EX-10.1






Exhibit 10.1




PHH CORPORATION

AMENDED AND RESTATED

2005 EQUITY AND INCENTIVE PLAN






 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	Section	 	Page
	 
	 	 	 	 	 	 
	1.

	 	Purpose; Types of Awards; Construction.
	 	 	3	 
	 
	 	 	 	 	 	 
	2.

	 	Definitions.
	 	 	3	 
	 
	 	 	 	 	 	 
	3.

	 	Administration.
	 	 	8	 
	 
	 	 	 	 	 	 
	4.

	 	Eligibility.
	 	 	9	 
	 
	 	 	 	 	 	 
	5.

	 	Stock Subject to the Plan.
	 	 	9	 
	 
	 	 	 	 	 	 
	6.

	 	Specific Terms of Awards.
	 	 	10	 
	 
	 	 	 	 	 	 
	7.

	 	Change in Control Provisions.
	 	 	17	 
	 
	 	 	 	 	 	 
	8.

	 	General Provisions.
	 	 	17	 






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PHH CORPORATION

AMENDED AND RESTATED

2005 EQUITY AND INCENTIVE PLAN





	1.	 	Establishment, Purpose; Types of Awards; Construction.




PHH Corporation (the “Company”) hereby establishes the PHH Corporation Amended and Restated 2005
Equity and Incentive Plan (the “Plan”), as set forth herein. The Plan is an amendment and
restatement and continuation of the PHH Corporation 2005 Equity and Incentive Plan (the “Prior
Plan”). The purposes of the Plan are to afford an incentive to non-employee directors, selected
officers and other employees, advisors and consultants of the Company, or any Parent or Subsidiary
of the Company that now exists or hereafter is organized or acquired, to continue as non-employee
directors, officers, employees, advisors or consultants, as the case may be, to increase their
efforts on behalf of the Company and its Subsidiaries and to promote the success of the Company’s
business. The Plan provides for the grant of Options (including “incentive stock options” and
“nonqualified stock options”), stock appreciation rights, restricted stock, restricted stock units
and other stock- or cash-based awards. The Plan is designed with the intention that Awards granted
hereunder will comply with the requirements for “performance-based compensation” under Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and the Plan and Awards shall
be interpreted in a manner consistent with such requirements. The Company also intends that the
Plan comply with Section 409A of the Code and the Plan shall be so construed. The provisions of
the Prior Plan continue to control with respect to any Awards outstanding thereunder prior to the
date of stockholder approval of this Plan, including to the extent necessary to avoid establishment
of a new measurement date for financial accounting purposes and to preserve the status of any
options that are intended to qualify as incentive stock options within the meaning of Section 422
of the Code.





	2.	 	Definitions.




For purposes of the Plan, the following terms shall be defined as set forth below:





	 	(a)	 	“Annual Incentive Program” means the program described in Section 6(c) hereof.
	 
	 	(b)	 	“Award” means any Option, SAR, Restricted Stock, Restricted Stock Unit or Other
Stock-Based Award or Other Cash-Based Award granted under the Plan.
	 
	 	(c)	 	“Award Agreement” means any written agreement, contract, or other instrument or
document evidencing an Award.
	 
	 	(d)	 	“Board” means the Board of Directors of the Company.




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	 	(e)	 	“Change in Control” means a change in control of the Company, which will be
deemed to have occurred if:






	 	(i)	 	any “person,” as such term is used in Sections 13(d) and 14(d)
of the Exchange Act (other than (A) the Company, (B) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, and
(C) any corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of Stock), is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company’s then outstanding voting
securities (excluding any person who becomes such a beneficial owner in
connection with a transaction immediately following which the individuals who
comprise the Board immediately prior thereto constitute at least a majority of
the Board, the entity surviving such transaction or, if the Company or the
entity surviving the transaction is then a subsidiary, the ultimate parent
thereof);
	 
	 	(ii)	 	the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
Effective Date, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on the Effective Date or whose appointment, election or nomination
for election was previously so approved or recommended;
	 
	 	(iii)	 	there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other corporation,
other than a merger or consolidation immediately following which the
individuals who comprise the Board immediately prior thereto constitute at
least a majority of the Board, the entity surviving such merger or
consolidation or, if the Company or the entity surviving such merger is then a
subsidiary, the ultimate parent thereof; or
	 
	 	(iv)	 	the stockholders of the Company approve a plan of complete
liquidation of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets
(or any transaction having a similar effect), other than a sale or disposition
by the Company of all or substantially all of the Company’s assets to an
entity, immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the board of
directors of the entity to which such assets are sold or disposed of or, if
such entity is a subsidiary, the ultimate parent thereof.




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Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred by virtue
of (x) a Public Offering or (y) the consummation of any transaction or series of integrated
transactions immediately following which the holders of the Stock immediately prior to such
transaction or series of transactions continue to have substantially the same proportionate
ownership in an entity which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions. Solely to the extent necessary to comply with
the requirements of Section 409A of the Code, a “Change in Control” as defined herein may occur
only upon or as a result of a Change in Control that is also a “change in control event,” as
defined in accordance with Section 1.409A-3(i)(5) of the Treasury Regulations.





	 	(f)	 	“Committee” means the committee established by the Board to administer the
Plan, the composition of which shall at all times satisfy the provisions of Rule 16b-3
and Section 162(m) of the Code.
	 
	 	(g)	 	“Company” means PHH Corporation, a Maryland corporation, or any successor
corporation.
	 
	 	(h)	 	“Covered Employee” shall have the meaning set forth in Section 162(m)(3) of the
Code.
	 
	 	(i)	 	“Effective Date” means, with respect to the Prior Plan, January 14, 2005, and,
with respect to this Plan, the date of approval of the Plan by the stockholders of the
Company.
	 
	 	(j)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder.
	 
	 	(k)	 	“Fair Market Value” means, with respect to Stock or other property, the fair
market value of such Stock or other property determined by such methods or procedures
as shall be established from time to time by the Committee. Unless otherwise
determined by the Committee in good faith, the per share Fair Market Value of Stock as
of a particular date shall mean (i) the closing sales price per share of Stock on the
national securities exchange on which the Stock is principally traded (or, if there was
no trading of the Stock on such date, the closing sales price for the last preceding
date on which there was trading of the Stock on such exchange), or (ii) if the shares
of Stock are then traded in an over-the-counter market, the average of the closing bid
and asked prices for the shares of Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Stock in such market, or (iii) if the shares of Stock are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Committee, in its sole discretion, shall
determine.
	 
	 	(l)	 	“Grantee” means a person who, as a non-employee director, officer or other
employee of the Company or a Parent or Subsidiary of the Company, has been granted an
Award under the Plan.




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	 	(m)	 	“ISO” means any Option intended to be and designated as an incentive stock
option within the meaning of Section 422 of the Code.
	 
	 	(n)	 	“Long Term Incentive Program” means the program described in Section 6(b)
hereof.
	 
	 	(o)	 	“Non-Employee Director” means any director of the Company who is not also
employed by the Company or any of its Subsidiaries.
	 
	 	(p)	 	“NQSO” means any Option that is not designated as an ISO.
	 
	 	(q)	 	“Option” means a right, granted to a Grantee under Section 6(b)(i), to purchase shares of Stock. An Option may be either an ISO or an NQSO, provided that ISOs may be
granted only to employees of the Company or a Parent or Subsidiary of the Company.
	 
	 	(r)	 	“Other Cash-Based Award” means cash awarded under the Annual Incentive Program
or the Long Term Incentive Program, including cash awarded as a bonus or upon the
attainment of Performance Goals or otherwise as permitted under the Plan.
	 
	 	(s)	 	“Other Stock-Based Award” means a right or other interest granted to a Grantee
under the Annual Incentive Program or the Long Term Incentive Program that may be
denominated or payable in, valued in whole or in part by reference to, or otherwise
based on, or related to, Stock, including but not limited to (i) unrestricted Stock
awarded as a bonus or upon the attainment of Performance Goals or otherwise as
permitted under the Plan, and (ii) a right granted to a Grantee to acquire Stock from
the Company containing terms and conditions prescribed by the Committee.
	 
	 	(t)	 	“Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.
	 
	 	(u)	 	“Performance Goals” means performance goals based on one or more of the
following criteria, determined in accordance with generally accepted accounting
principles where applicable: (i) pre-tax income or after-tax income; (ii) income or
earnings including operating income, earnings before or after taxes, earnings before or
after interest, depreciation, amortization, or extraordinary or special items;
(iii) pre-tax income of the Company or any Subsidiary, or any division or business unit
thereof, before or after non-controlling interest; (iv) net income excluding
amortization of intangible assets, depreciation and impairment of goodwill and
intangible assets and/or excluding charges attributable to the adoption of new
accounting pronouncements; (v) earnings or book value per share (basic or diluted);
(vi) return on assets (gross or net), return on investment, return on capital, or
return on equity; (vii) return on revenues; (viii) cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by operations, or
cash flow in excess of cost of capital; (ix) economic value created; (x) operating
margin or profit margin; (xi) stock price or total stockholder




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	 	 	 	return; (xii) income or
earnings from continuing operations; (xiii) cost targets, reductions and savings,
expense management, productivity and efficiencies; and (xiv) strategic business
criteria, consisting of one or more objectives based on meeting specified market
penetration or market share, geographic business expansion, customer satisfaction,
employee satisfaction, human resources management, supervision of litigation,
information technology, and goals relating to divestitures, joint ventures and similar
transactions. Where applicable, the Performance Goals may be expressed in terms of
attaining a specified level of the particular criterion or the attainment of a
percentage increase or decrease in the particular criterion, and may be applied to one
or more of the Company or a Parent or Subsidiary of the Company, or a division or
strategic business unit of the Company, all as determined by the Committee. The
Performance Goals may include a threshold level of performance below which no payment
will be made (or no vesting will occur), levels of performance at which specified
payments will be paid (or specified vesting will occur), and a maximum level of
performance above which no additional payment will be made (or at which full vesting
will occur). Each of the foregoing Performance Goals shall be evaluated in accordance
with generally accepted accounting principles, where applicable, and shall be subject
to certification by the Committee. The Committee shall have the authority to make
equitable adjustments to the Performance Goals in recognition of unusual or
non-recurring events affecting the Company or any Parent or Subsidiary of the Company
or the financial statements of the Company or any Parent or Subsidiary of the Company,
in response to changes in applicable laws or regulations, or to account for items of
gain, loss or expense determined to be extraordinary or unusual in nature or infrequent
in occurrence or related to the disposal of a segment of a business or related to a
change in accounting principles.
	 
	 	(v)	 	“Plan” means this PHH Corporation Amended and Restated 2005 Equity and
Incentive Plan, as it may be amended from time to time.
	 
	 	(w)	 	“Plan Year” means a calendar year.
	 
	 	(x)	 	“Public Offering” means an offering of equity securities of the Company that is
registered with the Securities and Exchange Commission.
	 
	 	(y)	 	“Restricted Stock” means an Award of shares of Stock to a Grantee under
Section 6(b)(iii) that may be subject to certain restrictions and to a risk of
forfeiture.
	 
	 	(z)	 	“Restricted Stock Unit” or “RSU” means a right granted to a Grantee under
Section 6(b)(iv) to receive Stock or cash at the end of a specified period, which right
may be conditioned on the satisfaction of specified performance or other criteria. To
the extent provided in an Award Agreement or as otherwise set forth herein, RSUs may
include dividend equivalent rights.




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	 	(aa)	 	“Rule 16b-3” means Rule 16b-3, as from time to time in effect promulgated by
the Securities and Exchange Commission under Section 16 of the Exchange Act, including
any successor to such Rule.
	 
	 	(bb)	 	“Securities Act” means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
	 
	 	(cc)	 	“Stock” means shares of the common stock, par value $0.01 per share, of the
Company.
	 
	 	(dd)	 	“Stock Appreciation Right” or “SAR” means the right, granted to a Grantee under
Section 6(b)(ii), to be paid an amount measured by the appreciation in the Fair Market
Value of Stock from the date of grant to the date of exercise of the right.
	 
	 	(ee)	 	“Subsidiary” means any corporation, limited partnership, limited liability
company or other entity (other than the Company) in or of which the Company owns,
directly or indirectly, at the time the relevant Award is granted, an equity interest
possessing 50 percent or more of the total combined voting power of all equity
interests of such entity; provided, however, that with respect to any Grantee
who has participated in the Plan for a period of at least one year, if such Grantee is
transferred by the Company or a Subsidiary to another entity in or of which the Company
owns, directly or indirectly, less than 50 percent of the total combined voting power
of all equity interests in or of such entity, such entity shall be treated as a
Subsidiary solely for purposes of determining whether such Grantee has incurred a
termination of employment with respect to any Awards outstanding as of the date of such
transfer; and, provided further, that for purposes of ISOs granted pursuant to
the Plan, the term ‘Subsidiary’ means a ‘subsidiary corporation,’ whether now or
hereafter existing, as defined in Section 424(f) of the Code.






	3.	 	Administration.




The Plan shall be administered by the Board or by such Committee that the Board may appoint for
this purpose. If a Committee is appointed to administer the Plan, all references herein to the
“Committee” shall be references to such Committee. If no Committee is appointed by the Board to
administer the Plan, all references herein to the “Committee” shall be references to the Board.
The Committee shall have the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to grant Awards; to
determine the persons to whom and the time or times at which Awards shall be granted; to determine
the type and number of Awards to be granted, the number of shares of Stock to which an Award may
relate and the terms, conditions, restrictions and performance criteria relating to any Award; to
determine Performance Goals no later than such time as required to ensure that an underlying Award
which is intended to comply with the requirements of Section 162(m) of the Code so complies; and to
determine whether, to what extent, and under what circumstances an Award may be settled, cancelled,
forfeited, exchanged, or surrendered; to make adjustments in



8









 






the terms and conditions of, and the Performance Goals (if any) included in, Awards; to construe and interpret the Plan and any Award or
Loan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the Award Agreements (which need not be identical for each Grantee); and to
make all other determinations deemed necessary or advisable for the administration of the Plan.
Notwithstanding the foregoing, neither the Board, the Committee nor their respective delegates
shall have the authority to reprice (or cancel and regrant) any Option or, if applicable, other
Award at a lower exercise, base or purchase price without first obtaining the approval of the
Company’s stockholders.



The Committee may appoint a chairperson and a secretary and may make such rules and regulations for
the conduct of its business as it shall deem advisable, and shall keep minutes of its meetings.
All determinations of the Committee shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or by written consent. The Committee
may delegate to one or more of its members or to one or more agents such administrative duties as
it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid
may employ one or more persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and interpretations of the
Committee shall be final and binding on all persons, including but not limited to the Company, any
Parent or Subsidiary of the Company or any Grantee (or any person claiming any rights under the
Plan from or through any Grantee) and any stockholder.



No member of the Board or Committee shall be liable for any action taken or determination made in
good faith with respect to the Plan or any Award granted hereunder.





	4.	 	Eligibility.




Awards may be granted to selected Non-Employee Directors, officers and other employees, advisors or
consultants of the Company or any Parent or Subsidiary of the Company, in the discretion of the
Committee. In determining the persons to whom Awards shall be granted and the type of any Award
(including the number of shares to be covered by such Award), the Committee shall take into account
such factors as the Committee shall deem relevant in connection with accomplishing the purposes of
the Plan.





	5.	 	Stock Subject to the Plan.




Subject to adjustment as provided for herein, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be 4,550,000, plus the number of shares of Stock that,
immediately prior to stockholder approval of the Plan, remain authorized and available for awards
under the Prior Plan or thereafter become available under the terms of the Prior Plan; of this
number, no more than 2,250,000 shares may be issued in the form of an Award other than an Option or
SAR. Such shares shall be authorized but unissued shares of Stock. If any shares subject to an
Award are forfeited or cancelled, or if an Award terminates or expires without a distribution of
shares to the Grantee, or if an Award is paid or settled in cash, the shares of Stock with respect
to such Award shall, to the extent of any such forfeiture, cancellation, termination or expiration,
or cash payment or settlement, again be available for Awards under the Plan other than Awards that
are intended to be ISOs. Each share subject to the foregoing sentence shall be




9









 






added back to the number of shares of Stock reserved under the Plan as one share.

 Notwithstanding anything to the
contrary contained herein, all shares of Stock covered by an SAR, to the extent that it is
exercised and settled in shares of Stock, shall be considered issued or transferred pursuant to the
Plan. Upon the exercise of any Award granted in tandem with any other Award, such related Award
shall be cancelled to the extent of the number of shares of Stock as to which the Award is
exercised and such number of shares shall no longer be available for Awards under the Plan. Shares
of Stock surrendered or withheld as payment of either the exercise price of an Award and/or
withholding taxes with respect to an Award shall not again be made available for Awards under the
Plan.



No more than 1,000,000 shares of Stock may be made subject to Options or SARs to a single
individual in a single Plan Year, subject to adjustment as provided herein, and no more than
1,000,000 shares of Stock may be made subject to stock-based awards other than Options or SARs
(including Restricted Stock and Restricted Stock Units or Other Stock-Based Awards denominated in
shares of Stock) to a single individual in a single Plan Year, in either case, subject to
adjustment as provided herein. Determinations made in respect of the limitations set forth in the
immediately preceding sentence shall be made in a manner consistent with Section 162(m) of the
Code.



In the event that the Committee shall determine that any dividend or other distribution (whether in
the form of cash, Stock, or other property), recapitalization, Stock split, reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or
other similar corporate transaction or event, affects the Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of Grantees under the Plan,
then the Committee shall make such equitable changes or adjustments as it deems necessary or
appropriate to any or all of (i) the number and kind of shares of Stock or other property
(including cash) that may thereafter be issued in connection with Awards, (ii) the number and kind
of shares of Stock or other property (including cash) issued or issuable in respect of outstanding
Awards, (iii) the exercise price, grant price, or purchase price relating to any Award; provided,
that, with respect to ISOs, such adjustment shall be made in accordance with Section 424(h) of the
Code; and (iv) the Performance Goals applicable to outstanding Awards.





	6.	 	Specific Terms of Awards.






	 	(a)	 	General. The term of each Award shall be for such period as may be
determined by the Committee. Subject to the terms of the Plan and any applicable Award
Agreement, payments to be made by the Company or a Parent or Subsidiary of the Company
upon the grant, vesting, maturation, or exercise of an Award may be made in such forms
as the Committee shall determine at the date of grant, including, without limitation,
cash, Stock, or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The Committee may make rules relating to
installment or deferred payments with respect to Awards, including the rate of interest
to be credited with respect to such payments. In addition to the foregoing, the
Committee may impose on any Award or the exercise thereof, at the date of grant or
thereafter, such additional terms and conditions, not inconsistent with the provisions
of the Plan, as the Committee shall determine.






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	 	(b)	 	Long Term Incentive Program. Under the Long Term Incentive Program,
the Committee is authorized to grant the Awards described in this Section 6(b), under
such terms and conditions as deemed by the Committee to be consistent with the
purposes of the Plan. Such Awards may be granted with value and payment contingent
upon Performance Goals. Except as otherwise set forth herein or as may be determined
by the Committee, each Award granted under the Long Term Incentive Program shall be
evidenced by an Award Agreement containing such terms and conditions applicable to
such Award as the Committee shall determine at the date of grant or thereafter.






	 	(i)	 	Options. The Committee is authorized to grant Options
to Grantees on the following terms and conditions:






	 	(A)	 	Type of Award. The Award Agreement
evidencing the grant of an Option under the Plan shall designate the
Option as an ISO or an NQSO.
	 
	 	(B)	 	Exercise Price. The exercise price per
share of Stock purchasable under an Option shall be determined by the
Committee, but in no event shall the per share exercise price of any
Option be less than the Fair Market Value of a share of Stock on the
date of grant of such Option. The exercise price for Stock subject to
an Option may be paid in cash or by an exchange of Stock previously
owned by the Grantee for at least six months (if acquired from the
Company), through a “broker cashless exercise” procedure approved by
the Committee (to the extent permitted by law), or a combination of the
above, in any case in an amount having a combined value equal to such
exercise price. An Award Agreement may provide that a Grantee may pay
all or a portion of the aggregate exercise price by having shares of
Stock with a Fair Market Value on the date of exercise equal to the
aggregate exercise price withheld by the Company.
	 
	 	(C)	 	Term and Exercisability of Options.
The date on which the Committee adopts a resolution expressly granting
an Option shall be considered the day on which such Option is granted.
Options shall be exercisable over the exercise period (which shall not
exceed ten years from the date of grant), at such times and upon such
conditions as the Committee may determine, as reflected in the Award
Agreement; provided that the Committee shall have the authority to
accelerate the exercisability of any outstanding Option at such time
and under such circumstances as it, in its sole discretion, deems
appropriate. An Option may be exercised to the extent of any or all
full shares of Stock as to which the Option has become exercisable, by
giving written notice of such exercise to the Committee or its
designated agent.




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	 	(D)	 	Termination of Employment. An Option
may not be exercised unless the Grantee is then a director of, in the
employ of, or providing services to, the Company or a Parent or
Subsidiary of the Company, and unless the Grantee has remained
continuously so employed, or continuously maintained such relationship,
since the date of grant of the Option; provided, that the Award
Agreement may contain provisions extending the exercisability of
Options, in the event of specified terminations of employment or
service, to a date not later than the expiration date of such Option.
	 
	 	(E)	 	Other Provisions. Options may be
subject to such other conditions including, but not limited to,
restrictions on transferability of the shares acquired upon exercise of
such Options, as the Committee may prescribe in its discretion or as
may be required by applicable law.






	 	(ii)	 	SARs. The Committee is authorized to grant SARs to
Grantees on the following terms and conditions:






	 	(A)	 	In General. Unless the Committee
determines otherwise, a SAR (1) granted in tandem with an NQSO may be
granted at the time of grant of the related NQSO or at any time
thereafter or (2) granted in tandem with an ISO may only be granted at
the time of grant of the related ISO. A SAR granted in tandem with an
Option shall be exercisable only to the extent the underlying Option is
exercisable. Payment of a SAR may made in cash, Stock, or property as
specified in the Award or determined by the Committee at the date of
grant.
	 
	 	(B)	 	Right Conferred. A SAR shall confer on
the Grantee a right to receive an amount with respect to each share
subject thereto, upon exercise thereof, equal to the excess of (1) the
Fair Market Value of one share of Stock on the date of exercise over
(2) the grant price of the SAR (which in the case of an SAR granted in
tandem with an Option shall be equal to the exercise price of the
underlying Option, and which in the case of any other SAR shall be such
price as the Committee may determine).
	 
	 	(C)	 	Term and Exercisability of SARs. The
date on which the Committee adopts a resolution expressly granting a
SAR shall be considered the day on which such SAR is granted. SARs
shall be exercisable over the exercise period (which shall not exceed
the lesser of ten years from the date of grant or, in the case of a
tandem SAR, the expiration of its related Award), at such times and
upon such conditions as the Committee may determine, as reflected in
the Award Agreement; provided, that the Committee shall have the
authority to accelerate the exercisability of any outstanding SAR at




12









 






	 	 	 	such time and under such circumstances as it, in its sole discretion,
deems appropriate. A SAR may be exercised to the extent of any or
all full shares of Stock as to which the SAR (or, in the case of a
tandem SAR, its related Award) has become exercisable, by giving
written notice of such exercise to the Committee or its designated
agent.






	 	(D)	 	Termination of Employment. A SAR may
not be exercised unless the Grantee is then a director of, in the
employ of, or providing services to, the Company or a Parent or
Subsidiary of the Company, and unless the Grantee has remained
continuously so employed, or continuously maintained such relationship,
since the date of grant of the SAR; provided, that the Award Agreement
may contain provisions extending the exercisability of the SAR, in the
event of specified terminations of employment or service, to a date not
later than the expiration date of such SAR (or, in the case of a tandem
SAR, its related Award).
	 
	 	(E)	 	Other Provisions. SARs may be subject
to such other conditions including, but not limited to, restrictions on
transferability of the shares acquired upon exercise of such SARs, as
the Committee may prescribe in its discretion or as may be required by
applicable law.






	 	(iii)	 	Restricted Stock. The Committee is authorized to
grant Restricted Stock to Grantees on the following terms and conditions:






	 	(A)	 	Issuance and Restrictions. Restricted
Stock shall be subject to such restrictions on transferability and
other restrictions, if any, as the Committee may impose at the date of
grant or thereafter, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such
installments, or otherwise, as the Committee may determine. The
Committee may place restrictions on Restricted Stock that shall lapse,
in whole or in part, only upon the attainment of Performance Goals.
Except to the extent restricted under the Award Agreement relating to
the Restricted Stock, a Grantee granted Restricted Stock shall have all
of the rights of a stockholder including, without limitation, the right
to vote Restricted Stock and the right to receive dividends thereon.






	 	(B)	 	Forfeiture. Upon termination of
employment with or service to the Company, or upon termination of the
director or independent contractor relationship, as the case may be,
during the applicable restriction period, Restricted Stock and any
accrued but unpaid dividends that are then subject to restrictions
shall be forfeited; provided, that the Committee may provide, by rule
or regulation or in any Award Agreement, or may determine in any
individual case,




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	 	 	 	that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee may in other cases
waive in whole or in part the forfeiture of Restricted Stock.






	 	(C)	 	Certificates for Stock. Restricted
Stock granted under the Plan may be evidenced in such manner as the
Committee shall determine. If certificates representing Restricted
Stock are registered in the name of the Grantee, such certificates
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such Restricted Stock, and the Company
shall retain physical possession of the certificate.
	 
	 	(D)	 	Dividends. Dividends paid on
Restricted Stock shall be either paid at the dividend payment date, or
deferred for payment to such date as determined by the Committee and
specified in the applicable Award Agreement, in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of
such dividends. Stock distributed in connection with a stock split or
stock dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as
the Restricted Stock with respect to which such Stock or other property
has been distributed. Notwithstanding anything herein to the contrary,
dividends paid on Restricted Stock that vest based upon the attainment
of Performance Goals shall be accumulated and paid only to the extent
of the attainment of the underlying Performance Goals, as determined by
the Committee.






	 	(iv)	 	Restricted Stock Units. The Committee is authorized to
grant Restricted Stock Units to Grantees, subject to the following terms and
conditions:






	 	(A)	 	Award and Restrictions. Delivery of
Stock or cash, as determined by the Committee at the date of grant,
will occur upon expiration of the deferral period specified for
Restricted Stock Units by the Committee. The Committee may place
restrictions on Restricted Stock Units that shall lapse, in whole or in
part, only upon the attainment of Performance Goals.
	 
	 	(B)	 	Forfeiture. Upon termination of
employment with or service to the Company, or upon termination of the
director or independent contractor relationship, as the case may be,
during the applicable deferral period or portion thereof to which
forfeiture conditions apply, or upon failure to satisfy any other
conditions precedent to the delivery of Stock or cash to which such
Restricted Stock Units relate, all Restricted Stock Units and any
accrued but unpaid dividend equivalent rights that are then subject to
deferral or restriction shall be forfeited; provided, that the
Committee may




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	 	 	 	provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock Units will be waived in whole
or in part in the event of termination resulting from specified
causes, and the Committee may in other cases waive in whole or in
part the forfeiture of Restricted Stock Units. Notwithstanding
anything herein to the contrary, dividend equivalent rights paid on
Restricted Stock Units that vest based upon the attainment of
Performance Goals shall be accumulated and paid only to the extent of
the attainment of the underlying Performance Goals, as determined by
the Committee.






	 	(C)	 	Non-Employee Director Deferred Compensation
Awards. Unless the Committee or the Board determines otherwise on
a prospective basis, the Company shall issue RSUs payable in Stock
pursuant to this Section 6(b)(iv)(C) for the purpose of fulfilling the
Company’s obligations under its Non-Employee Directors Deferred
Compensation Plan (the “Deferred Compensation Plan”); provided,
however, that certain terms and conditions of the grant and payment of
such RSUs set forth in the Deferred Compensation Plan (and only to the
extent set forth in such plan) shall supercede the terms generally
applicable to RSUs granted under the Plan. RSUs granted under this
Section 6(b)(iv)(C) need not be evidenced by an Award Agreement unless
the Committee determines that such an Award Agreement is desirable for
the furtherance of the purposes of the Plan and the Deferred
Compensation Plan.
	 
	 	(D)	 	Non-Employee Director Compensatory
Awards. Unless the Committee or the Board determines otherwise on
a prospective basis, the Company shall issue RSUs payable in Stock
pursuant to this Section 6(b)(iv)(D) for the purpose of fulfilling the
Company’s obligation to compensate each Non-Employee Director, in part,
in the form of RSUs. RSUs granted under this Section 6(b)(iv)(D) need
not be evidenced by an Award Agreement unless the Committee determines
that such an Award Agreement is desirable for the furtherance of the
purposes of the Plan. Such RSUs shall be awarded at such times as the
Company shall otherwise pay to Non-Employee Directors their annual
retainer fees, and annual committee stipends as well as such other
fees, stipends and payments as determined by the Committee or the Board
(each such award date, a “Fee Payment Date”). The Company shall keep a
separate book account in the name of each Non-Employee Director. RSUs
awarded pursuant to this Section 6(b)(iv)(D) may have dividend
equivalent rights to be credited and payable in the form of additional
RSUs or cash, as determined by the Committee or the Board on a
prospective basis. The number of RSUs to be credited to each
Non-Employee Director’s account as of each Fee




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	 	 	 	Payment Date shall be calculated by dividing (1) fifty percent (50%)
of the total retainer fee and committee stipends otherwise to be paid
to such Non-Employee Director on such Fee Payment Date by (2) the
Fair Market Value of a share of Stock on such date. In the event the
foregoing calculation would result in a grant of a fractional number
of RSUs, the number of RSUs to be granted to the Non-Employee
Director shall be rounded down to the nearest whole number of RSUs,
and the fractional amount shall be paid to the Non-Employee Director
in cash as part of the Non-Employee Director’s retainer fee and
committee stipends. RSUs credited pursuant to this Section
6(b)(iv)(D) shall be immediately vested and non-forfeitable and shall
become payable on the first anniversary immediately following the
date upon which a Non-Employee Director’s service as a member of the
Board terminates for any reason; no acceleration of such payment
shall be permitted, except to the extent the Committee determines
such acceleration is permitted under Code Section 409A.






	 	(v)	 	Other Stock- or Cash-Based Awards. The Committee is
authorized to grant Awards to Grantees in the form of Other Stock-Based Awards
or Other Cash-Based Awards, as deemed by the Committee to be consistent with
the purposes of the Plan. Awards granted pursuant to this Section 6(b)(v) may
be granted with value and payment contingent upon Performance Goals, so long as
such goals relate to periods of performance in excess of one calendar year.
The Committee shall determine the terms and conditions of such Awards at the
date of grant or thereafter. Performance periods under this Section 6(b)(v)
may overlap. The maximum value of the aggregate payment that any Grantee may
receive pursuant to this Section 6(b)(v) in respect of any Plan Year is $5
million. Payments earned hereunder may be decreased or, with respect to any
Grantee who is not a Covered Employee, increased in the sole discretion of the
Committee based on such factors as it deems appropriate. No such payment shall
be made to a Covered Employee prior to the certification by the Committee that
the Performance Goals have been attained. The Committee may establish such
other rules applicable to the Other Stock- or Cash-Based Awards to the extent
not inconsistent with Section 162(m) of the Code and provided that any
dividends or dividend equivalents payable with respect to such Awards that vest
based upon the attainment of Performance Goals shall be accumulated and paid
only to the extent of the attainment of the underlying Performance Goals, as
determined by the Committee.






	 	(c)	 	Annual Incentive Program. The Committee is authorized to grant Awards
to Grantees pursuant to the Annual Incentive Program, under such terms and conditions
as deemed by the Committee to be consistent with the purposes of the Plan. Grantees
will be selected by the Committee with respect to participation for a Plan Year. The
maximum value of the aggregate payment that any Grantee may




16









 






	 	 	 	receive under the Annual Incentive Program in respect of any Plan Year is $5
million. Payments earned hereunder may be decreased or, with respect to any Grantee
who is not a Covered Employee, increased, in the sole discretion of the Committee
based on such factors as it deems appropriate. No such payment shall be made to a
Covered Employee prior to the certification by the Committee that the Performance
Goals relating to Awards hereunder have been attained. The Committee may establish
such other rules applicable to the Annual Incentive Program to the extent not
inconsistent with Section 162(m) of the Code.






	7.	 	Change in Control Provisions.




Unless otherwise determined by the Committee and evidenced in an Award Agreement or set forth
herein, in the event of a Change in Control:





	 	(a)	 	any Award carrying a right to exercise that was not previously vested and
exercisable shall become fully vested and exercisable; and
	 
	 	(b)	 	the restrictions, deferral limitations, payment conditions, and forfeiture
conditions applicable to any other Award granted under the Plan shall lapse and such
Awards shall be deemed fully vested, and any performance conditions imposed with
respect to Awards shall be deemed to be fully achieved.






	8.	 	General Provisions.






	 	(a)	 	Nontransferability. Unless otherwise provided in an Award Agreement,
Awards shall not be transferable by a Grantee except by will or the laws of descent and
distribution and shall be exercisable during the lifetime of a Grantee only by such
Grantee or his guardian or legal representative.
	 
	 	(b)	 	No Right to Continued Employment, etc. Nothing in the Plan or in any
Award, any Award Agreement or other agreement entered into pursuant hereto shall confer
upon any Grantee the right to continue in the employ of, or to continue as a director
of, or to continue to provide services to, the Company or any Parent or Subsidiary of
the Company or to be entitled to any remuneration or benefits not set forth in the Plan
or such Award Agreement or other agreement or to interfere with or limit in any way the
right of the Company or any such Parent or Subsidiary to terminate such Grantee’s
employment, or director or independent contractor relationship.
	 
	 	(c)	 	Taxes. The Company or any Parent or Subsidiary of the Company is
authorized to withhold from any Award granted, any payment relating to an Award under
the Plan, including from a distribution of Stock, or any other payment to a Grantee,
amounts of withholding and other taxes due in connection with any transaction involving
an Award, and to take such other action as the Committee may deem advisable to enable
the Company and Grantees to satisfy obligations for the payment of withholding taxes
and other tax obligations relating to any Award. This authority shall include
authority to withhold or receive cash, Stock or other property in satisfaction of a
Grantee’s tax obligations, to the extent permitted




17









 






	 	 	 	under applicable law or regulation. The Committee may provide in the Award
Agreement that in the event that a Grantee is required to pay any amount to be
withheld in connection with the issuance of shares of Stock in settlement or
exercise of an Award, the Grantee may satisfy such obligation (in whole or in part)
by electing to have a portion of the shares of Stock to be received upon settlement
or exercise of such Award equal to the minimum amount required to be withheld.






	 	(d)	 	Stockholder Approval; Amendment and Termination.






	 	(i)	 	The Plan shall take effect upon its adoption by the Board but
the Plan shall be subject to the requisite approval of the stockholders of the
Company. In the event that the stockholders of the Company do not approve the
Plan at a meeting of the stockholders at which such issue is considered and
voted upon, then upon such event the Plan and all rights hereunder shall
immediately terminate and no Grantee (or any permitted transferee thereof)
shall have any remaining rights under the Plan or any Award Agreement entered
into in connection herewith.
	 
	 	(ii)	 	The Board may at any time and from time to time alter, amend,
suspend, or terminate the Plan in whole or in part; provided, however, that
unless otherwise determined by the Board, an amendment that requires
stockholder approval in order for the Plan to continue to comply with Section
162(m) or any other law, regulation or stock exchange requirement shall not be
effective unless approved by the requisite vote of stockholders.
Notwithstanding the foregoing, no amendment to or termination of the Plan shall
affect adversely any of the rights of any Grantee, without such Grantee’s
consent, under any Award theretofore granted under the Plan.






	 	(e)	 	Expiration of Plan. Unless earlier terminated by the Board pursuant to
the provisions of the Plan, the Plan shall expire on the tenth anniversary of the
Effective Date of the Prior Plan. No Awards shall be granted under the Plan after such
expiration date. The expiration of the Plan shall not affect adversely any of the
rights of any Grantee, without such Grantee’s consent, under any Award theretofore
granted.
	 
	 	(f)	 	Deferrals. The Committee shall have the authority to establish such
procedures and programs as it deems appropriate to provide Grantees with the ability to
defer receipt of cash, Stock or other property payable with respect to Awards granted
under the Plan. Such procedures and programs, if any, shall be interpreted in
accordance with the requirements of Section 409A of the Code.
	 
	 	(g)	 	No Rights to Awards; No Stockholder Rights. No Grantee shall have any
claim to be granted any Award under the Plan, and there is no obligation for uniformity
of treatment of Grantees. Except as provided specifically herein, a Grantee or a




18









 






	 	 	 	transferee of an Award shall have no rights as a stockholder with respect to any
shares covered by the Award until the date of the issuance of a stock certificate to
him for such shares.






	 	(h)	 	Unfunded Status of Awards. The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any payments
not yet made to a Grantee pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Grantee any rights that are greater than those of a general
creditor of the Company.
	 
	 	(i)	 	No Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine whether
cash, other Awards, or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
	 
	 	(j)	 	Regulations and Other Approvals.






	 	(i)	 	The obligation of the Company to sell or deliver Stock with
respect to any Award granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
	 
	 	(ii)	 	Each Award is subject to the requirement that, if at any time
the Committee determines, in its absolute discretion, that the listing,
registration or qualification of Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award or
the issuance of Stock, no such Award shall be granted or payment made or Stock
issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions not
acceptable to the Committee.
	 
	 	(iii)	 	In the event that the disposition of Stock acquired pursuant
to the Plan is not covered by a then-current registration statement under the
Securities Act and is not otherwise exempt from such registration, such Stock
shall be restricted against transfer to the extent required by the Securities
Act or regulations thereunder, and the Committee may require a Grantee
receiving Stock pursuant to the Plan, as a condition precedent to receipt of
such Stock, to represent to the Company in writing that the Stock acquired by
such Grantee is acquired for investment only and not with a view to
distribution.
	 
	 	(iv)	 	The Committee may require a Grantee receiving Stock pursuant to
the Plan, as a condition precedent to receipt of such Stock, to enter into a




19









 






	 	 	 	stockholder agreement or “lock-up” agreement in such form as the Committee
shall determine is necessary or desirable to further the Company’s
interests.






	 	(k)	 	Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware without giving
effect to the conflict of laws principles thereof, except that the duties and
responsibilities of the Board and the members thereof shall be determined in accordance
with the laws of the state of Maryland without giving effect to the conflict of law
principles thereof.






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