Exhibit 10.1


 


ACTIVISION BLIZZARD, INC.


 


AMENDED AND RESTATED


2008 INCENTIVE PLAN


 


1.  Purpose.  The purpose of the
Amended and Restated Activision Blizzard, Inc. 2008 Incentive Plan is to
attract and retain directors, officers and other employees of and consultants
to Activision Blizzard, Inc., a Delaware corporation, and its
Subsidiaries, and to provide to such persons incentives and rewards for
performance.


 


2.  Definitions.  As used in the Plan:


 


(a)           “Award”
means a grant of a Stock Option, SARs, Performance Shares, Performance Units or
a Senior Executive Bonus or a grant or sale of Restricted Shares, Restricted
Share Units or an award contemplated by Section 10.


 


(b)           “Base
Price” means the price per share specified in an Evidence of Award
of a Freestanding SAR.


 


(c)           “Board”
means the Board of Directors of the Company.


 


(d)           “Code”
means the Internal Revenue Code of 1986, as amended from time to time.


 


(e)           “Committee”
means the Compensation Committee of the Board or such other committee of the
Board responsible for administering the Plan pursuant to Section 11.


 


(f)            “Common
Shares” means the shares of common stock, par value $0.000001 per
share, of the Company or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in Section 12.


 


(g)           “Company”
means Activision Blizzard, Inc., a Delaware corporation, and its
successors.


 


(h)           “Covered
Employee” means a Participant who is, or is determined by the
Committee to be likely to become, a “covered employee” within the meaning of Section 162(m) of
the Code (or any successor provision).


 


(i)            “Date
of Grant” means  the date on
which the Committee determines the terms of an Award (including the number of
Common Shares to which it pertains, if any) or such later (but not earlier)
date as may be specified by the Committee as the date on which such Award
becomes effective.


 


(j)           “Deferral
Period” means the period of time during which Restricted Share Units
are subject to deferral limitations, as provided in Section 7.


 


(k)           “Director”
means a member of the Board of Directors of the Company.


 


(l)            “Effective
Date” means the date of approval of the Plan by the Company’s
stockholders.


 


(m)          “Evidence
of Award” means an agreement, certificate, resolution or other type
or form of writing or other evidence approved by the Committee that sets forth
the terms and conditions of Awards. An Evidence of Award may be in an
electronic medium, may be limited to notation on the books and records of the
Company and, with the approval of the Committee, need not be signed by a
representative of the Company or a Participant.


 


(n)           “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as such law, rules and regulations may
be amended from time to time.


 


(o)           “Exercise
Price” means the purchase price per share payable on exercise of a
Stock Option.


 


(p)           “Fiscal
Year” means the fiscal year of the Company.


 


(q)           “Freestanding
SAR” means a SAR that is not granted in tandem with a Stock Option.


 


As amended and restated
on June 5, 2009


 

















 


(r)            “Incentive
Stock Option” means a Stock Option that is intended to qualify as an
“incentive stock option” under Section 422 of the Code or any successor
provision.


 


(s)           “Management
Objectives” means the measurable performance objective or objectives
established pursuant to the Plan for Participants who have received grants of
Performance Shares or Performance Units or, when so determined by the
Committee, Stock Options, SARs, Restricted Shares, Restricted Share Units,
dividend credits and other awards pursuant to the Plan. Management Objectives
may be described in terms of Company-wide objectives or objectives that are
related to the performance of the individual Participant or of a Subsidiary,
division, department or function within the Company or a Subsidiary. The
Committee may provide, in connection with the setting of the Management
Objectives, that any evaluation of performance may include or exclude certain
items that may occur during any Fiscal Year, including, without limitation, the
following: (i) asset write downs; (ii) litigation or claim judgments
or settlements; (iii) the effect of changes in tax laws, accounting
principles or other laws or provisions affecting reported results; (iv) any
reorganization and restructuring programs; (v) extraordinary nonrecurring
items as described in Accounting Principles Board Opinion No. 30 and/or in
management’s discussion and analysis of financial condition and results of
operations appearing in the Company’s Annual Report on Form 10-K for the
applicable year; (vi) acquisitions or divestitures; and (vii) foreign
exchange gains and losses. To the extent such inclusions or exclusions affect
Awards to Covered Employees, they will be prescribed in a form that meets the
requirements of Section 162(m) of the Code for deductibility. The
Management Objectives applicable to any Award to a Covered Employee will be
based on specified levels of, or relative peer company, performance in any one
or more of the following objectives, or any combination thereof, as determined
by the Committee in its sole discretion:


 


(A)          Adjusted net earnings


 


(B)           Appreciation in and/or maintenance of the
price of Common Shares (or any other publicly-traded securities of the
Company), including, without limitation, comparisons with various stock market
indices


 


(C)           Attainment of strategic and operational
initiatives


 


(D)          Budget


 


(E)           Cash flow (including, without limitation,
free cash flow)


 


(F)           Cost of capital


 


(G)           Cost reduction


 


(H)          Earnings and earnings growth (including,
without limitation, earnings per share, earnings before taxes, earnings before
interest and taxes, and earnings before interest, taxes, depreciation and
amortization)


 


(I)            Maintenance of internal controls over
financial reporting and corporate governance practices


 


(J)            Market share


 


(K)          Market value added


 


(L)           Net income


 


(M)         Net sales


 


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(N)          Operating profit and operating income


 


(O)          Pretax income before allocation of
corporate overhead and bonus


 


(P)           Quality


 


(Q)          Recruitment and development of associates


 


(R)           Reductions in costs


 


(S)           Return on assets and return on net assets


 


(T)           Return on equity


 


(U)          Return on invested capital


 


(V)           Sales and sales growth


 


(W)         Successful acquisition/divestiture


 


(X)          Total stockholder return and improvement
of stockholder return


 


If the Committee
determines that a change in the business, operations, corporate structure or
capital structure of the Company, or the manner in which it conducts its
business, or other events or circumstances, render previously established
Management Objectives unsuitable, the Committee may in its discretion modify
such Management Objectives or the related levels of achievement, in whole or in
part, as the Committee deems appropriate and equitable, except in the case of a
Covered Employee where such action would result in the loss of the otherwise
available exemption of the Award under Section 162(m) of the Code. In
such case, the Committee will not make any modification of the Management
Objectives or the level or levels of achievement with respect to such Covered
Employee.


 


(t)            “Market
Value per Share” means, as of any particular date, (i) one
hundred percent (100%) of the closing price per Common Share as reported on the
principal securities exchange, association or quotation system on which Common
Shares are then listed or quoted, or (ii) if clause (i) does not
apply, the fair market value of a Common Share as determined by the Committee.


 


(u)           “Optionee”
means the optionee named in an Evidence of Award evidencing an outstanding
Stock Option.


 


(v)           “Participant”
means a person who is selected by the Committee to receive benefits under the
Plan and who is at the time an officer, employee, consultant, advisor or
director of the Company or of any Subsidiary.


 


(w)          “Performance
Period” means, in respect of a Performance Share, Performance Unit
or Senior Executive Plan Bonus, a period of time established pursuant to Section 8
or Section 9 within which the Management Objectives relating to such Award
are to be achieved. The Performance Period for a Senior Executive Plan Bonus
will be the Fiscal Year and, unless otherwise expressly provided in the Plan,
the Performance Period for all other Awards will be established by the
Committee at the time of the Award.


 


(x)            “Performance
Share” means a bookkeeping entry that records the equivalent of one
Common Share awarded pursuant to Section 8.


 


(y)           “Performance
Unit” means a bookkeeping entry awarded pursuant to Section 8
that records a unit equivalent to $1.00 or such other value as is determined by
the Committee.


 


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(z)            “Plan”
means this Amended and Restated Activision Blizzard, Inc. 2008 Incentive
Plan, as may be amended from time to time.


 


(aa)         “Prior
Plan” means any of the following: (i) Activision, Inc.
1998 Incentive Plan, as amended, (ii) Activision, Inc. 1999 Incentive
Plan, as amended, (iii) Activision, Inc. 2001 Incentive Plan, as
amended, (iv) Activision, Inc. 2002 Incentive Plan, as amended, (v) Activision, Inc.
2002 Executive Incentive Plan, as amended, (vi) Activision, Inc. 2002
Studio Employee Retention Incentive Plan, as amended, (vii) Activision, Inc.
2003 Incentive Plan, as amended, and (viii) Activision, Inc. 2007
Incentive Plan.


 


(bb)         “Related
SAR” means a SAR granted pursuant to Section 5 that is granted
in tandem with a Stock Option.


 


(cc)         “Restricted
Shares” means Common Shares granted or sold pursuant to Section 6
as to which neither the substantial risk of forfeiture nor the prohibition on
transfers has expired.


 


(dd)         “Restricted
Share Unit” means an award granted pursuant to Section 7 of the
right to receive Common Shares or cash at the end of a specified period.


 


(ee)         “SAR”
or “Share Appreciation Right” means
a right granted pursuant to Section 5 to receive a percentage of the
Spread upon exercise, and includes both Freestanding SARs and Related SARs.


 


(ff)           “Senior Executive Plan Bonus” means an award of annual incentive
compensation made pursuant to and subject to the conditions set forth in Section 9.


 


(gg)         “Spread”
means the excess of the Market Value per Share on the date when a SAR is
exercised over the Exercise Price or Base Price provided for in the related
Stock Option or Freestanding SAR, respectively.


 


(hh)         “Stock
Option” means the right to purchase Common Shares upon exercise of
an option granted pursuant to Section 4.


 


(ii)           “Subsidiary”
means a corporation, company or other entity (i) at least 50 percent
of whose outstanding shares or securities (representing the right to vote for
the election of directors or other managing authority) are, or (ii) which
does not have outstanding shares or securities (as may be the case in a
partnership, joint venture or unincorporated association), but at least 50 percent
of whose ownership interests representing the right generally to make decisions
for such other entity are, now or hereafter, owned or controlled, directly or
indirectly, by the Company, except that for purposes of determining whether any
person may be a Participant for purposes of any grant of Incentive Stock
Options, “Subsidiary” means any corporation in which at the time the Company
owns or controls, directly or indirectly, at least 50 percent of the total
combined voting power represented by all classes of stock issued by such
corporation.


 


(jj)           “2007
Plan” means the Activision, Inc. 2007 Incentive Plan.


 


3.  Shares Available Under the Plan.


 


(a)           Subject to adjustment as provided in Section 12,
the number of Common Shares that may be issued or transferred (i) upon the
exercise of Stock Options, (ii) in payment of SARs, (iii) as
Restricted Shares, (iv) in payment of Restricted Share Units, (v) in
payment of Performance Shares or Performance Units, (vi) in payment of
Senior Executive Bonuses, (vii) as or pursuant to Awards contemplated by Section 10,
or (viii) in payment of dividend equivalents paid with respect to Awards
made under the Plan will not exceed in the aggregate 30,000,000* Common Shares,
plus the number of Common Shares
that were reserved for issuance under the Prior 


 






* Gives effect to the
two-for-one stock split of Common Shares that was paid on September 5, 2008 to
stockholders of record as of August 25, 2008.


 


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Plans, other than
the 2007 Plan, that were not subject to outstanding awards on September 27,
2007, plus the number of Common
Shares subject to outstanding awards under the Prior Plans, other than the 2007
Plan, on September 27, 2007 that subsequently became available for issuance
pursuant to the terms of the 2007 Plan, plus
the number of shares subject to awards made under the 2007 Plan that
subsequently became available for issuance pursuant to the terms of the 2007
Plan, minus the number of shares
subject to awards issued under the 2007 Plan since September 27, 2007,
which maximum number will be increased by the following: (A) the number of
shares relating to awards outstanding under any Prior Plan as of the Effective
Date that (1) expire, or are forfeited, terminated or cancelled, without
the issuance of shares, (2) are settled in cash in lieu of shares, or (3) are
exchanged prior to the issuance of Common Shares, for awards not involving
Common Shares; and (B) if the exercise price of any stock option
outstanding under any Prior Plan as of the Effective Date is, or the tax
withholding requirements with respect to any award outstanding under any Prior
Plan as of the Effective Date are, satisfied by withholding shares otherwise
then deliverable in respect of the award or the actual or constructive transfer
to the Company of shares already owned, the number of shares equal to the
withheld or transferred shares.


 


(b)           Under the Plan, (i) if all or any
portion of an Award expires, or is forfeited, terminated or cancelled, without
the issuance of Common Shares, or is settled in cash in lieu of Common Shares,
or is exchanged with the Committee’s permission, prior to the issuance of
Common Shares, for an Award not involving Common Shares, the number of Common
Shares expired, forfeited, terminated or cancelled, or settled or exchanged, as
the case may be, will again be available for issuance or transfer under the
Plan; (ii) if the Exercise Price of any Stock Option granted under the
Plan is, or the tax withholding requirements with respect to any Award granted
under the Plan are, satisfied through the withholding by the Company of shares
otherwise then deliverable in respect of such Award or actual or constructive
transfer to the Company of shares already owned, a number of shares equal to
such withheld or transferred shares will again be available for issuance or
transfer under the Plan; and (iii) if a SAR is exercised and settled in
Common Shares, a number of shares equal to the difference between the total
number of shares for which the SAR was exercised and the number of shares
actually issued or transferred will again be available for issuance or transfer
under the Plan, with the result being that only the number of Common Shares
actually issued or transferred upon exercise of the SAR are counted against the
maximum number of Common Shares available for issuance or transfer under the
Plan. Shares utilized under the Plan may be shares of original issuance or
treasury shares or a combination of the foregoing.


 


(c)           Notwithstanding anything in the Plan to
the contrary, and subject to adjustment as provided in Section 12:


 


(i)            The number of Common Shares actually
issued or transferred by the Company upon the exercise of Incentive Stock
Options will not exceed that number of shares equal to the number of shares
available for grant under the 2007 Plan at the time the 2008 Plan is approved
by stockholders in the aggregate.


 


(ii)           The number of Common Shares actually
issued or transferred by the Company as or pursuant to Awards other than
Options or SARs will not exceed 15,000,000* in the aggregate, including no more
than 6,000,000 in the aggregate as or pursuant to Awards granted under Section 10.


 


(iii)          The
number of shares issuable or transferable in respect of Stock Options and SARs
granted to any one Participant in a single Fiscal Year may not exceed
4,000,000* in the aggregate.


 


(iv)          The number of (A) Restricted Shares
granted to any one Participant in a single Fiscal Year and (B) Common
Shares issuable or transferable in respect of Restricted Share Units granted to
such Participant in such Fiscal Year, may not exceed 2,000,000* in the
aggregate.


 






* Gives effect to
the two-for-one stock split of Common Shares that was paid on September 5,
2008 to stockholders of record as of August 25, 2008.


 


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(v)           The number of Performance Shares granted
to any one Participant in a single Fiscal Year may not exceed 3,000,000* in the
aggregate.


 


(vi)          The value of Performance Units granted to
any one Participant in a single Fiscal Year may not exceed $2,000,000 in the
aggregate (with the value of any such award to be determined as of the date of
such award).


 


(vii)         The
amount of any Senior Executive Plan Bonuses paid to any one Participant for any
single Fiscal Year may not exceed $6,000,000 in the aggregate.


 


(viii)        The
number of Common Shares issuable or transferable in respect of Awards
contemplated by Section 10 granted to any one Participant in a single
Fiscal Year may not exceed 3,000,000* in the aggregate. The value of any Awards
contemplated by Section 10 that do not involve the issuance or transfer of
Common Shares granted to any one Participant in a single Fiscal Year may not
exceed $2,000,000 in the aggregate (with the value of any such award to be determined
as of the date of such award).


 


(d)           If a Participant has elected to give up
the right to receive compensation in exchange for Common Shares based on fair
market value, such Common Shares will not count against the number of shares
available in Section 3(a) above.


 


4.  Stock Options.  The Committee may, from time to time and upon
such terms and conditions as it may determine, authorize the grant to
Participants of options to purchase Common Shares. Each such grant may utilize
any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:


 


(a)           Each grant will specify the number of
Common Shares to which it pertains.


 


(b)           Each grant will specify an Exercise Price
per share, which may not be less than the Market Value per Share on the Date of
Grant.


 


(c)           Each grant may specify that the Exercise
Price will be payable (i) by bank check or certified check or by wire
transfer of immediately available funds, (ii) through the delivery of
irrevocable instructions, in form acceptable to the Company, to a brokerage
firm approved by the Optionee to sell some or all of the Common Shares being
purchased upon such exercise and to thereafter deliver promptly to the Company
from the proceeds of such sale an amount in cash equal to the aggregate
Exercise Price of the Common Shares being purchased, (iii) by a
combination of such methods of payment, or (iv) by such other methods as
may be approved by the Committee.


 


(d)           Successive grants may be made to the same
Participant whether or not any Stock Options previously granted to such
Participant remain unexercised.


 


(e)           Each grant will specify the period or
periods of continuous employment or other service by the Optionee with the
Company or a Subsidiary that is necessary before the Stock Options or
installments thereof will become exercisable. A grant of Stock Options may
provide for the accelerated vesting and exercisability of all or a portion of
such Stock Options in the event of the retirement, death, disability or other
termination of the Optionee’s service or a change of control of the Company or
a Subsidiary (or other similar transaction or event).


 


(f)            A grant of Stock Options may specify
Management Objectives or other performance criteria that must be achieved as a
condition to the exercise of such rights or that may result in the accelerated
exercisability of such rights.


 


(g)           Stock Options may be (i) options
that are intended to qualify under the Code as Incentive Stock Options, (ii) options
that are not intended to so qualify, or (iii) combinations of the
foregoing.


 


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(h)           The exercise of a Stock Option will
result in the cancellation on a share- for-share basis of any Related SAR
authorized under Section 5.


 


(i)            No Stock Option will be exercisable more
than 10 years from the Date of Grant.


 


(j)            Each grant of Stock Options will be
evidenced by an Evidence of Award.  Each
Evidence of Award will be subject to the Plan and will contain such terms and
provisions, consistent with the Plan, as the Committee may approve from time to
time.  In addition, notice of each grant
of Stock Options will be given to the Optionee no more than one week after the
Date of Grant.


 


(k)           Each Optionee is responsible for
complying with all laws and regulations applicable to recipients and holders of
Stock Options, including any applicable federal or state securities laws, and
any Company policy or procedure that pertains to the trading of the Company’s
securities.  The Company will adopt or
maintain policies and procedures to notify Optionees of their obligations under
such laws, regulations, policies and procedures and will monitor Optionees’
compliance therewith.


 


5.  SARs.  The Committee may also authorize the grant to
any Optionee of Related SARs in respect of Stock Options granted hereunder and
the grant to any Participant of Freestanding SARs. A Related SAR will be a
right of the Optionee, exercisable by surrender of the related Stock Option, to
receive from the Company an amount determined by the Committee, which will be
expressed as a percentage of the Spread (not exceeding 100 percent) at the
time of exercise. Related SARs must be granted concurrently with the related
Stock Option. A Freestanding SAR will be a right of the Participant to receive
from the Company an amount determined by the Committee, which will be expressed
as a percentage of the Spread (not exceeding 100 percent) at the time of
exercise. Each grant of SARs may utilize any or all of the authorizations, and
will be subject to all of the requirements, contained in the following
provisions:


 


(a)           Each grant will specify the number of
Common Shares to which it pertains.


 


(b)           Each grant of Freestanding SARs will
specify the Base Price, which may not be less than the Market Value per Share
on the Date of Grant.


 


(c)           Upon exercise, each SAR will be payable
in Common Shares having an aggregate Market Value per Share equal to the Spread
(or the designated percentage of the Spread).


 


(d)           A grant may specify that the amount
payable on exercise of a SAR may not exceed a maximum specified by the
Committee at the Date of Grant.


 


(e)           A grant may specify waiting periods
before exercise and permissible exercise dates or periods.


 


(f)            A grant may specify that the
exercisability of a SAR may be conditioned on, or may be accelerated in whole
or in part in the event of, the retirement, death, disability or other
termination of the Participant’s service or a change of control of the Company
or a Subsidiary (or other similar transaction or event).


 


(g)           A grant of SARs may specify Management
Objectives or other performance criteria that must be achieved as a condition
of the exercise of such SARs or that may result in the accelerated
exercisability of such SARs.


 


(h)           Each grant of SARs will be evidenced by
an Evidence of Award, which Evidence of Award will describe such SARs, identify
the related Stock Options (if applicable), and contain such other terms and
provisions, consistent with the Plan, as the Committee may approve from time to
time.


 


(i)            A grant of Related SARs will provide that
such Related SARs may be exercised only at a time when the related Stock Option
is also exercisable and at a time when the Spread is positive, and by surrender
of the 


 


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related Stock
Option for cancellation. Successive grants of Related SARs may be made to the
same Participant regardless of whether any Related SARs previously granted to
the Participant remain unexercised.


 


(j)            Successive grants of Freestanding SARs
may be made to the same Participant regardless of whether any Freestanding SARs
previously granted to the Participant remain unexercised.


 


(k)           No Freestanding SAR granted under the
Plan may be exercised more than 10 years from the Date of Grant.


 


6.  Restricted Shares.  The Committee may also authorize the grant or
sale of Restricted Shares to Participants. Each such grant or sale will
constitute an immediate transfer of the ownership of Common Shares to the
Participant in consideration of the performance of services or other benefit to
the Company, entitling such Participant to voting, dividend and other ownership
rights, but subject to the substantial risk of forfeiture (within the meaning
of Section 83 of the Code) and restrictions on transfer hereinafter
referred to. Each such grant or sale may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in
the following provisions:


 


(a)           Each grant will specify the number of
Common Shares to which it pertains.


 


(b)           Each such grant or sale may be made
without additional consideration or in consideration of a payment by the
Participant that is less than the Market Value per Share at the Date of Grant.


 


(c)           Each such grant or sale will specify the
period or periods of continuous employment or other service by the Participant
with the Company or a Subsidiary (or other risk of forfeiture) that must be
satisfied before the restrictions described in Section 6(c) will
lapse and the Restricted Shares will become vested, and/or may provide that all
or a portion of the restrictions on the Restricted Shares will lapse upon the
achievement of Management Objectives or other performance criteria (as provided
in Section 6(d) below).


 


(d)           Each such grant or sale will provide
that, during the period for which the risk of forfeiture continues, the
transferability of the Restricted Shares will be prohibited or restricted in
the manner and to the extent prescribed by the Committee at the Date of Grant
(which restrictions may include, without limitation, rights of repurchase or
first refusal in the Company or provisions subjecting the Restricted Shares to
a continuing substantial risk of forfeiture in the hands of any transferee).


 


(e)           A grant of Restricted Shares may specify
Management Objectives or other performance criteria that, if achieved, will
result in the lapse or early lapse of the restrictions applicable to all or a
portion of such Restricted Shares. Each grant may specify in respect of such
Management Objectives or other performance criteria a minimum acceptable level
of achievement and may set forth a formula for determining the number of
Restricted Shares with respect to which restrictions will lapse if performance
is at or above the minimum level, but falls short of maximum achievement of the
specified Management Objectives or criteria.


 


(f)            Notwithstanding anything to the contrary
contained in the Plan, a grant or sale of Restricted Shares may provide for the
acceleration in whole or in part of the lapse of the restrictions on the
Restricted Shares in the event of the retirement, death, disability or other
termination of the Participant’s service or a change of control of the Company
or a Subsidiary (or other similar transaction or event).


 


(g)           A grant or sale of Restricted Shares may
require that any or all dividends or other distributions paid thereon during
the period of such restrictions be automatically deferred and reinvested in
additional shares of Restricted Shares, which may be subject to the same
restrictions as the underlying Award.


 


(h)           Each grant or sale of Restricted Shares
will be evidenced by an Evidence of Award and will contain such terms and
provisions, consistent with the Plan, as the Committee may approve. Unless
otherwise directed by the Committee, all Restricted Shares will be held in
custody by the Company or its transfer agent and registrar until all
restrictions thereon have lapsed.


 


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7.  Restricted Share Units.  The Committee may also authorize the grant or
sale of Restricted Share Units to Participants. Each such grant or sale will
constitute the agreement by the Company to deliver Common Shares or cash to the
Participant in the future in consideration of the performance of services or
other benefit to the Company, but subject to the fulfillment of such conditions
(which may include the achievement of Management Objectives or other
performance criteria) during the Deferral Period as the Committee may specify.
Each such grant or sale may utilize any or all of the authorizations, and will
be subject to all of the requirements, contained in the following provisions:


 


(a)           Each grant will specify the number of
Common Shares to which it pertains.


 


(b)           Each grant may specify in respect of such
Management Objectives or other performance criteria a minimum acceptable level
of achievement and may set forth a formula for determining the number of
Restricted Share Units which will vest if performance is at or above the
minimum level, but falls short of maximum achievement of the specified
Management Objectives or criteria.


 


(c)           Each such grant or sale may be made
without additional consideration or in consideration of a payment by such
Participant that is less than the Market Value per Share at the Date of Grant.


 


(d)           Notwithstanding anything to the contrary
contained in the Plan, a grant or sale may provide for the accelerated vesting
of Restricted Share Units and the lapse or other modification of the Deferral
Period in whole or in part in the event of the retirement, death, disability or
other termination of the Participant’s service or a change of control of the
Company or a Subsidiary (or other similar transaction or event).


 


(e)           During the Deferral Period, the
Participant will have no rights of ownership in the Restricted Share Units and
will have no right to vote Common Shares underlying the Restricted Share Units,
but an Evidence of Award may authorize the payment of dividend equivalents on such
Restricted Share Units on either a current or deferred or contingent basis,
either in cash or in Common Shares.


 


(f)            Each grant or sale will specify the time
and manner of payment of the Restricted Share Units that have been earned. A
grant or sale may specify that the amount payable with respect thereto may be
paid by the Company in cash, in Common Shares or in any combination thereof and
may either grant to the Participant or retain in the Committee the right to
elect among those alternatives.


 


(g)           Each grant or sale of Restricted Share
Units will be evidenced by an Evidence of Award and will contain such terms and
provisions, consistent with the Plan, as the Committee may approve from time to
time.


 


8.  Performance Shares and Performance Units.  The Committee may also authorize the grant of
Performance Shares and Performance Units that will become payable to a
Participant upon achievement of specified Management Objectives or other
performance criteria during the Performance Period. Each such grant may utilize
any or all of the authorizations, and will be subject to all of the
requirements, contained in the following provisions:


 


(a)           Each grant will specify the number of
Performance Shares or Performance Units to which it pertains, which number may
be subject to adjustment to reflect changes in compensation or other factors; provided, however,
that no such adjustment will be made in the case of a Covered Employee where
such action would result in the loss of the otherwise available exemption of
the Award under Section 162(m) of the Code.


 


(b)           The Performance Period with respect to
each Performance Share or Performance Unit will be such period of time as will
be determined by the Committee at the Date of Grant, which may be subject to
earlier lapse or other modification in the event of the retirement, death,
disability or other termination of the Participant’s service or a change of
control of the Company or a Subsidiary (or other similar transaction or event).


 


(c)           A grant of Performance Shares or
Performance Units will specify Management Objectives or other performance
criteria which, if achieved, will result in payment or early payment of the
Award, and each grant may specify in respect of such specified Management
Objectives or other performance criteria a level or levels of 


 


A-9

















 


achievement and
will set forth a formula for determining the number of Performance Shares or
Performance Units that will be earned if performance is at or above the minimum
level or levels, but falls short of maximum achievement of the specified
Management Objectives or criteria.


 


(d)           Each grant will specify the time and
manner of payment of Performance Shares or Performance Units that have been
earned. A grant may specify that the amount payable with respect thereto may be
paid by the Company in cash, in Common Shares or in any combination thereof and
may either grant to the Participant or retain in the Committee the right to
elect among those alternatives.


 


(e)           A grant of Performance Shares may specify
that the amount payable with respect thereto may not exceed a maximum specified
by the Committee at the Date of Grant. A grant of Performance Units may specify
that the amount payable or the number of Common Shares issued with respect
thereto may not exceed maximums specified by the Committee at the Date of
Grant.


 


(f)            The Committee may, at the Date of Grant
of Performance Shares, provide for the payment of dividend equivalents to the
holder thereof on either a current or deferred or contingent basis, either in
cash or in Common Shares.


 


(g)           Each grant of Performance Shares or
Performance Units will be evidenced by an Evidence of Award and will contain
such other terms and provisions, consistent with the Plan, as the Committee may
approve from time to time.


 


9.  Senior Executive Plan Bonuses.  The Committee may from time to time authorize
the payment of annual incentive compensation to a Participant who is a Covered
Employee, which incentive compensation will become payable upon achievement of
specified Management Objectives. Subject to Section 3(b)(vii), Senior
Executive Plan Bonuses will be payable upon such terms and conditions as the
Committee may determine in accordance with the following provisions:


 


(a)           No later than 90 days after the
first day of the Fiscal Year, the Committee will specify the Management
Objectives that, if achieved, will result in the payment of a Senior Executive
Plan Bonus for such Fiscal Year.


 


(b)           Following the close of the Fiscal Year,
the Committee will certify in writing whether the specified Management
Objectives have been achieved. Approved minutes of a meeting of the Committee
at which such certification is made will be treated as written certification
for this purpose. The Committee will also specify the time and manner of
payment of a Senior Executive Plan Bonus which becomes payable, which payment
may be made in (i) cash, (ii) Common Shares having an aggregate
Market Value per Share equal to the aggregate value of the Senior Executive
Plan Bonus which has become payable, or (iii) any combination thereof, as
determined by the Committee in its discretion at the time of payment.


 


(c)           The Committee may provide that, if a
change in control of the Company occurs during a Performance Period, the Senior
Executive Plan Bonus payable to each Participant for the Performance Period
will be determined at the highest level of achievement of the Management
Objectives, without regard to actual performance and without proration for less
than a full Performance Period. In such event, the Senior Executive Plan Bonus
will be paid at such time following the change in control as the Committee
determines in its discretion, but in no event later than 30 days after the
date of an event which results in a change in control.


 


(d)           Each grant may be evidenced by an
Evidence of Award, which will contain such terms and provisions as the
Committee may determine consistent with the Plan, including without limitation
provisions relating to the Participant’s termination of employment by reason of
retirement, death, disability or otherwise.


 


A-10

















 


10.  Other Awards.


 


(a)           In addition to Stock Options, SARs,
Performance Shares, Performance Units, Restricted Shares, Restricted Share
Units and Senior Executive Plan Bonuses, the Committee may, subject to
limitations under applicable law, make other Awards (i) that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Common Shares or factors that may influence
the value of such shares, including, without limitation, convertible or
exchangeable debt securities, other rights convertible or exchangeable into
Common Shares, purchase rights for Common Shares, (ii) with value and
payment contingent upon performance of the Company or specified Subsidiaries or
other business units thereof or any other factors designated by the Committee,
or (iii) valued by reference to the book value of Common Shares or the
value of securities of, or the performance of specified Subsidiaries or other
business units of the Company. The Committee will determine the terms and
conditions of such Awards. Common Shares delivered pursuant to an Award in the
nature of a purchase right granted under this Section 10 will be purchased
for such consideration, paid for at such time, by such methods, and in such
forms, including, without limitation, cash, Common Shares, other Awards, notes
or other property, as the Committee determines.


 


(b)           Cash awards, as an element of or a supplement
to any other Award made under the Plan, may also be made pursuant to this Section 10.


 


(c)           The Committee may grant Common Shares as
a bonus, or may make other Awards in lieu of obligations of the Company or a
Subsidiary to pay cash or deliver other property under the Plan or under other
plans or compensatory arrangements, subject to such terms as are determined by
the Committee from time to time.


 


11.  Administration of the Plan.


 


(a)           The Plan will be administered by the
Committee. The composition of the Committee will comply with applicable
independence requirements under the rules and regulations of any
securities exchange, association or quotation system on which Common Shares are
then listed or quoted, and the Board will also consider the advisability of
appointing to the Committee members who satisfy the requirements of (i) the
definition of the term “non-employee director” used Rule 16b-3 promulgated
under the Exchange Act and (ii) the definition of the term “outside
director” used in Section 162(m) of the Code.


 


(b)           The Committee may from time to time
delegate all or any part of its authority under the Plan to a subcommittee of
the Committee or to any other committee of the Board or a subcommittee thereof.
To the extent of any such delegation, references in the Plan to the Committee
will be deemed to be references to such committee or subcommittee.


 


(c)           Notwithstanding any other provision of
the Plan, any Award to a member of the Committee must be approved by the Board
to be effective.


 


(d)           The Committee will have sole discretion
to (i) interpret any provision of the Plan or an Evidence of Award, (ii) make
any determination necessary or advisable for the administration of the Plan and
Awards hereunder, and (iii) waive any condition or right of the Company
under an Award or discontinue or terminate an Evidence of Award. Without
intending to limit the generality or effect of the foregoing, any decision or
determination made by the Committee with respect to the Plan or an Award,
including whether to grant or withhold any required consent, will be made by
the Committee in its sole and absolute discretion, subject to the terms of the
Plan. The interpretation and construction by the Committee of any provision of
the Plan or of any Evidence of Award and any determination by the Committee
pursuant to any provision of the Plan or of any such Evidence of Award will be
final and conclusive.


 


(e)           The Committee may delegate to one or more
of its members or to one or more officers of the Company, or to one or more agents
or advisors, such administrative duties or powers as it may deem advisable, and
the Committee, or any person to whom duties or powers have been so delegated,
may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. Without
limiting the foregoing and subject to applicable law, the Committee may, by
resolution, authorize one or more 


 


A-11

















 


officers of the
Company to do one or both of the following on the same basis as the Committee: (i) designate
employees to be recipients of Awards under the Plan; and (ii) determine
the size of any such Awards; provided,
however, that (A) the
Committee will not delegate such responsibilities to any such officer for
Awards to an executive officer or any person subject to Section 162(m) of
the Code; (B) the resolution providing for such authorization sets forth
the total number of Common Shares such officer(s) may grant; and (C) the
officer(s) will report periodically to the Committee regarding the nature
and scope of the Awards made pursuant to the authority delegated.


 


12.  Adjustments.  The Committee will make or provide for such
adjustments in the number of Common Shares authorized under Section 3, in
the number of Common Shares covered by outstanding Awards, in the Exercise
Price of outstanding Stock Options and any amounts payable for Common Shares
under other outstanding Awards, in the Base Price of outstanding SARs, and in
the kind of shares covered thereby, as is equitably required to prevent
dilution or enlargement of the rights of Participants or Optionees that
otherwise would result from (a) any stock dividend, extraordinary
dividend, stock split, combination of shares, recapitalization or other change
in the capital structure of the Company, or (b) any change of control,
merger, consolidation, spin-off, split- off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of
assets, or issuance of rights or warrants to purchase securities, or (c) any
other corporate transaction or event having an effect similar to any of the
foregoing. Moreover, in the event of any such transaction or event, the
Committee, in its discretion, may provide in substitution for any or all
outstanding Awards under the Plan such alternative consideration (including,
without limitation, cash), if any, as it may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
Awards so replaced. The Committee will also make or provide for such
adjustments in the numbers of shares specified in Section 3(c) as the
Committee in its sole discretion, exercised in good faith, may determine is
appropriate to reflect any transaction or event described in this Section 12;
provided, however, that any such adjustment to the
numbers specified in Sections 3(c)(i) and 3(c)(ii) will be made
only if and to the extent that (i) such adjustment would not cause any
option intended to qualify as an Incentive Stock Option to fail to so qualify
and (ii) such adjustment would not result in negative tax consequences
under Section 409A of the Code. Without limiting the generality of the
foregoing, in the event that the Company issues warrants or other rights to
acquire Common Shares on a pro rata basis to all stockholders, the Committee
will make such adjustments in the number of Common Shares authorized under the
Plan and in the limits contained herein as it may deem to be equitable,
including, without limitation, proportionately increasing the number of
authorized Common Shares or any such limit.


 


13.  Non U.S. Participants.  In order to facilitate the making of any
grant or combination of grants under the Plan, the Committee may provide for
such special terms for Awards to Participants who are foreign nationals or who
are employed by the Company or any Subsidiary outside of the United States of
America or who provide services to the Company under an agreement with a
foreign nation or agency, as the Committee may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom.
Moreover, the Committee may approve such supplements to or amendments,
restatements or alternative versions of the Plan (including, without
limitation, sub-plans) as it may consider necessary or appropriate for such
purposes, without thereby affecting the terms of the Plan as in effect for any
other purpose, and the Secretary or other appropriate officer of the Company
may certify any such document as having been approved and adopted in the same
manner as the Plan. No such special terms, supplements, amendments or
restatements, however, will include any provisions that are inconsistent with
the terms of the Plan as then in effect unless the Plan could have been amended
to eliminate such inconsistency without further approval by the stockholders of
the Company.


 


14.  Transferability.


 


(a)           Except as provided below or as otherwise
determined by the Committee, (i) no Award will be transferable by a
Participant except by will or the laws of descent and distribution and (ii) Stock
Options and SARs will be exercisable during the Participant’s lifetime only by
the Participant or, in the event of the Participant’s legal incapacity to do
so, by the Participant’s guardian or legal representative acting on behalf of
the Participant in a fiduciary capacity under state law and/or court
supervision. With the consent of the Company, which may be granted or withheld
in its sole and absolute discretion, a Participant may transfer an Award for
estate planning purposes or pursuant to a domestic relations order; provided
that such transferee will be bound by and subject to all of the terms and
conditions of the Plan and the Evidence of Award relating to the Award and
executes an agreement satisfactory to the Company evidencing such obligations;
and provided further that such
Participant will remain bound by the 


 


A-12

















 


terms and
conditions of the Plan. Notwithstanding the foregoing, no Stock Option that is
intended to be an Incentive Stock Option or any Related SAR granted in tandem
therewith may be transferred.


 


(b)           The Committee may specify at the Date of
Grant that part or all of the Common Shares that are (i) to be issued or
transferred by the Company upon the exercise of Stock Options or SARs, upon the
termination of the Deferral Period applicable to Restricted Share Units or upon
payment under any grant of Performance Shares, Performance Units or a Senior
Executive Plan Bonus or (ii) no longer subject to the substantial risk of
forfeiture and restrictions on transfer referred to in Section 6, will be
subject to further restrictions on transfer.


 


15.  Withholding Taxes.  To the extent that the Company or a
Subsidiary is required to withhold federal, state, local or foreign taxes in
connection with any payment made or benefit realized by a Participant or other
person under the Plan, and the amounts available to the Company or Subsidiary
for such withholding are insufficient, it will be a condition to the receipt of
such payment or the realization of such benefit that the Participant or such
other person make arrangements satisfactory to the Company for payment of the
balance of such taxes required to be withheld, which arrangements (in the
discretion of the Committee) may include relinquishment of a portion of such
benefit.


 


16.  Compliance with Section 409A of the
Code.  To the extent
applicable, it is intended that the Plan and any Awards hereunder comply with
the provisions of Section 409A of the Code. The Plan and any Awards
hereunder will be administrated in a manner consistent with this intent, and
any provision that would cause the Plan or any Award to fail to satisfy Section 409A
of the Code will have no force and effect until amended to comply with Section 409A
of the Code (which amendment may be retroactive to the extent permitted by Section 409A
of the Code and may be made by the Company without the consent of
Participants). Any reference in the Plan to Section 409A of the Code will
also include any proposed, temporary or final regulations, or any other
guidance, promulgated by the U.S. Department of the Treasury or the Internal
Revenue Service.


 


17.  Amendments.


 


(a)           The Committee may at any time and from
time to time amend or suspend the Plan in whole or in part; provided, however,
that, if an amendment must be approved by the stockholders of the Company in
order to comply with applicable legal requirements or the requirements of the
principal securities exchange, association or quotation system on which the
Common Shares are then listed or quoted, then such amendment will be subject to
stockholder approval and will not be effective unless and until such approval
has been obtained. Without intending to limit the generality or effect of the foregoing,
if an amendment to the Plan would increase the number of Common Shares that may
be issued or transferred upon the exercise of Incentive Stock Options, then
such amendment will be subject to stockholder approval and will not be
effective unless and until such approval has been obtained.


 


(b)           The Committee will not, without the
further approval of the stockholders of the Company, authorize the amendment of
any outstanding Stock Option or SAR to reduce the Exercise Price or Base Price.
Furthermore, no Stock Option or SAR will be cancelled and replaced with Awards
having a lower Exercise Price or Base Price without further approval of the
stockholders of the Company. This Section 17(b) is intended to
prohibit the repricing of “underwater” Stock Options and SARs and will not be
construed to prohibit the adjustments provided for in Section 12.


 


(c)           Subject to Section 17(b) hereof,
the Committee may amend the terms of any Award under the Plan prospectively or
retroactively, except in the case of a Covered Employee where such action would
result in the loss of the otherwise available exemption of the Award under Section 162(m) of
the Code. In such case, the Committee will not make any modification of the
Management Objectives or the level or levels of achievement with respect to
such Covered Employee. Subject to Section 12, no amendment to any Award
may materially and adversely affect the rights of any Participant taken as a
whole without his or her consent.


 


(d)           If permitted by Section 409A of the
Code, in case of termination of employment by reason of the death, disability
or normal or early retirement, or in the case of unforeseeable emergency or
other special circumstances, of a Participant who holds a Stock Option or SAR
not immediately exercisable in full, or any 


 


A-13

















 


Restricted Shares
as to which the risk of forfeiture or the prohibition or restriction on
transfer has not lapsed, or any Restricted Share Units as to which the Deferral
Period has not been completed, or any Performance Shares or Performance Units
which have not been fully earned, or any other Award made pursuant to Section 10
subject to any vesting schedule or transfer restriction, or who holds Common
Shares subject to any transfer restriction imposed pursuant to Section 12(b),
the Committee may, in its sole discretion, accelerate the time at which such
Stock Option, SAR or other Award may be exercised, the time at which such risk
of forfeiture or prohibition or restriction on transfer will lapse, the time
when such Deferral Period will end, the time at which such Performance Shares
or Performance Units will be deemed to have been fully earned or the time when
such transfer restriction will terminate, or may waive any other limitation or
requirement under any such Award.


 


(e)           The Committee may, in its discretion,
terminate the Plan at any time. Termination of the Plan will not affect the
rights of Participants or their successors under any Awards outstanding
hereunder and not exercised in full on the date of termination.


 


18.  Governing Law.  The Plan and all Awards and actions taken
thereunder will be governed by and construed in accordance with the internal
substantive laws of the State of Delaware.


 


19.  Term of Plan.  The Plan will be effective as of the
Effective Date. No Award will be made under the Plan more than 10 years
after the Effective Date, but all Awards made on or prior to such date will
continue in effect thereafter subject to the terms thereof and of the Plan.


 


20.  Miscellaneous Provisions.


 


(a)           The Company will not be required to issue
any fractional Common Shares pursuant to the Plan. The Committee may provide
for the elimination of fractions or for the settlement of fractions in cash.


 


(b)           The Plan will not confer upon any Participant
any right with respect to continuance of employment or other service with the
Company or a Subsidiary, nor will it interfere in any way with any right the
Company or a Subsidiary would otherwise have to terminate such Participant’s
employment or other service at any time. Except as specifically provided by the
Committee, the Company will not be liable for the loss of existing or potential
profit with respect to an Award hereunder in the event of termination of
employment or other relationship, even if the termination is in violation of an
obligation of the Company or a Subsidiary to the Participant. The Committee’s
making of an Award to a Participant hereunder will not confer upon the
Participant any right to receive any other Awards hereunder or under any other
plan or arrangement.


 


(c)           Any Evidence of Award may provide for the
effect on any Common Shares issued or other payment made with respect to the
Award of any conduct of the Participant determined by the Committee to be
injurious, detrimental or prejudicial to the Company or any Subsidiary.


 


(d)           Notwithstanding any other provision of
the Plan or any Award to the contrary, no Award may be effectuated, through
exercise by the holder thereof or otherwise, if the delivery of cash or stock
to the holder of such Award pursuant to the terms thereof would be, based on
advice of counsel to the Company, contrary to law or the regulations of any
duly constituted authority having jurisdiction over the Plan. Notwithstanding
any other provision of the Plan to the contrary, each issuance of Common Shares
to a Participant pursuant to the Plan or an Award will be made for such
consideration as is required by applicable law to ensure that such Common
Shares are validly issued, fully paid and nonassessable upon such issuance.


 


(e)           Absence on leave approved by a duly
constituted officer of the Company or a Subsidiary will not be considered
interruption or termination of service of any employee for any purposes of the
Plan or an Award, except that no Award may be made to an employee while he or
she is absent on leave.


 


A-14

















 


(f)            No Participant will have any rights as a
stockholder with respect to any Common Shares subject to an Award made to him
or her under the Plan prior to the date as of which he or she is actually
recorded as the holder of such Common Shares upon the stock records of the
Company.


 


(g)           The Committee may condition any Award or
combination of Awards authorized under the Plan on the surrender or deferral by
the Participant of his or her right to receive a cash bonus or other
compensation otherwise payable by the Company or a Subsidiary to the
Participant.


 


(h)           If any provision of the Plan is or
becomes invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision will be construed or deemed amended or limited in
scope to conform to applicable laws or, in the discretion of the Committee,
will be stricken and the remainder of the Plan will remain in full force and
effect.


 


(i)            Each individual who is or has been a
member of the Board or a committee appointed by the Board will be indemnified
and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in
connection with or resulting from any claim, action, suit or proceeding to
which he or she may be a party or in which he or she may be involved by reason
of any action taken or failure to act under the Plan and against and from any
and all amounts paid in settlement thereof with the Company’s approval, or paid
in satisfaction of any judgment in any such action, suit or proceeding against
the individual, provided the
Company is given the opportunity, at its own expense, to handle and defend such
claim, action, suit or proceeding before the individual undertakes to handle
and defend such claim, action, suit or proceeding on his or her own behalf,
unless such loss, cost, liability or expense is a result of such individual’s
own willful misconduct or except as expressly provided by statute. The
foregoing right of indemnification will not be exclusive of any other rights of
indemnification to which such individuals may be entitled under the Company’s
Certificate of Incorporation or Bylaws, as a matter of law or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.


 


A-15