Exhibit 4.1



 



 


Exhibit 4-1




PAYCHEX, INC.




2002 STOCK INCENTIVE PLAN




(as amended and restated effective October 12, 2005)





	1.	 	Purpose.





     The purposes of the Plan are to provide long-term incentives and rewards to employees,
directors or other persons responsible for the success and growth of the Company and its
Affiliates, to attract and retain such persons on a competitive basis and to associate the
interests of such persons with those of the Company and its Affiliates.




	2.	 	Amendment and Restatement; Effective Date & Duration.





     The Plan was adopted by the Board of Directors on July 11, 2002, became effective on August
1, 2002 and was approved by the stockholders of the Company at the annual meeting of the
stockholders held on October 17, 2002. This amendment and restatement of the Plan was adopted
by the Board of Directors on July 7, 2005 and shall become effective upon the approval thereof
by the stockholders of the Company at the annual meeting of the stockholders to be held on
October 12, 2005. The Plan is unlimited in duration and, in the event of the termination of the
Plan, shall remain in effect as long as any Awards under it are outstanding; provided, however,
that to the extent required by the Code, (i) no Incentive Stock Option may be granted on a date
that is more than ten years from the date that this amendment and restatement of the Plan is
approved by stockholders, and (ii) no Performance Award may be granted on a date that is more
than five years from the date that this amendment and restatement of the Plan is approved by
stockholders unless the Performance Goals upon which such Performance Award is based have been
resubmitted to and approved by the stockholders of the Company within the five-year period
preceding such date.




	3.	 	Definitions.




As used in the Plan, the following terms shall have the meanings set forth below:




          (a) “Affiliate” means (i) any entity that, directly or indirectly through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the Company has a
significant equity interest, in each case as determined by the Committee.



          (b) “Award” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Performance Award or Stock Award granted under the Plan.



          (c) “Award Agreement” means any written agreement, contract or other instrument or document
evidencing an Award granted under the Plan. Each Award Agreement shall be subject to the
applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent
with the Plan) determined by the Committee.



          (d) “Board” means the Board of Directors of the Company.









 



 


          (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any
regulations promulgated thereunder.



          (f) “Committee” means the Compensation and Governance Committee of the Board or any
successor committee of the Board designated by the Board to administer the Plan. The Committee
shall be comprised of not less than such number of Directors as shall be required to permit
Awards granted under the Plan to qualify under Rule 16b-3, and each member of the Committee
shall be a “Non-Employee Director” within the meaning of Rule 16b-3 and an “outside director”
within the meaning of Section 162(m). The Company expects to have the Plan administered in
accordance with the requirements for the award of “qualified performance-based compensation”
within the meaning of Section 162(m).



          (g) “Company” means Paychex, Inc.



          (h) “Director” means a member of the Board.



          (i) “Eligible Person” means any officer, non-employee Director, employee, consultant or
advisor providing services to the Company or an Affiliate whom the Committee determines to be an
Eligible Person. An Eligible Person must be a natural person.



          (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
and the applicable rules and regulations promulgated thereunder.



          (k) “Fair Market Value” means, with respect to any property (including, without limitation,
any Shares or other securities), the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the Committee.
Notwithstanding the foregoing, unless otherwise determined by the Committee, the Fair Market
Value of Shares on a given date for purposes of the Plan shall be the closing sale price of the
Shares on NASDAQ, as reported in the consolidated transaction reporting system on such date or,
if NASDAQ is not open for trading on such date, on the most recent preceding date when NASDAQ is
open for trading.



          (l) “Incentive Stock Option” means an option granted under Section 7(a) that is intended to
meet the requirements of Section 422 of the Code.



          (m) “Non-Qualified Stock Option” means an option granted under Section 7(a) that is not
intended to be an Incentive Stock Option.



          (n) “Option” means an Incentive Stock Option or a Non-Qualified Stock Option.



          (o) “Participant” means an Eligible Person designated to be granted an Award.



          (p) “Performance Award” means any right granted under Section 7(e).



          (q) “Performance Goal” means one or more of the following performance goals, either
individually, alternatively or in any combination, applied on a corporate, subsidiary or
business unit basis, in each case, as determined by the Committee: total revenue or service
revenue, earnings per share, net income, operating income, stockholder return, return on
investment, return on assets, return on equity or return on capital. Such goals may reflect
absolute entity or business unit performance or a relative comparison to the performance of a
peer group of entities or other external measure of the selected performance









 



 



criteria. Pursuant to rules and conditions adopted by the Committee on or before the 90th
day of the applicable performance period for which Performance Goals are established, the
Committee may appropriately adjust any evaluation of performance under such goals to include or
exclude the effect of certain events, including any of the following events: interest on funds
held for clients; asset write-downs; litigation or claim judgments or settlements; changes in
tax law, accounting principles or other such laws or provisions affecting reported results;
severance, contract termination and other costs related to entering or exiting certain business
activities; and gains or losses from the acquisition or disposition of businesses or assets or
from the early extinguishment of debt, or other unusual items, as determined by the Committee.



          (r) “Plan” means this Paychex, Inc. 2002 Stock Incentive Plan, as amended and restated.



          (s) “Restricted Stock” means an Award of restricted Shares granted under Section 7(d).
Restricted Stock shall cease to be Restricted Stock at the time that such restrictions and risks
of forfeiture lapse in accordance with the terms of this Plan or the applicable Award Agreement.



          (t) “Restricted Stock Unit” means a unit granted under Section 7(d) evidencing the right to
receive a Share (or a cash payment equal to the Fair Market Value of a Share) at some future
date.



          (u) “Rule 16b-3” means Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Exchange Act or any successor rule or regulation.



          (v) “Section 162(m)” means Section 162(m) of the Code and the applicable treasury
regulations promulgated thereunder.



          (w) “Section 409A” means Section 409A of the Code and related treasury regulations and
pronouncements.



          (x) “Shares” means shares of $.01 par value common stock of the Company or such other
securities or property as may become subject to Awards pursuant to an adjustment made under
Section 5(c).



          (y) “Stock Appreciation Right” means any right granted under Section 7(b).



          (z) “Stock Award” means an Award of Shares granted under Section 7(c).




	4.	 	Administration.





          (a) Power and Authority of the Committee. The Plan shall be administered by the
Committee. Subject to the express provisions of the Plan and to applicable law, the Committee
shall have full power and authority to: (i) designate Participants; (ii) determine the type or
types of Awards to be granted to each Participant under the Plan; (iii) determine the number of
Shares to be covered by (or the method by which payments or other rights are to be calculated in
connection with) each Award; (iv) determine the terms and conditions of any Award or Award
Agreement; (v) amend the terms and conditions of any Award or Award Agreement, provided,
however, that, except as otherwise provided in Section 5(c), the Committee shall not reprice,
adjust or amend the exercise price of Options or the strike price of Stock Appreciation Rights
previously awarded to any Participant, whether through









 



 



amendment, cancellation and replacement grant, or any other means; (vi) except as otherwise
provided in this Plan, accelerate the exercisability of any Award or the lapse of restrictions
relating to any Award; (vii) determine whether, to what extent and under what circumstances
Awards may be exercised in cash, Shares, other securities, other Awards or other property, or
canceled, forfeited or suspended; (viii) determine whether, to what extent and under what
circumstances cash, Shares, other securities, other Awards, other property and other amounts
payable with respect to an Award under the Plan shall be deferred either automatically or at the
election of the holder of the Award or the Committee; (ix) interpret and administer the Plan and
any instrument or agreement, including any Award Agreement, relating to the Plan; (x) establish,
amend, suspend or waive such rules and regulations and appoint such agents as it shall deem
appropriate for the proper administration of the Plan; and (xi) make any other determination and
take any other action that the Committee deems necessary or desirable for the administration of
the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any Award or Award
Agreement shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive and binding upon any Participant and any holder or beneficiary of any
Award or Award Agreement.



          (b) Delegation. The Committee may delegate its powers and duties under the Plan to
one or more Directors (including a Director who is also an officer of the Company) or a
committee of Directors, subject to such terms, conditions and limitations as the Committee may
establish in its sole discretion; provided, however, that the Committee shall not delegate its
powers and duties under the Plan (i) with regard to officers or directors of the Company or any
Affiliate who are subject to Section 16 of the Exchange Act or (ii) in such a manner as would
cause the Plan not to comply with the requirements of Section 162(m). In addition, the
Committee may authorize one or more officers of the Company to grant Options under the Plan,
subject to the limitations of Section 157 of the Delaware General Corporation Law; provided,
however, that such officers shall not be authorized to grant Options to officers or directors of
the Company or any Affiliate who are subject to Section 16 of the Exchange Act.



          (c) Power and Authority of the Board of Directors. Notwithstanding anything to the
contrary contained herein, the Board may, at any time and from time to time, without any further
action of the Committee, exercise the powers and duties of the Committee under the Plan, unless
the exercise of such powers and duties by the Board would cause the Plan not to comply with the
requirements of Section 162(m), Section 16 of the Exchange Act, NASDAQ or any other securities
exchange the rules of which are applicable to the Company, or other pertinent laws.




	5.	 	Shares Available for Awards.





          (a) Shares Available. Subject to adjustment as provided in Section 5(c), the
aggregate number of Shares that may be issued under all Awards under the Plan shall be the sum
of (i) 27,500,000, plus (ii) any Shares available under the Company’s 1998 Stock Incentive Plan
as of August 1, 2002, plus (iii) any Shares that become available under the Company’s 1998 Stock
Incentive Plan after August 1, 2002 upon the expiration, termination, forfeiture or cancellation
of options issued thereunder. Shares to be issued under the Plan may be either authorized but
unissued Shares, or Shares that have been reacquired by the Company and designated as treasury
shares. If an Award terminates or is forfeited or









 



 



cancelled without the issuance of any Shares, then the number of Shares counted against the
aggregate number of Shares available under the Plan with respect to such Award, to the extent of
any such termination, forfeiture, cancellation or other event, shall again be available for
granting Awards under the Plan. If the Shares underlying an Award of Restricted Stock are
forfeited or otherwise reacquired by the Company prior to vesting, whether or not dividends have
been paid on such Shares, then the number of Shares counted against the aggregate number of
Shares available under the Plan with respect to such Award of Restricted Stock, to the extent of
any such forfeiture or reacquisition by the Company, shall again be available for granting
Awards under the Plan. In the case of a Stock Appreciation Right, the number of shares
available for issuance under the Plan shall be reduced by the number of Shares underlying the
Stock Appreciation Right, and not just the Shares actually issued upon the exercise of the Stock
Appreciation Right.



          (b) Accounting for Awards. For purposes of this Section 5, if an Award entitles
the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or
to which such Award relates shall be counted on the date of grant of such Award against the
aggregate number of Shares available for granting Awards under the Plan.



          (c) Adjustments. In the event that the Committee shall determine that any dividend
or other distribution (whether in the form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other securities of the
Company or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the
number and type of Shares (or other securities or other property) that thereafter may be made
the subject of Awards; (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards; and (iii) the purchase or exercise price with respect
to any Award.



          (d) Award Limitations.




                    i. Section 162(m) Limitation for Certain Types of Awards. No Eligible Person may be
granted Options, Stock Appreciation Rights or any other Award or Awards the value of which
is based solely on an increase in the value of the Shares after the date of grant of such
Award or Awards, for more than 1,500,000 Shares (subject to adjustment as provided in
Section 5(c)) in the aggregate in any calendar year. The foregoing annual limitation
specifically includes the grant of any Award or Awards representing “qualified
performance-based compensation” within the meaning of Section 162(m).




                    ii. Section 162(m) Limitation for Performance Awards. The maximum amount payable
pursuant to all Performance Awards to any Participant in the aggregate in any calendar year
shall be $6,000,000 in value, whether payable in cash, Shares or other property. This
limitation does not apply to any Award subject to the limitation contained in Section 5(d)i.









 



 



                    iii. Plan Limitation on Restricted Stock, Restricted Stock Units and Stock Awards. No
more than 7,500,000 Shares, subject to adjustment as provided in Section 5(c), shall be
available under the Plan for issuance pursuant to grants of Restricted Stock, Restricted
Stock Units and Stock Awards; provided, however, that if any Awards of Restricted Stock
Units terminate or are forfeited or cancelled without the issuance of any Shares or if the
Shares underlying an Award of Restricted Stock are forfeited or otherwise reacquired by the
Company prior to vesting, whether or not dividends have been paid on such Shares, then the
Shares subject to such termination, forfeiture, cancellation or reacquisition by the Company
shall again be available for grants of Restricted Stock, Restricted Stock Units and Stock
Awards for purposes of this limitation on grants of such Awards. Grants of Stock Awards
other than Awards of Restricted Stock shall only be made to officers and directors of the
Company and its Affiliates, shall only be made in lieu of salary or cash bonus, and the
number of Shares awarded shall be reasonable.




                    iv. Limitation on Incentive Stock Options. The maximum number of Shares that may be
delivered under Incentive Stock Option grants shall be 27,500,000, subject to adjustment as
provided in Section 5(c). In addition, the aggregate Fair Market Value (determined as of
the date of grant) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year (under the Plan
and all other incentive stock plans of the Company) shall not exceed $100,000. To the
extent that the aggregate Fair Market Value (determined as of the date of grant) of the
Shares with respect to which Incentive Stock Options are exercisable for the first time by
any individual during any calendar year (under the Plan and all other incentive stock plans
of the Company) exceeds $100,000, such Incentive Stock Options shall be treated as
Non-Qualified Stock Options; this provision shall be applied by taking Options into account
in the order in which they were granted.




	6.	 	Eligibility.





          Any Eligible Person shall be eligible to be designated a Participant. In determining which
Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into
account the nature of the services rendered by the respective Eligible Persons, their present
and potential contributions to the success of the Company or such other factors as the
Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full-time or part-time employees (which term as used herein
includes, without limitation, officers and Directors who are also employees), and an Incentive
Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a
“subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code.




	7.	 	Awards.





          (a) Options. The Committee is hereby authorized to grant Options to Eligible
Persons with the following terms and conditions and with such additional terms and conditions
not inconsistent with the provisions of the Plan as the Committee shall determine:









 



 



                    i. Exercise Price. The purchase price per Share purchasable under an Option shall be
determined by the Committee and shall not be less than 100 percent of the Fair Market Value
of a Share on the date of grant of such Option; provided, however, that the Committee may
designate a per share exercise price below Fair Market Value on the date of grant if the
Option is granted in substitution for a stock option previously granted by an entity that is
acquired by or merged with the Company or an Affiliate so long as the substituted Option
preserves the aggregate intrinsic value and the ratio of the exercise price to the Fair
Market Value of the stock option that it replaces.




                    ii. Option Term. The term of each Option shall be fixed by the Committee but shall not
be longer than ten years from the date of grant.




                    iii. Time and Method of Exercise. The Committee shall determine the time or times at
which an Option may be exercised in whole or in part and the method or methods by which, and
the form or forms in which, payment of the exercise price with respect thereto may be made
or deemed to have been made.




                    iv. Incentive Stock Option Requirements. Each Option intended to qualify as Incentive
Stock Option shall comply with the requirements applicable to “incentive stock options”
under Section 422 of the Code.



          (b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock
Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable
Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder
thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one
Share on the date of exercise (or, if the Committee shall so determine, at any time during a
specified period before or after the date of exercise) over (ii) the strike price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less than 100 percent
of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right;
provided, however, that the Committee may designate a per share strike price below Fair Market
Value on the date of grant if the Stock Appreciation Right is granted in substitution for a
stock appreciation right previously granted by an entity that is acquired by or merged with the
Company or an Affiliate so long as the substituted Stock Appreciation Right preserves the
aggregate intrinsic value and the ratio of the strike price to the Fair Market Value of the
stock appreciation right that it replaces. Subject to the terms of the Plan and any applicable
Award Agreement, the strike price, term, methods of exercise, dates of exercise, methods of
settlement and any other terms and conditions of any Stock Appreciation Right shall be as
determined by the Committee. The Committee may impose such conditions or restrictions on the
exercise of any Stock Appreciation Right as it may deem appropriate.



          (c) Stock Awards. The Committee is hereby authorized to grant to Eligible Persons
Shares without restrictions thereon, as deemed by the Committee to be consistent with the
purpose of the Plan. Subject to the terms of the Plan and any applicable Award Agreement, such
Stock Awards may have such terms and conditions as the Committee shall determine.



          (d) Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Awards of Restricted Stock and Restricted Stock Units to Eligible









 



 



Persons with the following terms and conditions and with such additional terms and
conditions not inconsistent with the provisions of the Plan as the Committee shall determine:




                    i. Restrictions. Restricted Stock and Restricted Stock Units shall be subject to such
restrictions as the Committee may impose (including, without limitation, any limitation on
the right to vote the Shares underlying an Award of Restricted Stock or the right to receive
any dividend or other right or property with respect to such Shares), which restrictions may
lapse separately or in combination at such time or times, in such installments or otherwise,
as the Committee may deem appropriate. The minimum vesting period of such Awards shall be
three years from the date of grant, unless the Award is conditioned on performance of the
Company or an Affiliate or on personal performance (other than continued service with the
Company or an Affiliate), in which case the Award may vest over a period of at least one
year from the date of grant. Notwithstanding the foregoing, the Committee may permit
acceleration of vesting of such Awards in the event of the Participant’s death, disability
or retirement or a change in control of the Company.




                    ii. Issuance and Delivery of Shares. The Shares underlying any Award of Restricted
Stock granted under the Plan shall be issued at the time such Awards are granted and may be
evidenced in such manner as the Committee may deem appropriate, including book-entry
registration or issuance of a stock certificate or certificates, which certificate or
certificates shall be held by the Company. Such certificate or certificates shall be
registered in the name of the Participant and shall bear an appropriate legend referring to
the restrictions applicable to such Restricted Stock. A stock certificate or certificates,
without restrictive legend, representing the Shares underlying an Award of Restricted Stock
that is no longer subject to restrictions shall be delivered to the Participant promptly
after the applicable restrictions lapse or are waived. In the case of Restricted Stock
Units, no Shares shall be issued at the time such Awards are granted. Upon the lapse or
waiver of restrictions and the restricted period relating to Restricted Stock Units
evidencing the right to receive Shares, a stock certificate or certificates, without
restrictive legend, representing the underlying Shares shall be issued and delivered to the
holder of the Restricted Stock Units.




                    iii. Forfeiture. Except as otherwise determined by the Committee, upon a Participant’s
termination of employment or resignation or removal as a Director (in either case, as
determined under criteria established by the Committee), all Restricted Stock and all
Restricted Stock Units held by the Participant at such time and still subject to
restrictions shall be forfeited and reacquired by the Company; provided, however, that the
Committee may, when it finds that a waiver would be in the best interest of the Company,
waive in whole or in part any or all remaining restrictions with respect to Restricted Stock
or Restricted Stock Units.



          (e) Performance Awards. The Committee is hereby authorized to grant to Eligible
Persons Performance Awards which are intended to be “qualified performance-based compensation”
within the meaning of Section 162(m). A Performance Award granted under the Plan may be payable
in cash or in Shares (including, without limitation, Restricted Stock), as determined by the
Committee. Performance Awards shall, to the extent required by Section 162(m), be conditioned
solely on the achievement of one or more objective Performance Goals, and such Performance Goals
shall be established by the Committee









 



 



within the time period prescribed by, and shall otherwise comply with the requirements of,
Section 162(m). Subject to the terms of the Plan and any applicable Award Agreement, the
Performance Goals to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award granted, the amount of any payment or transfer to be
made pursuant to any Performance Award and any other terms and conditions of any Performance
Award shall be determined by the Committee. The Committee shall also certify in writing that
such Performance Goals have been met prior to payment of the Performance Awards to the extent
required by Section 162(m).



          (f) General.




                    i. Consideration for Awards. Awards may be granted for no cash consideration or
for any cash or other consideration as may be determined by the Committee or required
by applicable law.




                    ii. Awards May Be Granted Separately or Together. Awards may, in the discretion
of the Committee, be granted either alone or in addition to, in tandem with or in
substitution for any other Award or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to or in tandem with other
Awards or in addition to or in tandem with awards granted under any other plan of the
Company or any Affiliate may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.




                    iii. Forms of Payment under Awards. Subject to the terms of the Plan and of any
applicable Award Agreement, payments to be made to the Company or an Affiliate upon
the grant, exercise or payment of an Award may be made in such form or forms as the
Committee shall determine, including, without limitation, in cash, by authorizing a
third party to sell Shares (or a sufficient portion thereof) acquired upon exercise of
an Award and to remit to the Company a sufficient portion of the proceeds to pay for
all the Shares acquired through such exercise and any tax withholding obligations
resulting from such exercise, or by a combination thereof.




                    iv. Term of Awards. The term of each Option and Stock Appreciation Right, and
the period during which the restrictions applicable to each Award of Restricted Stock
and Restricted Stock Units, shall be for a period not longer than ten years from the
date of grant.




                    v. Committee Rules. The Committee shall have the authority to promulgate rules
and regulations to determine the treatment of a Participant’s Awards under the Plan in
the event of such Participant’s death, disability, termination or breach of Section
9(f), and in the event of a change of control of the Company. In addition,
notwithstanding the rules and regulations promulgated by the Committee and in effect
from time to time and the terms of any Award Agreement, the Committee shall have the
right to extend the period for exercise of any Option or Stock Appreciation Right,
provided such extension does not exceed the term of such Option or Stock Appreciation
Right.




                    vi. Deferral. The Committee may, in its discretion, (i) permit selected
Participants to elect to defer payments of some or all types of Awards in









 



 



accordance with procedures established by the Committee or (ii) provide for the
deferral of an Award in an Award Agreement or otherwise.




                    vii. Dividends and Interest. Dividends or dividend equivalent rights may be
extended to and made part of any Award denominated in Shares or units of Shares,
subject to such terms, conditions and restrictions as the Committee may establish.
The Committee may also establish rules and procedures for the crediting of interest on
deferred cash payments and dividend equivalents for deferred payments denominated in
Shares or units of Shares.




                    viii. Limits on Transfer of Awards. Except as otherwise provided by the
Committee, the terms of this Plan or the terms of an Award Agreement, (A) no Award and
no right under any such Award shall be transferable by a Participant other than by
will, by the laws of descent and distribution, or pursuant to a domestic relations
order, and (B) no Award or right under any such Award may be pledged, alienated,
attached or otherwise encumbered, and any purported pledge, alienation, attachment or
encumbrance thereof shall be void and unenforceable against the Company or any
Affiliate. Notwithstanding the foregoing, but subject to Section 7(f)ix, the Shares
underlying any Award may be transferred at any time after such Shares are issued and
no longer restricted.




                    ix. Limits on Transfer of Shares. All Shares or other securities delivered under
the Plan pursuant to any Award or the exercise thereof shall be subject to such
restrictions as the Committee may deem advisable under the Plan, applicable federal or
state securities laws and regulatory requirements, and the Committee may cause
appropriate entries to be made or legends to be placed on the certificates for such
Shares or other securities to reflect such restrictions. If the Shares or other
securities are traded on a securities exchange, the Company shall not be required to
deliver any Shares or other securities covered by an Award unless and until such
Shares or other securities have been admitted for trading on such securities exchange.




                    x. Income Tax Withholding. In order to comply with all applicable federal,
state, local or foreign income tax laws or regulations, the Company may take such
action as it deems appropriate to ensure that all applicable federal, state, local or
foreign payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such Participant. In
order to assist a Participant in paying all or a portion of the applicable taxes to be
withheld or collected upon exercise or receipt of (or the lapse of restrictions
relating to) an Award, the Committee, in its discretion and subject to such additional
terms and conditions as it may adopt, may permit the Participant to satisfy such tax
obligation by (A) electing to have the Company withhold a portion of the Shares
otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the amount of such taxes or
(B) delivering to the Company Shares other than Shares issuable upon exercise or
receipt of (or the lapse of restrictions relating to) such Award with a Fair Market
Value equal to the amount of such taxes. The election, if any, must be made on or
before the date that the amount of tax to be withheld is determined.









 



 



                    xi. Company Redemption Right. Unless the applicable Award Agreement provides
otherwise, every Option and Stock Appreciation Right may be redeemed by the Company in
connection with the merger, consolidation, separation (including a spin off or other
distribution of stock or property), reorganization (whether or not such reorganization
comes within the meaning of such term in Section 368(a) of the Code) or partial or
complete liquidation of the Company. The redemption price for any Option redeemed by
the Company shall be the Fair Market Value of the Shares underlying such Option, less
the exercise price of such Option, and the redemption price for any Stock Appreciation
Right redeemed by the Company shall be the Fair Market Value of the Shares underlying
such Stock Appreciation Right, less the strike price of such Stock Appreciation Right.
The redemption price, less any amount of federal or state taxes attributable to the
redemption that the Company deems it necessary or advisable to pay or withhold, shall
be paid in cash. Notwithstanding the foregoing, if any Option or Stock Appreciation
Right constitutes “nonqualified deferred compensation” for purposes of Section 409A,
and if the Company’s redemption right under this Section 7(f)xi would cause such
Option or Stock Appreciation Right to be subject to excise tax under Section 409A,
then the Company’s redemption right under this Section 7(f)xi with respect to such
Option or Stock Appreciation Right shall be limited to those triggering events that
constitute a “change in ownership,” a “change in effective control” or a “change in
the ownership of a substantial portion of the assets” of the Company for purposes of
Section 409A.




	8.	 	Amendment and Termination; Corrections.





          (a) Amendments to the Plan. The Board of Directors of the Company may amend,
alter, suspend, discontinue or terminate the Plan, provided, however, that, notwithstanding any
other provision of the Plan or any Award Agreement, prior approval of the stockholders of the
Company shall be required for any amendment to the Plan that: (i) requires stockholder approval
under the rules or regulations of the Securities and Exchange Commission, NASDAQ or other
securities exchange that are applicable to the Company; (ii) increases the number of Shares
authorized under the Plan, as specified in Section 5(a); (iii) increases the limitations
contained in Section 5(d); (iv) permits repricing of Options or Stock Appreciation Rights, which
is prohibited by Section 4(a); (v) permits the award of Options or Stock Appreciation Rights at
a price less than 100 percent of the Fair Market Value of a Share on the date of grant of such
Option or Stock Appreciation Right, contrary to the provisions of Sections 7(a)i and 7(b); or
(vi) would cause Section 162(m) to become unavailable with respect Awards granted under the
Plan.



          (b) Amendments to Awards. Subject to the provisions of the Plan, the Committee may
waive any conditions of or rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided in the Plan, the Committee may amend, alter,
suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, but no
such action may adversely affect the rights of the holder of such Award without the consent of
the Participant or holder or beneficiary thereof. Notwithstanding the foregoing, if any Award
constitutes “nonqualified deferred compensation” for purposes of Section 409A, and if the
Company’s rights under this Section









 



 


          8(b) would cause such Award to be subject to excise tax under Section 409A, then the
Company’s rights under this Section 8(b) with respect to such Awards shall be limited to the
taking of only those actions that do not cause such Award to be subject to excise tax under
Section 409A.



          (c) Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any
Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or
maintain the effectiveness of the Plan.




	9.	 	General Provisions.





          (a) No Rights to Awards. No Eligible Person, Participant or other person shall have
any claim to be granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan.
The terms and conditions of Awards need not be the same with respect to any Participant or with
respect to different Participants.



          (b) Award Agreements. No Participant shall have rights under an Award granted to
such Participant unless and until an Award Agreement shall have been duly executed on behalf of
the Company and, if requested by the Company, signed by the Participant.



          (c) No Rights of Stockholders. Except with respect to Restricted Stock and Stock
Awards, neither a Participant nor the Participant’s legal representative shall be, or have any of
the rights and privileges of, a stockholder of the Company with respect to any Shares issuable
upon the exercise or payment of any Award, in whole or in part, unless and until the Shares have
been issued.



          (d) No Limit on Other Compensation Plans or Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or
additional compensation plans or arrangements, and such plans or arrangements may be either
generally applicable or applicable only in specific cases.



          (e) No Right to Employment or Directorship. The grant of an Award shall not be
construed as giving a Participant the right to be retained as an employee of the Company or any
Affiliate, or a Director to be retained as a Director, nor will it affect in any way the right of
the Company or an Affiliate to terminate a Participant’s employment or service as a Director at
any time, with or without cause. In addition, the Company or an Affiliate may at any time
dismiss a Participant from employment or service as a Director, free from any liability or any
claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any
Award Agreement.



          (f) Non-Competition; Confidentiality. A Participant will not, without the written
consent of the Company, either during his or her employment by the Company or thereafter,
disclose to anyone or make use of any confidential information which he or she has acquired
during his or her employment relating to any of the business of the Company, except as such
disclosure or use may be required in connection with his or her work as an employee of Company.
During a Participant’s employment by Company, and for a period of two years after the termination
of such employment, he or she will not, either as principal, agent,









 



 



consultant, employee, stockholder or otherwise, engage in any work or other activity in
direct competition with the Company in the field or fields in which he or she has worked for the
Company. The non-competition agreement in this Section 9(f) applies only to the extent that its
application shall be permitted by applicable law and reasonably necessary for the protection of
the Company. For purposes of this Section 9(f), a Participant shall not be deemed a stockholder
if the Participant’s record and beneficial ownership amount to not more than one percent of the
outstanding capital stock of any company subject to the periodic and other reporting requirements
of the Exchange Act.



          (g) No Guarantee of Tax Consequences. No person connected with the Plan in any
capacity, including, but not limited to, the Company and its Affiliates and their directors,
officers, agents and employees, makes any representation, commitment, or guarantee that any tax
treatment, including, but not limited to, federal, state and local income, estate and gift tax
treatment, will be applicable with respect to the tax treatment of any Award, or that such tax
treatment will apply to or be available to a Participant on account of participation in the Plan.



          (h) Indemnification. The Company shall indemnify and hold harmless each member of
the Board or the Committee and other persons connected with the Plan in any capacity, including,
but not limited to, the employees and directors of the Company and its Affiliates performing
services on behalf of the Committee, against any liability, cost or expense arising as a result
of any claim asserted by any person or entity under the laws of any state or of the United States
with respect to any action or failure to act of such individuals taken in connection with this
Plan, except claims or liabilities arising on account of the willful misconduct or bad faith of
such Board member, Committee member or individual.



          (i) Governing Law. The validity and construction of the Plan and all determinations
made and actions taken pursuant hereto, as well as any Agreement made under it, to the extent
that federal laws do not control, will be governed by the laws of the State of New York, without
giving effect to the principles of conflicts of laws.



          (j) Severability. If any provision of the Plan or any Award is, becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan
or any Award under any law deemed applicable by the Committee, then such provision shall be
construed or deemed amended to conform to applicable laws, or if it cannot be so construed or
deemed amended without, in the determination of the Committee, materially altering the purpose or
intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or
Award, and the remainder of the Plan or any such Award shall remain in full force and effect.



          (k) Unfunded Plan. Insofar as it provides for Awards of cash, Shares or rights
thereto, this Plan shall be unfunded. Although bookkeeping accounts may be established with
respect to Participants who are entitled to cash, Shares or rights thereto under this Plan, any
such accounts shall be used merely as a bookkeeping convenience. The Company shall not be
required to segregate any assets that may at any time be represented by cash, Shares or rights
thereto, nor shall this Plan be construed as providing for such segregation, nor shall the
Company, the Board or the Committee be deemed to be a trustee of any cash, Shares or rights
thereto to be granted under this Plan. Any liability or obligation of the Company to any
Participant with respect to a grant of cash, Shares or rights thereto under this Plan shall be









 



 



based solely upon any contractual obligations that may be created by this Plan and any Award
Agreement, and no such liability or obligation of the Company shall be deemed to be secured by
any pledge or other encumbrance on any property of the Company. None of the Company, the Board
or the Committee shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.



          (l) Code Section 409A Compliance. The Company intends that any Awards under the
Plan satisfy the requirements of Section 409A to avoid the imposition of excise taxes thereunder.
If any provision of the Plan or an Award Agreement would result in the imposition of an excise
tax under Section 409A, that provision will be reformed to avoid imposition of the excise tax and
no action taken to comply with Section 409A shall be deemed to impair a benefit under the Plan or
an Award Agreement.



          (m) References. Unless otherwise indicated, all references to “Sections” contained
herein are references to Sections of this Plan.



          (n) Headings. Headings are given to the Sections and subsections of the Plan solely
as a convenience to facilitate reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of the Plan or any provision thereof.