Exhibit 10.1








Exhibit 10.1




AMENDED AND RESTATED




ABERCROMBIE & FITCH CO.




2007 LONG-TERM INCENTIVE PLAN





1. Purpose. The purpose of this Amended and Restated 2007 Long-Term Incentive Plan (the
“Plan”) is to aid Abercrombie & Fitch Co., a Delaware corporation (together with its successors and
assigns, the “Company”), in attracting, retaining, motivating and rewarding certain employees of
the Company or its subsidiaries or affiliates, to provide for equitable and competitive
compensation opportunities, to recognize individual contributions and reward achievement of Company
goals, and promote the creation of long-term value for stockholders by closely aligning the
interests of Participants with those of stockholders. The Plan authorizes stock based incentives
for Participants.



2. Definitions. In addition to the terms defined in Section 1 above and elsewhere in the
Plan, the following capitalized terms used in the Plan have the respective meanings set forth in
this Section:




(a)
“Amendment Effective Date” means the effective date specified in Section 11(q).




(b)
“Annual Limit” shall have the meaning specified in Section 5(b).



(c) “Award” means any Option, SAR, Restricted Stock or Restricted Stock Unit,
together with any related right or interest, granted to a Participant under the Plan.



(d) “Beneficiary” means the legal representatives of the Participant’s estate
entitled by will or the laws of descent and distribution to receive the benefits under a
Participant’s Award upon a Participant’s death, provided that, if and to the extent authorized by
the Committee, a Participant may be permitted to designate a Beneficiary, in which case the
“Beneficiary” instead will be the person, persons, trust or trusts (if any are then surviving)
which have been designated by the Participant in his or her most recent written and duly filed
beneficiary designation to receive the benefits specified under the Participant’s Award upon such
Participant’s death.




(e)
“Board” means the Company’s Board of Directors.




(f)
“Change of Control” has the meanings specified in Section 9.



(g) “Code” means the Internal Revenue Code of 1986, as amended. References to any
provision of the Code or regulation thereunder shall include any successor provisions and
regulations, and reference to regulations includes any applicable guidance or pronouncement of the
Department of the Treasury and Internal Revenue Service.



(h) “Committee” means the Compensation Committee of the Board, the composition and
governance of which is established in the Committee’s Charter as approved from time to time by the
Board and subject to Section 303A.05 of the Listed Company Manual of the New York Stock Exchange,
and other corporate governance documents of the Company. No action of the Committee shall be void
or deemed to be without authority due to the failure of any member, at the time the action was
taken, to meet any qualification standard set forth in the Committee Charter or the Plan. The full
Board may perform any function of the Committee hereunder except to the extent limited under
Section 303A.05 of the Listed Company Manual, in which case the term “Committee” shall refer to the
Board.



(i) “Covered Employee” means an Eligible Person who is a Covered Employee as specified
in Section 11(j).




(j) “Effective Date” means the effective date specified in Section 11(q).




(k) “Eligible Person” has the meaning specified in Section 5.



(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended. References
to any provision of the Exchange Act or rule (including a proposed rule) thereunder shall include
any successor provisions and rules.


 


 









 





(m) “Fair Market Value” means the fair market value of Stock, Awards or other property
as determined in good faith by the Committee or under procedures established by the Committee.
Unless otherwise determined by the Committee, the Fair Market Value of Stock shall be the closing
price per share of Stock reported on a consolidated basis for securities listed on the principal
stock exchange or market on which Stock is traded on the day as of which such value is being
determined or, if there is no closing price on that day, then the closing price on the last
previous day on which a closing price was reported.



(n) “Incentive Stock Option” or “ISO” means any Option designated as an
incentive stock option within the meaning of Code Section 422 and qualifying thereunder.




(o) “Option” means a right, granted under the Plan, to purchase Stock.



(p) “Participant” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.



(q) “Restricted Stock” means Stock granted under the Plan which is subject to certain
restrictions and to a risk of forfeiture.



(r) “Restricted Stock Unit” or “RSU” means a right, granted under the Plan, to
receive Stock, cash or other Awards or a combination thereof at the end of a specified deferral
period.



(s) “Retirement” means, unless otherwise stated by the Committee (or the Board) in an
applicable Award agreement, Participant’s voluntary termination of employment (with the approval of
the Board) after achieving 65 years of age.



(t) “Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to
Participants, promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act.




(u) “Share Pool” has the meaning specified in Section 4.



(v) “Stock” means the Company’s Common Stock, par value $0.01 per share, and any other
equity securities of the Company or other issuer that may be substituted or resubstituted for Stock
pursuant to Section 11(c).



(w) “Stock Appreciation Rights” or “SAR” means a right granted to a
Participant under Section 6(c).




3. Administration.



(a) Authority of the Committee. The Plan shall be administered by the Committee, which shall
have full and final authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants; to grant Awards; to determine the type and
number of Awards, the dates on which Awards may be exercised and on which the risk of forfeiture
shall lapse or terminate, the acceleration of any such dates, the expiration date of any Award,
whether, to what extent, and under what circumstances an Award may be settled, or the exercise
price of an Award may be paid, in cash, Stock, other Awards, or other property, and other terms and
conditions of, and all other matters relating to, Awards; to prescribe documents evidencing or
setting terms of Awards (such Award documents need not be identical for each Participant),
amendments thereto, and rules and regulations for the administration of the Plan and amendments
thereto (including outstanding Awards); to construe and interpret the Plan and Award documents and
correct defects, supply omissions or reconcile inconsistencies therein; and to make all other
decisions and determinations as the Committee may deem necessary or advisable for the
administration of the Plan. Decisions of the Committee with respect to the administration and
interpretation of the Plan shall be final, conclusive, and binding upon all persons interested in
the Plan, including Participants, Beneficiaries, transferees under Section 11(b) and other persons
claiming rights from or through a Participant, and stockholders.


 


 









 





(b) Manner of Exercise of Committee Authority. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may act through subcommittees, including for
purposes of perfecting exemptions under Rule 16b-3 or qualifying Awards under Code Section 162(m)
as performance-based compensation, in which case the subcommittee shall be subject to and have
authority under the charter applicable to the Committee, and the acts of the subcommittee shall be
deemed to be acts of the Committee hereunder. The Committee may delegate the administration of the
Plan to one or more officers or employees of the Company, and such administrator(s) may
have the authority to execute and distribute Award agreements or other documents evidencing or
relating to Awards granted by the Committee under this Plan, to maintain records relating to
Awards, to process or oversee the issuance of Stock under Awards, to interpret and administer the
terms of Awards and to take such other actions as may be necessary or appropriate for the
administration of the Plan and of Awards under the Plan, provided that in no case shall any such
administrator be authorized (i) to grant Awards under the Plan, (ii) to take any action that would
result in the loss of an exemption under Rule 16b-3 for Awards granted to or held by Participants
who at the time are subject to Section 16 of the Exchange Act in respect of the Company or that
would cause Awards intended to qualify as “performance-based compensation” under Code Section
162(m) to fail to so qualify, (iii) to take any action inconsistent with Section 157 and other
applicable provisions of the Delaware General Corporation Law, or (iv) to make any determination
required to be made by the Committee under the New York Stock Exchange corporate governance
standards applicable to listed company compensation committees (currently, Rule 303A.05). Any
action by any such administrator within the scope of its delegation shall be deemed for all
purposes to have been taken by the Committee and, except as otherwise specifically provided,
references in this Plan to the Committee shall include any such administrator. The Committee
established pursuant to Section 3(a) and, to the extent it so provides, any subcommittee, shall
have sole authority to determine whether to review any actions and/or interpretations of any such
administrator, and if the Committee shall decide to conduct such a review, any such actions and/or
interpretations of any such administrator shall be subject to approval, disapproval or modification
by the Committee.



(c) Limitation of Liability. The Committee and each member thereof, and any person acting
pursuant to authority delegated by the Committee, shall be entitled, in good faith, to rely or act
upon any report or other information furnished by any executive officer, other officer or employee
of the Company or a subsidiary or affiliate, the Company’s independent auditors, consultants or any
other agents assisting in the administration of the Plan. Members of the Committee, any person
acting pursuant to authority delegated by the Committee, and any officer or employee of the Company
or a subsidiary or affiliate acting at the direction or on behalf of the Committee or a delegee
shall not be personally liable for any action or determination taken or made in good faith with
respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected
by the Company with respect to any such action or determination.




4. Stock Subject to Plan.



(a) Overall Number of Shares Available for Delivery. The total number of shares of Stock
reserved and available for delivery in connection with Awards under the Plan shall be 8,000,000
(the “Share Pool”). Subject to limitations provided in Section 6(b)(iv), up to 8,000,000 authorized
shares may be granted as ISOs under the Plan. The total number of shares available is subject to
adjustment as provided in Section 11(c). Any shares of Stock delivered under the Plan shall consist
of authorized and unissued shares or treasury shares.



(b) Share Counting Rules. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute
awards) and make adjustments in accordance with this Section 4(b). To the extent that an Award
under the Plan is canceled, expired, forfeited, settled in cash, settled by issuance of fewer
shares than the number underlying the Award, or otherwise terminated without delivery of shares to
the Participant, the shares retained by or returned to the Company will be available under the
Plan; and shares that are withheld from such an Award or separately surrendered by the Participant
in payment of any exercise price or taxes relating to such an Award shall be deemed to constitute
shares not delivered to the Participant and will be available for future grants under the Plan. In
addition, in the case of any Award granted in assumption of or in substitution for an award of a
company or business acquired by the Company or a subsidiary or affiliate or with which the Company
or a subsidiary or affiliate combines, shares issued or issuable in connection with such substitute
Award shall not be counted against the Share Pool.




5. Eligibility; Per-Person Award Limitations.



(a) Eligibility. Awards may be granted under the Plan only to Eligible Persons. For purposes
of the Plan, an “Eligible Person” means an employee of the Company or any subsidiary or affiliate,
including any person who has been offered employment by the Company or a subsidiary or affiliate,
provided that such prospective employee may not receive any payment or exercise any right relating
to an Award until such person has commenced employment with the Company or a subsidiary or
affiliate. An employee on leave of absence may be considered as still in the employ of the Company
or a subsidiary or affiliate for purposes of eligibility for participation in the Plan, if so
determined by the Committee. For purposes of the Plan, a joint venture in which the Company or a
subsidiary has a substantial direct or indirect equity investment shall be deemed an affiliate, if
so determined by the Committee.
Holders of awards granted by a company or business acquired by the Company or a subsidiary or
affiliate, or with which the Company or a subsidiary or affiliate combines, who will become
Eligible Persons are eligible for grants of substitute awards granted in assumption of or in
substitution for such outstanding awards previously granted under the Plan in connection with such
acquisition or combination transaction, if so determined by the Committee.


 


 









 





(b) Per-Person Award Limitations. In each calendar year during any part of which the Plan is
in effect, an Eligible Person may be granted Awards under each of Section 6(b), 6(c), 6(d), or 6(e)
relating to up to his or her Annual Limit (such Annual Limit to apply separately to the type of
Award authorized under each specified subsection). A Participant’s Annual Limit, in any year during
any part of which the Participant is then eligible under the Plan, shall equal two million
(2,000,000) shares plus the amount of the Participant’s unused Annual Limit relating to the same
type of Award as of the close of the previous year, subject to adjustment as provided in Section
11(c).




6. Specific Terms of Awards.



(a) General. Awards may be granted on the terms and conditions set forth in this Section 6.
In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or
thereafter (subject to Sections 11(e) and 11(k)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or service by the
Participant and terms permitting a Participant to make elections relating to his or her Award. The
Committee shall retain full power and discretion with respect to any term or condition of an Award
that is not mandatory under the Plan, subject to Section 11(k). The Committee shall require the
payment of lawful consideration for an Award to the extent necessary to satisfy the requirements of
the Delaware General Corporation Law, and may otherwise require payment of consideration for an
Award except as limited by the Plan.



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



(i) Exercise Price. The exercise price per share of Stock purchasable under an Option
(including both ISOs and non-qualified Options) shall be determined by the Committee, provided
that, notwithstanding anything contained herein to the contrary such exercise price shall be (A)
fixed as of the grant date, and (B) not less than the Fair Market Value of a share of Stock on the
grant date. Notwithstanding the foregoing, any substitute award granted in assumption of or in
substitution for an outstanding award granted by a company or business acquired by the Company or a
subsidiary or affiliate, or with which the Company or a subsidiary or affiliate combines, may be
granted with an exercise price per share of Stock other than as required above.



(ii) No Repricing. Without the approval of stockholders, the Committee will not amend or
replace previously granted Options in a transaction that constitutes a “repricing,” as such term is
used in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange.



(iii) Option Term; Time and Method of Exercise. The Committee shall determine the term of
each Option, provided that in no event shall the term of any Option exceed a period of ten years
from the date of grant. The Committee shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole or in part, provided that,
notwithstanding anything contained herein to the contrary, the sole and exclusive basis for
determining both the vesting and exercisability of an Option will be the passage of a specific
period of time or the occurrence or non-occurrence of certain specific performance related or
non-performance related events (e.g. death, disability, termination of employment and Change of
Control). In addition, the Committee shall determine the methods by which such exercise price may
be paid or deemed to be paid and the form of such payment (subject to Sections 11(k) and 11(l)),
including, without limitation, cash, Stock (including by withholding Stock deliverable upon
exercise), other Awards or awards granted under other plans of the Company or any subsidiary or
affiliate, or other property (including through broker-assisted “cashless exercise” arrangements,
to the extent permitted by applicable law), and the methods by or forms in which Stock will be
delivered or deemed to be delivered in satisfaction of Options to Participants.



(iv) ISOs. Notwithstanding anything to the contrary in this Section 6, in the case of the
grant of an Option intending to qualify as an ISO: (i) if the Participant owns stock possessing
more than 10 percent of the combined voting power of all classes of stock of the Company (a “10%
Stockholder”), the purchase price of such Option must be at least 110 percent of the fair market
value of the Common Stock on the date of grant and the Option must expire within a period of not
more than five (5) years from the date of grant, and (ii) termination of employment
will occur when the person to whom an Award was granted ceases to be an employee (as
determined in accordance with Section 3401(c) of the Code and the regulations promulgated
thereunder) of the Company and its subsidiaries. Notwithstanding anything in this Section 6 to the
contrary, Options designated as ISOs shall not be eligible for treatment under the Code as ISOs to
the extent that either (iii) the aggregate fair market value of shares of Common Stock (determined
as of the time of grant) with respect to which such Options are exercisable for the first time by
the Participant during any calendar year (under all plans of the Company and any Subsidiary)
exceeds $100,000, taking Options into account in the order in which they were granted, or (iv) such
Options otherwise remain exercisable but are not exercised within three (3) months of termination
of employment (or such other period of time provided in Section 422 of the Code).


 


 









 





(c) Stock Appreciation Rights. The Committee is authorized to grant SARs to Participants on
the following terms and conditions:



(i) Right to Payment. An SAR shall confer on the Participant to whom it is granted a right to
receive, upon exercise thereof, shares of Stock having a value equal to the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise (or, in the case of a “Limited SAR,” the
Fair Market Value determined by reference to the Change of Control Price, as defined under the
applicable award agreement) over (B) the exercise or settlement price of the SAR as determined by
the Committee. Stock Appreciation Rights may be granted to Participants from time to time either in
tandem with or as a component of other Awards granted under the Plan (“tandem SARs”) or not in
conjunction with other Awards (“freestanding SARs”) and may, but need not, relate to a specific
Option granted under Section 6(b). The per share price for exercise or settlement of SARs
(including both tandem SARs and freestanding SARs) shall be determined by the Committee, but in the
case of SARs that are granted in tandem with an Option shall not be less than the exercise price of
the Option and in the case of freestanding SARs shall be (A) fixed as of the grant date, and (B)
not less than the Fair Market Value of a share of Stock on the grant date.



(ii) No Repricing. Without the approval of stockholders, the Committee will not amend or
replace previously granted SARs in a transaction that constitutes a “repricing,” as such term is
used in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange.



(iii) Other Terms. The Committee shall determine the term of each SAR, provided that in no
event shall the term of an SAR exceed a period of ten years from the date of grant. The Committee
shall determine at the date of grant or thereafter, the time or times at which and the
circumstances under which an SAR may be exercised in whole or in part (including based on future
service requirements), the method of exercise, method of settlement, method by or forms in which
Stock will be delivered or deemed to be delivered to Participants, and whether or not an SAR shall
be freestanding or in tandem or combination with any other Award. Limited SARs that may only be
exercised in connection with a Change of Control or termination of service following a Change of
Control as specified by the Committee may be granted on such terms, not inconsistent with this
Section 6(c), as the Committee may determine. The Committee may require that an outstanding Option
be exchanged for an SAR exercisable for Stock having vesting, expiration, and other terms
substantially the same as the Option, so long as such exchange will not result in additional
accounting expense to the Company.



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



(i) Grant and Restrictions. Subject to Section 6(d)(ii), Restricted Stock shall be subject to
such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of performance conditions and/or future
service requirements), in such installments or otherwise and under such other circumstances as the
Committee may determine at the date of grant or thereafter. Except to the extent restricted under
the terms of the Plan and any Award document relating to the Restricted Stock, a Participant
granted Restricted Stock shall have all of the rights of a stockholder, including the right to vote
the Restricted Stock and the right to receive dividends thereon (subject to any mandatory
reinvestment or other requirement imposed by the Committee). Upon any forfeiture of Restricted
Stock, a Participant shall cease to have any rights of a stockholder and shall return any
certificates representing such Restricted Stock to the Company.



(ii) Limitation on Vesting. The grant, issuance, retention, vesting and/or settlement of
Restricted Stock shall occur at such time and in such installments as determined by the Committee
or under criteria established by the Committee. Subject to Section 10, the Committee shall have the
right to make the timing of the grant and/or the issuance, ability to retain, vesting and/or
settlement of Restricted Stock subject to continued employment, passage
of time and/or such performance conditions as deemed appropriate by the Committee; provided
that the grant, issuance, retention, vesting and/or settlement of a Restricted Stock Award that is
based in whole or in part on performance conditions and/or the level of achievement versus such
performance conditions shall be subject to a performance period of not less than one year, and any
Award based solely upon continued employment or the passage of time shall vest over a period not
less than three years from the date the Award is made, provided that such vesting may occur ratably
over the three-year period. The foregoing minimum vesting conditions need not apply (A) in the case
of the death, disability or Retirement of the Participant or termination in connection with a
Change of Control, and (B) with respect to up to an aggregate of 5% of the shares of Stock
authorized under the Plan, which may be granted (or regranted upon forfeiture) as Restricted Stock
or RSUs without regard to such minimum vesting requirements.


 


 









 





(iii) 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 Participant, the Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the certificates, and that the
Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted
Stock.



(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the
Committee may require that any dividends paid on a share of Restricted Stock shall be either (A)
paid with respect to such Restricted Stock at the dividend payment date in cash, in kind, or in a
number of shares of unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) automatically reinvested in additional Restricted Stock or held in kind, which
shall be subject to the same terms as applied to the original Restricted Stock to which it relates.
Unless otherwise determined by the Committee, 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.



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



(i) Award and Restrictions. Subject to Section 6(e)(ii), RSUs shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement of performance conditions and/or future
service requirements), in such installments or otherwise and under such other circumstances as the
Committee may determine at the date of grant or thereafter. A Participant granted RSUs shall not
have any of the rights of a stockholder, including the right to vote, until Stock shall have been
issued in the Participant’s name pursuant to the RSUs, except that the Committee may provide for
dividend equivalents pursuant to Section 6(e)(iii) below.



(ii) Limitation on Vesting. The grant, issuance, retention, vesting and/or settlement of RSUs
shall occur at such time and in such installments as determined by the Committee or under criteria
established by the Committee. Subject to Section 10, the Committee shall have the right to make the
timing of the grant and/or the issuance, ability to retain, vesting and/or settlement of RSUs
subject to continued employment, passage of time and/or such performance conditions as deemed
appropriate by the Committee; provided that the grant, issuance, retention, vesting and/or
settlement of an RSU that is based in whole or in part on performance conditions and/or the level
of achievement versus such performance conditions shall be subject to a performance period of not
less than one year, and any Award based solely upon continued employment or the passage of time
shall vest over a period not less than three years from the date the Award is made, provided that
such vesting may occur ratably over the three-year period. The foregoing minimum vesting conditions
need not apply (A) in the case of the death, disability or Retirement of the Participant or
termination in connection with a Change of Control, and (B) with respect to up to an aggregate of
5% of the shares of Stock authorized under the Plan, which may be granted (or regranted upon
forfeiture) as Restricted Stock or RSUs without regard to such minimum vesting requirements.



(iii) Dividend Equivalents. Unless otherwise determined by the Committee, dividend
equivalents on the specified number of shares of Stock covered by an Award of RSUs shall be either
(A) paid with respect to such RSUs at the dividend payment date in cash or in shares of
unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B)
deferred with respect to such RSUs, either as a cash deferral or with the amount or value thereof
automatically deemed reinvested in additional RSUs, other Awards or other investment
vehicles having a Fair Market Value equal to the amount of such dividends, as the Committee
shall determine or permit a Participant to elect.


 


 









 






7. Performance-Based Compensation.



(a) Performance Goals Generally. If the Committee specifies that any Restricted Stock or RSU
Award is intended to qualify as “performance-based compensation” for purposes of Code Section
162(m), the grant, issuance, vesting and/or settlement of such Award shall be contingent upon
achievement of preestablished performance goals and other terms set forth in this Section 7. The
performance goal for such Awards shall consist of one or more business criteria and the level or
levels of performance with respect to each of such criteria, as specified by the Committee
consistent with this Section 7. The performance goal shall be an objective business criteria
enumerated under Section 7(c) and shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder, including the requirement that the level or levels of performance targeted
by the Committee result in the achievement of performance goals being “substantially uncertain”.
Performance goals may differ for Awards granted to any one Participant or to different
Participants.



(b) Timing for Establishing Performance Conditions. A performance goal shall be established
not later than the earlier of (A) 90 days after the beginning of any performance period applicable
to such performance-based Award or (B) the time 25% of such performance period has elapsed.



(c) Business Criteria. For purposes of this Plan, a “performance goal” shall mean any one or
more of the following business criteria, either individually, alternatively or in any combination,
applied to either the Company as a whole or to a business unit or subsidiary, either individually,
alternatively or in any combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to previous years’ results or
to a designated comparison group, in each case as specified by the Committee:




(1) gross sales, net sales, or comparable store sales;




(2) gross margin, cost of goods sold, mark-ups or mark-downs;




(3) selling, general and administrative expenses;



(4) operating income, earnings from operations, earnings before or after taxes, earnings
before or after interest, depreciation, amortization, or extraordinary or special items;




(5) net income or net income per common share (basic or diluted);




(6) inventory turnover or inventory shrinkage;




(7) return on assets, return on investment, return on capital, or return on equity;



(8) cash flow, free cash flow, cash flow return on investment, or net cash provided by
operations;




(9) economic profit or economic value created;




(10) stock price or total stockholder return; and



(11) market penetration, geographic expansion or new concept development; customer
satisfaction; staffing; diversity; training and development; succession planning; employee
satisfaction; acquisitions or divestitures of subsidiaries, affiliates or joint ventures.



(d) Written Determinations. Determinations by the Committee as to the establishment of
performance conditions, the amount potentially payable in respect of performance-based Awards, the
level of actual achievement of the specified performance conditions relating to such Awards, and
the amount of any final Award shall be recorded in writing in the case of Awards intended to
qualify under Section 162(m). Specifically, the Committee shall certify in writing, in a manner
conforming to applicable regulations under Section 162(m), prior to settlement of each such Award
granted to a Covered Employee, that the performance objective relating to the performance-based
Award and other material terms of the Award upon which settlement of the Award was conditioned have
been satisfied.


 


 









 





(e) Settlement of performance-based Awards; Other Terms. Settlement of performance-based
Awards shall be in cash or Stock, in the Committee’s discretion. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in connection with such Awards.
Any settlement which changes the form of payment from that originally specified shall be
implemented in a manner such that the Award and other related Awards do not, solely for that
reason, fail to qualify as “performance-based compensation” for purposes of Code Section 162(m).
The Committee shall specify the circumstances in which such Awards shall be paid or forfeited in
the event of a Participant’s death, disability or Retirement, in connection with a Change of
Control or, subject to the one-year performance condition set forth in Sections 6(d)(ii) and
6(e)(ii), in connection with any other termination of employment prior to the end of a performance
period or settlement of such Awards.



(f) Right of Recapture. If at any time after the date on which a Participant has been granted
or becomes vested in an Award pursuant to the achievement of a performance goal under Section 7(c),
the Committee determines that the earlier determination as to the achievement of the performance
goal was based on incorrect data and that in fact the performance goal had not been achieved or had
been achieved to a lesser extent than originally determined and a portion of an Award would not
have been granted, vested or paid, given the correct data, then (i) such portion of the Award that
was granted shall be forfeited and any related shares (or if such shares were disposed of, the cash
equivalent) shall be returned to the Company as provided by the Committee, (ii) such portion of the
Award that became vested shall be deemed to be not vested and any related shares (or if such shares
were disposed of, the cash equivalent) shall be returned to the Company as provided by the
Committee, and (iii) such portion of the Award paid to the Participant shall be paid by the
Participant to the Company upon notice from the Company as provided by the Committee.




8. Certain Provisions Applicable to Awards.



(a) Stand-Alone, Additional, and Tandem Awards. Awards granted under the Plan may, in the
Committee’s discretion, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary or affiliate, or any business entity to be acquired by the Company or a
subsidiary or affiliate, or any other right of a Participant to receive payment from the Company or
any subsidiary or affiliate. Awards granted in addition to or in tandem with other Awards or awards
may be granted either as of the same time as or a different time from the grant of such other
Awards or awards.



(b) Term of Awards. The term of each Award shall be for such period as may be determined by
the Committee, subject to the express limitations set forth in Sections 6(b)(iii) and 6(c)(iii) or
elsewhere in the Plan.



(c) Form and Timing of Payment under Awards. Subject to the terms of the Plan (including
Sections 11(k) and 11(l)) and any applicable Award document, payments to be made by the Company or
a subsidiary or affiliate upon the exercise of an Option or other Award or settlement of an Award
may be made in such forms as the Committee shall determine, including, without limitation, cash,
Stock, other Awards or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be accelerated, and cash paid
in lieu of Stock in connection with such settlement, in the Committee’s discretion or upon
occurrence of one or more specified events, subject to Sections 6(b)(iv), 11(k) and 11(l).




9. Change of Control.



(a) Impact of Event. Unless the Board or Committee provides otherwise (either at the time of
grant of an Award or thereafter) prior to a Change of Control, this Section 9(a) shall govern the
treatment of any Option, SAR, Restricted Stock or RSU, the exercisability, vesting and/or
settlement of which is based solely upon continued employment or passage of time. In the case of an
Award subject to this Section 9(a) that the acquiring or surviving company in the Change of Control
assumes upon and maintains following the Change of Control (which Award shall be adjusted as to the
number and kind of shares as may be determined appropriate by the Committee prior to the Change of
Control), if there occurs an involuntary termination without cause of the Participant holding such
Award (excluding voluntary resignation, death, disability or Retirement) within three months prior
to or eighteen months following the Change of Control, such Award shall be treated as provided in
clause (i) or (ii) of this Section 9(a), as applicable. In the case of an Award subject to this
Section 9(a) that the acquiring or surviving company in the Change of Control does not assume upon
the Change of Control, immediately prior to the Change of Control, such Award shall be treated as
provided in clause (i) or (ii) of this Section 9(a), as applicable. The treatment provided for
under this Section 9(a) is as follows:



(i) in the case of an Option or SAR, the Participant shall have the ability to exercise such
Option or SAR, including any portion of the Option or SAR not previously exercisable, until the
earlier of the expiration of the Option or SAR under its original term and a date that is two years
(or such longer post-termination exercisability term as may be specified in the Option or SAR)
following such date of termination of employment; and


 


 









 





(ii) in the case of Restricted Stock or RSUs, the Award shall become fully vested and shall be
settled in full. The Committee may also, through the terms of an Award or otherwise, provide for an
absolute or conditional exercise, payment or lapse of conditions or restrictions on an Award which
shall only be effective if, upon the announcement of a transaction intended to result in a Change
of Control, no provision is made in such transaction for the assumption and continuation of
outstanding Awards.



(b) Effect of Change of Control upon performance-based Awards. Unless the Committee specifies
otherwise in the terms of an Award prior to a Change of Control, this Section 9(b) shall control
the treatment of any Restricted Stock or RSU if at the time of the Change of Control the grant,
issuance, retention, vesting and/or settlement of such Award is based in whole or in part on
performance criteria and level of achievement versus such criteria. In the case of an Award subject
to this Section 9(b) in which fifty percent (50%) or more of the performance period applicable to
the Award has elapsed as of the date of the Change of Control, the Participant shall be entitled to
payment, vesting or settlement of such Award based upon performance through a date occurring within
three months prior to the date of the Change of Control, as determined by the Committee prior to
the Change of Control, and pro-rated based upon the percentage of the performance period that has
elapsed between the date such Award was granted and the date of the Change of Control. In the case
of an Award subject to this Section 9(b) in which less than fifty percent (50%) of the performance
period applicable to the Award has elapsed as of the date of the Change of Control, the Participant
shall be entitled to payment, vesting or settlement of the target amount of such Award, as
determined by the Committee prior to the Change of Control, pro-rated based upon the percentage of
the performance period that has elapsed between the date such Award was granted and the date of the
Change of Control. The Committee may determine either in advance or at the time of the Change of
Control the treatment of the pro-rata portion of an Award attributable to the portion of the
performance period occurring after the date of the Change of Control.



Notwithstanding the foregoing, in no event shall the treatment specified in Sections 9(a) and
9(b) apply with respect to an Award prior to the earliest to occur of (A) the date such amounts
would have been distributed in the absence of the Change of Control, (B) a Participant’s
“separation from service” (as defined under Section 409A of the Code) with the Company (or six
months thereafter for “specified employees”), (C) the Participant’s death or “disability” (as
defined in Section 409A(a)(2)(C) of the Code), or (D) a “change in the ownership or effective
control” of the Company or in the “ownership of a substantial portion of the assets” of the Company
within the meanings ascribed to such terms in Treasury Department regulations issued under Section
409A of the Code, if and to the extent that the Committee determines, in its sole discretion, that
the effect of such treatment prior to the time specified in this Section 9(b)(A), (B), (C) or (D)
would be the imposition of the additional tax under Section 409A(a)(1)(B) of the Code on a
Participant holding such Award.



(c) Definition of Change of Control. For purposes of the Plan, the term “Change of Control”
shall mean, unless otherwise defined in an Award agreement, an occurrence of a nature that would be
required to be reported by the Company in response to Item 6(e) of Schedule 14A of Regulation 14A
issued under the Exchange Act. Without limiting the inclusiveness of the definition in the
preceding sentence, a Change of Control of the Company shall be deemed to have occurred as of the
first day that any one or more of the following conditions is satisfied:



(i) any person is or becomes the “beneficial owner” (as that term is defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company’s then outstanding securities and such person
would be deemed an “Acquiring Person” for purposes of the Rights Agreement dated as of July 16,
1998, as amended, between the Company and American Stock Transfer & Trust Company, LLC, as
successor Rights Agent (the “Rights Agreement”); or



(ii) any of the following occur: (A) any merger or consolidation of the Company, other than a
merger or consolidation in which the voting securities of the Company immediately prior to the
merger or consolidation continue to represent (either by remaining outstanding or being converted
into securities of the surviving entity) 80% or more of the combined voting power of the Company or
surviving entity immediately after the merger or consolidation with another entity; (B) any sale,
exchange, lease, mortgage, pledge, transfer, or other disposition (in a single transaction or a
series of related transactions) of assets or earning power aggregating more than 50% of the assets
or earning power of the Company on a consolidated basis; (C) any complete liquidation or
dissolution of the
Company; (D) any reorganization, reverse stock split or recapitalization of the Company that
would result in a Change of Control as otherwise defined herein; or (E) any transaction or series
of related transactions having, directly or indirectly, the same effect as any of the foregoing.


 


 









 






10. Additional Award Forfeiture Provisions.



(a) Forfeiture of Options and Other Awards and Gains Realized Upon Prior Option Exercises or
Award Settlements. Unless otherwise determined by the Committee, each Award granted shall be
subject to the following additional forfeiture conditions, to which the Participant, by accepting
an Award hereunder, agrees. If any of the events specified in Section 10(b)(i), (ii), or (iii)
occurs (a “Forfeiture Event”), all of the following forfeitures will result:



(i) The unexercised portion of each Option held by the Participant, whether or not vested, and
any other Award not then settled will be immediately forfeited and canceled upon the occurrence of
the Forfeiture Event; and



(ii) The Participant will be obligated to repay to the Company, in cash, within five business
days after demand is made therefor by the Company, the total amount of Award Gain (as defined
herein) realized by the Participant upon each exercise of an Option or settlement of an Award that
occurred on or after (A) the date that is six months prior to the occurrence of the Forfeiture
Event, if the Forfeiture Event occurred while the Participant was employed by the Company or a
subsidiary or affiliate, or (B) the date that is six months prior to the date the Participant’s
employment by the Company or a subsidiary or affiliate terminated, if the Forfeiture Event occurred
after the Participant ceased to be so employed. For purposes of this Section, the term “Award Gain”
shall mean (i) in respect of a given Option exercise, the product of (X) the Fair Market Value per
share of Stock at the date of such exercise (without regard to any subsequent change in the market
price of shares) minus the exercise price times (Y) the number of shares as to which the Option was
exercised at that date, and (ii) in respect of any other settlement of an Award granted to the
Participant, the Fair Market Value of the cash or Stock paid or payable to the Participant
(regardless of any elective deferral) less any cash or the Fair Market Value of any Stock or
property (other than an Award or award which would have itself then been forfeitable hereunder and
excluding any payment of tax withholding) paid by the Participant to the Company as a condition of
or in connection such settlement.



(b) Events Triggering Forfeiture. The forfeitures specified in Section 10(a) will be
triggered upon the occurrence of any one of the following Forfeiture Events at any time during a
Participant’s employment by the Company or a subsidiary or affiliate, or during the one-year period
following termination of such employment:



(i) The Participant, acting alone or with others, directly or indirectly, (A) engages, either
as employee, employer, consultant, advisor, or director, or as an owner, investor, partner, or
stockholder unless the Participant’s interest is insubstantial, in any business in an area or
region in which the Company conducts business at the date the event occurs, which is directly in
competition with a business then conducted by the Company or a subsidiary or affiliate; (B) induces
any customer or supplier of the Company or a subsidiary or affiliate, with which the Company or a
subsidiary or affiliate has a business relationship, to curtail, cancel, not renew, or not continue
his or her or its business with the Company or any subsidiary or affiliate; or (C) induces, or
attempts to influence, any employee of or service provider to the Company or a subsidiary or
affiliate to terminate such employment or service. The Committee shall, in its discretion,
determine which lines of business the Company conducts on any particular date and which third
parties may reasonably be deemed to be in competition with the Company. For purposes of this
Section 10(b)(i), a Participant’s interest as a stockholder is insubstantial if it represents
beneficial ownership of less than five percent of the outstanding class of stock, and a
Participant’s interest as an owner, investor, or partner is insubstantial if it represents
ownership, as determined by the Committee in its discretion, of less than five percent of the
outstanding equity of the entity;



(ii) The Participant discloses, uses, sells, or otherwise transfers, except in the course of
employment with or other service to the Company or any subsidiary or affiliate, any confidential or
proprietary information of the Company or any subsidiary or affiliate, including but not limited to
information regarding the Company’s current and potential customers, organization, employees,
finances, and methods of operations and investments, so long as such information has not otherwise
been disclosed to the public or is not otherwise in the public domain (other than by the
Participant’s breach of this provision), except as required by law or pursuant to legal process, or
the Participant makes statements or representations, or otherwise communicates, directly or
indirectly, in writing, orally, or otherwise, or takes any other action which may, directly or
indirectly, disparage or be damaging to the Company or any of its subsidiaries or affiliates or
their respective officers, directors, employees, advisors, businesses or reputations, except as
required by law or pursuant to legal process; or


 


 









 





(iii) The Participant fails to cooperate with the Company or any subsidiary or affiliate in
any way, including, without limitation, by making himself or herself available to testify on behalf
of the Company or such subsidiary or affiliate in any action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, or otherwise fails to assist the Company or any
subsidiary or affiliate in any way, including, without limitation, in connection with any such
action, suit, or proceeding by providing information and meeting and consulting with members of
management of, other representatives of, or counsel to, the Company or such subsidiary or
affiliate, as reasonably requested.



(c) Agreement Does Not Prohibit Competition or Other Participant Activities. Although the
conditions set forth in this Section 10 shall be deemed to be incorporated into an Award, a
Participant is not thereby prohibited from engaging in any activity, including but not limited to
competition with the Company and its subsidiaries and affiliates. Rather, the non-occurrence of the
Forfeiture Events set forth in Section 10(b) is a condition to the Participant’s right to realize
and retain value from his or her compensatory Options and Awards, and the consequence under the
Plan if the Participant engages in an activity giving rise to any such Forfeiture Event are the
forfeitures specified herein. The Company and a Participant shall not be precluded by this
provision or otherwise from entering into other agreements concerning the subject matter of
Sections 10(a) and 10(b).



(d) Committee Discretion. The Committee may, in its discretion, waive in whole or in part the
Company’s right to forfeiture under this Section, but no such waiver shall be effective unless
evidenced by a writing signed by a duly authorized officer of the Company. In addition, the
Committee may impose additional conditions on Awards, by inclusion of appropriate provisions in the
document evidencing or governing any such Award.




11. General Provisions.



(a) Compliance with Legal and Other Requirements. The Company may, to the extent deemed
necessary or advisable by the Committee and subject to Section 11(k), postpone the issuance or
delivery of Stock or payment of other benefits under any Award until completion of such
registration or qualification of such Stock or other required action under any federal or state
law, rule or regulation, listing or other required action with respect to any stock exchange or
automated quotation system upon which the Stock or other securities of the Company are listed or
quoted, or compliance with any other obligation of the Company, as the Committee may consider
appropriate, and may require any Participant to make such representations, furnish such information
and comply with or be subject to such other conditions as it may consider appropriate in connection
with the issuance or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. The foregoing
notwithstanding, in connection with a Change of Control, the Company shall take or cause to be
taken no action, and shall undertake or permit to arise no legal or contractual obligation, that
results or would result in any postponement of the issuance or delivery of Stock or payment of
benefits under any Award or the imposition of any other conditions on such issuance, delivery or
payment, to the extent that such postponement or other condition would represent a greater burden
on a Participant than existed on the 90th day preceding the Change of Control.



(b) Limits on Transferability; Beneficiaries. No Award or other right or interest of a
Participant under the Plan shall be pledged, hypothecated or otherwise encumbered or subject to any
lien, obligation or liability of such Participant to any party (other than the Company or a
subsidiary or affiliate thereof), or assigned or transferred by such Participant otherwise than by
will or the laws of descent and distribution or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable shall be exercised during the lifetime of the
Participant only by the Participant or his or her guardian or legal representative, except that
Awards and other rights (other than ISOs and SARs in tandem therewith) may be transferred to one or
more transferees during the lifetime of the Participant, and may be exercised by such transferees
in accordance with the terms of such Award, but only if and to the extent such transfers are
permitted by the Committee, subject to any terms and conditions which the Committee may impose
thereon (which may include limitations the Committee may deem appropriate in order that offers and
sales under the Plan will meet applicable requirements of registration forms under the Securities
Act of 1933 specified by the Securities and Exchange Commission). A Beneficiary, transferee, or
other person claiming any rights under the Plan from or through any Participant shall be subject to
all terms and conditions of the Plan and any Award document applicable to such Participant, except
as otherwise determined by the Committee, and to any additional terms and conditions deemed
necessary or appropriate by the Committee.


 


 









 





(c) Adjustments. In the event that any large, special and non-recurring dividend or other
distribution (whether in the form of cash or property other than Stock), recapitalization, forward
or reverse split, Stock dividend, reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, liquidation, dissolution or
other similar corporate transaction or event affects the Stock, then the Committee shall, in
an equitable manner as determined by the Committee, adjust any or all of (i) the number and kind of
shares of Stock or other securities of the Company or other issuer which are subject to the Plan,
(ii) the number and kind of shares of Stock or other securities of the Company or other issuer by
which annual per-person Award limitations are measured under Section 5, (iii) the number and kind
of shares of Stock or other securities of the Company or other issuer subject to or deliverable in
respect of outstanding Awards and (iv) the exercise price, settlement price or purchase price
relating to any Award or, if deemed appropriate, the Committee may make provision for a payment of
cash or property to the holder of an outstanding Option (subject to Sections 11(k) and 11(l)) or
other Award. In addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including performance-based Awards and
performance goals and any hypothetical funding pool relating thereto) in recognition of unusual or
nonrecurring events (including, without limitation, events described in the preceding sentence, as
well as acquisitions and dispositions of businesses and assets affecting any performance
conditions), or in response to changes in applicable laws, regulations, or accounting principles;
provided that no such adjustment shall be authorized or made if and to the extent that the
existence of such authority (i) would cause Options, SARs, Restricted Stock or RSUs granted under
the Plan to Participants designated by the Committee as Covered Employees and intended to qualify
as “performance-based compensation” under Code Section 162(m) and regulations thereunder to
otherwise fail to qualify as “performance-based compensation” under Code Section 162(m) and
regulations thereunder, or (ii) would cause the Committee to be deemed to have authority to change
the targets, within the meaning of Treasury Regulation 1.162-27(e)(4)(vi), under the performance
goals relating to Options or SARs granted to Covered Employees and intended to qualify as
“performance-based compensation” under Code Section 162(m) and regulations thereunder.




(d) Tax Provisions.



(i) Withholding. The Company and any subsidiary or affiliate 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 payroll or other payment to a Participant, amounts of withholding and other taxes
due or potentially payable in connection with any transaction or event involving an Award, or to
require a Participant to remit to the Company an amount in cash or other property (including Stock)
to satisfy such withholding before taking any action with respect to an Award, and to take such
other action as the Committee may deem advisable to enable the Company and Participants 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 Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant’s withholding obligations, either
on a mandatory or elective basis in the discretion of the Committee, or in satisfaction of other
tax obligations. The Company can delay the delivery to a Participant of Stock under any Award to
the extent necessary to allow the Company to determine the amount of withholding to be collected
and to collect and process such withholding.



(ii) Required Consent to and Notification of Code Section 83(b) Election. No election under
Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified
in Code Section 83(b)) or under a similar provision of the laws of a jurisdiction outside the
United States may be made unless expressly permitted by the terms of the Award document or by
action of the Committee in writing prior to the making of such election. In any case in which a
Participant is permitted to make such an election in connection with an Award, the Participant
shall notify the Company of such election within ten days of filing notice of the election with the
Internal Revenue Service or other governmental authority, in addition to any filing and
notification required pursuant to regulations issued under Code Section 83(b) or other applicable
provision.



(iii) Requirement of Notification Upon Disqualifying Disposition Under Code Section 421(b).
If any Participant shall make any disposition of shares of Stock delivered pursuant to the exercise
of an ISO under the circumstances described in Code Section 421(b) (i.e., a disqualifying
disposition), such Participant shall notify the Company of such disposition within ten days
thereof.



(e) Changes to the Plan. The Board may amend, suspend or terminate the Plan or the
Committee’s authority to grant Awards under the Plan without the consent of stockholders or
Participants; provided, however, that any amendment to the Plan shall be submitted to the Company’s
stockholders for approval not later than the earliest annual meeting for which the record date is
at or after the date of such Board action:



(i) if such stockholder approval is required by any federal or state law or regulation or the
rules of the New York Stock Exchange or any other stock exchange or automated quotation system on
which the Stock may then be listed or quoted; or


 


 









 





(ii) if such amendment would materially increase the number of shares reserved for issuance
and delivery under the Plan; or



(iii) if such amendment would alter the provisions of the Plan restricting the Company’s
ability to grant Options or SARs with an exercise price that is not less than the Fair Market Value
of Stock; or



(iv) in connection with any action to amend or replace previously granted Options or SARs in a
transaction that constitutes a “repricing,” as such term is used in Section 303A.08 of the Listed
Company Manual of the New York Stock Exchange.



The Board may otherwise, in its discretion, determine to submit other amendments to the Plan
to stockholders for approval; and provided further, that, without the consent of an affected
Participant, no such Board (or any Committee) action may materially and adversely affect the rights
of such Participant under any outstanding Award (for this purpose, actions that alter the timing of
federal income taxation of a Participant will not be deemed material unless such action results in
an income tax penalty on the Participant). With regard to other terms of Awards, the Committee
shall have no authority to waive or modify any such Award term after the Award has been granted to
the extent the waived or modified term would be mandatory under the Plan for any Award newly
granted at the date of the waiver or modification.



(f) Right of Setoff. The Company or any subsidiary or affiliate may, to the extent permitted
by applicable law, deduct from and set off against any amounts the Company or a subsidiary or
affiliate may owe to the Participant from time to time (including amounts payable in connection
with any Award, owed as wages, fringe benefits, or other compensation owed to the Participant),
such amounts as may be owed by the Participant to the Company, including but not limited to amounts
owed under Section 10(a), although the Participant shall remain liable for any part of the
Participant’s payment obligation not satisfied through such deduction and setoff. By accepting any
Award granted hereunder, the Participant agrees to any deduction or setoff under this Section
11(f).



(g) Unfunded Status of Awards; Creation of Trusts. To the extent that any Award is deferred
compensation, the Plan is intended to constitute an “unfunded” plan for deferred compensation with
respect to such Award. With respect to any payments not yet made to a Participant or obligation to
deliver Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general creditor of the Company; provided
that the Committee may authorize the creation of trusts and deposit therein cash, Stock, other
Awards or other property, or make other arrangements to meet the Company’s obligations under the
Plan. Such trusts or other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines with the consent of each affected Participant.



(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its
submission to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or a committee thereof to adopt such other incentive
arrangements, apart from the Plan, as it may deem desirable, including incentive arrangements and
awards which do not qualify under Code Section 162(m), and such other arrangements may be either
applicable generally or only in specific cases.



(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by
the Committee, in the event of a forfeiture of an Award with respect to which a Participant paid
cash consideration, the Participant shall be repaid the amount of such cash consideration. In
addition, nothing herein shall prevent the Committee from authorizing the payment in cash of any
amounts with respect to forfeited Awards. 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) Compliance with Code Section 162(m). It is the intent of the Company that Options and
SARs granted to Covered Employees and other Awards designated as Awards to Covered Employees
subject to Section 7 shall constitute qualified “performance-based compensation” within the meaning
of Code Section 162(m) and regulations thereunder, unless otherwise determined by the Committee at
the time of allocation of an Award. Accordingly, the terms of Section 7, including the definitions
of Covered Employee and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered Employee as used
herein shall mean only a person designated by the Committee as likely to be a Covered Employee with
respect to a specified fiscal
year. If any provision of the Plan or any Award document relating to an Award that is
designated as intended to comply with Code Section 162(m) does not comply or is inconsistent with
the requirements of Code Section 162(m) or regulations thereunder, such provision shall be
construed or deemed amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer upon the Committee or any other person discretion to increase
the amount of compensation otherwise payable in connection with any such Award upon attainment of
the applicable performance objectives.



(k) Certain Limitations on Awards to Ensure Compliance with Code Section 409A.
Notwithstanding anything herein to the contrary, any Award that is deferred compensation within the
meaning of Code Section 409A shall be automatically modified and limited to the extent that the
Committee determines necessary to avoid the imposition of the additional tax under Section
409A(a)(1)(B) of the Code on a Participant holding such Award.



(l) Certain Limitations Relating to Accounting Treatment of Awards. Other provisions of the
Plan notwithstanding, the Committee’s authority under the Plan (including under Sections 8(c),
11(c) and 11(d)) is limited to the extent necessary to ensure that any Option or other Award of a
type that the Committee has intended to be subject to “equity” accounting with a measurement date
at the date of grant under applicable accounting standards shall not become subject to “liability”
accounting solely due to the existence of such authority, unless the Committee specifically
determines that the Award shall remain outstanding despite such “liability” accounting.



(m) Governing Law. The validity, construction, and effect of the Plan, any rules and
regulations relating to the Plan and any Award document shall be determined in accordance with the
laws of the State of Delaware, without giving effect to principles of conflicts of laws, and
applicable provisions of federal law.



(n) Awards to Participants Outside the United States. The Committee may modify the terms of
any Award under the Plan made to or held by a Participant who is then resident or primarily
employed outside of the United States in any manner deemed by the Committee to be necessary or
appropriate in order that such Award shall conform to laws, regulations, and customs of the country
in which the Participant is then resident or primarily employed, or so that the value and other
benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions
applicable as a result of the Participant’s residence or employment abroad shall be comparable to
the value of such an Award to a Participant who is resident or primarily employed in the United
States. An Award may be modified under this Section 11(n) in a manner that is inconsistent with the
express terms of the Plan, so long as such modifications will not contravene any applicable law or
regulation or result in actual liability under Section 16(b) for the Participant whose Award is
modified.



(o) Limitation on Rights Conferred under Plan. Neither the Plan nor any action taken
thereunder shall be construed as (i) giving any Eligible Person or Participant the right to
continue as an Eligible Person or Participant or in the employ or service of the Company or a
subsidiary or affiliate, (ii) interfering in any way with the right of the Company or a subsidiary
or affiliate to terminate any Eligible Person’s or Participant’s employment or service at any time
(subject to the terms and provisions of any separate written agreements), (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly
with other Participants and employees, or (iv) conferring on a Participant any of the rights of a
stockholder of the Company unless and until the Participant is duly issued or transferred shares of
Stock in accordance with the terms of an Award or an Option is duly exercised. Except as expressly
provided in the Plan and an Award document, neither the Plan nor any Award document shall confer on
any person other than the Company and the Participant any rights or remedies thereunder.


 


 









 





(p) Severability; Entire Agreement. If any of the provisions of the Plan or any Award
document is finally held to be invalid, illegal or unenforceable (whether in whole or in part),
such provision shall be deemed modified to the extent, but only to the extent, of such invalidity,
illegality or unenforceability, and the remaining provisions shall not be affected thereby;
provided, that , if any of such provisions is finally held to be invalid, illegal, or unenforceable
because it exceeds the maximum scope determined to be acceptable to permit such provision to be
enforceable, such provision shall be deemed to be modified to the minimum extent necessary to
modify such scope in order to make such provision enforceable hereunder. The Plan and any
agreements or documents designated by the Committee as setting forth the terms of an Award contain
the entire agreement of the parties with respect to the subject matter thereof and supersede all
prior agreements, promises, covenants, arrangements, communications, representations and warranties
between them, whether written or oral with respect to the subject matter thereof.



(q) Plan Effective Date and Termination. The Plan became effective upon its approval by the
stockholders of the Company on June 13, 2007. The amended and restated plan shall become effective
if, and at such time as, the stockholders of the Company have approved it in accordance with
applicable law and stock exchange requirements
(such date, the “Amendment Effective Date”). Unless earlier terminated by action of the Board,
the authority of the Committee to make grants under the Plan shall terminate on the date that is
ten years after the latest date upon which stockholders of the Company have approved the Plan, and
the Plan will remain in effect until such time as no Stock remains available for delivery under the
Plan or as set forth above and the Company has no further rights or obligations under the Plan with
respect to outstanding Awards under the Plan.