ex10-1.htm


     

     

    
      TERMS
AND CONDITIONS OF

      PERFORMANCE
SHARE AWARDS ISSUED PURSUANT TO

      THE
CHURCHILL DOWNS INCORPORATED

      2007
OMNIBUS STOCK INCENTIVE PLAN

      


      As
Amended and Restated as of December 19, 2008

      


      


      
        
          
            
              
                
                  
                    
                      
                        	
                                1.           ESTABLISHMENT
      OF THE TERMS AND CONDITIONS OF PERFORMANCE SHARE AWARDS ISSUED PURSUANT TO
      THE CHURCHILL DOWNS INCORPORATED 2007 OMNIBUS STOCK INCENTIVE
      PLAN.

                                 

                              
	 
      	
                                    (a)           
      The Compensation Committee (the “Committee”) of the Board of Directors
      (the “Board”) of the Company (as defined below) hereby establishes the
      following Performance Share Awards Terms and Conditions, as may be amended
      from time to time (the “Performance Share Awards Terms and Conditions”)
      applicable to Performance Share Awards granted pursuant to the Company's
      2007 Omnibus Stock Incentive Plan, as may be amended from time to time
      (the “Plan”).  Any capitalized terms not defined herein shall
      have the meaning set forth in the Plan.  In the event of a
      conflict between the provisions of the Plan and the Performance Share
      Awards Terms and Conditions, the provisions of the Plan shall
      prevail.

                                 

                              
	 	       
      (b)	
                                For
      purposes of Performance Share Awards granted pursuant to the Plan, the
      terms listed below shall have the following meanings:

                                 

                              
	 	 	(1)	
                                Award Value shall mean
      the maximum dollar award value a Participant may earn for any Performance
      Period

                                 

                              
	 	 	(2)	
                                Cause shall have the
      meaning set forth in an employment agreement or other agreement,
      including, but not limited to a severance agreement, between Participant
      and

                              
	 	 	
                                and
      the Company or a Subsidiary that contains a definition of “Cause.” If no
      such agreement exists, “Cause” shall mean the occurrence of any one of the following acts by
      Participant:

                                 

                              
	 
      	 
      	 
      	
                                (i)      
      Participant shall have been convicted of, or shall have pleaded guilty or
      nolo contendere
      to, any felony or any crime involving dishonesty or moral
      turpitude;

                                 

                              
	 
      	 
      	 
      	
                                (ii)   
        Participant shall have breached his or her Performance Share Award
      Agreement or any employment, non-competition or non-solicitation covenant
      or agreement with the Company or a Subsidiary, whether in an employment
      agreement or otherwise;

                                 

                              
	 
      	 
      	 
      	
                                (iii)    
      Participant shall have failed (x) to substantially comply with the rules
      or policies of general application of the Company or a Subsidiary, or (y)
      to devote substantial time and energy to the
  business

                              


                      

                    

                  

                

              

            

          

        

      

      
 

      
        
          
          

        

        
          
          

        

        
          
          

        

      

      


      
        
          
            	 
      	 
      	 
      	
                    and
      affairs of the Company or a Subsidiary (other than due to death or
      Disability);

                     

                  
	 
      	 
      	 
      	
                    (iv)     Participant
      shall have engaged in any fraud, embezzlement, theft or other dishonesty
      against the Company or a Subsidiary;

                     

                  
	 
      	 
      	 
      	
                    (v)      Participant’s
      continued failure to substantially perform Participant’s
      duties;

                     

                  
	 
      	 
      	 
      	
                    (vi)     Participant’s
      repeated acts of insubordination, or failure to execute Company or
      Subsidiary plans and/or strategies; or

                     

                  
	 
      	 
      	 
      	
                    (vii)    Participant
      engages in any act that is intended or may reasonably be expected to harm
      the reputation, business, prospects or operations of the Company or a
      Subsidiary.

                     

                  
	 	 	(3) 	
                    Change in Control shall
      mean the first to occur of the following events:

                     

                  
	 
      	 
      	 
      	
                    (i)           the
      acquisition, directly or indirectly, by any individual, entity or group
      (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
      (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
      promulgated under the Exchange Act) of more than 50% of either the
      then-outstanding voting securities of the Company (the “Outstanding
      Company Common Stock”) or the combined voting power of the
      then-outstanding voting securities of the Company entitled to vote
      generally in the election of directors (the “Outstanding Company Voting
      Securities”); provided, however that for purposes of this subsection (i),
      the following acquisitions shall not constitute a Change in Control: (w)
      any acquisition directly from the Company, (x) any acquisition by the
      Company or any of its Subsidiaries, (y) any acquisition by any employee
      benefit plan (or related trust) sponsored or maintained by the Company or
      any corporation controlled by the Company, or (z) any acquisition by any
      corporation pursuant to a transaction which complies with clauses (x), (y)
      and (z) of subsection (iii) of this definition;

                     

                  
	 
      	 
      	 
      	
                    (ii)           individuals
      who, as of the Effective Date, constitute the Board of Directors of the
      Company (the “Incumbent Board”) cease for any reason to constitute at
      least a majority of the Board; provided, however, that any individual
      becoming a director subsequent to the Effective Date whose election, or
      nomination for election by the Company’s shareholders, was approved by a
      vote of at least a majority of the directors then comprising the Incumbent
      Board shall be considered as though such individual were a member of the
      Incumbent Board, but excluding, for this purpose, any such individual
      whose initial assumption of office occurs as a result of an actual or
      threatened election contest with respect to
the

                  


          

        

      

      


       

      
        
          
          

        

        
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                          election
      or removal of directors or other actual or threatened solicitation of
      proxies or consents by or on behalf of a Person other than the
      Board;

                           

                        
	 
      	 
      	 
      	
                          (iii)           consummation
      of a reorganization, merger or consolidation or sale or other disposition
      of all or substantially all of the assets of the Company or the
      acquisition of assets of another entity (a “Corporate Transaction”), in
      each case, unless, immediately following such Corporate Transaction, (x)
      all or substantially all of the individuals and entities who were the
      beneficial owners, respectively, of the Outstanding Company Common Stock
      and Outstanding Company Voting Securities immediately prior to such
      Corporate Transaction beneficially own, directly or indirectly, more than
      50% of, respectively, the then-outstanding shares of Common Stock and the
      combined voting power of the then-outstanding voting securities entitled
      to vote generally in the election of directors, as the case may be, of the
      Company resulting from such Corporate Transaction (including, without
      limitation, an entity which as a result of such transaction owns the
      Company or all or substantially all of the Company’s assets either
      directly or through one or more subsidiaries) in substantially the same
      proportions as their ownership, immediately prior to such Corporate
      Transaction, of the Outstanding Company Common Stock and Outstanding
      Company Voting Securities, as the case may be, (y) no Person (excluding
      any corporation resulting from such Corporate Transaction or any employee
      benefit plan (or related trust) of the Company or such corporation
      resulting from such Corporate Transaction) beneficially owns, directly or
      indirectly, 50% or more of, respectively, the then Outstanding Company
      Common Stock resulting from such Corporate Transaction or the Outstanding
      Company Voting Securities resulting from such Corporate Transaction,
      except to the extent that such ownership existed prior to the Corporate
      Transaction, and (z) at least a majority of the members of the Board
      resulting from the Corporate Transaction were members of the Incumbent
      Board at the time of the execution of the initial plan or action of the
      Board providing for such Corporate Transaction; or

                           

                        
	 
      	 
      	 
      	
                          (iv)           approval
      by the shareholders of the Company of a complete liquidation or
      dissolution of the Company.

                           

                        
	 	 	(4)	
                          Company shall mean
      Churchill Downs Incorporated or any successor or succesors.

                           

                        
	 	 	(5)	
                          Company Performance Goal
      shall have the meaning set forth in Section 5(a).

                           

                        
	 	 	(6)	Disability shall mean
      the inability of Participant to perform his normal duties as a result of
      any physical or mental injury or ailment for (i) any consecutive ninety
      (90)-day 
	 
      	 
      	
                          period,
      or (ii) any one hundred eighty (180) days (whether or not consecutive)
      during any three hundred sixty-five (365) calendar day
      period.  

                           

                        


                

              

            

          

        

      

      
 

      
        
          
          

        

        
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                (7)      EBITDA shall mean the
      Company's net income from continuing operations plus interest expense plus
      taxes plus depreciation and amortization (after giving effect to accruals
      for the cost of the Performance Share Awards).

                 

              
	 
      	 
      	
                (8)      Effective Date shall
      mean the date the Committee approves the Performance Share Awards Terms
      and Conditions.

                 

              
	 
      	 
      	
                (9)      Good Reason shall mean
      the occurrence (without Participant’s
      express consent) of any one of the following acts by the Company or a
      Subsidiary:

                 

              
	 
      	 
      	 
      	
                (i)           the assignment to Participant of any duties
      inconsistent in any material respect with the position of Participant as
      of the effective date of any Change in Control, or any other diminution in
      any material respect in such position, authority, duties or
      responsibilities unless agreed to by
      Participant;

                 

              
	 
      	 
      	 
      	
                (ii)          a material change in the geographic location at
      which Participant must perform services for the Company, as required by
      the Company;

                 

              
	 
      	 
      	 
      	
                (iii)         a material reduction in Participant’s base salary
      unless other similarly situated employees are subject to a comparable
      reduction; or

                 

              
	 
      	 
      	 
      	
                (iv)         a material breach of a material term of a written
      employment agreement by and between the Company or a Subsidiary and
      Participant.

                 

              
	 
      	 
      	
                (10)      Open Performance Period
      shall mean a Performance Period for which the Company Performance
      Goal has not been achieved.

                 

              
	 
      	 
      	
                (11)      Participant shall mean
      an eligible Employee that has been granted an Award Value pursuant to the
      Performance Share Awards Terms and Conditions.

                 

              
	 
      	 
      	
                (12)      Performance Period shall
      mean each of the 2008-2012 calendar years, inclusive.

                 

              
	 
      	 
      	
                (13)      Performance Share shall
      mean a bookkeeping entry that records the equivalent of one
      Share.

                 

              
	 
      	 
      	
                (14)      Performance Share Award
      shall mean a grant of
      Performance Shares following Committee certification of the Company's
      Performance

              


      

      


      


      
        
          
          

        

        
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                Goal
      and individual performance goals pursuant to the Performance Share Awards
      Terms and Conditions.

                 

              
	 
      	 
      	
                (15)    Performance Share Award
      Agreement shall mean a written agreement between the Company and a
      Participant with respect to any earned Performance Shares.

                 

              
	 
      	 
      	
                (16)    Retirement shall (i)
      have the meaning assigned to it in Company’s tax qualified retirement
      plan, or (ii) mean the attainment of such other retirement age as the
      Committee may designate from time to time.

                 

              
	 
      	 
      	
                (17)    Section 162(m) shall
      mean Section 162(m) of the Internal Revenue Code of 1986, as amended, and
      the guidance and regulations promulgated thereunder.

                 

              
	 
      	 
      	
                (18)    Section 409A shall mean
      Section 409A of the Internal Revenue Code of 1986, as amended, and the
      guidance and regulations promulgated thereunder.

                 

              
	 
      	 
      	
                (19)   
      Share shall mean
      one share of the Company’s common stock, no par value, or any security
      into which a Share may be converted by reason of a merger, acquisition or
      any other transaction or event that affects the stock of the
      Company.

                 

              
	 
      	 
      	
                (20)    Termination Date shall
      mean the date set forth in Section 12(a).

              
	 
      
	
                2.         ADMINISTRATION
      OF THE PERFORMANCE SHARE AWARDS TERMS AND CONDITIONS.

                 

              
	
                The Performance Share Awards
      Terms and Conditions shall be administered by the
      Committee.  The Committee shall have the sole authority, in its
      absolute discretion, to adopt, amend and rescind any and all rules and
      regulations as, in its opinion, may be advisable in the administration,
      construction and interpretation of the Performance Share Awards Terms and
      Conditions, its rules and regulations, and the instruments evidencing
      awards granted under these terms and conditions, and to make all other
      determinations deemed necessary or advisable for the administration of
      these terms and conditions.  All decisions, determinations and
      interpretations of the Committee shall be binding on all
      Participants.

                 

              
	
                3.           ELIGIBILITY.

                 

              
	
                The Committee shall determine the
      Employees that will be eligible for grant of Performance Share Awards
      under the Performance Share Awards Terms and Conditions, as well as his or
      her Award Value for each of the Performance Periods.

                 

              
	
                4.           AVAILABILITY
      OF PERFORMANCE SHARE AWARDS.

              


      

       

       

      
        
          
          

        

        
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                  Pursuant to the terms of the
      Plan, up to 300,000 Performance Share Awards may be granted under the
      Performance Share Awards Terms and Conditions to any Participant in any
      calendar year.  Performance Shares that are forfeited shall
      again be available for grant under the Plan and the Performance Share
      Awards Terms and Conditions.

                   

                
	
                  5.           PERFORMANCE
      MEASURES.

                   

                
	
                  (a)           Thirty
      percent (30%) of each Performance Share Award shall be based upon the
      Company's achievement of minimum EBITDA performance goal for a particular
      Performance Period.  The minimum EBITDA goal for each
      Performance Period is as follows (each, a “Company Performance
      Goal”):

                


        

      

    

     

    
      	
              ·  

            	
              2008
      - $70 million,

            


    

    
      	
              ·  

            	
              2009
      - $85 million,

            


    

    
      	
              ·  

            	
              2010
      - $100 million,

            


    

    
      	
              ·  

            	
              2011
      - $115 million,

            


    

    
      	
              ·  

            	
              2012
      - $130 million.

            


    

     

    
      
        	
                The determination of whether such
      Company Performance Goal has been achieved shall be made by the Company's
      outside auditors and certified by the Committee, as described
      below.

                 

              
	
                (b)           Seventy
      percent (70%) of each Performance Share Award shall be based upon the
      Participant's achievement of his or her individual performance objectives,
      which shall be recommended each year by the Company's CEO and approved by
      the Committee.  The determination of whether such individual
      performance goals have been achieved shall be made by the Committee upon
      advice of the Company's CEO.

                 

              
	
                (c)           To
      the extent necessary to avoid the limitation under Section 162(m) with
      respect to the deductibility of the payment of any Performance Share Award
      payable to a “covered employee” (as defined under Section 162(m)), the
      Performance Share Award shall be treated as two separate grants, the terms
      of which are respectively set forth in Sections 5(a) and
      5(b).  The grant set forth in Section 5(a) is intended to
      satisfy the “qualified performance-based compensation” exception under
      Treasury Regulation Section 1.162-27, as may be amended or
      replaced.  Consistent with that intent, with respect to any
      “covered employee,” the Performance Share Awards Terms and Conditions and
      applicable Performance Share Award Agreements shall be interpreted in a
      manner consistent with this exception, and in the event that any provision
      that is necessary for the Performance Share Award payable to such “covered
      employee” to comply with such exception is determined by the Committee, in
      its sole discretion, to have been omitted, such omitted provision shall be
      deemed included herein and is hereby incorporated as part of such terms
      and conditions.

                 

              
	
                6.         GRANT
      OF PERFORMANCE SHARE AWARDS.

              


      

    

     

     

    
      
        
        

      

      
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                (a)           The
      Committee shall certify the Company's EBITDA results and the results of
      each Participant's individual performance goals in the first quarter of
      each calendar year for the years 2009 through 2013, inclusive, following
      the Company's completion of its year end financial reports, as
      audited.  Except as otherwise provided in the Performance Share
      Awards Terms and Conditions, following such certification, each
      Participant shall be granted a Performance Share Award in respect of
      applicable Performance Periods; provided that no Performance Share Award
      for a particular Performance Period shall be granted unless and until the
      Company's Performance Goal for such Performance Period has been achieved;
      and provided further, that no Performance Share Award may be granted in
      respect of a future Performance Period.

                 

              
	
                (b)           The
      value of the Performance Share Award shall be based upon Participant's
      applicable Award Value and the Committee's certification of the Company's
      Performance Goal and Participant's individual performance
      objectives.  Except as otherwise provided, if the Performance
      Share Award is settled in Shares, the number of Shares subject to such
      Award shall be determined by dividing the dollar value of the Performance
      Share Award for the particular Performance Period by the closing price of
      a Share on the last business day of the calendar year immediately
      preceding the date of grant.  Except as otherwise set forth
      herein, the Performance Share Award shall vest and be payable in
      accordance with Section 7 below.

                 

              
	
                (c)           In
      the event the Company does not achieve its Company Performance Goal in the
      scheduled year, the Participant's Award Value attributable to such Company
      Performance Goal may be achieved in a future year, in which case, the
      Performance Share Award shall be granted in the first quarter following
      the year such Company Performance Goal is achieved.

                 

              
	
                (i)           The
      individual performance portion of Participant's Performance Share Award
      for the scheduled year shall be based on the Company's CEO recommendation
      and Committee's assessment of the Participant's attainment of performance
      objectives for the year in which the Company Performance Goal is met (and
      not attainment of individual performance objectives for the originally
      scheduled year).

                 

              
	
                (ii)           If
      the Performance Share Award is settled in Shares, the number of Shares
      subject to such Performance Share Award shall be determined by dividing
      the dollar value of the Performance Share Award for the particular
      Performance Period by the closing price of a Share on the last business
      day of the calendar year immediately preceding the date of grant of the
      Performance Share Award.  Such Performance Share Award shall
      vest and be payable in accordance with the vesting schedule attributable
      to the underlying Performance Period as set forth in Section 7
      below.

                 

              
	
                (iii)           Example:

                 

              
	
                (x)           Facts:  Participant
      was granted an Award Value of $100,000 for 2008, $125,000 for 2009 and
      $150,000 for 2010.  The Company did not achieve either of the
      2008 or 2009 Company Performance Goal, but achieved the 2010

                 

              


      

    

     

     

     

    
      
        
        

      

      
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                Company
      Performance Goal.  For the 2010 Performance Period, the
      Committee determined that Participant met 50% of his individual
      performance objectives.  The closing price of the Company's
      Common Stock on December 31, 2010 was $100.00 per share.

                 

              
	
                (y)           Awards:  In
      the first quarter of 2011, Participant would be granted three separate
      Performance Share Awards.

                 

              
	
                ·

              	
                The
      Performance Share Award in respect of the 2008 Performance Period would
      have a dollar value of $65,000 (30% x $100,000) + (70% x $100,000 x 50%)
      and if settled in Shares, would cover 650 Shares ($65,000 ÷ 100.00 per
      share).  This Performance Share Award would vest in quarterly
      installments over a period of thirty-six months, beginning on March 31,
      2011.

                 

              
	
                ·

              	
                The
      Performance Share Award in respect of the 2009 Performance Period would
      have a dollar value of $81,250 (30% x $125,000) + (70% x $125,000 x 50%)
      and if settled in Shares, would cover 812 Shares ($81,250 ÷ 100.00 per
      share), plus a cash payment in respect of the remaining half
      share.  This Performance Share Award would vest in quarterly
      installments over a period of thirty-six months, beginning on March 31,
      2011.

                 

              
	
                ·

              	
                The
      Performance Share Award in respect of the 2010 Performance Period would
      have a dollar value of $97,500 (30% x $150,000) + (70% x $150,000 x 50%)
      and if settled in Shares, would cover 975 Shares ($97,500 ÷ 100.00 per
      share).  This Performance Share Award would vest in quarterly
      installments over a period of twenty-four months, beginning on March 31,
      2011.

                 

              
	
                (d)           Once
      a Performance Share Award has been granted for a particular Performance
      Period, such Performance Period shall be closed.  Only one
      Performance Share Award grant may be awarded with respect to any single
      Performance Period.

                 

              
	
                7.         VESTING
      AND PAYMENT OF PERFORMANCE SHARE AWARDS.

                 

              
	
                (a)           Subject
      to Participant's continued employment with the Company or a Subsidiary on
      any applicable vesting date, Performance Share Awards granted in respect
      of the 2008 and 2009 Performance Periods shall vest over a period of
      thirty-six (36) months in equal quarterly installments on the last day of
      each quarter, at which time one-twelfth (1/12th) of the award shall be
      payable as soon as administratively practicable following each applicable
      vesting date, but in no event later than sixty (60) days following each
      applicable vesting date.  The first vesting date shall begin on
      March 31 of the year of grant.

                 

              
	
                (b)           Subject
      to Participant's continued employment with the Company or a Subsidiary on
      any applicable vesting date, Performance Share Awards granted in respect
      of the 2010 and 2011 Performance Periods shall vest over a period of
      twenty-four (24)

                 

              


      

    

     

     

     

    
      
        
        

      

      
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    months in
equal quarterly installments on the last day of each quarter, at which time
one-eighth (1/8th) of the award shall be payable as soon as administratively
practicable following each applicable vesting date, but in no event later than
sixty (60) days following each applicable vesting date.  The first
vesting date shall begin on March 31 of the year of grant.

     

    (c)           Subject
to Participant's continued employment with the Company or a Subsidiary on any
applicable vesting date, Performance Share Awards granted in respect of the 2012
Performance Period shall vest over a period of twelve (12) months in equal
quarterly installments on the last day of each quarter, at which time one-fourth
(1/4th) of the award shall be payable as soon as administratively practicable
following each applicable vesting date, but in no event later than sixty (60)
days following each applicable vesting date.  The first vesting date
shall begin on March 31 of the year of grant.

    


    (d)           At
or before each vesting date, the Committee shall determine, in its sole
discretion, whether the Performance Share Award shall be settled in cash, Shares
or a combination of both.

    


    8.         DIVIDEND
EQUIVALENTS.

    


    Participants shall be entitled to
accrue dividend equivalents with respect to the Performance Shares that are
subject to the unvested portion of any Performance Share Award, which dividend
equivalents shall be payable as soon as administratively practicable, but in no
event later than sixty (60) days, following the vesting of the Performance Share
Award related to such dividend equivalent amounts, but in no event later than
March 15th of the
year following the year of vesting.  Dividend equivalents will be
recorded as a dollar value and shall not be credited with interest or accrue
additional dividend equivalents, but, upon vesting of the Performance Share
Award related to such dividend equivalent amounts, may be settled in cash,
Shares or a combination of both, as determined by the Committee.

    


    9.         EXTRAORDINARY
EVENTS.

    


    If the Committee determines that one or
more extraordinary events has occurred during a Performance Period that alter
the basis upon which the performance measures set forth in Section 5 are to be
calculated, the Committee may adjust these performance measures as may be
necessary to exclude the effect of these events.  Events warranting
such action may include, but are not limited to, major acquisitions or
divestitures, significant changes in accounting practices, or a recapitalization
of the Company.  Notwithstanding the foregoing, the Committee shall
not have the discretion to increase the Award Value payable that would otherwise
be due upon certification of the Company's Performance Goal and individual
performance goals.

     

     

    
      
        
        

      

      
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    10.        TERMINATION
OF EMPLOYMENT.

    


    (a)           Except
as set forth in Sections 10(b) and 11(a) below, termination of a Participant's
employment with the Company or a Subsidiary prior to full vesting of the
Performance Share Award for any reason (whether voluntary or involuntary) shall
result in forfeiture (i) of any then unvested Performance Share Awards and any
accrued but unpaid dividend equivalents thereon and (ii) of all opportunity to
receive a Performance Share Award for any Open Performance Period.

    


    (b)           Termination
of a Participant's employment with the Company by reason of Participant's death,
Disability, or Retirement shall result in (i) full acceleration of vesting of
any earned but unvested Performance Share Awards and accrued dividend
equivalents thereon and payout as soon as administratively practicable, but in
no event later than sixty (60) days, following such termination date, in a lump
sum to the Participant (or the Participant's beneficiary or estate in the event
of death) and (ii) forfeiture of all opportunity to receive a Performance Share
Award for any Open Performance Period.

    


    11.       CHANGE
IN CONTROL.

     

    (a)         Termination
of Participant's employment with the Company or a Subsidiary by the Company
without Cause (but not by reason of Participant's death or Disability) or by
Participant for Good Reason as set forth in Section 11(a)(4) below, each within
24 months following a Change in Control, shall result in the
following:

     

    (1)           Full
acceleration of vesting and payout of Participant’s earned but unvested
Performance Share Awards as soon as administratively practicable, but in no
event later than sixty (60) days, following such termination date, in a lump sum
of such accelerated Performance Share Awards and accrued dividend equivalents
thereon to the Participant;

     

    (2)           Automatic
grant of a Performance Share Award equal to fifty percent (50%) of any of
Participant's unearned Award Values (without regard to the satisfaction of the
Company Performance Goal or Participant's individual performance objectives) for
any Open Performance Periods.  Such Performance Share Award shall be
fully vested and payable as soon as administratively practicable, but in no
event later than sixty (60) days, following such termination date, in a lump
sum.  To the extent the Performance Share Award is settled in Shares,
the number of Shares subject to such Award shall be determined by dividing fifty
percent (50%) of any of Participant's unearned Award Values for any Open
Performance Period by the closing price of a Share on the last business day
immediately prior to Participant’s termination of employment; and

     

    (3)           Immediate
termination and forfeiture of the remaining (50%) of any of Participant's
unearned Award Values for any Open Performance Period.

     

    (4)           Notwithstanding
any provision to the contrary, a Participant’s employment with the Company by
Participant shall be for Good Reason only if Participant terminates employment
with the Company or a Subsidiary within two years

     

     

    
      
        
        

      

      
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    following
the initial existence of one or more Good Reason conditions and prior to such
termination, Participant gives the Company written notice of the existence of
Good Reason within sixty (60) days of the initial existence of Good Reason with
a description of the conditions, events or actions constituting Good Reason and
upon receipt of such notice by the Company, the Company shall have sixty (60)
days following such receipt to cure and remedy the Good Reason
condition.  If the Company does cure and remedy such condition, there
shall not be a termination by Participant for Good Reason.

     

                (b)       In
the event the Performance Share Awards Terms and Conditions are terminated
following a Change in Control but prior to the Termination Date, the following
shall apply:

     

    (1)           Subject
to Sections 10(b) and 11(a)(1), any earned but unvested Performance Share Awards
and accrued dividend equivalents thereon shall continue to vest in accordance
with its existing vesting schedule;

     

    (2)           Participant
shall be automatically granted a Performance Share Award, effective immediately
prior to the termination of the Performance Share Awards Terms and Conditions,
equal to fifty percent (50%) of any of Participant's unearned Award Values
(without regard to the Company Performance Goal or Participant's individual
performance objectives) for any Open Performance Period.  To the
extent the Performance Share Award is settled in Shares, the number of Shares
subject to such Award shall be determined by dividing fifty percent (50%) of any
of Participant's unearned Award Values for any Open Performance Period by the
closing price of a Share on the last business day immediately prior to the
termination of the Performance Share Awards Terms and
Conditions.  Subject to Sections 10(b) and 11(a)(1), such Performance
Share Award shall vest in accordance with the vesting schedule attributable to
the underlying Open Performance Period of each such Performance Share Award,
with the first vesting date beginning on the last day of the calendar quarter in
which such Performance Share Award was granted.

     

    (3)           The
remaining (50%) of any of Participant's unearned Award Values for any Open
Performance Period shall terminate in full and Participant shall not be entitled
to any Performance Share Award in respect of such Award Values.

     

          (4)           Example:

     

            (i)           Facts:  Participant
was granted an Award Value of $100,000 for 2008, $125,000 for 2009, $150,000 for
2010, $200,000 for 2011 and $250,000 for 2012.  The Company achieved
the 2008 Company Performance Goal, but did not achieve the 2009 Company
Performance Goal.  In 2010, the Company was acquired in a transaction
that constituted a Change in Control and on June 15, 2010, the successor
corporation terminated the Performance Share Awards Terms and
Conditions.  The closing price of the Company's Common Stock on the
business day prior to the termination of the Performance Share Awards Terms and
Conditions was $100.00 per share.

     

            (ii)           Awards:  The
Performance Share Award granted in respect of the 2008 Performance Period would
continue to vest according to its existing schedule.  As a result of
the termination of the Performance Share Awards Terms and

     

     

    
      
        
        

      

      
        - 11
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    Conditions,
each Participant would be granted four separate Performance Share
Awards.

     

    
      	
              ·  

            	
              The
      Performance Share Award in respect of the 2009 Performance Period would
      have a dollar value of $62,500 (50% x $125,000) and if settled in Shares,
      would cover 625 Shares ($62,500 ÷ 100.00 per share).  This
      Performance Share Award would vest in quarterly installments over a period
      of thirty-six months, beginning on June 30,
  2010.

            


    

     

    
      	
              ·  

            	
              The
      Performance Share Award in respect of the 2010 Performance Period would
      have a dollar value of $75,000 (50% x $150,000) and if settled in Shares,
      would cover 750 Shares ($75,000 ÷ 100.00 per share).  This
      Performance Share Award would vest in quarterly installments over a period
      of twenty-four months, beginning on June 30,
  2010.

            


    

     

    
      	
              ·  

            	
              The
      Performance Share Award in respect of the 2011 Performance Period would
      have a dollar value of $100,000 (50% x $200,000) and if settled in Shares,
      would cover 1,000 Shares ($100,000 ÷ 100.00 per share).  This
      Performance Share Award would vest in quarterly installments over a period
      of twenty-four months, beginning on June 30,
  2010.

            


    

     

    
      	
              ·  

            	
              The
      Performance Share Award in respect of the 2012 Performance Period would
      have a dollar value of $125,000 (50% x $250,000) and if settled in Shares,
      would cover 1,250 Shares ($125,000 ÷ 100.00 per share).  This
      Performance Share Award would vest in quarterly installments over a period
      of twelve months, beginning on June 30,
2010.

            


    

     

    12.       EXPIRATION
OF THE PERFORMANCE SHARE AWARDS TERMS AND CONDITIONS; TERMINATION OF THE
PERFORMANCE SHARE AWARDS TERMS AND CONDITIONS.

     

    (a)           The
Performance Share Awards Terms and Conditions shall automatically terminate on
the date the Committee determines the grants of Performance Share Awards, if
any, in respect of 2012 Performance Period (the "Termination Date"), which date
shall not be later than March 31, 2013.  Any Open Performance Periods
as of such date shall be immediately terminated and Participant shall not be
entitled to any Performance Share Award for any remaining Open Performance
Period.

     

               
(b)          Except as set
forth in Section 11(b), in the event the Performance Share Awards Terms and
Conditions are terminated prior to the Termination Date, the following shall
apply:

     

           
(1)           Subject to
Section 10(b), any earned but unvested Performance Share Awards and accrued
dividend equivalents thereon shall continue to vest in accordance with its
existing vesting schedule; and

     

     
(2)           Participant
shall be automatically granted a Performance Share Award, effective immediately
prior to the termination of the Performance Share Awards Terms and Conditions,
equal to fifty percent (50%) of any of Participant's unearned

     

     

     

    
      
        
        

      

      
        - 12
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    Award
Values (without regard to the Company Performance Goal or Participant's
individual performance objectives) for any Open Performance
Period.  To the extent the Performance Share Award is settled in
Shares, the number of Shares subject to such Award shall be determined by
dividing fifty percent (50%) of any of Participant's unearned Award Values for
any Open Performance Period by the closing price of a Share on the last business
day immediately prior to the termination of the Performance Share Awards Terms
and Conditions.  Subject to Section 10(b), such Performance Share
Award shall vest in accordance with the vesting schedule attributable to the
underlying Open Performance Period of each such Performance Share Award, with
the first vesting date beginning on the last day of the calendar quarter in
which such Performance Share Award was granted.

     

     
(3)           The
remaining (50%) of any of Participant's unearned Award Values shall terminate in
full and Participant shall not be entitled to any Performance Share Award in
respect of such unearned Award Values.

     

    13.       UNFUNDED
STATUS OF THE PERFORMANCE SHARE AWARDS TERMS AND CONDITIONS.

     

    The Performance Share Awards Terms and
Conditions are intended to constitute an "unfunded" plan for incentive
compensation.  With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.

     

    14.        SECTION
409A OF THE CODE.

     

           
The Performance Share Awards Terms and Conditions and applicable Performance
Share Award Agreements are intended to comply with the requirements of Section
409A.  Consistent with that intent, the Performance Share Awards Terms
and Conditions and applicable Performance Share Award Agreements shall be
interpreted in a manner consistent with Section 409A and in the event that any
provision that is necessary for the Performance Share Awards Terms and
Conditions to comply with Section 409A is determined by the Committee, in its
sole discretion, to have been omitted, such omitted provision shall be deemed
included herein and is hereby incorporated as part of such terms and
conditions.  Further, all payments hereunder shall be made in no event
later than the last day of the “applicable 2 1⁄2 month period”, as such term is
defined under Section 409A in order that such amounts be treated as a short-term
deferral for purposes of Section 409A.

     

            
Notwithstanding any provision to the contrary, the provisions in this Section 14
shall apply to the extent required in order to avoid accelerated taxation and/or
tax penalties under Section 409A.  If Participant is a “specified
employee” (as defined under Section 409A) as of the date of his or her
“separation from service” (as defined under Section 409A) from the Company or
Subsidiary, then any payment of the Performance Share Award (and related
dividend equivalents) scheduled to be paid to such Participant during the first
six (6) month period following such separation date shall not be paid until the
earlier of (a) the expiration of the six (6) month period measured from the date
of Participant’s “separation from service” (b) the date of Participant’s
death.  All payments

     

     

    
      
        
        

      

      
        - 13
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    and
benefits that are delayed pursuant to the immediately preceding sentence shall
be paid to Participant in a lump sum as soon as practicable following the
expiration of such period (or if earlier, upon Participant’s death) but in no
event later than thirty (30) days following such period.  No
Performance Share Award (and related dividend equivalents) that is payable upon
a termination of Participant’s employment or services from the Company shall be
payable unless such termination also meets the requirements of a “separation
from service” under Section 409A.  For purposes of Section 409A of the
Code, to the extent that any payment payable under the Performance Share Awards
Terms and Conditions is to be paid in installments, each such payment shall be
treated as a separate identified payment for purposes of Section 409A of the
Code.

     

                                    

     

     

    
    

     

    
      	
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