EX-10.1  2004 INCENTIVE PLAN



 






Exhibit 10.1




TBC CORPORATION




2004 INCENTIVE PLAN










	Effective on Approval By the Board of Directors on March 26, 2004;
Approved By Stockholders on April 28, 2004














 










Table of Contents




	 	 	 	 	 
	Section
	 	Page

	1.  Purpose
	 	 	1	 
	2.  Definitions
	 	 	1	 
	3.  Maximum Incentive Awards; Adjustments
	 	 	3	 
	4.  Administration
	 	 	4	 
	5.  Eligibility and Incentive Awards
	 	 	5	 
	6.  Options
	 	 	6	 
	7.  Performance Awards
	 	 	9	 
	8.  Additional Provisions Applicable to Section 162(m) Performance Awards
	 	 	12	 
	9.  Non-Assignability
	 	 	13	 
	10. Amendment and Termination of Plan
	 	 	14	 
	11. Notices
	 	 	14	 
	12. Benefits of Plan
	 	 	14	 
	13. Stockholder Approval and Term of Plan
	 	 	15	 

















 






TBC CORPORATION




2004 INCENTIVE PLAN




Section 1. Purpose.




     The purposes of this 2004 Incentive Plan (the “Plan”) are (i) to establish
a means for providing incentives to key employees of the Company (as
hereinafter defined) upon whose judgment, initiative, and efforts the long-term
growth and success of the Company are largely dependent; (ii) to assist the
Company in attracting and retaining key employees of proven ability; and (iii)
to increase the identity of interests of the Company’s key employees with those
of its stockholders by providing such employees with the opportunity to acquire
stock of the Company.



Section 2. Definitions.




     “Annual Performance Award” means a right to receive cash contingent upon
the attainment of Performance Objectives determined by the Committee as more
fully set forth in Section 7 hereof.



     “Base Salary” means the base salary earned by a Participant from
employment with the Company at the beginning of the applicable Year or Cycle,
including amounts which a Participant has elected to defer or to contribute to
a flexible benefit, savings, or retirement plan established by the Company.



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



     “Change of Control” means any change in control of the Company of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”); provided that, without limitation, a Change of
Control shall be deemed to have occurred if (i) any “person” (as defined in
Sections 13(d) and 14(d)(2) of the Exchange Act), other than any entity then
controlled by the Company, is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company’s then outstanding securities; (ii) during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by the
Company’s stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period; (iii) the Company merges or consolidates with another
corporation or entity and the Company or an entity controlled by the Company
immediately prior to the merger or consolidation is not the surviving entity;
or (iv) a sale, lease, exchange or other disposition of all or substantially
all of the assets of the Company takes place.



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



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



     “Company” means TBC Corporation and, when used with reference to
employment of a Participant, includes any Subsidiary.



-1-









 





     “Cycle” means a period of two or more calendar years beginning on January
1 of the first year and ending on December 31 of the last year. Multiple
Cycles may be established and in effect at any given time under the Plan.



     “Employee” means any key employee of the Company or any Subsidiary.



     “Fair Market Value” means the closing price of a Share on the NASDAQ
National Market System on the date the value of a Share is to be determined or,
in the event the Shares are listed on any exchange, the closing price on such
exchange on the date the value of a Share is to be determined. If there are no
sales on any determination date, the Fair Market Value of a Share shall equal
the mean between the bid and asked prices for a Share on such date on the
NASDAQ National Market System or such exchange.



     “Incentive Award” means an Option, Annual Performance Award, or Long-Term
Performance Award granted under the Plan.



     “Incentive Stock Option” means an Option that is an Incentive Stock
Option, as defined in Section 422 of the Code.



     “Long-Term Performance Award” means a right to receive cash contingent
upon the attainment of Performance Objectives determined by the Committee as
more fully set forth in Section 7 hereof.



     “Maximum Annual Performance Award” for each Participant means 200% of that
Participant’s Targeted Annual Performance Award.



     “Maximum Performance Objective” for each Performance Measure upon which
any Annual Performance Award is based means the Performance at which 200% of
the Annual Performance Award attributable to that Performance Measure will be
earned by a Participant. No additional Annual Performance Award will be
payable under the Plan to any Participant for Performance above an applicable
Maximum Performance Objective.



     “Nonqualified Stock Option” means an Option that is not an Incentive Stock
Option.



     “Option” means a right to purchase Shares at a specified price; “Optionee”
means the holder of an Option.



     “Participant” means an Employee selected to receive an Incentive Award.



     “Performance” means the extent to which a Performance Measure is achieved
during an applicable Year or Cycle.



     “Performance Award” means, individually, an Annual Performance Award or a
Long-Term Performance Award and, collectively, Annual Performance Awards and
Long-Term Performance Awards.



-2-









 





     “Performance Measure” means one of the criteria by which the eligibility
of a Participant for an Annual Performance Award or Long-Term Performance
Award, in respect of an applicable Year or Cycle, is to be determined pursuant
to Section 8(b), except that if the underlying Performance Award is not
intended to be “performance-based” within the meaning of Code Section
162(m)(4)(C), the Committee has the discretion to select for use as Performance
Measures any criteria, whether or not listed in Section 8(b).



     “Performance Objectives” for each Performance Measure mean, collectively,
the Threshold Performance Objective, the Target Performance Objective, and with
respect to Annual Performance Awards, the Maximum Performance Objective, for
that Performance Measure.



     “Shares” means the shares of Common Stock of the Company.



     “Subsidiary” means any entity more than 50% of the voting control of which
is held, directly or indirectly, by the Company.



     “Targeted Annual Performance Award” for each Participant means the amount,
stated as a percentage of Base Salary, which a Participant is expected to earn
as an Annual Performance Award if Targeted Performance Objectives for all
Performance Measures applicable to that Participant are met.



     “Targeted Long-Term Performance Award” for each Participant means the
amount, stated as a percentage of Base Salary, which a Participant is expected
to earn as a Long-Term Performance Award if Targeted Performance Objectives for
all Performance Measures applicable to that Participant are met.



     “Targeted Performance Objective” for each Performance Measure means the
Performance at which 100% of the applicable Annual Performance Award or
Long-Term Performance Award attributable to that Performance Measure will be
earned by a Participant.



     “Tax Date” means the date as of which the amount of any withholding tax
payment with respect to the exercise of an Option is calculated.



     “Threshold Performance Objective” for each Performance Measure means the
Performance that must be exceeded before a Participant is eligible for any
Annual Performance Award or Long-Term Performance Award, as applicable,
attributable to that Performance Measure. No Annual Performance Award or
Long-Term Performance Award will be payable under the Plan to any Participant
for Performance at or below the applicable Threshold Performance Objective for
a Performance Measure.



     “Year” means a calendar year.



Section 3. Maximum Incentive Awards; Adjustments.




     (a) Options. All grants of Options under the Plan shall be subject to
the following limitations:



-3-









 






     (i) Maximum Number - Aggregate. Subject to the remaining provisions
of this Section 3(a), the maximum number of Shares that may be issued
pursuant to Options granted under the Plan shall be 2,000,000. Any Shares
so issued may be authorized and unissued Shares or Shares held in the
Company’s treasury.




     (ii) Terminated or Forfeited Options. If any Option granted under
the Plan is terminated or forfeited prior to its exercise in full, the
Shares that would otherwise have been issued upon the exercise of the
Option shall not be charged against the maximum number of Shares available
for issuance pursuant to Section 3(a)(i) and may be used for new Option
grants.




     (iii) Certain Reductions. Unless prohibited by applicable Treasury
Income Tax Regulations, if any Shares are tendered or withheld (by
attestation as set forth in Section 6(d) or otherwise) in payment of all
or part of the Option price of Shares issuable upon the exercise of any
Option granted under the Plan or in satisfaction of withholding tax
obligations with respect to the exercise of any Option granted under the
Plan, the number of Shares that shall be charged against the maximum
number of Shares available for issuance pursuant to Section 3(a)(i) shall
be reduced by the number of Shares so tendered in payment or withheld.




     (iv) Maximum Number - Per Employee. Subject to Section 3(b), no
Employee shall be granted Options for more than 100,000 Shares in the
aggregate in any Year.



     (b) Recapitalization Adjustment. In the event of any change affecting
the Shares by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, combination or exchange of stock or other corporate
change, or any distribution to a holder of Shares other than ordinary cash
dividends, the Committee shall make such adjustment, if any, as it may deem
appropriate to avoid dilution in the number and kind of shares authorized for
issuance under the Plan, the number and kind of shares subject to Options, and
the Option price.



     (c) Performance Award Limitations. All awards of Annual Performance
Awards and Long-Term Performance Awards shall be subject to the following
limitations:




     (i) Annual Performance Award Limitation. The Maximum Annual
Performance Award that an Employee may be eligible to receive with respect
to each Year shall not exceed $1,000,000.




     (ii) Long-Term Performance Award Limitation. The Targeted Long-Term
Performance Award that an Employee may be eligible to receive with respect
to each Cycle shall not exceed $1,000,000.



Section 4. Administration.




     (a) Committee. The Plan shall be administered by the Committee. Each
director serving on the Committee shall be a “non-employee director” within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 and
an “outside director” within the meaning of Code Section 162(m).



-4-









 





     (b) Authority. The Committee shall have and exercise all the power and
authority granted to it under the Plan. Subject to Section 8 and the other
provisions of the Plan, the Committee shall have authority in its sole
discretion from time to time (i) to designate the Employees who shall be
granted Incentive Awards; (ii) to prescribe such limitations, restrictions and
conditions upon any Incentive Award as the Committee shall deem appropriate;
(iii) to interpret the Plan and to adopt, amend and rescind rules and
regulations relating to the Plan; (iv) to revise the Performance Measures
applicable to Performance Awards; and (v) to make all other determinations and
take all other actions necessary or advisable for the implementation and
administration of the Plan.



     (c) Committee Actions. A majority of the Committee shall constitute a
quorum, and the acts of a majority of the members present at a meeting at which
a quorum is present, or acts reduced to or approved in writing by all members
of the Committee, shall be acts of the Committee. All such actions shall be
final, conclusive, and binding. No member of the Committee shall be liable for
any action taken or decision made in good faith relating to the Plan or any
Incentive Award granted hereunder. In the performance of their duties, the
members of the Committee shall be fully protected in relying in good faith upon
information provided by the Company’s officers or auditors.



     (d) Interpretation and Construction. Any provision of this Plan to the
contrary notwithstanding, (i) Options and designated Performance Awards under
this Plan are intended to qualify as performance-based compensation within the
meaning of Code Section 162(m)(4)(C); and (ii) any provision of this Plan that
would prevent an Option or designated Performance Award from so qualifying
shall be administered, interpreted and construed to carry out such intention
and any provision that cannot be so administered, interpreted and construed
shall to that extent be disregarded.



     (e) No Repricing. Notwithstanding anything to the contrary set forth
elsewhere in the Plan, the Committee shall have no authority to reprice any
Option granted under the Plan if such repricing has not been approved by the
stockholders of the Company.



Section 5. Eligibility and Incentive Awards.




     (a) Eligible Employees. The Committee may grant Incentive Awards to any
Employee.



     (b) Incentive Awards. Incentive Awards may be granted in any one or more
combinations of (i) Incentive Stock Options; (ii) Nonqualified Stock Options;
(iii) Annual Performance Awards; and (iv) Long-Term Performance Awards. All
Incentive Awards shall be subject to such other terms and conditions as may be
established by the Committee. Determinations by the Committee with respect to
matters relating to the Plan, including without limitation, designation of
Participants, the form, amount and timing of granting of Incentive Awards, the
terms and provisions of Incentive Awards, and the written documents evidencing
Incentive Awards, need not be uniform and may be made selectively among
Employees who receive, or are eligible to receive, Incentive Awards, whether or
not such Employees are similarly situated.



     (c) Employment. The Plan and the Incentive Awards granted hereunder
shall not confer upon any Employee the right to continued employment with the
Company or affect in any way the right of the Company to terminate the
employment of any Employee at any time and for any reason.



-5-









 





Section 6. Options.




     The Committee may grant Incentive Stock Options and Nonqualified Stock
Options and such Options shall be subject to the following terms and conditions
and such other terms and conditions as the Committee may prescribe.



     (a) Provisions Applicable to All Options. All Options granted under the
Plan shall be subject to the following terms and conditions:




     (i) Written Form. The terms and conditions of each Option granted
under the Plan shall be set forth in writing in a form which shall be
approved by the Committee.




     (ii) Option Price. The Option price per Share with respect to each
Option shall be determined by the Committee but shall not be less than the
Fair Market Value per Share on the date the Option is granted.




     (iii) Term and Exercise of Options. Subject to Section 6(b)(i), the
term of each Option shall be not more than ten years after the date of
grant. At the time an Option is granted, the Committee may provide that
the Option may be exercised in full or in part only after the passage of a
specified period or periods of time following the date of grant or only if
specified conditions have been satisfied. Except as set forth in Section
6(a)(vi), an Option may be exercised only if the Optionee has been
continuously employed by the Company since the date of grant.




     (iv) Other Terms. At the time an Option is granted, the Committee
may specify such other terms, restrictions or limitations as it may deem
appropriate in addition to those set forth herein, including without
limitation, restrictions on the transferability of the Shares issuable
upon the exercise of the Option.




     (v) Procedure for Exercise of Options and Payment. The holder of an
Option granted under the Plan may exercise the Option in full or in part
(but for full Shares only) by giving written notice of exercise to the
Committee. At the time such notice is given, the Option price for the
Shares purchased must be paid in full either in cash or by delivery of
Shares owned by the Optionee or any combination of cash and already-owned
Shares. In any case in which payment of the Option price is to be made by
delivery of already-owned Shares, the attestation procedure set forth in
Section 6(d) may be used, subject to the limitations described therein. An
Option shall be deemed exercised on the date the Committee receives
written notice of the exercise, together with full payment for the Shares
purchased. In the event already-owned Shares are used to pay all or a
portion of the Option price, such Shares must have been held by the Option
holder for at least six months prior to their delivery to the Company.
The amount credited to payment of the Option price shall be the Fair
Market Value of the already-owned Shares on the date the Option is
exercised.




     (vi) Certain Events Impacting Outstanding Options.




     (A) Leaves of Absence. Whether authorized leave of absence or
absence for military or governmental service constitutes a
termination of employment for purposes


-6-









 






of any Option shall be determined by the Committee, after
consideration of any applicable regulations issued under the Code.




     (B) Termination of Employment. Subject to the limitation set
forth in Section 6(a)(vi)(D), at the time an Option is granted, or
at such other time as the Committee may determine, with respect to
all or any portion of any Option as the Committee may determine, the
Committee may provide that if the Optionee ceases to be employed by
the Company for any reason (including retirement or disability)
other than death, then the Option will continue to vest or the
vesting of the Option will be accelerated and/or the Option will
continue to be exercisable by the Optionee for such additional
period (not to exceed the remaining term of such Option) after
termination of employment as the Committee may provide.




     (C) Death. At the time an Option is granted or at such other
time as the Committee may determine, the Committee may provide that
if the Optionee dies while employed by the Company or while entitled
to the benefits of any additional exercise period established by the
Committee with respect to such Option in accordance with Section
6(a)(vi)(B), then the Option will continue to be exercisable by the
person or persons (including the holder’s estate) to whom the
holder’s rights with respect to such Option have passed by will or
by the laws of descent and distribution or the holder’s designated
beneficiary, for such additional period after death (not to exceed
the remaining term of such Option) as the Committee may provide.




     (D) Limitation on Exercise. Except in the case of death,
disability or retirement, or under such other circumstances as the
Committee may from time to time determine, no Option shall be
exercisable prior to the first anniversary of its date of grant.



     (b) Additional Provisions Applicable to Incentive Stock Options. The
following additional terms and provisions shall apply to all Incentive Stock
Options granted under the Plan, notwithstanding any other provisions of this
Section 6 to the contrary:




     (i) Certain Optionees. No Incentive Stock Option shall be granted
to any Employee who possesses, directly or indirectly (as provided in
Section 424(d) of the Code), at the time of grant, more than 10% of the
combined voting power of all classes of stock of the Company, any
Subsidiary or any parent corporation (as defined in the Code), unless (A)
the option price is at least 110% of the Fair Market Value of the Shares
subject to the Option on the date such Option is granted, and (B) such
Option is not exercisable after the expiration of five years from the date
of grant.




     (ii) $100,000 Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of Shares with respect
to which Incentive Stock Options granted under the Plan and all other
plans of the Company, any Subsidiary, and any parent corporation are
exercisable for the first time by any individual in any calendar year
shall not exceed $100,000, or such other maximum amount then permitted by
the Code.



-7-









 






     (iii) No Grants After Ten Years. No Incentive Stock Option may be
granted on or after the tenth anniversary of the adoption of the Plan by
the Board.



     (c) Fractional Shares. No fractional Shares shall be issued pursuant to
the exercise of an Option, nor shall any cash payment be made in lieu of
fractional Shares.



     (d) Attestation Procedure. If a holder desires to pay the Option price by
delivery of already-owned Shares, the holder may either physically deliver
already-owned Shares or follow the attestation procedure set forth in this
Section 6(d). To attest to the ownership of already-owned Shares, the holder
shall submit to the Company a signed statement at the time of exercise of an
Option that (i) sets forth the number of Shares already-owned by the holder
that are to be used in payment of the Option price (the “Payment Shares”), (ii)
confirms that the holder is the owner of the Payment Shares, and (iii) if the
Payment Shares are registered in the holder’s name, sets forth the certificate
number(s) of the Payment Shares. The Payment Shares shall be treated as having
been delivered to the Company by the holder on the date of exercise, and the
Company shall issue to the holder a certificate for the number of Shares being
purchased, less the number of Payment Shares. The Committee shall have the
authority to amend the foregoing procedure from time to time or to limit its
use in such manner as the Committee may in its discretion determine.



     (e) Change of Control. In order to maintain a Participant’s rights with
respect to any Option in the event of a Change of Control, the Committee may,
in its sole discretion, take any one or more of the following actions, either
at the time that the Option is granted or at any time thereafter: (i) provide
for the acceleration of any time periods relating to the exercise of any
Option, so that such Option may be exercised in full on or before a date fixed
by the Committee, (ii) provide for the purchase of any Option by the Company
for an amount of cash equal to the amount that could have been attained upon
the exercise of such Option had such Option been currently exercisable or
payable, (iii) make such adjustment to any Option as the Committee deems
appropriate to reflect a Change of Control, or (iv) cause any Option to be
assumed, or new rights substituted therefor, by the acquiring or surviving
corporation, if any, in connection with a Change of Control.



     (f) Withholding for Taxes. The Company shall be entitled, if necessary
or desirable, to withhold from any cash compensation otherwise payable to the
holder of any Option, the amount of any required federal, state and local
withholding tax attributable to the Shares to be issued upon exercise of the
Option, or the Company may defer issuing any Shares upon exercise of any Option
if any such tax, charge, or assessment is pending until the Company is
indemnified to the Committee’s satisfaction.



     (g) Use of Shares to Pay Withholding Taxes. The holder of a Nonqualified
Stock Option may elect to have the Company retain from the Shares to be issued
upon the exercise of the Option Shares having a Fair Market Value on the Tax
Date equal to the required federal, state and local withholding tax payments to
be made by the holder with respect thereto, in lieu of making such payments in
cash. The Committee may from time to time establish rules or limitations with
respect to the right of a holder to elect to have the Company retain Shares in
satisfaction of withholding payments.



     (h) Deferral of Receipt of Shares. The Committee may establish
procedures to enable the holder of any outstanding Option to defer receipt of
the Shares issuable upon exercise of such Option.



-8-









 





     (i) Compliance with Laws and Exchange Requirements. No Option shall be
granted and no Shares shall be issued in connection with any Option unless the
grant of the Option and the issuance and delivery of Shares pursuant thereto
shall comply with all relevant provisions of state and federal law, including
without limitation, the Securities Act of 1933, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of the NASDAQ National
Market System or any stock exchange upon which the Shares may then be listed.



Section 7. Performance Awards.




     The Committee may grant to Employees, Annual Performance Awards for any
Year beginning after December 31, 2004, and Long-Term Performance Awards for
any Cycle beginning after December 31, 2004. Performance Awards shall be
subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe:



     (a) Performance Award Amounts and Performance Goals. The amount which a
Participant selected to receive a Performance Award has an opportunity to earn
is based upon (i) the specified percentage of the Participant’s Base Salary
represented by that Participant’s Targeted Annual Performance Award or Targeted
Long-Term Performance Award, as the case may be; (ii) the Performance of the
Performance Measures applicable to that Participant; (iii) the respective
weightings of those Performance Measures; and (iv) the Performance Objectives
for each applicable Performance Measure.



     (b) Procedure for Implementation.




     (i) CEO Recommendations. As promptly as possible after January 1 of
each applicable Year or of the first year of each Cycle, the Chief
Executive Officer of the Company shall submit his recommendations to the
Committee as to Employees (other than the Chief Executive Officer) (A) who
should be Participants with respect to Annual Performance Awards for the
then current Year and the Targeted Annual Performance Award for each
recommended Participant; and (B) who should be Participants with respect
to Long-Term Performance Awards for the applicable Cycle and the Targeted
Long-Term Performance Award for each recommended Participant. With these
recommendations, the Chief Executive Officer shall also submit his
recommendations as to the Performance Measures applicable to each
recommended Participant and their respective weightings, and the Threshold
Performance Objective, Targeted Performance Objective, and for Annual
Performance Awards, the Maximum Performance Objective, for each
Performance Measure, together with such explanations as the Chief
Executive Officer may deem appropriate or the Committee shall request.




     (ii) Committee Action. The Committee shall act promptly upon the
recommendations of the Chief Executive Officer of the Company as to the
matters listed in Section 7(b)(i), with such changes in the
recommendations of the Chief Executive Officer as the Committee may adopt,
and shall at that time also approve the Performance Measures and the
Performance Objectives for each Performance Measure which shall be
applicable to the Chief Executive Officer for the then current Year or
applicable Cycle, as well as the respective weightings of each Performance
Measure.



-9-









 






     (iii) Furnishing of Information to Participants. Action by the
Committee in accordance with Section 7(b)(ii) shall constitute direction
to the Chief Executive Officer of the Company to furnish to Participants
for the then current Year or applicable Cycle, as promptly as reasonably
possible, information with respect to their respective Targeted Annual
Performance Award and/or Targeted Long-Term Performance Award, Performance
Measures, weighting, Performance Objectives and with respect to Annual
Performance Awards, Maximum Performance Objectives, for that Year or
Cycle.




     (iv) Reduction of Targeted Performance Award Percentages. The
percentage of a Participant’s Base Salary represented by that
Participant’s Targeted Annual Performance Award or Targeted Long-Term
Performance Award shall not be reduced for any Year or Cycle after the
information described in Section 7(b)(iii) has been furnished to that
Participant.



     (c) Performance Award Formula; Calculation. Performance Awards shall be
calculated as follows:




     (i) General Rules. As to each Performance Measure applicable to a
Participant, (A) if the Threshold Performance Objective is not exceeded,
no Performance Award shall be made with respect to such Performance
Measure; (B) in the case of a Long-Term Award, if the Targeted
Performance Objective is met or exceeded, the amount used in calculating
the Long-Term Performance Award attributable to that Performance Measure
shall be the Targeted Performance Objective for that Performance Measure;
and (C) in the case of an Annual Performance Award, if the Maximum
Performance Objective is met or exceeded, the amount used in calculating
the Annual Performance Award attributable to that Performance Measure
shall be the Maximum Performance Objective for that Performance Measure.




     (ii) Performance Between Threshold and Targeted Performance
Objectives. For each Performance Measure for which the Performance
exceeds the Threshold Performance Objective for that Performance Measure,
but is less than or equal to the Targeted Performance Objective for that
Performance Measure, the amount of the Performance Award payable to a
Participant shall be equal to the Participant’s Base Salary, multiplied
by the Targeted Annual Performance Award or Targeted Long-Term
Performance Award, as the case may be, percentage applicable to that
Participant, multiplied by the percentage weighting of that Performance
Measure, multiplied by a fraction (computed to the nearest hundredth of
one percent), the numerator of which is an amount equal to the
Performance of that Performance Measure less the Threshold Performance
Objective for that Performance Measure, and the denominator of which is
an amount equal to the Targeted Performance Objective for that
Performance Measure less the Threshold Performance Objective for that
Performance Measure.




     (iii) Certain Annual Performance Award Calculations. In the case
of an Annual Performance Award only, for each Performance Measure for
which the Performance exceeds the Targeted Performance Objective for that
Performance Measure, the amount of the Annual Performance Award payable
to a Participant shall be equal to the Participant’s Base Salary,
multiplied by the Targeted Annual Performance Award percentage applicable
to that


-10-









 





Participant, multiplied by the percentage weighting of that Performance
Measure, multiplied by the sum of 1.0 plus a fraction (computed to
the nearest hundredth of one percent), the numerator of which is an
amount equal to the Performance of that Performance Measure (not to
exceed the Maximum Performance Objective for that Performance
Measure) less the Targeted Performance Objective for that Performance
Measure, and the denominator of which is an amount equal to the
Maximum Performance Objective for that Performance Measure less the
Targeted Performance Objective for that Performance Measure.


     (d) Determinations and Adjustments.




     (i) Basis for Determinations. To the extent practicable,
determination of Performance Measures, Performance Objectives, and
Performance shall be based upon the books and records of the Company kept
in the ordinary course of business, including its audited financial
statements and results of operations and such official and industry data
as is generally available and relied upon by the Company and its
competitors and suppliers in the industry. Any questions or disputes
regarding the correctness, adequacy, definition, or otherwise of books,
records, and data relied upon for determinations under the Plan shall, for
all purposes of the Plan, be finally decided by the Committee, acting upon
the recommendation of the Chief Executive Officer of the Company and such
other sources as the Committee shall deem prudent.




     (ii) Certain Adjustments. Subject to Section 8, the Committee shall
have the right to adjust Performance Objectives for any Year or Cycle as
it deems appropriate due to the occurrence of extraordinary items during
that Year or Cycle (such as, by way of example and not in limitation, the
acquisition or sale of a business unit or the Company’s decision to incur
additional indebtedness or to make optional debt prepayments).



     (e) Pro-Ration of Awards; Change of Control. A Participant’s Annual
Performance Award for any Year or Long-Term Performance Award for any Cycle
shall be pro-rated in the event that the Participant’s employment is terminated
prior to the last day of that Year or of the applicable Cycle (i) by reason of
retirement in accordance with the retirement policies of the Company, death,
disability, or other circumstances approved by the Committee; or (ii) with
respect to Annual Performance Awards, following a Change in Control of the
Company occurring during that Year. Any such pro-ration shall be based upon
the number of days in the Current Year or applicable Cycle during which the
individual was a Participant. Upon the occurrence of a Change of Control of
the Company, Long-Term Performance Awards for each Cycle which includes the
year in which such Change of Control occurs shall be deemed fully earned on the
date of the Change of Control, as if the date of the Change of Control was the
last day of the Cycle and as if the Targeted Performance Objective for each
Performance Measure applicable to Participants for that Cycle was met and
exceeded. Payment of the Awards for any such Cycle shall be made on the date
of the Change of Control. In all other cases, to receive an Annual Performance
Award for any Year or a Long-Term Performance Award for any Cycle, a
Participant must be an employee of the Company on the last day of that Year or
of the applicable Cycle, as the case may be.



     (f) Promotion; Employment for Less than Full Year. A Participant’s
Annual Performance Award for any Year shall be pro-rated in the event that the
Participant is employed on the last day of that Year but has been a Participant
in the Plan for less than all of the Year, or a Participant who was



-11-









 







a Participant on January 1 of a Year is promoted and the Committee decides
to increase the Targeted Annual Performance Award for that Participant because
of the promotion. Any such pro-ration shall be based upon the number of days
in the Year during which the individual was a Participant or a Participant at
different Targeted Annual Performance Awards.



     (g) Conduct Detrimental to Company. Notwithstanding any other provision
of this Plan to the contrary, the Committee shall have the right to reduce or
cancel, prior to the last day of any Year or applicable Cycle, any
Participant’s Annual Performance Award for that Year or Long-Term Performance
Award for that Cycle on the basis of the Participant’s individual performance
or in the event of conduct by the Participant which the Committee determines is
detrimental to the Company or any Subsidiary.



     (h) Payment.




     (i) Report and Certification. Promptly after receipt of the report
of the Company’s independent public accountants with respect to the
consolidated financial statements of the Company for each Year, the Chief
Executive Officer of the Company shall provide a report to the Committee
setting forth the Annual Performance Award and Long-Term Performance Award
calculations for each Participant for that Year or the Cycle then
completed. The Committee shall consider and act upon the Chief Executive
Officer’s report and recommendations and shall certify as to whether and
to the extent that the Performance Objectives and other material terms
have been satisfied for all Performance Awards, so as to permit payment of
Performance Awards promptly thereafter and, in any event, prior to March
15 of the year following the end of the Year or Cycle for which the
Performance Awards are being paid.




     (ii) Method of Payment. Payment of Performance Awards shall be made
by check or direct deposit to the account of each Participant, in
accordance with the regular payroll practices of the Company. The Company
shall withhold from the gross amount of any Performance Award all required
amounts necessary to satisfy all applicable federal, state, and local
withholding requirements.



     (i) Deferral. Notwithstanding any provision of Section 8, to the extent
that the Committee, in its sole discretion, determines that the payment of any
portion of any Performance Award earned by any Participant is not deductible by
the Company or any of its Subsidiaries by reason of Code Section 162(m), the
Company or the applicable Subsidiary shall delay the payment of such portion of
such Award. The Company shall remain obligated to pay in full the portion of
the Performance Award which is unpaid by reason of this Section 7(i) and shall
thereafter promptly pay such part thereof as the Committee, in its sole
discretion, shall from time to time determine is then deductible in accordance
with Code Section 162(m). Until paid in full, the portion of any Performance
Award which is unpaid by reason of this Section 7(i) shall, unless a different
rate of return has been selected from time to time by the Committee, bear
interest, compounded daily and computed at an annual rate which is equal to the
average yield for BBB Industrial Bonds, as published in Standard & Poor’s
Corporate and Government Bond Yield Index (or such similar index as the
Committee shall select) for the month last preceding the beginning of the
then-current calendar quarter.



Section 8. Additional Provisions Applicable to Section 162(m) Performance Awards.




-12-









 








     The following provisions apply to all Annual Performance Awards and
Long-Term Performance Awards that are intended to qualify as
“performance-based” within the meaning of Code Section 162(m)(4)(C):



     (a) Authority of the Committee. The Committee shall, no later than 90
days after the commencement of each applicable Year or Cycle (or such earlier
or later date as may be the applicable deadline for compensation payable
hereunder to qualify as “performance-based” within the meaning of Code Section
162(m)(4)(C)), select and establish in writing (i) the Employees who will be
Participants with respect to such Performance Awards; (ii) the applicable
Performance Measures (which shall be selected from among the Performance
Measures set forth in Section 8(b) below), their weighting, and the Performance
Objectives relating to each such Performance Measure; and (iii) designate the
Annual Performance Awards and Long-Term Performance Awards that are to qualify
as “performance-based” within the meaning of Code Section 162(m)(4)(C).



     (b) Determination of Performance Measures. Performance Measures for
Performance Awards designated to qualify as “performance-based” within the
meaning of Code Section 162(m)(4)(C) shall be based on any of the following
performance criteria, either alone or in any combination, on either a
consolidated or business unit or divisional level, and including or excluding
discontinued operations and acquisition expenses as the Committee may
determine: level of sales; unit tire sales; gross profit; earnings per share;
share price; earnings before interest, taxes, depreciation, and amortization;
income before taxes; net income; return on assets; return on equity; return on
capital; total stockholder return; market valuation; cash flow; cash from
operating activities; and completion of acquisitions. The foregoing criteria
shall be determined as set forth in Section 7(d) and shall have any reasonable
definitions, which may include or exclude any or all of the following items, as
the Committee may specify within the period described in Section 8(a):
extraordinary, unusual or non-recurring items; effects of accounting changes;
effects of currency fluctuations; effects of financing activities; expenses for
restructuring or productivity initiatives; non-operating items; acquisition
expenses; and effects of divestitures.



     (c) Discretion of the Committee. The Committee has no discretion to
increase the amount of the Performance Award due upon attainment of the
applicable Performance Measures. No provision of the Plan shall preclude the
Committee from exercising negative discretion with respect to any Performance
Award (i.e., to reduce or eliminate the Award payable) within the meaning of
Treasury Income Tax Regulation Section 1.162-27(e)(2)(iii)(A).



Section 9. Non-Assignability.




     (a) General Rule. Except as provided in Section 9(b) with respect to
Nonqualified Stock Options, no Incentive Award granted under the Plan shall be
sold, assigned, transferred, pledged, or otherwise encumbered by the
Participant, or be made subject to execution, attachment or similar process,
otherwise than by will, by the laws of descent and distribution, or by the
Participant’s designation, in a writing delivered to the Company before the
Participant’s death, of a beneficiary or beneficiaries to whom the
Participant’s rights in the Incentive Award will be transferred upon the
Participant’s death. Except as provided in Section 9(b) with respect to
Nonqualified Stock Options, each Option shall be exercisable during the
Participant’s lifetime only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative.



-13-









 





     (b) Special Provisions Applicable to Nonqualified Stock Options. Any
Option granted as a Nonqualified Stock Option and such other Options as the
Committee may determine and any rights thereunder may be assigned or
transferred pursuant to a qualified domestic relations order (as defined in the
Code or the Employee Retirement Income Security Act of 1974). In addition, the
Committee may permit any Optionee holding an Option granted as a Nonqualified
Stock Option and such other Options as the Committee may determine, either
before or after the date of grant, to transfer the Option during the Optionee’s
lifetime to one or more members of the Optionee’s family, to one or more trusts
for the benefit of one or more members of the Optionee’s family, or to a
partnership or partnerships of members of the Optionee’s family, if no
consideration is paid for the transfer and such transfer would not result in
the loss of any exemption under Rule 16b-3 for any Option granted under any
plan of the Company. The transferee of an Option shall be subject to all
restrictions, terms and conditions applicable to the Option prior to its
transfer. The Committee may impose on any transferable Option and on the
Shares to be issued upon the exercise thereof such limitations and conditions
as the Committee deems appropriate.



Section 10. Amendment and Termination of Plan.




     (a) Amendment. The Board may from time to time amend the Plan, or any
provision thereof, in such respects as the Board may deem advisable except that
it may not amend the Plan without stockholder approval so as to: increase the
maximum number of Shares that may be issued under the Plan except in accordance
with Section 3(b); permit the granting of Options with exercise prices lower
than that specified in Section 6(a)(ii); materially modify the requirements as
to eligibility for participation in the Plan; or reprice any outstanding
Options granted pursuant to the Plan.



     (b) Termination. The Board may terminate the Plan at any time.



     (c) Effect of Amendment or Termination. Any amendment or the termination
of the Plan shall not adversely affect any Incentive Award previously granted
nor disqualify an Incentive Award from being treated as “performance based”
within the meaning of Code Section 162(m)(4)(C). Incentive Awards outstanding
at the time the Plan is terminated shall remain in full force and effect as if
the Plan had not been terminated.



Section 11. Notices.




     Each notice relating to the Plan shall be in writing and delivered in

person or by mail to the proper address. Each notice to the Committee shall be
addressed as follows: TBC Corporation, 7111 Fairway Drive, Palm Beach Gardens,
Florida 33418, Attention: Compensation Committee. Each notice to a Participant
shall be addressed to the Participant at the address of the Participant
maintained by the Company on its books and records or to such other address as
the Participant may designate by written notice to the Company to that effect.



Section 12. Benefits of Plan.




     The Plan shall inure to the benefit of and be binding upon each successor
of the Company. All rights and obligations imposed upon a Participant and all
rights granted to the Company under the Plan shall be binding upon the
Participant’s heirs, legal representatives and successors.



-14-









 





Section 13. Stockholder Approval and Term of Plan.




     (a) Adoption and Approval. The Plan shall become effective upon its
adoption by the Board; provided, however, that if the Plan is not approved by
the affirmative vote of the holders of a majority of the outstanding Shares
present, in person or by proxy, and entitled to vote at the 2004 Annual Meeting
of the Stockholders of the Company, the Plan shall terminate automatically on
the date of such Annual Meeting.



     (b) Term. If approved by the stockholders of the Company as provided in
Section 13(a), the Plan shall continue in effect until terminated pursuant to
Section 10.




-15-