EX-4.1











Exhibit 4.1




FURNITURE BRANDS INTERNATIONAL, INC.

2008 INCENTIVE PLAN




ARTICLE I

ESTABLISHMENT




1.1 Purpose. The purpose of the Furniture Brands International 2008 Incentive Plan (the
“Plan” or “Incentive Plan”) is to enhance Company performance by motivating, attracting, and
retaining key employees and non-employee directors through the issuance of equity and cash
awards. This Plan is intended to supersede the 1999 Furniture Brands Long Term Incentive Plan and
no new awards will be made under such prior plan after the effective date of this Plan.



1.2 Effective Date. The Plan shall be effective as of the date the stockholders of the
Company approve the Plan.



ARTICLE II

DEFINITIONS




          As used in this Plan, the following terms shall be defined as set forth below:




2.1 “Award” means any Short- or Long-Term Incentive, Stock Option, SAR, Restricted Share,
Restricted Share Unit, or Performance Share or Performance Unit award granted or payable under the
Plan.



2.2 “Award Agreement” means an agreement, certificate, resolution or other form of
writing or other evidence approved by the Committee that sets forth the terms and conditions of an
Award. An Award Agreement may be in an electronic medium, may be limited to a notation on the
Company’s books and records and, if approved by the Committee, need not be signed by a
representative of the Company or a Participant.



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



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



          Any rights the Company may have in respect of the events giving rise to Cause shall be in
addition to the rights the Company may have under any other agreement with a Participant or at law
or in equity. Any determination of whether a Participant’s
employment is (or is deemed to have been) terminated for Cause shall be made by the Committee
in its sole discretion, which determination shall be final and binding on all parties. If,
subsequent to a Participant’s termination of employment (whether voluntary or involuntary) without
Cause, it is discovered that the Participant’s employment could have been terminated for Cause,
such Participant’s employment shall be deemed to have been terminated for Cause. A Participant’s
termination of employment for Cause shall be effective as of the date of the occurrence of the
event giving rise to Cause, regardless of when the determination of Cause is made.




2.5 “Change in Control” means the first to occur of any of the following events:




	 	(i)	 	any person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company or its affiliates, other than
in connection




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	 	 	 	with the acquisition by the Company or its affiliates of a business)
representing 35% or more of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company’s then outstanding securities; or
	 
	 	(ii)	 	the majority of the members of the Board is replaced during any 12-month period
by directors whose appointment or election is not endorsed by a majority of the members
of the Board prior to the date of the appointment or election; or
	 
	 	(iii)	 	the consummation of a merger or consolidation of the Company with any other
entity, other than (a) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, 60% or more of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (b) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction) in
which no person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by such
person any securities acquired directly from the Company or its affiliates, other than
in connection with the acquisition by the Company or its affiliates of a business)
representing 50% or more of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company’s then outstanding securities; or
	 
	 	(iv)	 	the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets, other than a sale or disposition
by the Company of all or substantially all of the Company’s assets to an entity, 60% or
more of the combined voting power of the voting securities of which is owned by persons
in substantially the same proportions as their ownership of the Company immediately
prior to such sale.





          Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if
there is consummated any transaction or series of integrated transactions immediately following
which the record holders of the common stock of the Company immediately prior to such transaction
or series of transactions continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the Company immediately following such
transaction or series of transactions.







          For purposes of this Section, “beneficial ownership” shall be determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended.




2.6 “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time.



2.7 “Committee” means the committee of the Board described in Section 4.1.



2.8 “Company” means Furniture Brands International, Inc., a Delaware corporation, or any
successor corporation.



2.9 “Covered Employee” shall have the meaning as set forth in Code Section 162(m).



2.10 “Disability” means that a Participant is permanently and totally disabled and unable
to engage in any substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of twelve months. The existence of a Disability shall be
determined by the Committee in its sole




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discretion. 

2.11 “Employee” means any person, including an officer, employed by the Company or a
Subsidiary as an employee. The Company’s employment classification of an individual shall be
binding and controlling for all purposes of the Plan and shall apply irrespective of any contrary
employment classification of such individual by the Internal Revenue Service, a court of competent
jurisdiction or any other person or entity.



2.12 “Fair Market Value” means the fair market value of the Shares as determined by the
Committee from time to time. Unless otherwise determined by the Committee, the fair market value
shall be the closing price for the Shares reported on the New York Stock Exchange on the relevant
date or, if there were no sales on such date, the closing price on the nearest following date on
which sales occurred.



2.13 “Grant Date” means the date specified by the Committee on which a grant of an Award
shall become effective, which date shall not be earlier than the date on which the Committee takes
action creating the legally binding right constituting the Award



2.14 “Incentive Stock Option” means any Option that is intended to qualify as an “incentive
stock option” under Code Section 422 or any successor provision. Only Participants who are
employees of the Company or a Subsidiary may receive Incentive Stock Options.



2.15 “Long-Term Incentive” means an incentive payment described in Section 8.1.



2.16 “Non-Employee Director” means a director of the Company who is not an active employee
of the Company or a Subsidiary.



2.17 “Nonqualified Stock Option” means an Option that is not intended to qualify as an
Incentive Stock Option.



2.18 “Option” or “Stock Option” means any option to purchase Shares granted under
Article VI.



2.19 “Participant” means an Employee or Non-Employee Director who is selected by the
Committee to receive benefits under this Plan.



2.20 “Performance Award” means an Award of “Performance Shares” or “Performance Units”
granted pursuant to Article V that is contingent upon the satisfaction of one or more Performance
Objectives. Each Performance Share or Performance Unit shall have an initial value equal to the
Fair Market Value of one Share.



2.21 “Performance Objectives” has the meaning set for in Article XII.



2.22 “Performance Period” means a period of time established by the Committee during which
the attainment of Performance Objectives relating to an Award are to be achieved.



2.23 “Qualified Performance-Based Award” means an Award or portion of an Award that is
intended to satisfy the requirements for “qualified performance-based
compensation” under Code Section 162(m). The Committee shall designate any Qualified
Performance-Based Award as such at the time of grant.



2.24 “Restricted Shares” means an award of Shares granted pursuant to Article VIII that are
subject to a substantial risk of forfeiture.



2.25 “Restricted Share Units” means an award of a contractual right granted pursuant to
Article VII to receive a specified number of Shares or cash at the end of a specified deferral
period. Each Restricted Share Unit shall have an initial value equal to the Fair Market Value of
one Share.



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2.26 “Restriction Period” means that time from the Grant Date during which a grant of
Restricted Shares or Restricted Share Units shall be subject to a “substantial risk of forfeiture”
pursuant to Section 7.5.



2.27 “Retirement” means a Participant’s termination of employment on or after attaining age
55 and completing 5 years of service with the Company.



2.28 “Shares” means shares of the Common Stock of the Company, no par value.



2.29 “Short Term Incentive” means an incentive payment described in Section 8.1.



2.30 “SAR” means an award of a contractual right granted pursuant to Article VI to receive
an amount equal to the appreciation in the Company’s Shares from the Grant Date. Acronym for Stock
Appreciation Right.



2.31 “Stock Option” see Option



2.32 “Subsidiary” means a corporation in which the Company owns or controls directly or
indirectly more than 50% of the total combined voting power represented by all classes of stock
issued by such corporation at the time of such grant.



ARTICLE III

SHARES AVAILABLE UNDER THE PLAN




3.1 Reserved Shares. Subject to adjustment as provided in Section 3.5, the maximum
number of Shares that may be issued or transferred pursuant to this Plan shall not exceed 1,800,000
Shares. Such Shares may be Shares of original issuance, Shares held in treasury, or Shares that
have been reacquired by the Company.



3.2 Grant Maximums. In no event shall the total number of Shares issued upon the
exercise of Stock Options and stock-settled SARs exceed 1,200,000 Shares; nor shall the total
number of Shares granted in association with any award other than a Stock Option or SAR exceed
600,000 Shares; nor shall the total number of Shares
granted to Employees in association with any non-performance award of time-based Restricted Shares
that are subject to any restrictions or minimum vesting periods exceed 80,000 shares; with all such
limits subject to adjustment as provided in Section 3.4.



3.3 Maximum Calendar Year Award. No Employee may receive Awards representing more than
400,000 Shares or $4,000,000 in any one calendar year, subject to adjustment as provided in
Section 3.4. The maximum number of Shares that may be granted in the aggregate to Non-Employee
Directors for all types of Awards shall not exceed 100,000 Shares in any one calendar year. The
maximum number of Shares that may be granted in the aggregate to Employees for all types of Awards
shall not exceed 600,000 Shares in any one calendar year, net of adjustment for forfeited and
unused Shares as provided in Section 3.7.



3.4 Adjustments to Maximum Limits. The maximum Awards provided in Sections 3.2 and 3.3
above are subject to Authorization Adjustments as provided in Section 3.5.



3.5 Authorization Adjustments. The Committee shall make such adjustments in (a)
the number of Shares covered by outstanding Awards granted hereunder, (b) prices per share
applicable to outstanding Options and SARs, and (c) the kind of shares covered thereby (including
shares of another issuer), as the Committee determines to be equitable in order to prevent dilution
or enlargement of the rights of Participants that otherwise would result from any stock dividend,
stock split, combination or exchange of Shares, reorganization, partial or complete liquidation or
other distribution of assets (other than a normal cash dividend), recapitalization or other change
in the capital structure of the Company, or other corporate transaction or event having an effect
similar to any of the foregoing. Adjustments under



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this Section 3.5 shall be made by the
Committee, whose determinations with regard thereto shall be final and binding upon all persons.



3.6 Fractional Shares. The Company shall not be required to issue any fractional Shares
pursuant to this Plan. The Committee may provide for the elimination of fractions or for the
settlement thereof in cash.



3.7 Unused and Forfeited Shares. If any Award expires, terminates, or is terminated for
any reason before exercise or vesting in full, the Shares that were subject to the unexercised,
forfeited, expired or terminated portion of such Incentive Award shall be available for future
grants of Awards under the Plan. Notwithstanding any provision of the Plan to the contrary,
liberal share counting is not permitted under the Plan such that no Shares derived from any of the
following circumstances may be added to the Plan’s reserve of shares: (i) shares tendered in
payment of an Option, (ii) shares withheld for taxes, (iii) shares repurchased by the Corporation
using Option proceeds, or (iv) SARs settled in Stock when only the shares delivered are counted
against the Plan reserve.



ARTICLE IV

PLAN ADMINISTRATION




4.1 Board Committee Administration. This Plan shall be administered by the Human
Resource Committee of the Board (or such other Committee appointed by the Board from among its
Non-Employee Directors), provided that, except with respect to any Qualified Performance-Based
Award, the full Board may act at any time as the Committee. Notwithstanding the foregoing, the
full Board shall be responsible for the administration of Awards to Non-Employee Directors.



4.2 Duties and Powers. The Committee shall have the full power and discretion to
determine the Participants eligible to receive Awards and the type, size and conditions of such
Awards, and to administer, construe, and apply the provisions of the Plan and any Award.



4.3 Committee Delegation. The Committee may delegate to one or more officers of the
Company the authority to grant Awards to Participants who are not Covered Employees of the Company;
provided that the Committee shall determine a limit for the total number of shares of Stock subject
to such delegated grants.



4.4 Determinations Binding. All actions taken or determinations made by the Committee,
in good faith, with respect to the Plan, an Award or any Award Agreement shall not be subject to
review by anyone, but shall be final, binding and conclusive upon all persons interested in the
Plan or any Award. No member of the Committee shall be liable to any person for any such action
taken or determination made in good faith.



ARTICLE V

PERFORMANCE AWARDS




5.1 General. The Committee may from time to time authorize grants to Participants of
Performance Awards upon such terms and conditions as the Committee may determine in accordance with
provisions of this Article V. Performance Awards shall be evidenced by an Award Agreement
containing such terms and provisions as the Committee may determine consistent with this Plan



5.2 Incentive Opportunity. Prior to the beginning of each Performance Period, the
Committee shall specify the value of the opportunity subject to the number of Performance Shares or
Performance Units to which the Performance Award pertains.



5.3 Performance Period. The Performance Period with respect to each Performance Award
shall commence and end as of the dates determined by the Committee under the terms of the
applicable Award Agreement.



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5.4 Performance Objectives. Each Performance Award shall specify the Performance
Objectives that must be achieved before such Award shall become vested and payable. The Committee
may adjust such Performance Objectives as provided in Section 12.2. The Committee shall specify a
minimum acceptable level of achievement of the specified Performance Objectives, below which no
payment will be made and a highest level of achievement of the specified Performance Objectives
that determines the maximum payment that will be made. The Committee may also set forth a formula
for determining the amount of payment to be made between the minimum and maximum levels of
achievement.



5.5 Payment in Cash or Shares. The amount payable upon the completion of the Performance
Period and the achievement of the Performance Objectives with respect to any Performance Award
shall be specified in the Award Agreement and may be paid by the Company in cash, Shares or any
combination thereof and may either grant to the Participant or reserve to the Committee the right
to elect among those alternatives. The final determination of the payment in cash or Shares will
be made at the end of the Performance Period at the sole discretion of the Committee. Payment with
respect to any Performance Award shall be made within 60 days after the end of the applicable
Performance Period.



5.6 Dividend Equivalents. Prior to the expiration of a Performance Period and payment of
any Shares or cash earned with respect to a Performance Award, no dividend equivalents shall be
paid or payable with respect to such Award.



5.7 Effect of Termination of Employment.




	 	(i)	 	Unless otherwise specified by the Committee, in the event that the employment
of a Participant shall terminate for any reason other than Retirement, Cause,
Disability or death prior to the payment of any Performance Award granted to such
Participant, all Performance Awards that have not paid as of the date of such
termination shall be forfeited.
	 
	 	(ii)	 	Unless otherwise specified by the Committee, in the event that the employment
of a Participant with the Company shall terminate on account of the Retirement, death,
or Disability of the Participant prior to the payment of any Performance Award granted
to such Participant, a pro rata portion of such Performance Award shall be payable to
such Participant within 60 days following the end of the applicable Performance
Period. The amount payable pursuant to the preceding sentence shall be determined by
measuring actual achievement versus the Performance Objectives for the full Performance
Period, and by multiplying that earned amount by a fraction, the numerator of which
shall be the number of full months that have elapsed in the applicable Performance
Period prior to the Participant’s termination of employment and the denominator of
which shall be the total number of months in the Performance Period.
	 
	 	(iii)	 	In the event of the termination of a Participant’s employment for Cause, all
outstanding Performance Awards granted to such Participant shall be forfeited.





5.8 Effect of Change in Control. Unless otherwise specified by the Committee, any
unvested Performance Awards shall be payable to such Participant within thirty days following a
Change in Control. The amount payable pursuant to the preceding sentence shall be determined by
determining the actual achievement versus the Performance Objectives to date of the Change in
Control, and paid out by multiplying that earned amount by a fraction, the numerator of which shall
be the number of full months that have elapsed in the applicable Performance Period prior to the
Change in Control and the denominator of which shall be the total number of months in the
Performance Period.




ARTICLE VI

OPTIONS AND SARS




6.1 General. The Committee may from time to time authorize grants to Participants of
Options



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and/or SARs upon such terms and conditions as the Committee may determine in accordance
with provisions of this Article VI. Options and SARs shall be evidenced by an Award Agreement
containing such terms and provisions as the Committee may determine consistent with this Plan.


6.2 Number of Options or SARs. Each grant shall specify the number of Shares subject to
the Option or SAR.



6.3 Exercise Price. Each grant shall specify an exercise price per Option Share or SAR,
provided that in no event shall the exercise price be less than the Fair Market Value per Share on
the Grant Date (or, in the case of an Incentive Stock Option for a Participant possessing more than
10% of the voting power of all classes of stock of the Company, less than 110% of the Fair Market
Value per Share on the Grant Date).



6.4 Consideration. The form of consideration to be paid in satisfaction of the exercise
price of an Option and the manner of payment of such consideration may include, as determined by
the Committee: (i) cash in the form of currency or check or other cash equivalent acceptable to the
Company, (ii) nonforfeitable, unrestricted Shares owned by the Participant which have a value at
the time of exercise that is equal to the option price, (iii) any other legal consideration that
the Committee may deem appropriate, on such basis as the Committee shall determine in accordance
with this Plan, or (iv) any combination of the foregoing. The method of payment shall be specified
in the Award Agreement. Notwithstanding the foregoing, to the extent permitted by applicable law,
any grant may provide for payment of the exercise price of an Option from the proceeds of sale
through a bank or broker on the date of exercise of some or all of the Shares to which the exercise
relates.



6.5 Exercise of SARs. Upon exercise of a SAR, a Participant shall be entitled to receive
payment from the Company in an amount determined by multiplying (i) the difference between the Fair
Market Value of a Share on the date of exercise over the exercise price, times (ii) the number
of Shares with respect to which the SAR is exercised. The Award Agreement for the grant may
specify that the amount payable upon the exercise of a SAR may be paid by the Company in cash,
Shares or any combination thereof and may either grant to the Participant or reserve to the
Committee the right to elect among those alternatives.



6.6 Performance-Based Options and SARs. Any grant of an Option or SAR may specify
Performance Objectives that must be achieved as a condition to vesting and/or exercise of the
Option or SAR.



6.7 Vesting. Each Option or SAR grant may specify the conditions that must be satisfied
before the Options or SARs (or installments thereof) shall become vested and exercisable, provided
however, no Option or SAR award may become exercisable in full until three years from the date such
Stock Option was granted. The limitations of the preceding sentence shall not apply in the case of
a Stock Option that becomes exercisable as a result of the attainment of a specified Performance
Measure or in the case of a Stock Option granted as an employee recognition award, a retention
award, or to a newly hired employee; provided that except as provided for under the Plan no portion
of any such Stock Option may become exercisable until six months from the date the Stock Option was
granted. The exceptions in the preceding sentence to the general minimum vesting provisions of
this subsection, other than the exception applying to a Stock Option that becomes exercisable as a
result of the attainment of a specified Performance Measure, are intended to be applied only in
special circumstances as determined by the Committee (or its delegate).



6.8 ISO Dollar Limitation. Options granted under this Plan may be Incentive Stock
Options, Nonqualified Stock Options or a combination of the foregoing. Each grant shall specify
whether (or the extent to which) the Option is an Incentive Stock Option or a Nonqualified Stock
Option. Notwithstanding any such designation, to the extent that the aggregate Fair Market Value of
the Shares with respect to which Options designated as Incentive Stock Options are exercisable for
the first time by a Participant during any calendar year (under all plans of the Company) exceeds
$100,000, such Options shall be treated as Nonqualified Stock Options.



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6.9 Exercise Period. Any grant may specify (i) a waiting period or periods before
Options or SARs shall become exercisable and (ii) permissible dates or periods on or during which
Options or SARs shall be exercisable. No Option or SAR granted under this Plan may be exercised
more than seven years from the Grant Date. In addition, the exercise period for any Incentive
Stock Option for a Participant possessing more than 10% of the voting power of all classes of stock
of the Company shall not exceed five years. The Committee may not extend the exercise period of an
outstanding Option or
SAR beyond the time originally prescribed in the Award Agreement, except to the extent permitted
under Code Section 409A and U.S. Department of Treasury regulations or other guidance issued
thereunder.



6.10 Repricing and Backdating Prohibited. The Committee shall not reprice any outstanding
Option or SAR including the cancellation of an existing Option or SAR and substitution of a new
Option or SAR with a lower exercise price, directly or indirectly, without the approval of the
stockholders of the Company, provided that nothing herein shall prevent the Committee from taking
any action provided for in Section 3.5. In no event shall the Grant Date of any Option or SAR be
earlier than the date on which the Committee takes action with respect thereto.



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



6.12 Effect of Termination of Employment.





     (i) Unless otherwise provided in an applicable Award Agreement, in the event
that the employment of a Participant shall terminate for any reason other than Retirement,
Cause, Disability or death, (a) Options and SARs granted to such Participant, to the extent
that they were exercisable at the time of such termination, shall remain exercisable until
the expiration of 90 days after such termination, on which date they shall expire, and
(b) Options and SARs granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close of business on the
date of such termination; provided however, no Option or SAR shall be exercisable after the
expiration of its term.




     (ii) Unless otherwise provided in an applicable Award Agreement, in the event
that the employment of a Participant shall terminate on account of the Retirement, death, or
Disability of the Participant, (a) Options and SARs granted to such Participant, to the
extent that they were exercisable at the time of such termination, shall remain exercisable
until the expiration of three years after such termination, on which date they shall expire,
and (b) Options and SARs granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close of business on the
date of such termination; provided however, no Option or SAR shall be exercisable after the
expiration of its term.




     (iii) In the event of the termination of a Participant’s employment for Cause,
all outstanding Options and SARs granted to such Participant (regardless of whether or not
exercisable at the time of such termination) shall expire at the
commencement of business on the effective date of such termination (or deemed
termination).




6.13 Effect of Change in Control. Unless otherwise provided in an applicable Award
Agreement, all Options and SARs granted to Participants who are employed by the Company or a
Subsidiary at the time of such Change in Control shall become fully vested and exercisable.




ARTICLE VII

RESTRICTED SHARES AND RESTRICTED SHARE UNITS




7.1 General. The Committee may from time to time authorize grants to Participants of
Restricted



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Shares and/or Restricted Share Units upon such terms and conditions as the Committee may
determine in accordance with provisions of this Article VII. Each grant of Restricted Shares and
Restricted Share Units shall be evidenced by an Award Agreement containing such terms and
provisions as the Committee may determine consistent with this Plan.



7.2 Number of Restricted Shares or Units. Each grant shall specify the number of
Restricted Shares or Restricted Share Units to which it pertains.



7.3 Minimum Restriction Period. Except as provided in this subsection or as otherwise
provided under the Plan, the Restriction Period applicable to a Restricted Share Award or
Restricted Share Unit Award may not lapse in full until three years from the date such award was
granted and no portion of the Restriction Period applicable to a Restricted Share Award or
Restricted Share Unit Award may lapse until one year from the date such award was granted. The
limitations of the preceding sentence shall not apply in the case of a Restricted Share Award or
Restricted Share Unit Award that vests as a result of the attainment of a specified Performance
Measure or in the case of a Restricted Share Award or Restricted Share Unit Award granted as a
founder’s grant, an employee recognition award, or to a newly hired employee; provided that except
as provided for under the Plan the minimum Restriction Period applicable to such award shall be six
months. The exceptions in the preceding sentence to the general minimum vesting provisions of this
subsection, other than the exception applying to a Restricted Share Award or Restricted Share Unit
Award that vests as a result of the attainment of a specified Performance Measure, are intended to
be applied only in special circumstances as determined by the Committee (or its delegate).



7.4 Transfer of Shares. Each grant of Restricted Shares shall constitute an immediate
transfer of the ownership of Shares to the Participant in consideration of the performance of
services, subject to the restrictions on transfer hereinafter referred to. Each grant of
Restricted Share Units shall constitute the agreement by the Company to issue or transfer Shares,
cash or a combination thereof to the Participant in
the future subject to the fulfillment of such conditions as the Committee may specify, but in no
event later than 60 days following the end of the risk of forfeiture period determined in Section 7.6.



7.5 Consideration. Each grant of Restricted Shares or Restricted Share Units may be made
without additional consideration from the Participant or in consideration of a payment by the
Participant that is less than the Fair Market Value per share or unit on the Grant Date.



7.6 Substantial Risk of Forfeiture. Each grant of Restricted Shares shall provide that
those Shares covered thereby shall be subject to a “substantial risk of forfeiture” within the
meaning of Code Section 83 for a period to be determined by the Committee on the Grant Date. Each
grant of Restricted Share Units shall provide that those Unites covered thereby shall be subject to
a “substantial risk of forfeiture” within the meaning of Code 409A for a period to be determined by
the Committee on the Grant Date. This risk of forfeiture period for any grant of Restricted Shares
or Restricted Share Units whether based solely on continued employment of the Participant or in
part on the achievement of specified Performance Objectives shall not be less than 3 years from the
Grant Date. If any Participant makes an election under Code Section 83(b) with respect to any
Restricted Shares granted hereunder, such election shall be made within 30 days of the Grant Date
and the Participant shall notify the Company with ten days of such making election, and provide the
Company with a copy of such election.



7.7 Dividends, Voting and Other Ownership Rights. Unless otherwise provided in an
applicable Award Agreement, an Award of Restricted Shares shall entitle the Participant to
dividend, voting and other ownership rights during the period for which such substantial risk of
forfeiture is to continue. Any Award of Restricted Shares may require that any or all dividends or
other distributions paid on the Restricted Shares during the period of such restrictions be
automatically sequestered and reinvested on an immediate or deferred basis in additional Shares,
which may be subject to the same restrictions as the underlying Award or such other restrictions as
the Committee may determine. To the extent set forth in a Participant’s Award Agreement with
respect to Restricted Share Units, a Participant may be entitled to receive dividend equivalents
payable in cash or additional Shares on a current, deferred or contingent basis.



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7.8 Performance-Based Restricted Shares and Restricted Share Unit. Any grant of
Restricted Shares or Restricted Share Units may specify Performance Objectives that must be
achieved as a condition of vesting and/or payment of such Restricted Shares or Restricted Stock
Units.



7.9 Effect of Termination of Employment.




     (i) Unless otherwise provided in an applicable Award Agreement, in the event
that the employment of a Participant shall terminate for any reason other than Retirement,
Cause, Disability or death prior to the vesting of
Restricted Shares or Restricted Stock Units granted to such Participant, all
Restricted Shares and Restricted Stock Units that have not vested as of the date of such
termination shall be forfeited.




     (ii) Unless otherwise provided in an applicable Award Agreement, in the
event that the employment of a Participant shall terminate on account of the Retirement,
death or Disability of the Participant prior to the vesting of Restricted Shares or
Restricted Stock Units granted to such Participant, a proportion of such Restricted Shares
and Restricted Stock Units, to the extent not forfeited or canceled on or prior to such
termination pursuant to any provision hereof, shall vest on the date of such termination,
and payment with respect to any such vested Restricted Share Units shall be made no later
than 60 days following the date of such termination. The proportion referred to in the
preceding sentence shall be determined by multiplying the Participant’s non-vested
Restricted Shares or Restricted Stock Units by a fraction, the numerator of which shall be
the number of full months that have elapsed in the applicable vesting period prior to the
Participant’s termination of employment and the denominator of which shall be the total
number of months in such vesting period.




     (iii) In the event a Participant’s employment is or is deemed to have been
terminated for Cause, all Restricted Shares and Restricted Stock Units granted to such
Participant that have not vested as of the effective date of such termination shall be
forfeited.




7.10 Effect of Change in Control. Unless otherwise provided in an applicable Award
Agreement, all Restricted Shares and Restricted Stock Units granted to Participants who are
employed by the Company or a Subsidiary at the time of such Change in Control shall become fully
vested and non-forfeitable.



ARTICLE VIII

SHORT- AND LONG-TERM INCENTIVE PLANS




8.1 Cash Incentives. For each of the Company’s fiscal year or series of years, the
Committee may establish an incentive pool or other incentive structure or policy with respect to
Participants who are not Non-Employee Directors. Any such incentive pool, structure or policy
shall be subject to such terms, restrictions and conditions determined by the Committee and
consistent with the terms of this Plan. Cash Incentives shall normally be paid in cash; the
Committee may at its discretion determine that Shares or a combination thereof be used to deliver
the payment of the incentives. Payment of such Short- or Long-Term Incentives shall be subject to
the following:




     (i) Unless otherwise specified by the Committee, in the event that the
employment of a Participant shall terminate for any reason other than
Retirement, Cause, Disability or death prior to the payment date of any Short- or
Long-Term Incentive, such incentive opportunity shall be forfeited in its entirety.




     (ii) Unless otherwise specified by the Committee, in the event that the
employment of a Participant with the Company shall terminate on account of the Retirement,
death, or Disability of the Participant prior to the payment date of any Short- or
Long-Term Incentive, a pro rata portion of such Short- or Long-Term Incentive shall be
payable to such



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Participant within 60 days following the end of the applicable Performance
Period. The amount payable pursuant to the preceding sentence shall be determined by
measuring actual achievement versus the Performance Objectives for the full Performance
Period, and by multiplying that earned amount by a fraction, the numerator of which shall
be the number of full months that have elapsed in the applicable Performance Period prior
to the Participant’s termination of employment and the denominator of which shall be the
total number of months in the Performance Period.




     (iii) In the event of the termination of a Participant’s employment for
Cause, such Participant’s Short- and Long-Term incentive opportunity shall be forfeited in
its entirety.




     (iv) Unless otherwise specified by the Committee, a pro rata portion of a
Participant’s Short- and Long-Term Incentive shall be payable to such Participant within
thirty days following a Change in Control. The amount payable pursuant to the preceding
sentence shall be determined by determining the actual achievement versus the Performance
Objectives to date of the Change in Control, and paid out by multiplying that earned amount
by a fraction, the numerator of which shall be the number of full months that have elapsed
in the applicable Performance Period prior to the Change in Control and the denominator of
which shall be the total number of months in the Performance Period.



ARTICLE IX

OTHER AWARDS




9.1 Other Stock Awards. The Committee may, subject to limitations under applicable law,
grant to any Participant such other awards that may be denominated or payable in, valued in whole
or in part by reference to, or otherwise based on, or related to, Shares or factors that may
influence the value of such Shares, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Shares, purchase rights for Shares,
awards with value and payment contingent upon performance of the Company or specified Subsidiaries,
affiliates or other business units thereof or any other factors designated by the Committee, and
awards valued by reference to the book value of Shares or the value of securities of, or the
performance of specified Subsidiaries or affiliates or other business units of the Company. The
Committee shall determine the terms and conditions of such
awards. Shares delivered pursuant to an award in the nature of a purchase right granted under this
Article IX shall be purchased for such consideration, paid for at such time, by such methods, and
in such forms, including, without limitation, cash, Shares, other awards, notes or other property,
as the Committee shall determine.



9.2 Payment In Lieu of Other Obligations. The Committee may grant Shares as a bonus, or
may grant other awards in lieu of obligations of the Company or a Subsidiary to pay cash or deliver
other property under this Plan or under other plans or compensatory arrangements, subject to such
terms as shall be determined by the Committee.



ARTICLE X

TRANSFERABILITY




10.1 Transfer Restrictions. Unless provided in Section 10.2, no Award granted under this
Plan shall be transferable by a Participant other than by will or the laws of descent and
distribution, and Options and SARs shall be exercisable during a Participant’s lifetime only by the
Participant or, in the event of the Participant’s legal incapacity, by his guardian or legal
representative acting in a fiduciary capacity on behalf of the Participant under state law. Any
attempt to transfer an Award in violation of this Plan shall render such Award null and void.



10.2 Family Transfers. The Committee may, in its sole discretion, authorize all or a
portion of the Award granted to a Participant to be on terms which permit transfer to: (i) the
spouse, children or grandchildren of the Participant (“Immediate Family Members”), (ii) a trust or
trusts for the exclusive



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benefit of Immediate Family Members, (iii) a partnership in which
Immediate Family Members are the only partners, or (iv) a former spouse pursuant to a qualified
domestic relations order, provided that subsequent transfers of transferred Awards shall be
prohibited except by will or the laws of descent and distribution. Following transfer, any such
Awards shall continue to be subject to the same terms and conditions as were applicable immediately
prior to transfer.



10.3 Restrictions on Transfer. Any Award made under this Plan may provide that all or
any part of the Shares that are (i) to be issued or transferred by the Company upon the exercise of
Options or SARs, upon the termination of any risk of forfeiture period applicable to Restricted
Share Units or upon payment of any Short- or Long-Term Incentives or Performance Awards, or (ii) no
longer subject to the substantial risk of forfeiture and restrictions on transfer referred to in
Article VII applicable to Restricted Shares, shall be subject to further restrictions upon
transfer, as is determined by the Committee at the time of grant of that Award.



ARTICLE XI

DEFERRAL OF AWARDS




11.1 General. The Committee may permit Participants to elect to defer the issuance of
Shares or the settlement of Awards in cash under the Plan pursuant to such rules, procedures or
programs as it may establish for purposes of this Plan. In the case of an Award of Restricted
Shares, the deferral may be effected by the Participant’s agreement to forego or exchange his or
her Award of Restricted Shares and to receive an Award of Restricted Share Units. The Committee
also may provide that deferred settlements include the payment or crediting of interest on the
deferral amounts, or the payment or crediting of dividend equivalents where the deferral amounts
are denominated in Shares.



11.2 Compliance with Code Section 409A. To the extent any Award (or portion thereof)
provides for the deferral of compensation and is subject to Code Section 409A, such deferred
compensation shall be subject to the following limitations and conditions:




(i) In no event shall any deferred compensation be distributed earlier than
separation from service, death, disability, a time (or pursuant to a fixed schedule)
specified at the date of the deferral of such compensation, a change in the ownership or
effective control of the Company or in the ownership of a substantial portion of the assets
of the Company, or the occurrence of an unforeseeable emergency.




(ii) In the case of a Participant who is a key employee, as defined in Code
Section 416(i), distribution due to separation from service may not be made before the date
which is six months after the date of separation from service (or, if earlier, the date of
death of such Participant).




(iii) Except to the extent provided in U.S. Department of Treasury regulations or
other guidance, any deferred compensation payable to a Participant may not be accelerated.




(iv) To the extent a Participant is offered an opportunity to defer receipt of
compensation for services performed during a taxable year, such Participant’s deferral
election must be made not later than the close of the preceding taxable year (or within
30 days of eligibility in the case of a newly eligible individuals) or at such other time
as provided in U.S. Department of Treasury regulations or other guidance. Notwithstanding
the foregoing, in the case of any performance-based compensation based on services
performed over a period of at least twelve months, such election may be made no later than
six months before the end of such performance period.




(v) To the extent a Participant is offered an opportunity to delay the payment
date of any deferred compensation or to change the form in which such deferred compensation
shall be paid, (a) the Participant’s new election may not take effect for at least twelve
months after the date on which the election is made, (b) except in the case of an election
related to a payment due to disability,
death or the occurrence of an unforeseeable emergency, the first payment with respect to
which a new election is made must provide for a deferral period of not less than five years
from the date such payment would otherwise have been made, and (c) any election



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relating to
a specified time (or pursuant to a fixed schedule) may not be made less than twelve months
prior to the date of the first scheduled payment.



     To the extent applicable, the Plan and Award Agreements shall be interpreted in accordance
with Code Section 409A and U.S. Department of Treasury regulations and other interpretative
guidance issued thereunder, including without limitation any regulations or other guidance that may
be issued after the effective date of this Plan. Notwithstanding any provision of the Plan to the
contrary, in the event that following the effective date of this Plan any Award is subject to Code
Section 409A and related U.S. Department of Treasury guidance (including such U.S. Department of
Treasury guidance as may be issued after the effective date of the Plan), the Committee may adopt
such amendments to the Plan and applicable Award Agreements or adopt other policies and procedures
(including amendments, policies and procedures retroactive effect), or take any other actions, that
the Committee determines are necessary or appropriate to exempt the Award from Code Section 409A
and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or
comply with the requirements of Code Section 409A and related U.S. Department of Treasury guidance.







ARTICLE XII

PERFORMANCE OBJECTIVES




12.1 General. Performance Objectives means the performance objectives established
pursuant to this Plan for Participants who have received Awards. Performance Objectives may be
described in terms of Company-wide objectives or objectives that are related to the performance of
an individual Participant or the Subsidiary, division, department or function within the Company or
Subsidiary in which the Participant is employed. Performance Objectives may be measured on an
absolute or relative basis. Relative performance may be measured by comparison to a group of peer
companies or to a financial market index. Any Performance Objectives applicable to a Qualified
Performance-Based Award are intended to be “performance-based” under Code Section 162(m) and shall
be limited to specified levels of or increases in one or more of the following Performance
Objectives: return on equity, return on invested capital, return on sales regional income, diluted
earnings per share, net earnings, total earnings, earnings growth, return on capital, working
capital turnover, return on assets, earnings before interest and taxes, sales, sales growth, gross
margin return on investment, increase in the fair market value of the Shares, share price
(including but not limited to, growth measures and total stockholder return), operating profit,
cash flow (including, but not limited to, operating cash flow and free cash flow), cash flow return
on investment (which equals net cash flow divided by total capital),
inventory turns, financial return ratios, total return to stockholders, market share, earnings
measures/ratios, economic value added, balance sheet measurements such as receivable turnover,
internal rate of return, increase in net present value or expense targets, productivity and
satisfaction of environment, health and safety targets.



12.2 Adjustments of Performance Objectives. . Subject to any limitation under Code
Section 162(m) with respect to Covered Employees, the Committee may adjust Performance Objectives
and the related minimum acceptable level of achievement if, in the sole judgment of the Committee,
events or transactions have occurred after the Grant Date that are unrelated to the performance of
the Company and/or Participant and result in distortion of the Performance Objectives or the
related minimum acceptable level of achievement. Potential transactions or events giving rise to
adjustment include but are not limited to (i) restructurings, discontinued operations,
extraordinary items or events, and other unusual or non-recurring charges; (ii) an event either not
directly related to the operations of the Company or not within the reasonable control of the
Company’s management; or (iii) a change in tax law or accounting standards required by generally
accepted accounting principles.



12.3 Performance Period. The period over which results are measured for determining the
value Performance Award or payout under any Incentive Plan, whether that award or payment consists
of shares or cash or a combination thereof, shall in no case be less than 12 months.



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ARTICLE XIII

MISCELLANEOUS




13.1 Withholding Taxes. To the extent that the Company is required to withhold federal,
state, local or foreign taxes in connection with any payment made or benefit realized by a
Participant or other person under this Plan, the Committee may withhold any amounts necessary to
collect any withholding taxes upon any taxable event relating to an Award. At the discretion of
the Committee, such arrangements may include relinquishment of a portion of such benefit payable in
cash or Shares.



13.2 Change in Control. Notwithstanding any provision in this Plan or an Award Agreement
to the contrary, in the event that the Company undergoes a Change in Control, or in the event the
Company shall become a party to any corporate merger, consolidation, major acquisition of property
for stock, separation, reorganization or liquidation, the Committee (or the board of directors of
any corporation assuming the obligations of the Company) shall have the sole and absolute power and
discretion to prescribe and amend the terms and conditions for the exercise, or modification, of
any outstanding Awards granted hereunder. Such power and discretion shall include, but shall not be
limited to, the power and authority to remove restrictions on Restricted Shares, to modify the
performance requirements for any Awards, and to provide that Options or SARs granted hereunder must
be exercised in connection with the closing of such transaction and that if not so exercised such
Options and SARs will expire. Any such determinations by the Committee may be made generally with
respect to all Participants, or may be made on a case-by-case basis with respect to particular
Participants. Notwithstanding the foregoing, any transaction undertaken for the purpose of
reincorporating the Company under the laws of another jurisdiction, if such transaction does not
materially affect the beneficial ownership of the Company’s capital, shall not constitute a merger,
consolidation, major acquisition of property for stock, separation, reorganization, liquidation, or
Change in Control.



13.3 Certain Terminations of Employment, Hardship and Approved Leaves of Absence.
Notwithstanding any other provision of this Plan to the contrary, in the event of termination of
employment by reason of death, Disability, Retirement or leave of absence approved by the Company,
or in the event of hardship or other special circumstances, of a Participant who holds an Option or
SAR that is not immediately and fully exercisable, any Restricted Shares as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer has not lapsed, any
Restricted Share Units as to which any deferral period is not complete, any Short- or Long-Term
Incentives or Performance Awards that have not been fully earned, or any Shares that are subject to
any transfer restriction, the Committee may in its sole discretion take any action that it deems to
be equitable under the circumstances or in the best interests of the Company, including, without
limitation, waiving or modifying any limitation or requirement with respect to any Award under this
Plan.



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



13.5 Foreign Participants. To facilitate the making of any Award or combination of
Awards under



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this Plan, the Committee may provide for such special terms for Awards to Participants
who are foreign nationals, or who are employed by or perform services for the Company or any
Subsidiary outside of the United States of America, as the Committee may consider necessary or
appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Committee
may approve such supplements to, or amendments, restatements or alternative versions of, this Plan
as it may consider necessary or appropriate for such purposes without thereby affecting the terms
of this Plan as in effect for any other purpose, provided that no such supplements, amendments,
restatements or alternative versions shall include any provisions that are inconsistent with the
terms of this Plan, as then in effect, unless this Plan could have been amended to eliminate such
inconsistency without further approval by the stockholders of the Company.



13.6 Amendment or Termination. The Board shall have complete power and authority to
amend the Plan at any time; provide, however, that the Board shall not, without the requisite
affirmative approval of stockholders of the Company, make any amendment which materially modifies
the Plan by increasing the benefits accrued to Participants under the Plan; increasing the numbers
of securities which may be issued under the Plan; modifying the requirement for participation in
the Plan; or including a provision allowing the Board to lapse or waive restrictions at its
discretion; or which requires stockholder approval under the Code, unless such compliance is no
longer desired under the Code, or under any other applicable law or rule of any stock exchange
which lists Common Stock or Company Voting Securities. No termination or amendment of the Plan
may, without the consent of the Participant to whom any Award
shall theretofore have been granted under the Plan, adversely affect the right of such individual
under such Award.



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



13.8 No Employment Right. This Plan shall not confer upon any Participant any right with
respect to continuance of employment or other service with the Company or any Subsidiary and shall
not interfere in any way with any right that the Company or any Subsidiary would otherwise have to
terminate any Participant’s employment or other service at any time.



13.9 Tax Qualification. To the extent that any provision of this Plan would prevent any
Option that was intended to qualify under particular provisions of the Code from so qualifying,
such provision of this Plan shall be null and void with respect to such Option, provided that such
provision shall remain in effect with respect to other Options, and there shall be no further
effect on any provision of this Plan.



13.10 Duration of the Plan. Unless sooner terminated in accordance with Section 13.6,
this Plan shall automatically terminate on the tenth anniversary of the date upon which it is
approved by the stockholders of the Company, and no Award shall be granted after such tenth
anniversary. Awards outstanding at the termination of the Plan shall continue in accordance with
their terms and shall not be affected by such termination.



13.11 Limitations Period. Any person who believes he or she is being denied any benefit or
right under the Plan may file a written claim with the Committee. Any claim must be delivered to
the Committee within forty-five (45) days of the specific event giving rise to the claim. Untimely
claims will not be processed and shall be deemed denied. The Committee, or its designated agent,
will notify the Participant of its decision in writing as soon as administratively
practicable. Claims not responded to by the Committee in writing within ninety (90) days of the
date the written claim is delivered to the Committee shall be deemed denied. The Committee’s
decision shall be final and conclusive and binding on all persons. No lawsuit relating to the Plan
may be filed before a written claim is filed with the Committee and is denied or deemed denied and
any lawsuit must be filed within one year of such denial or deemed denial or be forever barred.



13.12 Governing Law. The validity, construction and effect of this Plan and any Award
hereunder will be determined in accordance the laws of state of Delaware.




15









 





13.13 Investment Representations. As a condition to the exercise or granting of an
Award, the Committee may require the person exercising or receiving such Award
to represent and warrant that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.



13.14 Post-Employment Limitations. At its sole discretion, the Committee may, as a
condition to granting an Award, require that the Participant exercising or receiving that Award
after that Participant’s termination from active employment, agree to or execute an agreement
defining limitations to that Participant’s actions for a defined period after employment. Such
limitations may include, but are not limited to, nondisclosure of confidential company information,
the soliciting Company employees or the execution of a non-compete agreement.



13.15 Uncertificated Shares. To the extent that the Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the rules of any stock
exchange.



13.16 Unfunded Plan. Participants shall have no right, title, or interest whatsoever in
or to any investments that the Company may make to aid it in meeting its obligations under the
Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create
or be construed to create a trust of any kind, or a fiduciary relationship between the Company and
any Participant, beneficiary, legal representative or any other person. To the extent that any
person acquires a right to receive payments from the Company under the Plan, such right shall be no
greater than the right of an unsecured general creditor of the Company. All payments to be made
hereunder shall be paid from the general funds of the Company and no special or separate fund shall
be established and no segregation of assets shall be made to assure payment of such amounts except
as expressly set forth in the Plan.



13.17 Beneficiary Designation. Each Participant under the Plan may, from time to time,
name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or she receives any or
all of such benefit. Each such designation shall revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be effective only when filed
by the Participant in writing with the Committee during the Participant’s lifetime. In the absence
of any such designation, benefits remaining unpaid at the Participant’s death shall be paid to the
Participant’s estate.



ADOPTED BY THE BOARD OF DIRECTORS — MARCH 14, 2008

APPROVED BY THE STOCKHOLDERS — MAY 1, 2008





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