2006 Omnibus Equity Compensation Plan



 




EXHIBIT 10.2




SPANISH BROADCASTING SYSTEM, INC.




2006 OMNIBUS EQUITY COMPENSATION PLAN




Adopted by




Spanish Broadcasting System, Inc.




Board of Directors on March 3, 2006




Approved by




Spanish Broadcasting System, Inc.




Stockholders on July 18, 2006











 




SPANISH BROADCASTING SYSTEM, INC.




2006 OMNIBUS EQUITY COMPENSATION PLAN






		
	1.	
    Purpose



     
The purpose of the Spanish Broadcasting System, Inc. 2006
Omnibus Equity Compensation Plan (the “Plan”) is to
provide (i) designated employees of Spanish Broadcasting
System, Inc. (the “Company”) and its subsidiaries, and
(ii) non-employee members of the board of directors of the
Company with the opportunity to receive grants of stock options,
stock units, stock awards, dividend equivalents and other
stock-based awards. The Company believes that the Plan will
encourage the participants to contribute materially to the
overall growth of the Company, thereby benefitting the
Company’s shareholders, and will align the economic
interests of the participants with those of the shareholders.
The Plan shall be effective as of July 18, 2006, subject to
approval by the shareholders of the Company.






		
	2.	
    Definitions



     
Whenever used in this Plan, the following terms will have the
respective meanings set forth below:






		
	 	     
    (a) “Board” means the Company’s Board
    of Directors.
	 
	 	     
    (b) “Change of Control” shall mean a
    change in the ownership of the voting power or effective control
    of the Company, or in the ownership of a substantial portion of
    the assets of the Company, as determined in accordance with the
    rules and guidance set forth in Internal Revenue Service Notice
    2005-1 and any further regulations or guidance issued by the
    Internal Revenue Service under Code Section 409.
	 
	 	     
    (c) “Code” means the Internal Revenue Code
    of 1986, as amended.
	 
	 	     
    (d) “Committee” means (i) with
    respect to Grants to Employees, the Compensation Committee of
    the Board or another committee appointed by the Board to
    administer the Plan, (ii) with respect to Grants made to
    Non-Employee Directors, the Board, and (iii) with respect
    to Grants that are intended to be “qualified
    performance-based compensation” under section 162(m)
    of the Code as well as Grants to Employees who are officers, a
    committee that consists of two or more persons appointed by the
    Board, all of whom shall be “outside directors” as
    defined under section 162(m) of the Code and related
    Treasury regulations and “non-employee directors” as
    defined under
    Rule 16b-3
    promulgated under the Exchange Act. The Board or committee, as
    applicable, that has authority with respect to a specific Grant
    shall be referred to as the “Committee” with respect
    to that Grant.
	 
	 	     
    (e) “Company” means Spanish Broadcasting
    System, Inc. and any successor corporation.
	 
	 	     
    (f) “Company Stock” means the common stock
    of the Company or such other securities of the Company that may
    be substituted for common stock pursuant to Section 5(e)
    provided that such stock qualifies as “service recipient
    stock” as defined under section 409A of the Code and
    the applicable regulations thereunder.
	 
	 	     
    (g) “Disability” means a physical or
    mental incapacity that renders a Participant incapable of
    engaging in any substantial gainful employment, or that has
    lasted for a continuous period of no less than six consecutive
    months, or six months in any twelve-month period, as determined
    by the Committee in good faith in its sole discretion, provided
    that if a Participant has entered into an employment agreement
    with the Company or a subsidiary, the definition of disability,
    if any, set forth in that agreement shall be substituted for the
    above definition. All determinations as to the date and extent
    of disability shall be made by the Committee upon the basis of
    such evidence as it deems necessary or desirable.
	 
	 	     
    (h) “Dividend Equivalent” means an amount
    determined by multiplying the number of shares of Company Stock
    subject to a Grant by the per-share cash dividend, or the
    per-share fair market value



1







 


		
	 	
    (as determined by the Committee) of any dividend in
    consideration other than cash, paid by the Company on its
    Company Stock.
	 
	 	     
    (i) “Effective Date” of the Plan means
    July 18, 2006, subject to approval of the Plan by the
    shareholders of the Company.
	 
	 	     
    (j) “Employee” means an employee of the
    Employer (including an officer or director who is also an
    employee).
	 
	 	     
    (k) “Employer” means the Company and its
    subsidiaries.
	 
	 	     
    (l) “Exchange Act” means the Securities
    Exchange Act of 1934, as amended.
	 
	 	     
    (m) “Exercise Price” means the per share
    price at which shares of Company Stock may be purchased under an
    Option, as designated by the Committee.
	 
	 	     
    (n) “Fair Market Value” of Company Stock
    means as of any given date, unless the Committee determines
    otherwise with respect to a particular Grant, (i) if the
    principal trading market for the Company Stock is a national
    securities exchange such as the New York Stock Exchange or the
    Nasdaq National Market, the last reported sale price of Company
    Stock on the relevant date or (if there were no trades on that
    date) the latest preceding date upon which a sale was reported,
    (ii) if the Company Stock is not principally traded on such
    exchange or market, the mean between the last reported
    “bid” and “asked” prices of Company Stock on
    the relevant date, as reported on Nasdaq or, if not so reported,
    as reported by the National Daily Quotation Bureau, Inc. or as
    reported in a customary financial reporting service, as
    applicable and as the Committee determines, or (iii) if the
    Company Stock is not publicly traded or, if publicly traded, is
    not subject to reported transactions or “bid” or
    “asked” quotations as set forth above, the Fair Market
    Value per share shall be as determined by the Committee through
    the reasonable application of a reasonable valuation method.
	 
	 	     
    (o) “Grant” means an Option, Stock Unit,
    Stock Award, SAR, Dividend Equivalent or Other Stock-Based Award
    granted under the Plan.
	 
	 	     
    (p) “Grant Agreement” means the written
    instrument that sets forth the terms and conditions of a Grant,
    including all amendments thereto.
	 
	 	     
    (q) “Incentive Stock Option” means an
    Option that is intended to meet the requirements of an incentive
    stock option under section 422 of the Code or any successor
    provision thereto.
	 
	 	     
    (r) “Non-Employee Director” means a member
    of the Board who is not an employee of the Employer.
	 
	 	     
    (s) “Nonqualified Stock Option” means an
    Option that is not intended to be an Incentive Stock Option.
	 
	 	     
    (t) “Option” means a right granted to a
    Participant to purchase shares of Company Stock, as described in
    Section 7.
	 
	 	     
    (u) “Other Stock-Based Award” means any
    Grant based on, measured by or payable in Company Stock (other
    than a Grant described in Sections 7, 8, 9 or 10
    of the Plan), as described in Section 11.
	 
	 	     
    (v) “Participant” means an Employee or
    Non-Employee Director designated by the Committee to participate
    in the Plan.
	 
	 	     
    (w) “Plan” means this Spanish Broadcasting
    System, Inc. 2006 Omnibus Equity Compensation Plan, as in effect
    from time to time.
	 
	 	     
    (x) “SAR” means a stock appreciation right
    as described in Section 10.
	 
	 	     
    (y) “Stock Award” means an award of
    Company Stock as described in Section 9.
	 
	 	     
    (z) “Stock Unit” means an award of a
    phantom unit representing a share of Company Stock, as described
    in Section 8.




2







 




3.     Administration



     
(a) Committee. The Plan shall be administered
and interpreted by the Committee. In its sole discretion, the
Board may at anytime and from time to time exercise any and all
rights and duties of the Committee under the Plan except with
respect to a matter that under
Rule 16b-3 of the
Exchange Act or section 162(m) of the Code or any
regulations or rules issued thereunder is required to be
determined in the sole discretion of the Committee. Committee
members may resign at any time by delivering written notice to
the Board. Vacancies in the Committee may only be filled by the
Board. To the extent permitted by applicable law, ministerial
functions may be performed by an administrative committee
comprised of Company employees appointed by the Committee. Any
delegation hereunder shall be subject to the restrictions and
limits that the Committee specifies at the time of such
delegation, and the Committee may at any time rescind the
authority so delegated or appoint a new delegate. At all times,
the delegate appointed under this Section 3 shall serve in
such capacity at the pleasure of the Committee.



     
(b) Committee Authority. A majority of the
Committee shall constitute a quorum. The acts of a majority of
the members present at any meeting at which a quorum is present,
and acts approved in writing by a majority of the Committee in
lieu of a meeting, shall be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely
or act upon any report or other information furnished to that
member by any officer or other employee of the Company or any
subsidiary, the Company’s independent certified public
accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the
administration of the Plan. The Committee shall have the sole
authority to (i) determine the Participants to whom Grants
shall be made under the Plan, (ii) determine the type, size
and terms and conditions of the Grants to be made to each such
Participant, (iii) determine the time when the grants will
be made and the duration of any applicable exercise or
restriction period, including the criteria for exercisability
and the acceleration of exercisability; provided, however, that
the Committee shall not have the authority to accelerate the
vesting or waive the forfeiture of any performance based awards
granted pursuant to Section 12, (iv) amend the terms
and conditions of any previously issued Grant, subject to the
provisions of Section 18 below, and (v) deal with any
other matters arising under the Plan.



     
(c) Committee Determinations. The Committee
shall have full power and express discretionary authority to
administer and interpret the Plan, to make factual
determinations and to adopt or amend such rules, regulations,
agreements and instruments for implementing the Plan and for the
conduct of its business as it deems necessary or advisable, in
its sole discretion. The Committee’s interpretations of the
Plan and all determinations made by the Committee pursuant to
the powers vested in it hereunder shall be conclusive and
binding on all persons having any interest in the Plan or in any
awards granted hereunder. All powers of the Committee shall be
executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives
of the Plan and need not be uniform as to similarly situated
Participants.






		
	4.	
    Grants



     
(a) Grants under the Plan may consist of Options as
described in Section 7, Stock Units as described in
Section 8, Stock Awards as described in Section 9, and
SARs or Other Stock-Based Awards as described in
Section 10. All Grants shall be subject to such terms and
conditions as the Committee deems appropriate and as are
specified in writing by the Committee to the Participant in the
Grant Agreement.



     
(b) All Grants shall be made conditional upon the
Participant’s acknowledgement, in writing or by acceptance
of the Grant, that all decisions and determinations of the
Committee shall be final and binding on the Participant, his or
her beneficiaries and any other person having or claiming an
interest under such Grant. Grants under a particular section of
the Plan need not be uniform as among the Participants.



     
(c) The Committee may make Grants that are contingent on,
and subject to, shareholder approval of the Plan or an amendment
to the Plan.



3







 






		
	5.	
    Shares Subject to the Plan



     
(a) Shares Authorized. The total aggregate
number of shares of Company Stock that may be issued under the
Plan is 3.5 million (3,500,000) shares, subject to
adjustment as described in subsection (e) below.



     
(b) Limit on Stock Awards, Stock Units and Other
Stock-Based Awards. Within the aggregate limit described
in subsection (a), the maximum number of shares of Company
Stock that may be issued under the Plan pursuant to Stock
Awards, Stock Units and Other Stock-Based Awards during the term
of the Plan is 3.5 million (3,500,000) shares, subject to
adjustment as described in subsection (e) below.



     
(c) Source of Shares; Share Counting. Shares
issued under the Plan may be authorized but unissued shares of
Company Stock or reacquired shares of Company Stock, including
shares purchased by the Company on the open market for purposes
of the Plan. If and to the extent Options or SARs granted under
the Plan terminate, expire, or are canceled, forfeited,
exchanged or surrendered without having been exercised, and if
and to the extent that any Stock Awards, Stock Units, or Other
Stock-Based Awards are forfeited or terminated prior to vesting,
or otherwise are not paid in full, the shares reserved for such
Grants shall again be available for purposes of the Plan. Shares
of Company Stock surrendered in payment of the Exercise Price of
an Option shall again be available for purposes of the Plan.
Shares of Company Stock withheld for payment of applicable tax
withholding obligations with respect to the exercise or other
taxation of a Grant shall again be available for purposes of the
Plan. If SARs are exercised, only the net number of shares
actually issued upon exercise of the SARs shall be considered
issued under the Plan for purposes of this subsection (c).
To the extent that Grants are paid in cash, and not in shares of
Company Stock, any shares previously reserved for issuance
pursuant to such Grants shall again be available for purposes of
the Plan. Notwithstanding the foregoing, no shares shall become
available pursuant to this section 5(c) to the extent that
the transaction resulting in the return of shares occurs more
than ten years after the date of the most recent shareholder
approval of the Plan or such return of shares would constitute a
“material revision” of the Plan subject to shareholder
approval under then applicable rules of the Nasdaq Marketplace Rules (or any applicable exchange or quotation system).



     
(d) Individual Limits. All Grants under the
Plan shall be expressed in shares of Company Stock. The maximum
aggregate number of shares of Company Stock with respect to
which all Grants may be made under the Plan to any individual
during any calendar year shall be 1 million (1,000,000)
shares, subject to adjustment as described in
subsection (e) below. The individual limits of this
subsection (d) shall apply without regard to whether
the Grants are to be paid in Company Stock or cash. All cash
payments (other than with respect to Dividend Equivalents) shall
equal the Fair Market Value of the shares of Company Stock to
which the cash payments relate.



     
(e) Adjustments. If there is any change in
the number or kind of shares of Company Stock outstanding
(i) by reason of a stock dividend, spinoff,
recapitalization, stock split, or combination or exchange of
shares, (ii) by reason of a merger, reorganization or
consolidation, (iii) by reason of a reclassification or
change in par value, or (iv) by reason of any other
extraordinary or unusual event affecting the outstanding Company
Stock as a class without the Company’s receipt of
consideration, or if the value of outstanding shares of Company
Stock is substantially reduced as a result of a spinoff or the
Company’s payment of an extraordinary dividend or
distribution, the maximum number of shares of Company Stock
available for issuance under the Plan, the maximum number of
shares of Company Stock for which any individual may receive
Grants in any year, the number of shares covered by outstanding
Grants, the kind of shares issued and to be issued under the
Plan, and the price per share or the applicable market value of
such Grants shall be appropriately adjusted by the Committee, as
it may deem reasonably necessary, to reflect any increase or
decrease in the number of, or change in the kind or value of,
issued shares of Company Stock to preclude, to the extent
practicable, the enlargement or dilution of rights and benefits
under such Grants; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated. Any
adjustments determined by the Committee shall be final, binding
and conclusive. Any adjustment affecting a Grant made pursuant
to Section 12 shall be made consistent with the
requirements of section 162 (m) of the Code.



4







 






		
	6.	
    Eligibility for Participation



     
(a) Eligible Persons. All Employees,
including Employees who are officers or members of the Board,
and all Non-Employee Directors shall be eligible to participate
in the Plan.



     
(b) Selection of Participants. The Committee
shall select the Employees and Non-Employee Directors to receive
Grants and shall determine the number of shares of Company Stock
subject to each Grant.






		
	7.	
    Options



     
(a) General Requirements. The Committee may
grant Options to an Employee or Non-Employee Director upon such
terms and conditions as the Committee deems appropriate under
this Section 7. The Committee shall determine the number of
shares of Company Stock that will be subject to each Grant of
Options to Employees and Non-Employee Directors.



     
(b) Type of Option, Price and Term.






		
	 	     
    (i) The Committee may grant Incentive Stock Options or
    Nonqualified Stock Options or any combination of the two, all in
    accordance with the terms and conditions set forth herein.
    Incentive Stock Options may be granted only to Employees of the
    Company or its parents or subsidiaries, as defined in
    section 424 of the Code. Nonqualified Stock Options may be
    granted to Employees or Non-Employee Directors.
	 
	 	     
    (ii) The Exercise Price of Company Stock subject to an
    Option shall be determined by the Committee and may be equal to
    or greater than the Fair Market Value of a share of Company
    Stock on the date the Option is granted; provided, however, that
    an Incentive Stock Option may not be granted to an Employee who,
    at the time of grant, owns stock possessing more than 10% of the
    total combined voting power of all classes of stock of the
    Company or any parent or subsidiary, as defined in
    section 424 of the Code, unless the Exercise Price per
    share is not less than 110% of the Fair Market Value of the
    Company Stock on the date of grant.
	 
	 	     
    (iii) The Committee shall determine the term of each
    Option, which shall not exceed ten years from the date of grant.
    However, an Incentive Stock Option that is granted to an
    Employee who, at the time of grant, owns stock possessing more
    than 10% of the total combined voting power of all classes of
    stock of the Company or any parent or subsidiary, as defined in
    section 424 of the Code, may not have a term that exceeds
    five years from the date of grant.



     
(c) Exercisability of Options.






		
	 	     
    (i) Options shall become exercisable in accordance with
    such terms and conditions as may be determined by the Committee
    and specified in the Grant Agreement. The Committee may
    accelerate the exercisability of any or all outstanding Options
    at any time for any reason.
	 
	 	     
    (ii) The Committee may provide in a Grant Agreement that
    the Participant may elect to exercise part or all of an Option
    before it otherwise has become exercisable. Any shares so
    purchased shall be restricted shares and shall be subject to a
    repurchase right in favor of the Company during a specified
    restriction period, with the repurchase price equal to the
    lesser of (A) the Exercise Price or (B) the Fair
    Market Value of such shares at the time of repurchase, or such
    other restrictions as the Committee deems appropriate.
	 
	 	     
    (iii) Options granted to persons who are non-exempt
    employees under the Fair Labor Standards Act of 1938, as
    amended, may not be exercisable for at least six months after
    the date of grant (except that such Options may become
    exercisable, as determined by the Committee, upon the
    Participant’s death, Disability or retirement, or upon a
    Change of Control or other circumstances permitted by applicable
    regulations).



     
(d) Termination of Employment or Service.
Except as provided in the Grant Agreement, an Option may only be
exercised while the Participant is employed by the Employer, or
providing service as a Non-



5







 




Employee Director. The Committee shall determine in the Grant
Agreement under what circumstances and during what time periods
a Participant may exercise an Option after termination of
employment or service.



     
(e) Exercise of Options. A Participant may
exercise an Option that has become exercisable, in whole or in
part, by delivering a notice of exercise to the Company. The
Participant shall pay the Exercise Price for the Option
(i) in cash, (ii) if permitted by the Committee, by
delivery of or attestation to ownership of shares of Company
Stock owned by the Participant and having a Fair Market Value on
the date of exercise equal to the Exercise Price, (iii) by
payment through a broker in accordance with procedures permitted
by Regulation T of the Federal Reserve Board, or
(iv) by such other method as the Committee may approve.
Shares of Company Stock used to exercise an Option shall have
been held by the Participant for the requisite period of time to
avoid adverse accounting consequences to the Company with
respect to the Option. Payment for the shares pursuant to the
Option, and any required withholding taxes, must be received by
the time specified by the Committee depending on the type of
payment being made, but in all cases prior to the issuance of
the Company Stock.



     
(f) Limits on Incentive Stock Options. Each
Incentive Stock Option shall provide that, if the aggregate Fair
Market Value of the stock on the date of the grant with respect
to which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year, under the Plan
or any other stock option plan of the Company or a parent or
subsidiary, as defined in section 424 of the Code, exceeds
$100,000, then the Option, as to the excess, shall be treated as
a Nonqualified Stock Option.



     
(g) The Participant shall give the Company prompt notice of
any disposition of shares of Company Stock acquired by exercise
of an Incentive Stock Option within two years from the date of
grant of such Option or one year after the transfer of such
shares of Company Stock to the Participant.






		
	8.	
    Stock Units



     
(a) General Requirements. The Committee may
grant Stock Units to an Employee or Non-Employee Director, upon
such terms and conditions as the Committee deems appropriate
under this Section 8. Each Stock Unit shall represent the
right of the Participant to receive a share of Company Stock or
an amount based on the value of a share of Company Stock. All
Stock Units shall be credited to bookkeeping accounts on the
Company’s records for purposes of the Plan.



     
(b) Terms of Stock Units. The Committee may
grant Stock Units that are payable on terms and conditions
determined by the Committee, which may include payment based on
achievement of performance goals. Stock Units may be paid at the
end of a specified vesting or performance period, or payment may
be deferred to a date authorized by the Committee in a manner
that complies with section 409A of the Code. The Committee
shall determine the number of Stock Units to be granted and the
requirements applicable to such Stock Units.



     
(c) Payment With Respect to Stock Units.
Payment with respect to Stock Units shall be made in cash, in
Company Stock, or in a combination of the two, as determined by
the Committee. The Grant Agreement shall specify the maximum
number of shares that can be issued under the Stock Units.



     
(d) Requirement of Employment or Service. The
Committee shall determine in the Grant Agreement under what
circumstances a Participant may retain Stock Units after
termination of the Participant’s employment or service, and
the circumstances under which Stock Units may be forfeited.






		
	9.	
    Stock Awards



     
(a) General Requirements. The Committee may
issue shares of Company Stock to an Employee or Non-Employee
Director under a Stock Award, upon such terms and conditions as
the Committee deems appropriate under this Section 9.
Shares of Company Stock issued pursuant to Stock Awards may be
issued for cash consideration or for no cash consideration, and
subject to restrictions or no restrictions, as determined by the
Committee. The Committee may establish conditions under which
restrictions on Stock Awards shall lapse over a period of time
or according to such other criteria as the Committee deems



6







 




appropriate, including restrictions based upon the achievement
of specific performance goals. The Committee shall determine the
number of shares of Company Stock to be issued pursuant to a
Stock Award.



     
(b) Requirement of Employment or Service. The
Committee shall determine in the Grant Agreement under what
circumstances a Participant may retain Stock Awards after
termination of the Participant’s employment or service, and
the circumstances under which Stock Awards may be forfeited or
repurchased by the Company.



     
(c) Restrictions on Transfer. While Stock
Awards are subject to restrictions, a Participant may not sell,
assign, transfer, pledge or otherwise dispose of the shares of a
Stock Award except upon death as described in
Section 15(a). Each certificate for a share of a Stock
Award shall contain a legend giving appropriate notice of the
restrictions in the Grant. The Participant shall be entitled to
have the legend removed when all restrictions on such shares
have lapsed. The Company may retain possession of any
certificates for Stock Awards until all restrictions on such
shares have lapsed.



     
(d) Right to Vote and to Receive Dividends.
The Committee shall determine to what extent, and under what
conditions, the Participant shall have the right to vote shares
of Stock Awards and to receive any dividends or other
distributions paid on such shares during the restriction period.






		
	10.	
    Stock Appreciation Rights and Other Stock-Based
    Awards



     
(a) SARs. The Committee may grant SARs to an
Employee or Non-Employee Director separately or in tandem with
an Option. The following provisions are applicable to SARs:






		
	 	     
    (i) Base Amount. The Committee shall
    establish the base amount of the SAR at the time the SAR is
    granted. The base amount of each SAR shall be equal to the per
    share Exercise Price of the related Option or, if there is no
    related Option, an amount that is at least equal to the Fair
    Market Value of a share of Company Stock as of the date of Grant
    of the SAR.
	 
	 	     
    (ii) Tandem SARs. The Committee may grant
    tandem SARs either at the time the Option is granted or at any
    time thereafter while the Option remains outstanding; provided,
    however, that, in the case of an Incentive Stock Option, SARs
    may be granted only at the date of the grant of the Incentive
    Stock Option. In the case of tandem SARs, the number of SARs
    granted to a Participant that shall be exercisable during a
    specified period shall not exceed the number of shares of
    Company Stock that the Participant may purchase upon the
    exercise of the related Option during such period. Upon the
    exercise of an Option, the SARs relating to the Company Stock
    covered by such Option shall terminate. Upon the exercise of
    SARs, the related Option shall terminate to the extent of an
    equal number of shares of Company Stock.
	 
	 	     
    (iii) Exercisability. A SAR shall be
    exercisable during the period specified by the Committee in the
    Grant Agreement and shall be subject to such vesting and other
    restrictions as may be specified in the Grant Agreement. The
    Committee may grant SARs that are subject to achievement of
    performance goals or other conditions. The Committee may
    accelerate the exercisability of any or all outstanding SARs at
    any time for any reason. The Committee shall determine in the
    Grant Agreement under what circumstances and during what periods
    a Participant may exercise a SAR after termination of employment
    or service. A tandem SAR shall be exercisable only while the
    Option to which it is related is exercisable.
	 
	 	     
    (iv) Grants to Non-Exempt Employees. SARs
    granted to persons who are non-exempt employees under the Fair
    Labor Standards Act of 1938, as amended, may not be exercisable
    for at least six months after the date of grant (except that
    such SARs may become exercisable, as determined by the
    Committee, upon the Participant’s death, Disability or
    retirement, or upon a Change of Control or other circumstances
    permitted by applicable regulations).
	 
	 	     
    (v) Value of SARs. When a Participant
    exercises SARs, the Participant shall receive in settlement of
    such SARs an amount equal to the value of the stock appreciation
    for the number of



7







 


		
	 	
    SARs exercised. The stock appreciation for a SAR is the amount
    by which the Fair Market Value of the underlying Company Stock
    on the date of exercise of the SAR exceeds the base amount of
    the SAR as described in subsection (i).
	 
	 	     
    (vi) Form of Payment. The Committee shall
    determine whether the stock appreciation for a SAR shall be paid
    in the form of shares of Company Stock, cash or a combination of
    the two. For purposes of calculating the number of shares of
    Company Stock to be received, shares of Company Stock shall be
    valued at their Fair Market Value on the date of exercise of the
    SAR. If shares of Company Stock are to be received upon exercise
    of a SAR, cash shall be delivered in lieu of any fractional
    share.




     
(b) Other Stock-Based Awards. The Committee
may grant other awards not specified in Sections 7, 8
or 9 above that are based on or measured by Company Stock
to Employees and Non-Employee Directors, on such terms and
conditions as the Committee deems appropriate. Other Stock-Based
Awards may be granted subject to achievement of performance
goals or other conditions and may be payable in Company Stock or
cash, or in a combination of the two, as determined by the
Committee in the Grant Agreement.






		
	11.	
    Dividend Equivalents.



     
(a) General Requirements. When the Committee
makes a Grant under the Plan or anytime between the date of a
Grant and the date the Grant is exercised, vests or expires, the
Committee may grant Dividend Equivalents in connection with the
Grant, under such terms and conditions as the Committee deems
appropriate under this Section 11. Dividend Equivalents may
be paid to Participants currently or may be deferred, as
determined by the Committee. All Dividend Equivalents that are
not paid currently shall be credited to bookkeeping accounts on
the Company’s records for purposes of the Plan. Dividend
Equivalents may be accrued as a cash obligation, or may be
converted to Stock Units for the Participant, and deferred
Dividend Equivalents may accrue interest, all as determined by
the Committee. The Committee may provide that Dividend
Equivalents shall be payable based on the achievement of
specific performance goals. Dividend Equivalents granted with
respect to Options or SARs that are intended to be qualified
performance based compensation shall be payable, with respect to
pre-exercise periods, regardless of whether such Option or SAR
is subsequently exercised.



     
(b) Payment with Respect to Dividend
Equivalents. Dividend Equivalents may be payable in cash
or shares of Company Stock or in a combination of the two, as
determined by the Committee.






		
	12.	
    Qualified Performance-Based Compensation



     
(a) Designation as Qualified Performance-Based
Compensation. The Committee may determine that Stock
Units, Stock Awards, Dividend Equivalents or Other Stock-Based
Awards granted to an Employee shall be considered
“qualified performance-based compensation” under
section 162(m) of the Code, in which case the provisions of
this Section 12 shall apply and control over any contrary
provision in this Plan. The Committee may also grant Options or
SARs under which the exercisability of the Options is subject to
achievement of performance goals as described in this
Section 12 or otherwise.



     
(b) Performance Goals. When Grants are made
under this Section 12, the Committee shall establish in
writing (i) the objective performance goals that must be
met, (ii) the period during which performance will be
measured, (iii) the maximum amounts that may be paid if the
performance goals are met, and (iv) any other conditions
that the Committee deems appropriate and consistent with the
requirements of section 162(m) of the Code for
“qualified performance-based compensation.” The
performance goals shall satisfy the requirements for
“qualified performance-based compensation,” including
the requirement that the achievement of the goals be
substantially uncertain at the time they are established and
that the performance goals be established in such a way that a
third party with knowledge of the relevant facts could determine
whether and to what extent the performance goals have been met.
The Committee shall not have discretion to increase the amount
of compensation that is payable, but may



8







 




reduce the amount of compensation that is payable, pursuant to
Grants identified by the Committee as “qualified
performance-based compensation.”



     
(c) Criteria Used for Objective Performance
Goals. The Committee shall use objectively determinable
performance goals based on one or more of the following
criteria: stock price, earnings per share, price-earnings
multiples, net earnings, operating earnings, revenue, number of
days sales outstanding in accounts receivable, productivity,
margin, EBITDA (earnings before interest, taxes, depreciation
and amortization), net capital employed, return on assets,
shareholder return, return on equity, return on capital
employed, growth in assets, unit volume, sales, cash flow,
market share, relative performance to a comparison group
designated by the Committee, or strategic business criteria
consisting of one or more objectives based on meeting specified
revenue goals, market penetration goals, customer growth,
geographic business expansion goals, cost targets or goals
relating to acquisitions or divestitures. The performance goals
may relate to one or more business units or the performance of
the Company as a whole, or any combination of the foregoing.
Performance goals need not be uniform as among Participants.



     
(d) Timing of Establishment of Goals. The
Committee shall establish the performance goals in writing
either before the beginning of the performance period or during
a period ending no later than the earlier of
(i) 90 days after the beginning of the performance
period or (ii) the date on which 25% of the performance
period has been completed, or such other date as may be required
or permitted under applicable regulations under
section 162(m) of the Code.



     
(e) Certification of Results. The Committee
shall certify the performance results for the performance period
specified in the Grant Agreement after the performance period
ends. The Committee shall determine the amount, if any, to be
paid pursuant to each Grant based on the achievement of the
performance goals and the satisfaction of all other terms of the
Grant Agreement.



     
(f) Death, Disability or Other Circumstances.
The Committee may provide in the Grant Agreement that Grants
under this Section 12 shall be payable, in whole or in
part, in the event of the Participant’s death or
Disability, a Change of Control or under other circumstances
consistent with the Treasury regulations and rulings under
section 162(m) of the Code.






		
	13.	
    Deferrals



     
The Committee may permit or require a Participant to defer
receipt of the payment of cash or the delivery of shares that
would otherwise be due to the Participant in connection with any
Grant. The Committee shall establish rules and procedures for
any such deferrals, consistent with applicable requirements of
section 409A of the Code. Notwithstanding any provision of
the Plan to the contrary, in the event that following the
Effective Date the Committee determines that a Grant may be
subject to section 409A of the Code and related Department
of Treasury guidance, the Committee may adopt such amendments to
the Plan and the applicable Grant Agreements or take any other
actions that the Committee determines are necessary or
appropriate to (a) exempt the Grant from section 409A
of the Code and/or preserve the intended tax treatment of the
benefits with respect to the Grant, or (b) comply with the
requirements of section 409A of the Code and the applicable
guidance.






		
	14.	
    Withholding of Taxes



     
(a) Required Withholding. All Grants under
the Plan shall be subject to applicable federal (including
FICA), state and local tax withholding requirements. The Company
may require that the Participant or other person receiving or
exercising Grants pay to the Company the amount of any federal,
state or local taxes that the Company is required to withhold
with respect to such Grants, or the Company may deduct from
other wages paid by the Company the amount of any withholding
taxes due with respect to such Grants.



     
(b) Election to Withhold Shares. If the
Committee so permits, a Participant may elect to satisfy the
Company’s tax withholding obligation with respect to Grants
paid in Company Stock by having shares withheld, at the time
such Grants become taxable, up to an amount that does not exceed
the minimum



9







 




applicable withholding tax rate for federal (including FICA),
state and local tax liabilities. The election must be in a form
and manner prescribed by the Committee.






		
	15.	
    Transferability of Grants



     
(a) Restrictions on Transfer. No right or
interest of a Participant in any Grant may be pledged,
encumbered or hypothecated to or in favor of any party other
than the Company or a subsidiary. Except as described in
subsection  (b) below, only the Participant
may exercise rights under a Grant during the Participant’s
lifetime, and a Participant may not transfer those rights except
by will or by the laws of descent and distribution. When a
Participant dies, the personal representative or other person
entitled to succeed to the rights of the Participant may
exercise such rights. Any such successor must furnish proof
satisfactory to the Company of his or her right to receive the
Grant under the Participant’s will or under the applicable
laws of descent and distribution.



     
(b) Transfer of Nonqualified Stock Options to or for
Family Members. Notwithstanding the foregoing, the
Committee may provide, in a Grant Agreement, that a Participant
may transfer Nonqualified Stock Options to family members,
charitable institutions or one or more trusts or other entities
for the benefit of or owned by family members, consistent with
the applicable securities laws, according to such terms as the
Committee may determine; provided that the Participant receives
no consideration for the transfer of an Option and the
transferred Option shall continue to be subject to the same
terms and conditions as were applicable to the Option
immediately before the transfer.






		
	16.	
    Consequences of a Change of Control 



     
(a) In the event of a Change of Control, the Committee may
take any one or more of the following actions with respect to or
all outstanding Grants, without the consent of any Participant:
(i) the Committee may determine that outstanding Options
and SARs shall be fully exercisable, and restrictions on
outstanding Stock Awards and Stock Units shall lapse, as of the
date of the Change of Control or at such other time as the
Committee determines, (ii) the Committee may require that
Participants surrender their outstanding Options and SARs in
exchange for one or more payments by the Company, in cash or
Company Stock as determined by the Committee, in an amount equal
to the amount by which the then Fair Market Value of the shares
of Company Stock subject to the Participant’s unexercised
Options and SARs exceeds the Exercise Price, if any, and on such
terms as the Committee determines, (iii) after giving
Participants an opportunity to exercise their outstanding
Options and SARs, the Committee may terminate any or all
unexercised Options and SARs at such time as the Committee deems
appropriate, (iv) with respect to Participants holding
Stock Units, Other Stock-Based Awards or Dividend Equivalents,
the Committee may determine that such Participants shall receive
one or more payments in settlement of such Stock Units, Other
Stock-Based Awards or Dividend Equivalents, in such amount and
form and on such terms as may be determined by the Committee, or
(v) the Committee may determine that Grants that remain
outstanding after the Change of Control shall be converted to
similar grants of, or assumed by, the surviving corporation (or
a parent or subsidiary of the surviving corporation or
successor). Such acceleration, surrender, termination,
settlement or conversion shall take place as of the date of the
Change of Control or such other date as the Committee may
specify.



     
(b) Other Transactions. The Committee may
provide in a Grant Agreement that a sale or other transaction
involving a subsidiary or other business unit of the Company
shall be considered a Change of Control for purposes of a Grant,
or the Committee may establish other provisions that shall be
applicable in the event of a specified transaction.






		
	17.	
    Requirements for Issuance of Shares



     
No Company Stock shall be issued in connection with any Grant
hereunder unless and until all legal requirements applicable to
the issuance of such Company Stock have been complied with to
the satisfaction of the Committee. The Committee shall have the
right to condition any Grant made to any Participant hereunder
on such Participant’s undertaking in writing to comply with
such restrictions on his or her subsequent disposition of such
shares of Company Stock as the Committee shall deem necessary or



10







 




advisable, and certificates representing such shares may be
legended to reflect any such restrictions. Certificates
representing shares of Company Stock issued under the Plan will
be subject to such stop-transfer orders and other restrictions
as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be
placed thereon. No Participant shall have any right as a
shareholder with respect to Company Stock covered by a Grant
until shares have been issued to the Participant.






		
	18.	
    Amendment and Termination of the Plan



     
(a) Amendment. The Board may amend or
terminate the Plan at any time; provided, however, that the
Board shall not amend the Plan without approval of the
shareholders of the Company if such approval is required in
order to comply with the Code or applicable laws, or to comply
with applicable stock exchange requirements. No amendment or
termination of this Plan shall, without the consent of the
Participant, materially impair any rights or obligations under
any Grant previously made to the Participant under the Plan,
unless such right has been reserved in the Plan or the Grant
Agreement, or except as provided in Sections 13 above
or 19(b) below. Notwithstanding anything in the Plan to the
contrary, the Board may amend the Plan in such manner as it
deems appropriate in the event of a change in applicable law or
regulations.



     
(b) No Repricing Without Shareholder
Approval. Notwithstanding anything in the Plan to the
contrary, the Committee may not reprice Options, nor may the
Board amend the Plan to permit repricing of Options, unless the
shareholders of the Company provide prior approval for such
repricing. The term “repricing” shall have the meaning
given that term in section 303A(8) of the New York Stock
Exchange Listed Company Manual, as in effect from time to time.



     
(c) Shareholder Approval for “Qualified
Performance-Based Compensation.” If Grants are made
under Section 12 above, the Plan must be reapproved by the
Company’s shareholders no later than the first shareholders
meeting that occurs in the fifth year following the year in
which the shareholders previously approved the provisions of
Section 12, if additional Grants are to be made under
Section 12 and if required by section 162(m) of the
Code or the regulations thereunder.



     
(d) Termination of Plan. The Plan shall
terminate on the day immediately preceding the tenth anniversary
of its Effective Date, unless the Plan is terminated earlier by
the Board or is extended by the Board with the approval of the
shareholders. The termination of the Plan shall not impair the
power and authority of the Committee with respect to an
outstanding Grant.






		
	19.	
    Miscellaneous



     
(a) Grants in Connection with Corporate Transactions
and Otherwise. Nothing contained in this Plan shall be
construed to (i) limit the right of the Committee to make
Grants under this Plan in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association,
including Grants to employees thereof who become Employees, or
for other proper corporate purposes, or (ii) limit the
right of the Company to grant stock options or make other
stock-based awards outside of this Plan. Without limiting the
foregoing, the Committee may make a Grant to an employee of
another corporation who becomes an Employee by reason of a
corporate merger, consolidation, acquisition of stock or
property, reorganization or liquidation involving the Company in
substitution for a grant made by such corporation. The terms and
conditions of the Grants may vary from the terms and conditions
required by the Plan and from those of the substituted stock
incentives, as determined by the Committee.



     
(b) Compliance with Law. The Plan, the
exercise of Options and the obligations of the Company to issue
or transfer shares of Company Stock under Grants shall be
subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. With
respect to persons subject to section 16 of the Exchange
Act, it is the intent of the Company that the Plan and all
transactions under the Plan comply with all applicable
provisions of
Rule 16b-3 or its
successors under the Exchange Act. In addition, it is the intent
of the Company that Incentive Stock Options comply with the
applicable provisions of section 422 of the Code, that
Grants of “qualified performance-based compensation”
comply



11







 




with the applicable provisions of section 162(m) of the
Code and that, to the extent applicable, Grants comply with the
requirements of section 409A of the Code. To the extent
that any legal requirement of section 16 of the Exchange
Act or section 422, 162(m) or 409A of the Code as set
forth in the Plan ceases to be required under section 16 of
the Exchange Act or section 422, 162(m) or 409A of the
Code, that Plan provision shall cease to apply. The Committee
may revoke any Grant if it is contrary to law or modify a Grant
to bring it into compliance with any valid and mandatory
government regulation. The Committee may also adopt rules
regarding the withholding of taxes on payments to Participants.
The Committee may, in its sole discretion, agree to limit its
authority under this Section.



     
(c) Enforceability. The Plan shall be binding
upon and enforceable against the Company and its successors and
assigns.



     
(d) Funding of the Plan; Limitation on
Rights. This Plan shall be unfunded. The Company shall
not be required to establish any special or separate fund or to
make any other segregation of assets to assure the payment of
any Grants under this Plan. Nothing contained in the Plan and no
action taken pursuant hereto shall create or be construed to
create a fiduciary relationship between the Company and any
Participant or any other person. No Participant or any other
person shall under any circumstances acquire any property
interest in any specific assets of the Company. To the extent
that any person acquires a right to receive payment from the
Company hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Company.



     
(e) Rights of Participants. Nothing in this
Plan shall entitle any Employee, Non-Employee Director or other
person to any claim or right to receive a Grant under this Plan.
Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by
or in the employment or service of the Employer.



     
(f) No Fractional Shares. No fractional
shares of Company Stock shall be issued or delivered pursuant to
the Plan or any Grant. The Committee shall determine whether
cash, other awards or other property shall be issued or paid in
lieu of such fractional shares or whether such fractional shares
or any rights thereto shall be forfeited or otherwise eliminated.



     
(g) Employees Subject to Taxation Outside the United
States. With respect to Participants who are subject to
taxation in countries other than the United States, the
Committee may make Grants on such terms and conditions as the
Committee deems appropriate to comply with the laws of the
applicable countries, and the Committee may create such
procedures, addenda and subplans and make such modifications as
may be necessary or advisable to comply with such laws.



     
(h) Governing Law. The validity,
construction, interpretation and effect of the Plan and Grant
Agreements issued under the Plan shall be governed and construed
by and determined in accordance with the laws of the State of
New York, without giving effect to the conflict of laws
provisions thereof.



     
(i) Indemnification. To the extent allowable
pursuant to applicable law, each member of the Committee or of
the Board shall be indemnified or held harmless by the Company
from any loss, cost, liability or expense that may be imposed
upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit or proceeding to which he
or she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts
paid by him or her in satisfaction of judgment in such action,
suit or proceeding against him or her; provided he or she gives
the Company an opportunity to handle and defend the same before
he or she undertakes to handle and defend it on his or her own
behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such
persons may be entitled pursuant to the Company’s
Certificate of Corporation or Bylaws as a matter of law, or
otherwise, any power that the Company may have to indemnify them
or hold them harmless.



     
(j) Relationship to other Benefits. No
payment pursuant to the Plan shall be taken into account in
determining any benefits pursuant to any pension, retirement,
savings, profit sharing, group insurance, welfare or other
benefit plan of the Company or any subsidiary except to the
extent otherwise expressly provided in writing in such other
plan or in agreement thereunder.



     
(k) Expenses. The expenses of administering
the Plan shall be borne by the Company.



12