exv4w1






Exhibit 4.1




 






FURNITURE BRANDS INTERNATIONAL, INC.



2010 OMNIBUS INCENTIVE PLAN

 





 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	1.	 	PURPOSE 
	 	 	1	 
	2.	 	DEFINITIONS 
	 	 	1	 
	3.	 	ADMINISTRATION OF THE PLAN 
	 	 	5	 
	 	 	3.1. Board 
	 	 	5	 
	 	 	3.2. Committee 
	 	 	6	 
	 	 	3.3. Jurisdictions 
	 	 	6	 
	 	 	3.4. Terms of Awards 
	 	 	6	 
	 	 	3.5. No Repricing 
	 	 	8	 
	 	 	3.6. Deferral Arrangement 
	 	 	8	 
	 	 	3.7. No Liability 
	 	 	8	 
	 	 	3.8. Share Issuance/Book-Entry 
	 	 	8	 
	4.	 	STOCK SUBJECT TO THE PLAN 
	 	 	8	 
	 	 	4.1. Number of Shares Available for Awards 
	 	 	8	 
	 	 	4.2. Adjustments in Authorized Shares 
	 	 	8	 
	 	 	4.3. Share Usage 
	 	 	9	 
	5.	 	EFFECTIVE DATE, DURATION AND AMENDMENTS 
	 	 	9	 
	 	 	5.1. Effective Date 
	 	 	9	 
	 	 	5.2. Term 
	 	 	9	 
	 	 	5.3. Amendment and Termination of the Plan 
	 	 	9	 
	6.	 	AWARD ELIGIBILITY AND LIMITATIONS 
	 	 	9	 
	 	 	6.1. Service Providers and Other Persons 
	 	 	9	 
	 	 	6.2. Adjustments in Authorized Shares 
	 	 	10	 
	 	 	6.3. Limitation on Shares of Stock Subject to Awards and Cash Awards
	 	 	10	 
	7.	 	AWARD AGREEMENT 
	 	 	10	 
	8.	 	TERMS AND CONDITIONS OF OPTIONS 
	 	 	11	 
	 	 	8.1. Option Price 
	 	 	11	 
	 	 	8.2. Vesting 
	 	 	11	 
	 	 	8.3. Term 
	 	 	11	 
	 	 	8.4. Termination of Service 
	 	 	11	 
	 	 	8.5. Limitations on Exercise of Option 
	 	 	11	 
	 	 	8.6. Method of Exercise 
	 	 	12	 
	 	 	8.7. Rights of Holders of Options 
	 	 	12	 
	 	 	8.8. Delivery of Stock Certificates 
	 	 	12	 
	 	 	8.9. Transferability of Options 
	 	 	12	 
	 	 	8.10. Family Transfers 
	 	 	12	 
	 	 	8.11. Limitations on Incentive Stock Options 
	 	 	13	 
	 	 	8.12. Notice of Disqualifying Disposition 
	 	 	13	 
	9.	 	TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS 
	 	 	13	 
	 	 	9.1. Right to Payment and Grant Price 
	 	 	13	 
	 	 	9.2. Other Terms 
	 	 	13	 
	 	 	9.3. Term 
	 	 	13	 






- i -









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	9.4. Transferability of SARS 
	 	 	14	 
	 	 	9.5. Family Transfers 
	 	 	14	 
	10.	 	TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS 
	 	 	14	 
	 	 	10.1. Grant of Restricted Stock or Stock Units 
	 	 	14	 
	 	 	10.2. Restrictions 
	 	 	14	 
	 	 	10.3. Restricted Stock Certificates 
	 	 	15	 
	 	 	10.4. Rights of Holders of Restricted Stock 
	 	 	15	 
	 	 	10.5. Rights of Holders of Stock Units 
	 	 	15	 
	 	 	10.5.1. Voting and Dividend Rights 
	 	 	15	 
	 	 	10.5.2. Creditor’s Rights 
	 	 	15	 
	 	 	10.6. Termination of Service 
	 	 	15	 
	 	 	10.7. Purchase of Restricted Stock and Shares Subject to Stock Units 
	 	 	16	 
	 	 	10.8. Delivery of Stock 
	 	 	16	 
	11.	 	TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS 
	 	 	16	 
	12.	 	TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS 
	 	 	16	 
	 	 	12.1. Dividend Equivalent Rights 
	 	 	16	 
	 	 	12.2. Termination of Service 
	 	 	17	 
	13.	 	PAYMENT 
	 	 	17	 
	 	 	13.1. General Rule
	 	 	17	 
	 	 	13.2. Surrender of Stock
	 	 	17	 
	 	 	13.3. Cashless Exercise
	 	 	17	 
	 	 	13.4. Other Forms of Payment
	 	 	17	 
	14.	 	TERMS AND CONDITIONS OF PERFORMANCE SHARES, PERFORMANCE UNITS,
LONG-TERM INCENTIVE AWARDS AND SHORT-TERM INCENTIVE AWARDS
	 	 	18	 
	 	 	14.1. Grant of Performance Units/Performance Shares
	 	 	18	 
	 	 	14.2. Value of Performance Units/Performance Shares
	 	 	18	 
	 	 	14.3. Earning of Performance Units/Performance Shares
	 	 	18	 
	 	 	14.4. Form and Timing of Payment of Performance Units/Performance Shares.
	 	 	18	 
	 	 	14.5. Performance Conditions
	 	 	18	 
	 	 	14.6. Long-Term Incentive Awards or Short-Term Incentive Awards Granted to
Designated Covered Employees. 19
	 	 	 	 
	 	 	14.6.1. Performance Goals Generally
	 	 	19	 
	 	 	14.6.2. Timing For Establishing Performance Goals
	 	 	19	 
	 	 	14.6.3. Settlement of Awards; Other Terms
	 	 	19	 
	 	 	14.6.4. Performance Measures
	 	 	19	 
	 	 	14.6.5. Evaluation of Performance
	 	 	21	 
	 	 	14.6.6. Adjustment of Performance-Based Compensation
	 	 	21	 
	 	 	14.6.7. Board Discretion
	 	 	21	 
	 	 	14.7. Status of Section Awards Under Code Section 162(m)
	 	 	21	 
	15.	 	PARACHUTE LIMITATIONS 
	 	 	22	 
	16.	 	REQUIREMENTS OF LAW 
	 	 	22	 






- ii --









 






	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	16.1. General 
	 	 	22	 
	 	 	16.2. Rule 16b-3 
	 	 	23	 
	17.	 	EFFECT OF CHANGES IN CAPITALIZATION 
	 	 	23	 
	 	 	17.1. Changes in Stock 
	 	 	23	 
	 	 	17.2. Reorganization in Which the Company Is the Surviving Entity Which
does not Constitute a Corporate Transaction 24
	 	 	 	 
	 	 	17.3. Corporate Transaction in which Awards are not Assumed 
	 	 	24	 
	 	 	17.4. Corporation Transaction in which Awards are Assumed 
	 	 	25	 
	 	 	17.5. Adjustments 
	 	 	25	 
	 	 	17.6. No Limitations on Company 
	 	 	25	 
	18.	 	GENERAL PROVISIONS 
	 	 	25	 
	 	 	18.1. Disclaimer of Rights 
	 	 	25	 
	 	 	18.2. Nonexclusivity of the Plan 
	 	 	26	 
	 	 	18.3. Withholding Taxes 
	 	 	26	 
	 	 	18.4. Captions 
	 	 	26	 
	 	 	18.5. Other Provisions 
	 	 	26	 
	 	 	18.6. Number and Gender 
	 	 	26	 
	 	 	18.7. Severability 
	 	 	27	 
	 	 	18.8. Governing Law 
	 	 	27	 
	 	 	18.9. Code Section 409A 
	 	 	27	 











- iii -









 











FURNITURE BRANDS INTERNATIONAL, INC.




2010 OMNIBUS INCENTIVE PLAN



     Furniture Brands International, Inc., a Delaware corporation (the “Company”), sets
forth herein the terms of its 2010 Omnibus Incentive Plan (the “Plan”), as follows:



1. PURPOSE




     The Plan is intended to enhance the Company’s and its Affiliates’ (as defined herein) ability
to attract and retain highly qualified officers, directors, key employees, and other persons, and
to motivate such persons to serve the Company and its Affiliates and to expend maximum effort to
improve the business results and earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest in the operations and future
success of the Company. To this end, the Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, stock units (including deferred stock units), unrestricted
stock, dividend equivalent rights, and cash bonus awards. Any of these awards may, but need not,
be made as performance incentives to reward attainment of annual or long-term performance goals in
accordance with the terms hereof. Stock options granted under the Plan may be non-qualified stock
options or incentive stock options, as provided herein, except that stock options granted to
outside directors and any consultants or advisers providing services to the Company or an Affiliate
shall in all cases be non-qualified stock options.



     As of the date that the Company’s stockholders adopt this Plan, any of the shares of Stock
authorized for issuance under the Furniture Brands International, Inc. 2008 Incentive Plan (the
“Prior Plan”) in excess of the number of shares reserved for awards that have been made
under the Prior Plan shall be transferred into this Plan and shall become available for grant under
this Plan. From and after the date that the Company’s stockholders adopt this Plan, no further
awards shall be made under the Prior Plan.



2. DEFINITIONS




     For purposes of interpreting the Plan and related documents (including Award Agreements), the
following definitions shall apply:



     2.1 “Affiliate” means, with respect to the Company, any company or other trade or business
that controls, is controlled by or is under common control with the Company within the meaning of
Rule 405 of Regulation C under the Securities Act, including, without limitation, any Subsidiary.
For purposes of granting stock options or stock appreciation rights, an entity may not be
considered an Affiliate unless the Company holds a “controlling interest” in such entity, where the
term “controlling interest” has the same meaning as provided in Treasury Regulation
1.414(c)-2(b)(2)(i), provided that the language “at least 50 percent” is used instead of “at least
80 percent” and, provided further, that where granting of stock options or stock appreciation
rights is based upon a legitimate business criteria, the language “at least 20 percent” is used
instead of “at least 80 percent” each place it appears in Treasury Regulation 1.414(c)-2(b)(2)(i).



     2.2 “Applicable Laws” means the legal requirements relating to the Plan and the Awards under
applicable provisions of the corporate, securities, tax and other laws, rules, regulations and
government orders, and the rules of any applicable stock exchange or national market system, of any
jurisdiction applicable to Awards granted to residents therein.



 









 





     2.3 “Award” means a grant of an Option, Stock Appreciation Right, Restricted Stock,
Unrestricted Stock, Stock Unit, Dividend Equivalent Rights, Performance Share, Performance Unit or
cash award under the Plan.



     2.4 “Award Agreement” means the agreement between the Company and a Grantee that evidences and
sets out the terms and conditions of an Award.



     2.5 “Benefit Arrangement” shall have the meaning set forth in Section 15 hereof.



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



     2.7 “Cause” means, as determined by the Board and unless otherwise provided in an applicable
agreement with the Company or an Affiliate, (a) a Grantee’s conviction of any crime (whether or not
involving the Company) constituting a felony in the jurisdiction involved; (b) conduct of a Grantee
related to the Grantee’s employment for which either criminal or civil penalties against the
Grantee or the Company may be sought; (c) material violation of the Company’s policies, including
the disclosure or misuse of confidential information, or those set forth in Company manuals or
statements of policy; or (d) serious neglect or misconduct in the performance of a Grantee’s duties
for the Company or willful or repeated failure or refusal to perform such duties.



     2.8 “Code” means the Internal Revenue Code of 1986, as now in effect or as hereafter
amended.



     2.9 “Committee” means a committee of, and designated from time to time by resolution of, the
Board, which shall be constituted as provided in Section 3.2.



     2.10 “Company” means Furniture Brands International, Inc.



     2.11 “Corporate Transaction” means (i) the dissolution or liquidation of the Company or a
merger, consolidation, or reorganization of the Company with one or more other entities in which
the Company is not the surviving entity, (ii) a sale of substantially all of the assets of the
Company to another person or entity, or (iii) any transaction (including without limitation a
merger or reorganization in which the Company is the surviving entity) which results in any person
or entity (other than persons who are stockholders or affiliates immediately prior to the
transaction) owning 50% or more of the combined voting power of all classes of stock of the
Company.



     2.12 “Covered Employee” means a Grantee who is a covered employee within the meaning of
Section 162(m)(3) of the Code.



     2.13 “Disability” means, as determined by the Board and unless otherwise provided in an
applicable agreement with the Company or an Affiliate, the Grantee is unable to perform each of the
essential duties of such Grantee’s position by reason of a medically determinable physical or
mental impairment which is potentially permanent in character or which can be expected to last for
a continuous period of not less than 12 months; provided, however, that, with respect to rules
regarding expiration of an Incentive Stock Option following termination of the Grantee’s Service,
Disability shall mean the Grantee is unable to engage in any substantial gainful activity by reason
of a medically determinable physical or mental impairment which can be expected to result in death
or which has lasted or can be expected to last for a continuous period of not less than 12 months.



- 2 -









 





     2.14 “Dividend Equivalent Right” means a right, granted to a Grantee under Section 12 hereof,
to receive cash, Stock, other Awards or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.



     2.15 “Effective Date” means February 26, 2010, the date the Plan was approved by the Board.



     2.16 “Exchange Act” means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.



     2.17 “Fair Market Value” means the value of a share of Stock, determined as follows: if on
the Grant Date or other determination date the Stock is listed on an established national or
regional stock exchange, or is publicly traded on an established securities market, the Fair Market
Value of a share of Stock shall be the closing price of the Stock on such exchange or in such
market (if there is more than one such exchange or market the Board shall determine the appropriate
exchange or market) on the Grant Date or such other determination date (or if there is no such
reported closing price, the Fair Market Value shall be the mean between the highest bid and lowest
asked prices or between the high and low sale prices on such trading day) or, if no sale of Stock
is reported for such trading day, on the next preceding day on which any sale shall have been
reported. If the Stock is not listed on such an exchange or traded on such a market, Fair Market
Value shall be the value of the Stock as determined by the Board by the reasonable application of a
reasonable valuation method, in a manner consistent with Section 409A of the Code (“Code Section
409A”).



     2.18 “Family Member” means a person who is a spouse, former spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother, sister, brother-in-law, or sister-in-law, including adoptive
relationships, of the Grantee, any person sharing the Grantee’s household (other than a tenant or
employee), a trust in which any one or more of these persons have more than fifty percent of the
beneficial interest, a foundation in which any one or more of these persons (or the Grantee)
control the management of assets, and any other entity in which one or more of these persons (or
the Grantee) own more than fifty percent of the voting interests.



     2.19 “Grant Date” means, as determined by the Board, the latest to occur of (i) the date as of
which the Board approves an Award, (ii) the date on which the recipient of an Award first becomes
eligible to receive an Award under Section 6 hereof, or (iii) such other date as may be specified
by the Board.



     2.20 “Grantee” means a person who receives or holds an Award under the Plan.



     2.21 “Incentive Stock Option” means an “incentive stock option” within the meaning of Section
422 of the Code, or the corresponding provision of any subsequently enacted tax statute, as amended
from time to time.



     2.22 “Long-Term Incentive Award” means an Award made subject to the attainment of performance
goals (as described in Section 14.6) over a performance period of up to ten (10) years.



     2.23 “Non-qualified Stock Option” means an Option that is not an Incentive Stock Option.



     2.24 “Option” means an option to purchase one or more shares of Stock pursuant to the Plan.



     2.25 “Option Price” means the exercise price for each share of Stock subject to an Option.



     2.26 “Other Agreement” shall have the meaning set forth in Section 15 hereof.



- 3 -









 





     2.27 “Outside Director” means a member of the Board who is not an officer or employee of the
Company.



     2.28 “Performance-Based Compensation” means compensation under an Award that is intended to
satisfy the requirements of Code Section 162(m) for certain performance-based compensation paid to
Covered Employees. Notwithstanding the foregoing, nothing in this Plan shall be construed to mean
that an Award which does not satisfy the requirements for performance-based compensation under Code
Section 162(m) does not constitute performance-based compensation for other purposes, including
Code Section 409A.



     2.29 “Performance Measures” means measures as described in Section 14.6 on which the
performance goals are based and which are approved by the Company’s shareholders pursuant to this
Plan in order to qualify Awards as Performance-Based Compensation.



     2.30 “Performance Period” means the period of time during which the performance goals must be
met in order to determine the degree of payout and/or vesting with respect to an Award.



     2.31 “Performance Share” means an Award under Section 14 herein and subject to the terms of
this Plan, denominated in shares of Stock, the value of which at the time it is payable is
determined as a function of the extent to which corresponding performance criteria have been
achieved.



     2.32 “Performance Unit” means an Award under Section 14 herein and subject to the terms of
this Plan, denominated in units, the value of which at the time it is payable is determined as a
function of the extent to which corresponding performance criteria have been achieved.



     2.33 “Plan” means this Furniture Brands International, Inc. 2010 Omnibus Incentive Plan.



     2.34 “Purchase Price” means the purchase price for each share of Stock pursuant to a grant of
Restricted Stock, Stock Units or Unrestricted Stock.



     2.35 “Reporting Person” means a person who is required to file reports under Section 16(a) of
the Exchange Act.



     2.36 “Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to Section 10
hereof.



     2.37 “SAR Exercise Price” means the per share exercise price of a SAR granted to a Grantee
under Section 9 hereof.



     2.38 “Securities Act” means the Securities Act of 1933, as now in effect or as hereafter
amended.



     2.39 “Service” means service as a Service Provider to the Company or an Affiliate. Unless
otherwise stated in the applicable Award Agreement, a Grantee’s change in position or duties shall
not result in interrupted or terminated Service, so long as such Grantee continues to be a Service
Provider to the Company or an Affiliate. Subject to the preceding sentence, whether a termination
of Service shall have occurred for purposes of the Plan shall be determined by the Board, which
determination shall be final, binding and conclusive.



- 4 -









 





     2.40 “Service Provider” means an employee, officer or director of the Company or an Affiliate,
or a consultant or adviser (who is a natural person) currently providing services to the Company or
an Affiliate.



     2.41 “Short-Term Incentive Award” means an Award made subject to attainment of performance
goals (as described in Section 14.6) over a performance period of up to one year (the Company’s
fiscal year, unless otherwise specified by the Committee).



     2.42 “Stock” means the shares of common stock, no par value, of the Company.



     2.43 “Stock Appreciation Right” or “SAR” means a right granted to a Grantee under Section 9
hereof.



     2.44 “Stock Unit” means a bookkeeping entry representing the equivalent of one share of Stock
awarded to a Grantee pursuant to Section 10 hereof.



     2.45 “Subsidiary” means any “subsidiary corporation” of the Company within the meaning of
Section 424(f) of the Code.



     2.46 “Substitute Awards” means Awards granted upon assumption of, or in substitution for,
outstanding awards previously granted by a company or other entity acquired by the Company or any
Affiliate or with which the Company or any Affiliate combines.



     2.47 “Ten Percent Stockholder” means an individual who owns more than ten percent
(10%) of the total combined voting power of all classes of outstanding stock of the Company, its
parent or any of its Subsidiaries. In determining stock ownership, the attribution rules of
Section 424(d) of the Code shall be applied.



     2.48 “Unrestricted Stock” means an Award pursuant to Section 11 hereof.



     2.49 “U.S. Grantee” means any Grantee who is or becomes a taxpayer in the United States.



3. ADMINISTRATION OF THE PLAN




     3.1. Board



     The Board shall have such powers and authorities related to the administration of the Plan as
are consistent with the Company’s certificate of incorporation and by-laws and applicable law. The
Board shall have full power and authority to take all actions and to make all determinations
required or provided for under the Plan, any Award or any Award Agreement, and shall have full
power and authority to take all such other actions and make all such other determinations not
inconsistent with the specific terms and provisions of the Plan that the Board deems to be
necessary or appropriate to the administration of the Plan, any Award or any Award Agreement. All
such actions and determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in writing in
accordance with the Company’s certificate of incorporation and by-laws and applicable law. The
interpretation and construction by the Board of any provision of the Plan, any Award or any Award
Agreement shall be final, binding and conclusive.



- 5 -









 





3.2. Committee




     The Board from time to time may delegate to the Committee such powers and authorities related
to the administration and implementation of the Plan, as set forth in Section 3.1 above and other
applicable provisions, as the Board shall determine, consistent with the certificate of
incorporation and by-laws of the Company and applicable law.




     (i) Except as provided in Subsection (ii) and except as the Board may otherwise
determine, the Committee, if any, appointed by the Board to administer the Plan shall
consist of two or more Outside Directors of the Company who: (a) qualify as “outside
directors” within the meaning of Section 162(m) of the Code and who (b) meet such other
requirements as may be established from time to time by the Securities and Exchange
Commission for plans intended to qualify for exemption under Rule 16b-3 (or its successor)
under the Exchange Act and who (c) comply with the independence requirements of the stock
exchange on which the Common Stock is listed.




     (ii) The Board may also appoint one or more separate committees of the Board, each
composed of one or more directors of the Company who need not be Outside Directors, who may
administer the Plan with respect to employees or other Service Providers who are not
officers or directors of the Company, may grant Awards under the Plan to such employees or
other Service Providers, and may determine all terms of such Awards.



     In the event that the Plan, any Award or any Award Agreement entered into hereunder provides
for any action to be taken by or determination to be made by the Board, such action may be taken or
such determination may be made by the Committee if the power and authority to do so has been
delegated to the Committee by the Board as provided for in this Section. Unless otherwise
expressly determined by the Board, any such action or determination by the Committee shall be
final, binding and conclusive. To the extent permitted by law, the Committee may delegate its
authority under the Plan to a member of the Board. Discretionary Awards made to Outside Directors
under the Plan must be approved and administered by the Committee.



     3.3. Jurisdictions



     In order to assure the viability of Awards granted to Grantees employed in various
jurisdictions, the Committee may provide for such special terms as it may consider necessary or
appropriate to accommodate differences in local law, tax policy, or custom applicable in the
jurisdiction in which the Grantee resides or is employed. Moreover, the Committee may approve such
supplements to, or amendments, restatements, or alternative versions of, the Plan 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; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations contained in Section 4.1
of the Plan. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and
no Awards shall be granted, that would violate any Applicable Laws.



     3.4. Terms of Awards



     Subject to the other terms and conditions of the Plan, the Board shall have full and final
authority to:



     (i) designate Grantees,



     (ii) determine the type or types of Awards to be made to a Grantee,



- 6 -









 





     (iii) determine the number of shares of Stock to be subject to an Award,



     (iv) establish the terms and conditions of each Award (including, but not limited to, the
exercise price of any Option, the nature and duration of any restriction or condition (or provision
for lapse thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award or the
shares of Stock subject thereto, the treatment of an Award in the event of a change of control, and
any terms or conditions that may be necessary to qualify Options as Incentive Stock Options),



     (v) prescribe the form of each Award Agreement evidencing an Award, and



     (vi) amend, modify, or supplement the terms of any outstanding Award. Such authority
specifically includes the authority, in order to effectuate the purposes of the Plan but without
amending the Plan, to make or modify Awards to U.S. Grantees and eligible individuals who are
foreign nationals or are individuals who are employed outside the United States to recognize
differences in local law, tax policy, or custom. Notwithstanding the foregoing, no amendment,
modification or supplement of any Award shall, without the consent of the Grantee, impair the
Grantee’s rights under such Award.



     Notwithstanding any other provision of this Plan or any provision of any Award Agreement, if
the Company is required to prepare a material accounting restatement, then the Board shall have the
discretion to determine whether any Grantee shall forfeit any Award, in whole or in part, including
any cash or shares of Stock received in connection with such Award (or an amount equal to the fair
market value of such Stock on the date of delivery if the Grantee no longer holds the shares of
Stock) if: (1) the Board or Committee, in their sole discretion, determines that the Grantee
engaged in misconduct relating to such accounting restatement, (2) pursuant to the terms of the
Award Agreement for such Award, the amount of the Award earned or the vesting in the Award was
explicitly based on the achievement of pre-established performance goals set forth in the Award
Agreement (including earnings, gains, or other criteria) that are later determined, as a result of
the accounting restatement, not to have been achieved, and (3) the Award was earned within the
three (3) years following the date of the first public issuance or filing with the Securities and
Exchange Commission of the financial statements that subsequently required restatement. In
determining the amount of forfeiture, the Company shall credit the Grantee with any taxes already
paid in connection with such Award.



     In addition, if, at any time within one (1) year after the date on which a Grantee exercises
an Option or SAR, or receives payment of a Short-Term Incentive Award, Long-Term Incentive Award,
or on which Restricted Shares or Stock Units vest or on which income is realized by a Grantee in
connection with any other Award (each of which events shall be a “realization event”), the Board
determines in its discretion that the Company has been materially harmed by the Grantee, whether
such harm (a) results in the Grantee’s termination or deemed termination of employment for Cause or
(b) results from any activity of the Grantee determined by the Board to be in competition with any
activity of the Company, or otherwise prejudicial, contrary or harmful to the interests of the
Company (including, but not limited to, accepting employment with or serving as a consultant,
adviser or in any other capacity to an entity that is in competition with or acting against the
interests of the Company), then any gain realized by the Grantee from the realization event shall
be paid by the Grantee to the Company upon notice from the Company. Such gain shall be determined
as of the date of the realization event, without regard to any subsequent change in the Fair Market
Value of the Stock. The Company shall have the right to offset such gain against any amounts
otherwise owed to the Grantee by the Company (whether as wages, vacation pay, or pursuant to any
benefit plan or other compensatory arrangement).



- 7 -









 





     3.5. No Repricing



     Notwithstanding anything in this Plan to the contrary, no amendment or modification may be
made to an outstanding Option or SAR, including, without limitation, by replacement of Options or
SARs with cash or other award type, that would be treated as a repricing under the rules of the
stock exchange on which the Stock is listed, in each case, without the approval of the stockholders
of the Company, provided, that, appropriate adjustments may be made to outstanding Options and SARs
pursuant to Section 17 or Section 5.3 and may be made to make changes to achieve compliance with
applicable law, including Code Section 409A.



     3.6. Deferral Arrangement



     The Board may permit or require the deferral of any award payment into a deferred compensation
arrangement, subject to such rules and procedures as it may establish, which may include provisions
for the payment or crediting of interest or dividend equivalents, including converting such credits
into deferred Stock equivalents. Any such deferrals shall be made in a manner that complies with
Code Section 409A.



     3.7. No Liability



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



     3.8. Share Issuance/Book-Entry



     Notwithstanding any provision of this Plan to the contrary, the issuance of the Stock under
the Plan may be evidenced in such a manner as the Board, in its discretion, deems appropriate,
including, without limitation, book-entry registration or issuance of one or more Stock
certificates.



4. STOCK SUBJECT TO THE PLAN




     4.1. Number of Shares Available for Awards



     Subject to adjustment as provided in Section 17 hereof, the number of shares of Stock
available for issuance under the Plan shall be the sum of (i) up to two million (2,000,000) shares
and (ii) the number of shares remaining as of the date that this Plan is approved by the Company’s
stockholders under the Prior Plan and increased by shares of Stock covered by awards granted under
the Prior Plan that are not purchased or are forfeited or expire, or otherwise terminate without
delivery of any Stock subject thereto, to the extent such shares would again be available for
issuance under such Prior Plan. Subject to adjustment as provided in Section 17 hereof, the number
of shares of Stock available for issuance as Incentive Stock Options shall be two million
(2,000,000). Stock issued or to be issued under the Plan shall be authorized but unissued shares;
or, to the extent permitted by applicable law, issued shares that have been reacquired by the
Company.



     4.2. Adjustments in Authorized Shares



     The Board shall have the right to substitute or assume Awards in connection with mergers,
reorganizations, separations, or other transactions to which Section 424(a) of the Code applies.
The number of shares of Stock reserved pursuant to Section 4 shall be increased by the
corresponding number of Awards
assumed and, in the case of a substitution, by the net increase in the number of shares of Stock
subject to Awards before and after the substitution.



- 8 -









 





     4.3. Share Usage



     Shares covered by an Award shall be counted as used as of the Grant Date. Any shares of Stock
that are subject to Awards shall be counted against the limit set forth in Section 4.1 as one (1)
share for every one (1) share subject to an Award. With respect to SARs, the number of shares
subject to an award of SARs will be counted against the aggregate number of shares available for
issuance under the Plan regardless of the number of shares actually issued to settle the SAR upon
exercise. If any shares covered by an Award granted under the Plan or the Prior Plan are not
purchased or are forfeited or expire, or if an Award otherwise terminates without delivery of any
Stock subject thereto or is settled in cash in lieu of shares, then the number of shares of Stock
counted against the aggregate number of shares available under the Plan with respect to such Award
shall, to the extent of any such forfeiture, termination or expiration, again be available for
making Awards under the Plan in the same amount as such shares were counted against the limit set
forth in Section 4.1. The number of shares of Stock available for issuance under the Plan shall
not be increased by (i) any shares of Stock tendered or withheld or Award surrendered in connection
with the purchase of shares of Stock upon exercise of an Option as described in Section 13, (ii)
any shares of Stock deducted or delivered from an Award payment in connection with the Company’s
tax withholding obligations as described in Section 18.3, or (iii) any shares of Stock repurchased
by the Company using proceeds from the purchase of shares of Stock upon exercise of an Option as
described in Section 13.



5. EFFECTIVE DATE, DURATION AND AMENDMENTS




     5.1. Effective Date



     The Plan shall be effective as of the Effective Date, subject to approval of the Plan by the
Company’s stockholders within one year of the Effective Date. Upon approval of the Plan by the
stockholders of the Company as set forth above, all Awards made under the Plan on or after the
Effective Date shall be fully effective as if the stockholders of the Company had approved the Plan
on the Effective Date. If the stockholders fail to approve the Plan within one year of the
Effective Date, any Awards made hereunder shall be null and void and of no effect. Following the
date the Plan is approved by the Company’s stockholders, no awards will be made under the Prior
Plan.



     5.2. Term



     The Plan shall terminate automatically ten (10) years after the Effective Date and may be
terminated on any earlier date as provided in Section 5.3.



     5.3. Amendment and Termination of the Plan



     The Board may, at any time and from time to time, amend, suspend, or terminate the Plan as to
any shares of Stock as to which Awards have not been made; provided however, that the Company shall
submit for stockholder approval any amendment required to be submitted for stockholder approval by
Applicable Law or applicable stock exchange listing requirements, or that would otherwise
materially: (i) increase the benefits accrued to Participants under the Plan, (ii) increase the
numbers of securities which may be issued under the Plan (other than an increase pursuant to the
adjustment provisions of Section 17), or (iii) modify the requirements for participation in the
Plan. No amendment, suspension, or
termination of the Plan shall, without the consent of the Grantee, impair rights or obligations
under any Award theretofore awarded under the Plan.



6. AWARD ELIGIBILITY AND LIMITATIONS




     6.1. Service Providers and Other Persons



- 9 -









 





     Subject to this Section 6, Awards may be made under the Plan to: (i) any Service Provider to
the Company or of any Affiliate, including any Service Provider who is an officer or director of
the Company, or of any Affiliate, as the Board shall determine and designate from time to time and
(ii) any other individual whose participation in the Plan is determined to be in the best interests
of the Company by the Board.



     6.2. Adjustments in Authorized Shares



     An eligible person may receive more than one Award, subject to such restrictions as are
provided herein. The Board shall have the right to substitute or assume Awards in connection with
mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code
applies. The number of shares of Stock reserved pursuant to Section 4 shall be increased by the
corresponding number of Substitute Awards.



     6.3. Limitation on Shares of Stock Subject to Awards and Cash Awards.



     During any time when the Company has a class of equity security registered under Section 12 of
the Exchange Act and the transition period under Treasury Reg. section 1.162-27(f)(2) has lapsed or
does not apply:



     (i) the maximum number of shares of Stock subject to Options or SARs that can be awarded under
the Plan to any person eligible for an Award under Section 6 hereof is four hundred thousand
(400,000) per calendar year;



     (ii) the maximum number of shares that can be awarded under the Plan, other than pursuant to
an Option or SARs, to any person eligible for an Award under Section 6 hereof is four hundred
thousand (400,000) per calendar year; and



     (iii) the maximum amount that may be earned as an Short-Term Incentive Award or other cash
Award in any calendar year by any one Grantee shall be four million dollars ($4,000,000) and the
maximum amount that may be earned as a Long-Term Incentive Award or other cash Award in respect of
a performance period by any one Grantee shall be seven millions dollars ($7,000,000).



     The preceding limitations in this Section 6.3 are subject to adjustment as provided in Section
17 hereof.



7. AWARD AGREEMENT




     Each Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in such form
or forms as the Board shall from time to time determine. Award Agreements granted from time to
time or at the same time need not contain similar provisions but shall be consistent with the terms
of the Plan. Each Award Agreement evidencing an Award of Options shall specify whether such
Options are intended to be Non-qualified Stock Options or Incentive Stock Options, and in the
absence of such specification such options shall be deemed Non-qualified Stock Options.



- 10 -









 





8. TERMS AND CONDITIONS OF OPTIONS




     8.1. Option Price



     The Option Price of each Option shall be fixed by the Board and stated in the Award Agreement
evidencing such Option. Except in the case of Substitute Awards, the Option Price of each Option
shall be at least the Fair Market Value on the Grant Date of a share of Stock; provided,
however, that in the event that a Grantee is a Ten Percent Stockholder, the Option Price of
an Option granted to such Grantee that is intended to be an Incentive Stock Option shall be not
less than 110 percent of the Fair Market Value of a share of Stock on the Grant Date. In no case
shall the Option Price of any Option be less than the par value of a share of Stock.



     8.2. Vesting



     Subject to Sections 8.3 and 17.3 hereof, each Option granted under the Plan shall become
exercisable at such times and under such conditions as shall be determined by the Board and stated
in the Award Agreement. For purposes of this Section 8.2, fractional numbers of shares of Stock
subject to an Option shall be rounded down to the next nearest whole number.



     8.3. Term



     Each Option granted under the Plan shall terminate, and all rights to purchase shares of Stock
thereunder shall cease, upon the expiration of ten years from the date such Option is granted, or
under such circumstances and on such date prior thereto as is set forth in the Plan or as may be
fixed by the Board and stated in the Award Agreement relating to such Option; provided,
however, that in the event that the Grantee is a Ten Percent Stockholder, an Option granted
to such Grantee that is intended to be an Incentive Stock Option shall not be exercisable after the
expiration of five years from its Grant Date. If on the day preceding the date on which a
Grantee’s Options would otherwise terminate, the Fair Market Value of shares of Stock underlying a
Grantee’s Options is greater than the Option Price of such Options, the Company shall, prior to the
termination of such Options and without any action being taken on the part of the Grantee, consider
such Options to have been exercised by the Grantee. The Company shall deduct from the shares of
Stock deliverable to the Grantee upon such exercise the number of shares of Stock necessary to
satisfy payment of the Option Price and all withholding obligations.



     8.4. Termination of Service



     Unless otherwise stated in the applicable Award Agreement, the Grantee shall have the right to
exercise the Option for ninety (90) days following termination of the Grantee’s Service, unless
terminated for Cause, in which case there shall be no post-termination exercise period. Unless
otherwise stated in the applicable Award Agreement, the Option shall remain exercisable for twelve
(12) months after termination of the Grantee’s Service due to death or Disability. The
post-termination provisions shall be determined in the sole discretion of the Board, need not be
uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of Service.



     8.5. Limitations on Exercise of Option



     Notwithstanding any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the stockholders of the Company as
provided herein or after the occurrence of an event referred to in Section 17 hereof which results
in termination of the Option.



- 11 -









 





     8.6. Method of Exercise



     Subject to the terms of Section 13 and Section 18.3, an Option that is exercisable may be
exercised by the Grantee’s delivery to the Company of notice of exercise on any business day, at
the Company’s principal office, on the form specified by the Company. Such notice shall specify
the number of shares of Stock with respect to which the Option is being exercised and shall be
accompanied by payment in full of the Option Price of the shares for which the Option is being
exercised plus the amount (if any) of federal and/or other taxes which the Company may, in its
judgment, be required to withhold with respect to an Award.



     8.7. Rights of Holders of Options



     Unless otherwise stated in the applicable Award Agreement, an individual holding or exercising
an Option shall have none of the rights of a stockholder (for example, the right to receive cash or
dividend payments or distributions attributable to the subject shares of Stock or to direct the
voting of the subject shares of Stock) until the shares of Stock covered thereby are fully paid and
issued to him. Except as provided in Section 17 hereof, no adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date of such issuance.



     8.8. Delivery of Stock Certificates



     Promptly after the exercise of an Option by a Grantee and the payment in full of the Option
Price, such Grantee shall be entitled to the issuance of a stock certificate or certificates
evidencing his or her ownership of the shares of Stock subject to the Option.



     8.9. Transferability of Options



     Except as provided in Section 8.10, during the lifetime of a Grantee, only the Grantee (or, in
the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise an Option. Except as provided in Section 8.10, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by will or the laws of descent and
distribution.



     8.10. Family Transfers



     If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or
part of an Option which is not an Incentive Stock Option to any Family Member. For the purpose of
this Section 8.10, a “not for value” transfer is a transfer which is (i) a gift, (ii) a transfer
under a domestic relations order in settlement of marital property rights; or (iii) unless
applicable law does not permit such transfers, a transfer to an entity in which more than fifty
percent of the voting interests are owned by Family Members (or the Grantee) in exchange for an
interest in that entity. Following a transfer under this Section 8.10, any such Option shall
continue to be subject to the same terms and conditions as were applicable immediately prior to
transfer, and shares of Stock acquired pursuant to the Option shall be subject to the same
restrictions on transfer of shares as would have applied to the Grantee. Subsequent transfers of
transferred Options are prohibited except to Family Members of the original Grantee in
accordance with this Section 8.10 or by will or the laws of descent and distribution. The events
of termination of Service of Section 8.4 hereof shall continue to be applied with respect to the
original Grantee, following which the Option shall be exercisable by the transferee only to the
extent, and for the periods specified, in Section 8.4.



- 12 -









 





     8.11. Limitations on Incentive Stock Options



     An Option shall constitute an Incentive Stock Option only (i) if the Grantee of such Option is
an employee of the Company or any Subsidiary of the Company; (ii) to the extent specifically
provided in the related Award Agreement; and (iii) to the extent that the aggregate Fair Market
Value (determined at the time the Option is granted) of the shares of Stock with respect to which
all Incentive Stock Options held by such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the Grantee’s employer and its Affiliates)
does not exceed $100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.



     8.12. Notice of Disqualifying Disposition



     If any Grantee shall make any disposition of shares of Stock issued pursuant to the exercise
of an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to
certain disqualifying dispositions), such Grantee shall notify the Company of such disposition
within ten (10) days thereof.



9. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS




     9.1. Right to Payment and Grant Price



     A SAR shall confer on the Grantee to whom it is granted a right to receive, upon exercise
thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over
(B) the grant price of the SAR as determined by the Board. The Award Agreement for a SAR shall
specify the grant price of the SAR, which shall be at least the Fair Market Value of a share of
Stock on the date of grant. SARs may be granted in conjunction with all or part of an Option
granted under the Plan or at any subsequent time during the term of such Option, in conjunction
with all or part of any other Award or without regard to any Option or other Award; provided that a
SAR that is granted subsequent to the Grant Date of a related Option must have a SAR Price that is
no less than the Fair Market Value of one share of Stock on the SAR Grant Date.



     9.2. Other Terms



     The Board shall determine at the date of grant or thereafter, the time or times at which and
the circumstances under which a SAR may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements), the time or times at which
SARs shall cease to be or become exercisable following termination of Service or upon other
conditions, the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be delivered to
Grantees, whether or not a SAR shall be in tandem or in combination with any other Award, and any
other terms and conditions of any SAR.



     9.3. Term



     Each SAR granted under the Plan shall terminate, and all rights thereunder shall cease, upon
the expiration of ten years from the date such SAR is granted, or under such circumstances and on
such date
prior thereto as is set forth in the Plan or as may be fixed by the Board and stated in the Award
Agreement relating to such SAR.



- 13 -









 





     9.4. Transferability of SARS



     Except as provided in Section 9.5, during the lifetime of a Grantee, only the Grantee (or, in
the event of legal incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise a SAR. Except as provided in Section 9.5, no SAR shall be assignable or transferable by
the Grantee to whom it is granted, other than by will or the laws of descent and distribution.



     9.5. Family Transfers



     If authorized in the applicable Award Agreement, a Grantee may transfer, not for value, all or
part of a SAR to any Family Member. For the purpose of this Section 9.5, a “not for value”
transfer is a transfer which is (i) a gift, (ii) a transfer under a domestic relations order in
settlement of marital property rights; or (iii) unless applicable law does not permit such
transfers, a transfer to an entity in which more than fifty percent of the voting interests are
owned by Family Members (or the Grantee) in exchange for an interest in that entity. Following a
transfer under this Section 9.5, any such SAR shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, and shares of Stock acquired pursuant
to a SAR shall be subject to the same restrictions on transfer or shares as would have applied to
the Grantee. Subsequent transfers of transferred SARs are prohibited except to Family Members of
the original Grantee in accordance with this Section 9.5 or by will or the laws of descent and
distribution.



10. TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS




     10.1. Grant of Restricted Stock or Stock Units



     Awards of Restricted Stock or Stock Units may be made for no consideration (other than par
value of the shares which is deemed paid by Services already rendered).



     10.2. Restrictions



     At the time a grant of Restricted Stock or Stock Units is made, the Board may, in its sole
discretion, establish a period of time (a “restricted period”) applicable to such
Restricted Stock or Stock Units. Each Award of Restricted Stock or Stock Units may be subject to a
different restricted period. The Board may in its sole discretion, at the time a grant of
Restricted Stock or Stock Units is made, prescribe restrictions in addition to or other than the
expiration of the restricted period, including the satisfaction of corporate or individual
performance objectives, which may be applicable to all or any portion of the Restricted Stock or
Stock Units. Notwithstanding the foregoing, (i) Restricted Stock and Stock Units that vest solely
by the passage of time shall not vest in full in less than three (3) years from the grant date
(provided, however, Restricted Stock and Stock Units may vest pro-rata during that period and
vesting may accelerate on death, Disability or a Corporate Transaction), and (ii) Restricted Stock
and Stock Units for which vesting may be accelerated by achieving performance targets shall not
vest in full in less than one (1) year from the grant date (provided, however, vesting may
accelerate on death, Disability or a Corporate Transaction); provided, however, up to ten percent
of the shares reserved for issuance under this Plan may be granted pursuant to this Section 10 or
the other provisions of this Plan without being subject to the foregoing restrictions. Neither
Restricted Stock nor Stock Units may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the restricted period or prior to the satisfaction of any other
restrictions prescribed by the Board with respect to such Restricted Stock or Stock Units.



- 14 -









 





     10.3. Restricted Stock Certificates



     The Company shall issue, in the name of each Grantee to whom Restricted Stock has been
granted, stock certificates representing the total number of shares of Restricted Stock granted to
the Grantee, as soon as reasonably practicable after the Grant Date. The Board may provide in an
Award Agreement that either (i) the Secretary of the Company shall hold such certificates for the
Grantee’s benefit until such time as the Restricted Stock is forfeited to the Company or the
restrictions lapse, or (ii) such certificates shall be delivered to the Grantee, provided,
however, that such certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and makes appropriate reference to the restrictions
imposed under the Plan and the Award Agreement.



     10.4. Rights of Holders of Restricted Stock



     Unless the Board otherwise provides in an Award Agreement, holders of Restricted Stock shall
have the right to vote such Stock and the right to receive any dividends declared or paid with
respect to such Stock. The Board may provide that any dividends paid on Restricted Stock must be
reinvested in shares of Stock, which may or may not be subject to the same vesting conditions and
restrictions applicable to such Restricted Stock. All distributions, if any, received by a Grantee
with respect to Restricted Stock as a result of any stock split, stock dividend, combination of
shares, or other similar transaction shall be subject to the restrictions applicable to the
original Grant.



     10.5. Rights of Holders of Stock Units



          10.5.1. Voting and Dividend Rights




     Holders of Stock Units shall have no rights as stockholders of the Company. The Board may
provide in an Award Agreement evidencing a grant of Stock Units that the holder of such Stock Units
shall be entitled to receive, upon the Company’s payment of a cash dividend on its outstanding
Stock, a cash payment for each Stock Unit held equal to the per-share dividend paid on the Stock.
Such Award Agreement may also provide that such cash payment will be deemed reinvested in
additional Stock Units at a price per unit equal to the Fair Market Value of a share of Stock on
the date that such dividend is paid.



          10.5.2. Creditor’s Rights




     A holder of Stock Units shall have no rights other than those of a general creditor of the
Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.



     10.6. Termination of Service



     Unless the Board otherwise provides in an Award Agreement or in writing after the Award
Agreement is issued, upon the termination of a Grantee’s Service, any Restricted Stock or Stock
Units held by such Grantee that have not vested, or with respect to which all applicable
restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon
forfeiture of Restricted Stock or Stock Units, the Grantee shall have no further rights with
respect to such Award, including but not limited to any right to vote Restricted Stock or any right
to receive dividends with respect to shares of Restricted Stock or Stock Units. Notwithstanding the
terms of this Section 10.6, but subject to the ten percent limitation set forth in Section 10.2,
the Board may not waive restrictions or conditions applicable to Restricted Stock or Stock Units
except in the case of a Grantee’s death, Disability or a Corporate Transaction or as specified in
Section 18.3. If the Board waives restrictions or conditions applicable to Restricted Stock or
Stock Units, the shares subject to



- 15 -









 




such Restricted Stock or Stock Units shall be deducted from the ten percent
limitation set forth in Section 10.2.




     10.7. Purchase of Restricted Stock and Shares Subject to Stock Units



     The Grantee shall be required, to the extent required by applicable law, to purchase the
Restricted Stock or shares of Stock subject to vested Stock Units from the Company at a Purchase
Price equal to the greater of (i) the aggregate par value of the shares of Stock represented by
such Restricted Stock or Stock Units and (ii) the Purchase Price, if any, specified in the Award
Agreement relating to such Restricted Stock or Stock Units. The Purchase Price shall be payable in
a form described in Section 13 or, in the discretion of the Board, in consideration for past or
future Services rendered to the Company or an Affiliate.



     10.8. Delivery of Stock



     Upon the expiration or termination of any restricted period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to shares of Restricted Stock or
Stock Units settled in Stock shall lapse, and, unless otherwise provided in the Award Agreement, a
stock certificate for such shares shall be delivered, free of all such restrictions, to the Grantee
or the Grantee’s beneficiary or estate, as the case may be. Neither the Grantee, nor the Grantee’s
beneficiary or estate, shall have any further rights with regard to a Stock Unit once the share of
Stock represented by the Stock Unit has been delivered.



11. TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS




     The Board may, in its sole discretion, grant (or sell at par value or such other higher
purchase price determined by the Board) an Unrestricted Stock Award to any Grantee pursuant to
which such Grantee may receive shares of Stock free of any restrictions (“Unrestricted
Stock”) under the Plan; provided, however, that in the aggregate, no more than ten percent of
the shares reserved for issuance under this Plan may be granted pursuant to this Section 11 and the
exceptions set forth in Section 10.2 and Section 10.6. Unrestricted Stock Awards may be granted or
sold as described in the preceding sentence in respect of past services and other valid
consideration, or in lieu of, or in addition to, any cash compensation due to such Grantee.



12. TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS




     12.1. Dividend Equivalent Rights



     A Dividend Equivalent Right is an Award entitling the recipient to receive credits based on
cash distributions that would have been paid on the shares of Stock specified in the Dividend
Equivalent Right (or other award to which it relates) if such shares had been issued to and held by
the recipient. A Dividend Equivalent Right may be granted hereunder to any Grantee. The terms and
conditions of Dividend Equivalent Rights shall be specified in the grant. Dividend equivalents
credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be
reinvested in additional shares of Stock, which may thereafter accrue additional equivalents. Any
such reinvestment shall be at Fair Market Value on the date of reinvestment. Dividend Equivalent
Rights may be settled in cash or Stock or a combination thereof, in a single installment or
installments, all determined in the sole discretion of the Board. A Dividend Equivalent Right
granted as a component of another Award may provide that such Dividend Equivalent Right shall be
settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other award,
and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same
conditions as such other award. A Dividend Equivalent Right



- 16 -









 




granted as a component of another Award may also contain terms and conditions different from such
other award. Notwithstanding the foregoing, a Dividend Equivalent Right granted as a component of a
Performance Share or Performance Unit award shall not settle prior to payment of such Performance
Share or Performance Unit award and shall expire or be forfeited and annulled under the same
conditions as such Performance Share or Performance Unit award.




     12.2. Termination of Service



     Except as may otherwise be provided by the Board either in the Award Agreement or in writing
after the Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights or
interest equivalents shall automatically terminate upon the Grantee’s termination of Service for
any reason.



13. PAYMENT




     13.1. General Rule.



     Payment of the Option Price for the shares purchased pursuant to the exercise of an
Option or the Purchase Price for Restricted Stock shall be made in cash or in cash equivalents
acceptable to the Company.



     13.2. Surrender of Stock.



     To the extent the Award Agreement so provides, payment of the Option Price for shares
purchased pursuant to the exercise of an Option or the Purchase Price for Restricted Stock may be
made all or in part through the tender or attestation to the Company of shares of Stock, which
shall be valued, for purposes of determining the extent to which the Option Price or Purchase Price
has been paid thereby, at their Fair Market Value on the date of exercise or surrender.



     13.3. Cashless Exercise.



     With respect to an Option only (and not with respect to Restricted Stock), to the extent
permitted by law and to the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to the exercise of an Option may be made all or in part by delivery (on a
form acceptable to the Board) of an irrevocable direction to a licensed securities broker
acceptable to the Company to sell shares of Stock and to deliver all or part of the sales proceeds
to the Company in payment of the Option Price and any withholding taxes described in Section 18.3,
or, with the consent of the Company, by issuing the number of shares equal in value to the
difference between the Option Price and the Fair Market Value of the shares subject to the portion
of the Option being exercised.



     13.4. Other Forms of Payment.



     To the extent the Award Agreement so provides and/or unless otherwise specified in an
Award Agreement, payment of the Option Price for shares purchased pursuant to exercise of an Option
or the Purchase Price for Restricted Stock may be made in any other form that is consistent with
applicable laws, regulations and rules, including, without limitation, Service.



- 17 -









 






			
	14.	 	TERMS AND CONDITIONS OF PERFORMANCE SHARES, PERFORMANCE UNITS, LONG-TERM INCENTIVE AWARDS AND
SHORT-TERM INCENTIVE AWARDS





     14.1. Grant of Performance Units/Performance Shares.



     Subject to the terms and provisions of this Plan, the Board, at any time and from time to
time, may grant Performance Units and/or Performance Shares to Grantees in such amounts and upon
such terms as the Committee shall determine.



     14.2. Value of Performance Units/Performance Shares.



     Each Performance Unit shall have an initial value that is established by the Board at the
time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Board shall set performance goals in its discretion which,
depending on the extent to which they are met, will determine the value and/or number of
Performance Units/Performance Shares that will be paid out to the Grantee.



     14.3. Earning of Performance Units/Performance Shares.



     Subject to the terms of this Plan, after the applicable Performance Period has ended, the
holder of Performance Units/Performance Shares shall be entitled to receive payout on the value and
number of Performance Units/Performance Shares earned by the Grantee over the Performance Period,
to be determined as a function of the extent to which the corresponding performance goals have been
achieved.



     14.4. Form and Timing of Payment of Performance Units/Performance Shares.



     Payment of earned Performance Units/Performance Shares shall be as determined by the
Board and as evidenced in the Award Agreement. Subject to the terms of this Plan, the Board, in its
sole discretion, may pay earned Performance Units/Performance Shares in the form of cash or in
shares (or in a combination thereof) equal to the value of the earned Performance Units/Performance
Shares at the close of the applicable Performance Period, or as soon as practicable after the end
of the Performance Period. Any shares of Stock may be granted subject to any restrictions deemed
appropriate by the Committee. The determination of the Committee with respect to the form of
payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the
Award.



     14.5. Performance Conditions.



     The right of a Grantee to exercise or receive a grant or settlement of any Award, and the
timing thereof, may be subject to such performance conditions as may be specified by the Board.
The Board may use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions. If and to the extent required under Code
Section 162(m), any power or authority relating to an Award intended to qualify under Code Section
162(m), shall be exercised by the Committee and not the Board.



- 18 -









 






	 	14.6.	 	Long-Term Incentive Awards or Short-Term Incentive Awards Granted to Designated
Covered Employees.





     If and to the extent that the Board determines that an Award to be granted to a Grantee
who is designated by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Award shall be contingent upon achievement of pre-established performance goals
and other terms set forth in this Section 14.6.




	 	14.6.1.	 	Performance Goals Generally.





          The performance goals for such Awards shall consist of one or more business criteria and
a targeted level or levels of performance with respect to each of such criteria, as specified by
the Committee consistent with this Section 14.6. Performance goals shall be objective 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.” The Committee may determine that
such Awards shall be granted, exercised and/or settled upon achievement of any one performance goal
or that two or more of the performance goals must be achieved as a condition to grant, exercise
and/or settlement of such Awards. Performance goals may differ for Awards granted to any one
Grantee or to different Grantees.





	 	14.6.2.	 	Timing For Establishing Performance Goals.





          Performance goals shall be established not later than 90 days after the beginning of any
performance period applicable to such Awards, or at such other date as may be required or permitted
for “performance-based compensation” under Code Section 162(m).





	 	14.6.3.	 	Settlement of Awards; Other Terms.





          Settlement of such Awards shall be in cash, Stock, other Awards or other property, in the
discretion of the Committee. The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Awards. The Committee shall specify the
circumstances in which such Long-Term or Short-Term Incentive Awards shall be paid or forfeited in
the event of termination of Service by the Grantee prior to the end of a performance period or
settlement of Awards.





	 	14.6.4.	 	Performance Measures.





          The performance goals upon which the payment or vesting of an Award to a Covered
Employee that is intended to qualify as Performance-Based Compensation shall be limited to the
following Performance Measures:





(a) net earnings or net income;




(b) operating earnings;




(c) pretax earnings;




(d) earnings per share;



- 19 -









 






(e) share price, including growth measures and total stockholder return;




(f) earnings before interest and taxes;




(g) earnings before interest, taxes, depreciation and/or amortization;




(h) sales or revenue growth, whether in general, by type of product or service, or
by type of customer;




(i) gross or operating margins;




(j) return measures, including return on assets, capital, investment, equity, sales
or revenue;




(k) cash flow, including operating cash flow, free cash flow, cash flow return on
equity and cash flow return on investment;




(l) productivity ratios;




(m) expense targets;




(n) market share;




(o) financial ratios as provided in credit agreements of the Company and its
subsidiaries;




(p) working capital targets;




(q) completion of acquisitions of business or companies.




(r) completion of divestitures and asset sales; and




(s) any combination of any of the foregoing business criteria.



          Any Performance Measure(s) may be used to measure the performance of the Company, Subsidiary,
and/or Affiliate as a whole or any business unit of the Company, Subsidiary, and/or Affiliate or
any combination thereof, as the Committee may deem appropriate, or any of the above Performance
Measures as compared to the performance of a group of comparator companies, or published or special
index that the Committee, in its sole discretion, deems appropriate, or the Company may select
Performance Measure (f) above as compared to various stock market indices. The Committee also has
the
authority to provide for accelerated vesting of any Award based on the achievement of
performance goals pursuant to the Performance Measures specified in this Section 14.





- 20 -









 









	 	14.6.5.	 	Evaluation of Performance.





          The Committee may provide in any such Award that any evaluation of performance may
include or exclude any of the following events that occur during a Performance Period: (a) asset
write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax
laws, accounting principles, or other laws or provisions affecting reported results; (d) any
reorganization and restructuring programs; (e) 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 to
shareholders for the applicable year; (f) acquisitions or divestitures; (g) foreign exchange gains
and losses; (h) award expense related to the restricted stock units awarded in December 2008
pursuant to the Prior Plan; (i) tax valuation allowance reversals; (j) impairment expense; and (k)
environmental expense. To the extent such inclusions or exclusions affect Awards to Covered
Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m)
for deductibility.





	 	14.6.6.	 	Adjustment of Performance-Based Compensation.





          Awards that are intended to qualify as Performance-Based Compensation may not be adjusted
upward. The Board shall retain the discretion to adjust such Awards downward, either on a formula
or discretionary basis, or any combination as the Committee determines.





	 	14.6.7.	 	Board Discretion.





          In the event that applicable tax and/or securities laws change to permit Board discretion
to alter the governing Performance Measures without obtaining shareholder approval of such changes,
the Board shall have sole discretion to make such changes without obtaining shareholder approval
provided the exercise of such discretion does not violate Code Section 409A. In addition, in the
event that the Committee determines that it is advisable to grant Awards that shall not qualify as
Performance-Based Compensation, the Committee may make such grants without satisfying the
requirements of Code Section 162(m) and base vesting on Performance Measures other than those set
forth in Section 14.6.4.





	 	14.7.	 	Status of Section Awards Under Code Section 162(m).




It is the intent of the Company that Awards under Section 14.6 hereof granted to persons who
are designated by the Committee as likely to be Covered Employees within the meaning of Code
Section 162(m) and regulations thereunder shall, if so designated by the Committee, constitute
“qualified performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of Section 14.6, 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 Grantee 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, at the time of grant of an Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of the Plan or any
agreement relating to such Awards 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.




15. PARACHUTE LIMITATIONS




     Notwithstanding any other provision of this Plan or of any other agreement, contract, or
understanding heretofore or hereafter entered into by a U.S. Grantee with the Company or any
Affiliate,



- 21 -









 







except an agreement, contract, or understanding that expressly addresses Section 280G or
Section 4999 of the Code (an “Other Agreement”), and notwithstanding any formal or informal
plan or other arrangement for the direct or indirect provision of compensation to the U.S. Grantee
(including groups or classes of U.S. Grantees or beneficiaries of which the U.S. Grantee is a
member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit
to or for the U.S. Grantee (a “Benefit Arrangement”), if the U.S. Grantee is a
“disqualified individual,” as defined in Section 280G(c) of the Code, any Option, Restricted Stock,
Stock Unit, Performance Share or Performance Unit held by that U.S. Grantee and any right to
receive any payment or other benefit under this Plan shall not become exercisable or vested (i) to
the extent that such right to exercise, vesting, payment, or benefit, taking into account all other
rights, payments, or benefits to or for the U.S. Grantee under this Plan, all Other Agreements, and
all Benefit Arrangements, would cause any payment or benefit to the U.S. Grantee under this Plan to
be considered a “parachute payment” within the meaning of Section 280G(b)(2) of the Code as then in
effect (a “Parachute Payment”) and (ii) if, as a result of receiving a Parachute
Payment, the aggregate after-tax amounts received by the U.S. Grantee from the Company under this
Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax
amount that could be received by the U.S. Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right to exercise,
vesting, payment, or benefit under this Plan, in conjunction with all other rights, payments, or
benefits to or for the U.S. Grantee under any Other Agreement or any Benefit Arrangement would
cause the U.S. Grantee to be considered to have received a Parachute Payment under this Plan that
would have the effect of decreasing the after-tax amount received by the U.S. Grantee as described
in clause (ii) of the preceding sentence, then the U.S. Grantee shall have the right, in the U.S.
Grantee’s sole discretion, to designate those rights, payments, or benefits under this Plan, any
Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid
having the payment or benefit to the U.S. Grantee under this Plan be deemed to be a Parachute
Payment; provided, however, that in order to comply with Code Section 409A, the reduction or
elimination will be performed in the order in which each dollar of value subject to an Award
reduces the Parachute Payment to the greatest extent.



16. REQUIREMENTS OF LAW




     16.1. General



     The Company shall not be required to sell or issue any shares of Stock under any Award if the
sale or issuance of such shares would constitute a violation by the Grantee, any other individual
exercising an Option, or the Company of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or regulations. If at
any time the Company shall determine, in its discretion, that the listing, registration or
qualification of any shares subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary or desirable as a condition of, or in connection with,
the issuance or purchase of shares hereunder, no shares of Stock may be issued or sold to the
Grantee or any other individual exercising an Option pursuant to such Award unless such listing,
registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company, and any delay caused thereby shall in no way affect the
date of termination of the Award. Without limiting the generality of the foregoing, in connection
with the Securities Act, upon the exercise of any Option or any SAR that may be settled in shares
of Stock or the delivery of any shares of Stock underlying an Award, unless a registration
statement under such Act is in effect with respect to the shares of Stock covered by such Award,
the Company shall not be required to sell or issue such shares unless the Board has received
evidence satisfactory to it that the Grantee or any other
individual exercising an Option may acquire such shares pursuant to an exemption from registration
under the Securities Act. Any determination in this connection by the Board shall be final,
binding, and conclusive. The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act. The Company shall not be obligated to
take any affirmative action in order to cause the exercise of an Option or a SAR or the issuance of
shares of Stock pursuant to the Plan to comply with any



- 22 -









 




law or regulation of any governmental
authority. As to any jurisdiction that expressly imposes the requirement that an Option (or SAR
that may be settled in shares of Stock) shall not be exercisable until the shares of Stock covered
by such Option (or SAR) are registered or are exempt from registration, the exercise of such Option
(or SAR) under circumstances in which the laws of such jurisdiction apply shall be deemed
conditioned upon the effectiveness of such registration or the availability of such an exemption.




     16.2. Rule 16b-3



     During any time when the Company has a class of equity security registered under Section 12 of
the Exchange Act, it is the intent of the Company that Awards pursuant to the Plan and the exercise
of Options and SARs granted hereunder will qualify for the exemption provided by Rule 16b-3 under
the Exchange Act. To the extent that any provision of the Plan or action by the Board does not
comply with the requirements of Rule 16b-3, it shall be deemed inoperative to the extent permitted
by law and deemed advisable by the Board, and shall not affect the validity of the Plan. In the
event that Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify this
Plan in any respect necessary to satisfy the requirements of, or to take advantage of any features
of, the revised exemption or its replacement.



17. EFFECT OF CHANGES IN CAPITALIZATION





	 	17.1.	 	Changes in Stock





     If the number of outstanding shares of Stock is increased or decreased or the shares of Stock
are changed into or exchanged for a different number or kind of shares or other securities of the
Company on account of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares effected without receipt of consideration by
the Company occurring after the Effective Date, the number and kinds of shares for which grants of
Options and other Awards may be made under the Plan, shall be adjusted proportionately and
accordingly by the Company. In addition, the number and kind of shares for which Awards are
outstanding shall be adjusted proportionately and accordingly so that the proportionate interest of
the Grantee immediately following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options or SARs shall not change
the aggregate Option Price or SAR Exercise Price payable with respect to shares that are subject to
the unexercised portion of an outstanding Option or SAR, as applicable, but shall include a
corresponding proportionate adjustment in the Option Price or SAR Exercise Price per share. The
conversion of any convertible securities of the Company shall not be treated as an increase in
shares effected without receipt of consideration. Notwithstanding the foregoing, in the event of
any distribution to the Company’s stockholders of securities of any other entity or other assets
(including an extraordinary dividend but excluding a non-extraordinary dividend of the Company)
without receipt of consideration by the Company, the Company shall, in such manner as the Company
deems appropriate, adjust (i) the number and kind of shares subject to outstanding Awards and/or
(ii) the exercise price of outstanding Options and Stock Appreciation Rights to reflect such
distribution.




	 	17.2.	 	Reorganization in Which the Company Is the Surviving Entity Which does not
Constitute a Corporate Transaction





     Subject to Section 17.3 hereof, if the Company shall be the surviving entity in any
reorganization, merger, or consolidation of the Company with one or more other entities which does
not constitute a Corporate Transaction, any Option or SAR theretofore granted pursuant to the Plan
shall pertain to and apply to the securities to which a holder of the number of shares of Stock
subject to such Option or SAR would have been entitled immediately following such reorganization,
merger, or consolidation, with a corresponding proportionate adjustment of the Option Price or SAR
Exercise Price per share so that the



- 23 -









 







aggregate Option Price or SAR Exercise Price thereafter shall
be the same as the aggregate Option Price or SAR Exercise Price of the shares remaining subject to
the Option or SAR immediately prior to such reorganization, merger, or consolidation. Subject to
any contrary language in an Award Agreement evidencing an Award, any restrictions applicable to
such Award shall apply as well to any replacement shares received by the Grantee as a result of the
reorganization, merger or consolidation. In the event of a transaction described in this Section
17.2, Stock Units shall be adjusted so as to apply to the securities that a holder of the number of
shares of Stock subject to the Stock Units would have been entitled to receive immediately
following such transaction.



     17.3. Corporate Transaction in which Awards are not Assumed



          Upon the occurrence of a Corporate Transaction in which outstanding Options, SARs, Stock Units
and Restricted Stock are not being assumed or continued:




          (i) all outstanding shares of Restricted Stock shall be deemed to have vested, and all Stock
Units shall be deemed to have vested and the shares of Stock subject thereto shall be delivered,
immediately prior to the occurrence of such Corporate Transaction, and




          (ii) either of the following two actions shall be taken:




               (A) fifteen days prior to the scheduled consummation of a Corporate Transaction, all Options
and SARs outstanding hereunder shall become immediately exercisable and shall remain exercisable
for a period of fifteen days, or



               (B) the Board may elect, in its sole discretion, to cancel any outstanding Awards of Options,
Restricted Stock, Stock Units, and/or SARs and pay or deliver, or cause to be paid or delivered, to
the holder thereof an amount in cash or securities having a value (as determined by the Board
acting in good faith), in the case of Restricted Stock or Stock Units, equal to the formula or
fixed price per share paid to holders of shares of Stock and, in the case of Options or SARs, equal
to the product of the number of shares of Stock subject to the Option or SAR (the “Award
Shares”) multiplied by the amount, if any, by which (I) the formula or fixed price per share
paid to holders of shares of Stock pursuant to such transaction exceeds (II) the Option Price or
SAR Exercise Price applicable to such Award Shares.



          (iii) Long-Term Incentive Awards shall be treated as though target performance has been
achieved and will be paid in cash or converted into Unrestricted Stock.




          With respect to the Company’s establishment of an exercise window, (i) any exercise of an
Option or SAR during such fifteen-day period shall be conditioned upon the consummation of the
event and shall be effective only immediately before the consummation of the event, and (ii) upon
consummation of any Corporate Transaction, the Plan and all outstanding but unexercised Options and
SARs shall terminate.
The Board shall send notice of an event that will result in such a termination to all individuals
who hold Options and SARs not later than the time at which the Company gives notice thereof to its
stockholders.




     17.4. Corporation Transaction in which Awards are Assumed



     The Plan, Options, SARs, Stock Units and Restricted Stock theretofore granted shall continue
in the manner and under the terms so provided in the event of any Corporate Transaction to the
extent that provision is made in writing in connection with such Corporate Transaction for the
assumption or continuation of the Options, SARs, Stock Units and Restricted Stock theretofore
granted, or for the substitution for such Options, SARs, Stock Units and Restricted Stock for new
common stock options and stock appreciation rights and new common stock units and restricted stock
relating to the stock of a



- 24 -









 







successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number of shares (disregarding any consideration that is not common stock)
and option and stock appreciation right exercise prices. In the event a Grantee’s Award is
assumed, continued or substituted upon the consummation of any Corporate Transaction and his
employment is terminated without Cause within one year following the consummation of such Corporate
Transaction, the Grantee’s Award will be fully vested and may be exercised in full, to the extent
applicable, beginning on the date of such termination and for the one-year period immediately
following such termination or for such longer period as the Committee shall determine.



     17.5. Adjustments



     Adjustments under this Section 17 related to shares of Stock or securities of the Company
shall be made by the Board, whose determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share. The Board shall determine the effect of a
Corporate Transaction upon Awards other than Options, SARs, Stock Units and Restricted Stock, and
such effect shall be set forth in the appropriate Award Agreement. The Board may provide in the
Award Agreements at the time of grant, or any time thereafter with the consent of the Grantee, for
different provisions to apply to an Award in place of those described in Sections 17.1, 17.2, 17.3
and 17.4. This Section 17.5 does not limit the Company’s ability to provide for alternative
treatment of Awards outstanding under the Plan in the event of change of control events that are
not Corporate Transactions.



     17.6. No Limitations on Company



     The making of Awards pursuant to the Plan shall not affect or limit in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.



18. GENERAL PROVISIONS




     18.1. Disclaimer of Rights



     No provision in the Plan or in any Award or Award Agreement shall be construed to confer upon
any individual the right to remain in the employ or service of the Company or any Affiliate, or to
interfere in any way with any contractual or other right or authority of the Company either to
increase or decrease the compensation or other payments to any individual at any time, or to
terminate any employment or other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the contrary, unless otherwise stated
in the applicable Award Agreement, no Award granted
under the Plan shall be affected by any change of duties or position of the Grantee, so long as
such Grantee continues to be a director, officer, consultant or employee of the Company or an
Affiliate. The obligation of the Company to pay any benefits pursuant to this Plan shall be
interpreted as a contractual obligation to pay only those amounts described herein, in the manner
and under the conditions prescribed herein. The Plan shall in no way be interpreted to require the
Company to transfer any amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.



18.2. Nonexclusivity of the Plan




     Neither the adoption of the Plan nor the submission of the Plan to the stockholders of the
Company for approval shall be construed as creating any limitations upon the right and authority of
the Board to adopt



- 25 -









 







such other incentive compensation arrangements (which arrangements may be
applicable either generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than under the Plan.



     18.3. Withholding Taxes



     No shares of Stock shall be delivered under the Plan to any Grantee until such Grantee has
made arrangements acceptable to the Committee for the satisfaction of any income and employment tax
withholding obligations under Applicable Laws. The Company or any Affiliate shall have the
authority and the right to deduct or withhold, or require a Grantee to remit to the Company, an
amount sufficient to satisfy federal, state, local or foreign taxes (including the Grantee’s
payroll tax obligations) required or permitted by law to be withheld with respect to any taxable
event concerning a Grantee arising as a result of this Plan. The Committee may in its discretion
and in satisfaction of the foregoing requirement allow a Grantee to elect to have the Company
withhold shares of Stock otherwise issuable under an Award or allow the return of shares of Stock
having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other
provision of the Plan, the number of shares which may be withheld with respect to the issuance,
vesting, exercise or payment of any Award (or which may be repurchased from the Grantee of such
Award after such shares of Stock were acquired by the Grantee from the Company) in order to satisfy
the Grantee’s federal, state, local and foreign income and payroll tax liabilities with respect to
the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the
Committee, be limited to the number of shares of Stock which have a Fair Market Value on the date
of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum
statutory withholding rates for federal, state, local and foreign income tax and payroll tax
purposes that are applicable to such supplemental taxable income.



     18.4. Captions



     The use of captions in this Plan or any Award Agreement is for the convenience of reference
only and shall not affect the meaning of any provision of the Plan or such Award Agreement.



     18.5. Other Provisions



     Each Award granted under the Plan may contain such other terms and conditions not inconsistent
with the Plan as may be determined by the Board, in its sole discretion.



     18.6. Number and Gender



     With respect to words used in this Plan, the singular form shall include the plural form, the
masculine gender shall include the feminine gender, etc., as the context requires.



     18.7. Severability



     If any provision of the Plan or any Award Agreement shall be determined to be illegal or
unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof
shall be severable and enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.



- 26 -









 





     18.8. Governing Law



     The validity and construction of this Plan and the instruments evidencing the Awards hereunder
shall be governed by the laws of the state of Delaware, other than any conflicts or choice of law
rule or principle that might otherwise refer construction or interpretation of this Plan and the
instruments evidencing the Awards granted hereunder to the substantive laws of any other
jurisdiction.



     18.9. Code Section 409A



     The Board intends to comply with Code Section 409A, or an exemption to Code Section 409A, with
regard to Awards hereunder that constitute nonqualified deferred compensation within the meaning of
Code Section 409A. To the extent that the Board determines that a Grantee would be subject to the
additional 20% tax imposed on certain nonqualified deferred compensation plans pursuant to Code
Section 409A as a result of any provision of any Award granted under this Plan, such provision
shall be deemed amended to the minimum extent necessary to avoid application of such additional
tax. The nature of any such amendment shall be determined by the Board.



* * *






- 27 -









 








     To record adoption of the Plan by the Board as of February 26, 2010, and approval of the Plan
by the stockholders on May 6, 2010, the Company has caused its
authorized officer to execute the Plan.



FURNITURE BRANDS INTERNATIONAL, INC.




By:  Jon
D. Botsford




Title:  General
Counsel





- 28 -