator. Subject to any exceptions adopted by the
    Administrator, such election must be made at least one
    (1) year prior to completion of the Deferral Period for the
    Deferred Stock Award (or of the applicable installment thereof),
    and any such deferral that is effective after the vesting date
    of a Deferred Stock Award shall result in the Deferred Stock
    Award remaining subject to the claims of the Company’s
    general creditors until the distribution date.
    





(c) Rights as a Shareholder. A
Participant receiving a Deferred Stock Award shall have the
rights of a shareholder only as to shares actually received by
the Participant under the Plan and not with respect to shares
subject to the Award but not actually received by the
Participant. A Participant shall be entitled to receive a stock
certificate (as described in Section 14(b)) evidencing the
acquisition of shares of Stock under a Deferred Stock Award only
upon satisfaction of all conditions specified in the Deferred
Stock Award Agreement.




(d) Termination. Except as may
otherwise be provided by the Administrator either in the
Deferred Stock Award Agreement or, subject to Section 11
below, in writing after the Deferred Stock Award Agreement is
issued, a Participant’s rights in all Deferred Stock Awards
shall automatically terminate upon the Participant’s
termination of employment (or service as a Non-employee
Director) with the Company and its Subsidiaries for any reason.




(e) 162(m) Limit on Deferred Stock
Awards. A Participant can receive grants covering no more
than two hundred thousand shares of Deferred Stock Awards during
any one calendar year, subject to adjustment under
Section 3(c).




(f) Section 162(m) Performance
Restrictions. For purposes of qualifying grants of Deferred
Stock Awards as “performance-based compensation” under
Section 162(m) of the Code, the Administrator, in its
discretion, may set restrictions based upon the achievement of
Performance Goals. The Performance Goals shall be set by the
Administrator on or before the latest date permissible to enable
the Restricted Stock to qualify as “performance-based
compensation” under Section 162(m) of the Code. In
granting Deferred Stock Awards which are intended to qualify
under Section 162(m) of the Code, the Administrator shall
follow any procedures determined by it from time to time to be
necessary or appropriate to ensure qualification of the Deferred
Stock Awards under Section 162(m) of the Code (e.g., in
determining the Performance Goals).




SECTION 8.



NON-EMPLOYEE DIRECTOR STOCK OPTION
PROGRAM



Each person who is elected as a Non-employee
Director shall be granted, on the date of his or her initial
election and annually thereafter on the date of the annual
shareholders meeting (so long as the Non-Employee Director has
then been serving as such for at least three months), a
Non-Qualified Stock









[EXHIBITS TAG]









 








 




Option to acquire such number of shares of Stock
as may be determined by the Administrator with an exercise price
per share for the Stock covered by such Stock Option at least
equal to the Fair Market Value on the date as of which the Stock
Option is granted. Such Stock Options shall become exercisable
as may be determined by the Administrator. Stock Options granted
under this Section 8 may be exercised only by written
notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase price of the shares to
be purchased may be made by one or more of the methods specified
in Section 5(a)(iv). An optionee shall have the rights of a
shareholder only as to shares acquired upon the exercise of a
Stock Option and not as to unexercised Stock Options.





SECTION 9.



TAX WITHHOLDING



(a) Payment by Participant. Each
Participant shall, no later than the date as of which the value
of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the Participant
for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment
of, any Federal, state, or local taxes of any kind required by
law to be withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by Applicable
Law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant. The Company’s
obligation to deliver stock certificates to any Participant is
subject to and conditioned on tax obligations being satisfied by
the Participant.




(b) Payment in Stock. Subject to
approval by the Administrator, a Participant may elect to have
such tax withholding obligation satisfied, in whole or in part,
by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with
an aggregate Fair Market Value (as of the date the withholding
is effected) that would satisfy the required statutory minimum
(but no more than such required minimum) with respect to the
Company’s withholding obligation, or (ii) transferring
to the Company shares of Stock owned by the Participant with an
aggregate Fair Market Value (as of the date the withholding is
effected) that would satisfy the required statutory minimum (but
no more than such required minimum) with respect to the
Company’s withholding obligation.




SECTION 10.



TRANSFER, LEAVE OF ABSENCE, ETC.



For purposes of the Plan, the following events
shall not be deemed a termination of employment:




(a) a transfer to the employment of the
Company from a Subsidiary or from the Company to a Subsidiary,
or from one Subsidiary to another; or




(b) an approved leave of absence for
military service or sickness, or for any other purpose approved
by the Company, if the employee’s right to re-employment is
guaranteed either by a statute or by contract or under the
written policy pursuant to which the leave of absence was
granted or if the Administrator otherwise so provides in writing.




SECTION 11.



AMENDMENTS AND TERMINATION



The Board may, at any time, amend or discontinue
the Plan, and the Administrator may, at any time, amend or
cancel any outstanding Award for the purpose of satisfying
changes in law or for any other lawful purpose, but no such
action shall adversely affect rights under any outstanding Award
without the holder’s written consent. If and to the extent
determined by the Administrator to be required by (a) the
Code to ensure that Incentive Stock Options granted under the
Plan are qualified under Section 422 of the Code or ensure
that compensation earned under Awards granted under the Plan
qualify as performance-based compensation under
Section 162(m) of the Code, if and to the extent intended
to so qualify, or



 








 




(b) the rules of the New York Stock
Exchange, Plan amendments shall be subject to approval by the
Company’s shareholders entitled to vote at a meeting of
shareholders. Nothing in this Section 11 shall limit the
Board’s authority to take any action permitted pursuant to
Section 3(c) or 3(d).





SECTION 12.



STATUS OF PLAN



Unless the Administrator shall otherwise
expressly determine in writing, with respect to the portion of
any Award which has not been exercised and any payments in cash,
Stock or other consideration not received by a Participant, a
Participant shall have no rights greater than those of a general
creditor of the Company. In its sole discretion, the
Administrator may authorize the creation of trusts or other
arrangements to meet the Company’s obligations to deliver
Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements
is consistent with the foregoing sentence.




SECTION 13.



MERGER & SIMILAR TRANSACTION
PROVISIONS



In contemplation of and subject to the
consummation of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which
outstanding shares of Stock are exchanged for securities, cash
or other property of an unrelated corporation or business entity
or in the event of a liquidation or dissolution of the Company
or in the case of a corporate reorganization of the Company (in
each case, a “Transaction”), the Board, or the board
of directors of any corporation or other entity assuming the
obligations of the Company, may, in its discretion, take any one
or more of the following actions, as to outstanding Awards:
(i) provide that such Awards shall be assumed or equivalent
awards shall be substituted, by the acquiring or succeeding
corporation or other entity (or an affiliate thereof), and/or
(ii) upon written notice to the Participants, provide that
all Awards will terminate immediately prior to the consummation
of the Transaction. In the event that, pursuant to
clause (ii) above, Awards will terminate immediately prior
to the consummation of the Transaction, all outstanding Awards
shall vest 100% immediately prior to their termination.
Moreover, in such event, all Awards, other than Options, shall
be fully settled in cash, in kind or in some combination
thereof, at such appropriate consideration as determined by the
Administrator in its sole discretion after taking into account
any and all consideration payable per share of Stock pursuant to
the Transaction (the “Transaction Price”) and all
Stock Options shall be fully settled, in cash, in kind or in
some combination thereof, in an amount equal to the difference
between (A) the Transaction Price times the number of
shares of Stock subject to such outstanding Stock Options (to
the extent then exercisable at prices not in excess of the
Transaction Price) and (B) the aggregate exercise price of
all such outstanding Stock Options.




SECTION 14.



GENERAL PROVISIONS



(a) No Distribution; Compliance with
Legal Requirements. The Administrator may require each
person acquiring Stock pursuant to an Award to represent to and
agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof. No shares of
Stock shall be issued pursuant to an Award until all Applicable
Laws have been satisfied. The Administrator may require the
placing of such stop-orders and restrictive legends on
certificates for Stock (as described in Section 14(b)
below) as it deems appropriate.




(b) Stock Certificates. To the extent
the Company uses certificates to represent shares of Stock,
certificates to be delivered to Participants under this Plan
shall be deemed delivered for all purposes when the Company or a
stock transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the
Participant, at the Participant’s last known address on
file with the Company.









[EXHIBITS TAG]









 








 




Any reference in this Section 14(b) or
elsewhere in the Plan to actual stock certificates and/or the
delivery of actual stock certificates shall be deemed satisfied
by the electronic record-keeping and electronic delivery of
shares of Stock or other mechanism then utilized by the Company
and its agents for reflecting ownership of such shares.





(c) Other Compensation Arrangements; No
Employment Rights. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation
arrangements, including trusts, and such arrangements may be
either generally applicable or applicable only in specific
cases. The adoption of this Plan and the grant of Awards shall
not confer upon any individual any right to continued employment
or service as a director with the Company or any Subsidiary and
shall not interfere in any way with the right of the Company or
any Subsidiary to terminate the employment of any of its
employees at any time, with or without cause or notice.




(d) Trading Policy Restrictions.
Awards and related transactions under the Plan shall be subject
to such Company insider-trading-policy-related restrictions,
terms and conditions as may be established by the Administrator,
or in accordance with policies set by the Administrator, from
time to time.




SECTION 15.



GOVERNING LAW



This Plan and all Awards and actions taken
thereunder shall be governed by, and construed in accordance
with, the laws of the State of California, applied without
regard to conflict of law principles.