# **Exhibit 10.10**

 

**STEINWAY MUSICAL INSTRUMENTS, INC.**

 

**AMENDED AND RESTATED**

 

**1996 STOCK PLAN**

 

 

**1.****             Purpose**.  The purpose of the Steinway MusicalInstruments, Inc. Amended and Restated 1996 Stock Plan (the “Plan”) is tofurther and promote the interests of Steinway Musical Instruments, Inc. (the“Company”), its Subsidiaries and its stockholders by enabling the Company andits Subsidiaries to attract, retain and motivate directors, employees,consultants and advisors or those who will become directors, employees, consultantsor advisors to the Company, and to align the interests of those individuals andthe Company’s stockholders.  To do this,the Plan offers equity-based and performance-based incentive awards andopportunities to provide such directors, employees, consultants and advisorswith a proprietary interest in maximizing the growth, profitability and overallsuccess of the Company and its Subsidiaries.

 

**2.****             Definitions**.  For purposesof the Plan, the following terms shall have the meanings set forth below:

 

** 2.1         “Award”** meansan award or grant made to a Participant under Sections 6, 7, 8 or 9 of thePlan.

 

** 2.2         “Award Agreement”**means the agreement executed by a Participant pursuant to Sections 3.2 and 17.7of the Plan in connection with the granting of an Award.

 

** 2.3         “****Board”**means the Board of Directors of the Company, as constituted from time to time.

 

** 2.4****         “Code”** means the InternalRevenue Code of 1986, as in effect and as amended from time to time, or anysuccessor statute thereto,together with any rules, regulations and interpretations promulgated thereunderor with respect thereto.

 

** 2.5****         “Committee”** means thecommittee of the Board described in Section 3 of the Plan.

 

** 2.6****         “Common Stock”** means theOrdinary Common Stock, par value $.001 per share, of the Company or anysecurity of the Company issued by the Company in substitution or exchangetherefor.

 

** 2.7****         “Company”** means SteinwayMusical Instruments, Inc., a Delaware corporation, or any successor corporationto Steinway Musical Instruments, Inc.

 

** 2.8****         “Disability”** meansdisability as defined in the Participant’s then effective employment agreement,or if the Participant is not then a party to an effective employment agreementwith the Company that defines such term, “Disability” means disability as determinedby the Committee in accordance with standards and procedures similar to thoseunder the Company’s long-term disability plan, if any.  Subject to the first sentence of thisSection 2.8, at any time that the Company does not

 

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maintain a long-term disabilityplan, “Disability” shall mean any physical or mental disability which isdetermined to be total and permanent by a physician selected in good faith bythe Committee.

 

** 2.9****         “Exchange Act”** means the SecuritiesExchange Act of 1934, as in effect and as amended from time to time, or anysuccessor statute thereto, together with any rules, regulations andinterpretations promulgated thereunder or with respect thereto.

 

** 2.10****       “Fair Market Value”** means on, orwith respect to, any given date, the average of the highest and lowest marketprices of the relevant security, as reported on the consolidated transactionreporting system for the New York Stock Exchange (or, if the relevant securityis not so listed or if the principal market on which it is traded is not theNew York Stock Exchange, such other reporting system as shall be selected bythe Committee) for such date or, if the relevant security was not traded onsuch date, on the next preceding day on which the security was traded.  The Committee shall determine the FairMarket Value of any security that is not publicly traded, using criteria as itshall determine, in its sole discretion, to be appropriate for the valuation.

 

** 2.11****       “Incentive Stock Option”** meansany stock option granted pursuant to the provisions of Section 6 of the Plan(and the relevant Award Agreement) that is intended to be (and is specificallydesignated as) an “incentive stock option” within the meaning of Section 422 ofthe Code.

 

** 2.12****       “Maximum Shares”** means themaximum number of shares of Common Stock subject to the Plan in accordance withSection 4.2.

 

** 2.13****       “Non-Qualified Stock Option”**means any stock option granted pursuant to the provisions of Section 6 of thePlan (and the relevant Award Agreement) that is not (and is specificallydesignated as not being) an Incentive Stock Option.

 

** 2.14****       “Participant”** means anyindividual who is selected under Section 5 to receive an Award under thePlan.

 

** 2.15**       **“Performance Units”** means the monetaryunits granted under Section 9 of the Plan and the relevant Award Agreement.

 

** 2.16****       “Plan”** means the SteinwayMusical Instruments, Inc. Amended and Restated 1996 Stock Plan, as set forthherein and as in effect and as amended from time to time (together with anyrules and regulations promulgated by the Committee with respect thereto).

 

** 2.17**       **“Reload Stock Option”** means anyNon-Qualified Stock Option automatically granted pursuant to the provisions ofSection 6.7 of the Plan and the relevant Award Agreement.

 

** 2.18****       “Restricted Shares”** means therestricted shares of Common Stock granted pursuant to the provisions of Section8 of the Plan and the relevant Award Agreement.

 

** 2.19**       **“Retirement”** means the voluntary retirementby the Participant from active employ­ment with the Company and itsSubsidiaries on or after the attainment of age 65.

 

** 2.20****       “Stock Appreciation Right”**means an Award described in Section 7.2 of the Plan and granted pursuant to theprovisions of Section 7 of the Plan.

 

** 2.21**       **“Subsidiary(ies)”** means any corporation(other than the Company) in an unbroken chain of corporations, including andbeginning with the Company, if each of such corporations,

 

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other than the last corporationin the unbroken chain, owns, directly or indirectly, more than fifty percent(50%) of the voting stock in one of the other corporations in such chain.

 

**3.****             Administration.**

 

** 3.1****         The Committee.**  The Plan shall be administered by theCommittee.  The Committee shall be appointedfrom time to time by the Board and shall be comprised of not less than two (2)of the then members of the Board all of whom qualify as (i) Non-EmployeeDirectors (within the meaning of Securities and Exchange Commission Rule16b-3), and (ii) Outside Directors (as defined in Treasury Regulation1.162-27(e)(3)).  Consistent with theBylaws of the Company, members of the Committee shall serve at the pleasure ofthe Board and the Board, subject to the immediately preceding sentence, may atany time and from time to time remove members from or add members to theCommittee.

 

** 3.2****         Plan Administration and Plan Rules.**  The Committee is authorized to construe andinterpret the Plan and to promulgate, amend and rescind rules and regulationsrelating to the implementation, administration and maintenance of thePlan.  Subject to the terms andconditions of the Plan, the Committee shall make all determinations necessaryor advisable for the implementation, administration and maintenance of the Planincluding, without limitation, (a) selecting the Plan’s Participants, (b)making Awards in such amounts and form as the Committee shall determine, (c)imposing such restrictions, terms and conditions upon such Awards as theCommittee shall deem appropriate, and (d) correcting any technical defect ortechnical omission, or reconciling any technical inconsistency, in the Planand/or any Award Agreement.  TheCommittee may designate persons other than members of the Committee to carryout the day-to-day administration of the Plan under such conditions andlimitations as it may prescribe, except that the Committee shall not delegateits authority with regard to selection for participation in the Plan and/or thegranting of any Awards to Participants. The Committee’s determinations under the Plan need not be uniform andmay be made selectively among Participants, whether or not such Participantsare similarly situated.  Anydetermination, decision or action of the Committee in connection with theconstruction, interpretation, administration, implementation or maintenance ofthe Plan shall be final, conclusive and binding upon all Participants and anyperson(s) claiming under or through any Participants.  The Company shall effect the granting of Awards under the Plan,in accordance with the determinations made by the Committee, by execution ofwritten agreements and/or other instruments in such form as is approved by theCommittee.

 

** 3.3**         **Liability Limitation.**  Neither the Board nor the Committee, nor anymember of either, shall be liable for any act, omission, interpretation,construction or determination made in good faith in connection with the Plan(or any Award Agreement), and the members of the Board and the Committee shallbe entitled to indemnification and reimbursement by the Company in respect ofany claim, loss, damage or expense (including, without limitation, attorneys’fees) arising or resulting there from to the fullest extent permitted by lawand/or under any directors and officers liability insurance coverage which maybe in effect from time to time.

 

**4.****             Term of Plan/Common StockSubject to Plan.**

 

** 4.1****         Term**.  The Plan shall terminate on July 31, 2006,except with respect to Awards then outstanding.  After such date no further Awards shall be granted under thePlan.

 

** 4.2****         Common Stock**.  The maximum number of shares of Common Stockin respect of which Awards may be granted or paid out under the Plan, subjectto adjustment as provided in Section 14.2 of the Plan, shall not exceed **1,500,000** shares (after giving effect to thestock split approved by the Board in May 1996) (the “Maximum Shares”).  In the event of a change in the Common Stockof the Company that is limited to a change in the designation thereof to“Capital Stock” or other similar

 

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designation, or to a change inthe par value thereof, or from par value to no par value, without increase ordecrease in the number of issued shares, the shares resulting from any suchchange shall be deemed to be the Common Stock for purposes of the Plan.  Common Stock which may be issued under thePlan may be either authorized and unissued shares or issued shares which havebeen reacquired by the Company and which are being held as treasury shares.  No fractional shares of Common Stock shallbe issued under the Plan, unless the Committee determines otherwise.

 

** 4.3****         Computation of Available Shares.**  For the purpose of computing the totalnumber of shares of Common Stock available for Awards under the Plan, thereshall be counted against the limitations set forth in Section 4.2 of the Planthe maximum number of shares of Common Stock potentially subject to issuanceupon exercise or settlement of Awards granted under Sections 6 and 7 of thePlan, the number of shares of Common Stock issued or subject to potentialissuance under grants of Restricted Shares pursuant to Section 8 of the Planand the maximum number of shares of Common Stock potentially issuable undergrants or payments of Performance Units pursuant to Section 9 of the Plan, ineach case determined as of the date on which such Awards are granted.  If any Awards expire unexercised or areforfeited, surrendered, cancelled, terminated or settled in cash in lieu ofCommon Stock, the shares of Common Stock which were theretofore subject (orpotentially subject) to such Awards shall again be available for Awards underthe Plan to the extent of such expiration, forfeiture, surrender, cancella­tion,termination or settlement of such Awards.

 

**5.****             Eligibility.**  Individuals eligible for Awards under thePlan shall consist of all directors, employees, consultants and advisors orthose who will become directors, employees, consultants or advisors of theCompany and/or its Subsidiaries whose performance or contribution, in the solediscretion of the Committee, benefits or will benefit the Company or anySubsidiary; provided, however, that any Awards granted to amember of the Committee shall only be valid if approved or ratified by theBoard.

 

**6.****             Stock Options.**

 

** 6.1****         Terms and Conditions**.  Stock options granted under the Plan shallbe in respect of Common Stock and may be in the form of Incentive StockOptions, Non-Qualified Stock Options or Reload Stock Options (sometimesreferred to collectively herein as the “Stock Option(s)”).  Such Stock Options shall be subject to theterms and conditions set forth in this Section 6 and any additional terms andconditions, not inconsistent with the express terms and provisions of the Plan,as the Committee shall set forth in the relevant Award Agreement.

 

** 6.2****         Grant.**  Stock Options may be granted under the Planin such form as the Committee may from time to time approve.  Stock Options may be granted alone or inaddition to other Awards under the Plan or in tandem with Stock AppreciationRights.  Notwithstanding the above, noIncentive Stock Options shall be granted to (i) any non-employee director,consultant or advisor or (ii) any employee who owns (within the meaning ofSection 422(b)(6) of the Code) more than ten percent (10%) of the totalcombined voting power of all classes of stock of the Company or its parentcorporation or any subsidiary of the Company.

 

** 6.3****         Exercise Price.**  The exercise price per share of Common Stocksubject to a Stock Option shall be determined by the Committee, including,without limitation, a determination based on a formula determined by theCommittee; provided, however, that (a) the exercise price of anIncentive Stock Option shall not be less than one hundred percent (100%) of theFair Market Value of the Common Stock on the date of the grant of suchIncentive Stock Option, and (b) the exercise price of a Non-Qualified StockOption shall not be less than eighty-five percent (85%) of the Fair MarketValue of the Common Stock on the date of the grant of such Non-Qualified StockOption; and, provided, further that no exercise price shall beless than the par value of the Common Stock.

 

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** 6.4****         Term.**  The term of each Stock Option shall be suchperiod of time as is fixed by the Committee; provided, however,that the term of any Stock Option shall not exceed ten (10) years after thedate on which the Stock Option is granted.

 

** 6.5****         Method of Exercise.**  A Stock Option may be exercised, in whole orin part, by giving written notice of exercise to the Secretary of the Company,or the Secretary’s designee, specifying the number of shares to bepurchased.  Such notice shall beaccompanied by payment in full of the exercise price in cash, by certified check,bank draft or money order payable to the order of the Company or, if permittedby the Committee (in its sole discretion) and applicable law, by delivery of,alone or in conjunction with a partial cash or instrument payment, (a) afully-secured promissory note or notes, (b) shares of Common Stock alreadyowned by the Participant for at least six (6) months, or (c) some other form ofpayment acceptable to the Committee. The Committee may also permit Participants (either on a selective orgroup basis) to simultaneously exercise Stock Options and sell the shares ofCommon Stock thereby acquired, pursuant to a “cashless exercise” arrangement orprogram, selected by and approved of in all respects in advance by theCommittee.  Payment instruments shall bereceived by the Company subject to collection. The proceeds received by the Company upon exercise of any Stock Optionmay be used by the Company for general corporate purposes.  Any portion of a Stock Option that is exercisedmay not be exercised again.

 

** 6.6**         **Date of Exercisability.**

 

**6.6.1**  In respect of any Stock Option granted underthe Plan, unless otherwise (a) determined by the Committee (in its solediscretion) at any time and from time to time in respect of any such StockOption, or (b) provided in the Award Agreement or in the Participant’semployment or engagement agreement in respect of any such Stock Option, suchStock Option shall become exercisable as to the aggregate number of shares ofCommon Stock underlying such Stock Option on the date of grant as follows:

 

**•****                                         **20%,on the first anniversary of the date of grant of the Stock Option, provided theParticipant is then employed or engaged by, or a director of, the Companyand/or one of its Subsidiaries;

 

•                                          40%,on the second anniversary of the date of grant of the Stock Option, provided theParticipant is then employed or engaged by, or a director of, the Companyand/or one of its Subsidiaries;

 

•                                          60%,on the third anniversary of the date of grant of the Stock Option, provided theParticipant is then employed or engaged by, or a director of, the Companyand/or one of its Subsidiaries;

 

•                                          80%,on the fourth anniversary of the date of grant of the Stock Option, providedthe Participant is then employed or engaged by, or a director of, the Companyand/or one of its Subsidiaries; and

 

•                                          100%,on the fifth anniversary of the date of grant of the Stock Option, provided theParticipant is then employed or engaged by, or a director of, the Companyand/or one of its Subsidiaries.

 

**6.6.2 **Notwithstandinganything to the contrary contained in Section 6.6.1 above, such Stock Optionshall become one hundred percent (100%) exercisable as to the aggregate numberof shares of Common Stock then underlying such Stock Option upon the death,Disability

 

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or Retirementof the Participant, or upon the occurrence of a Change of Control, as definedin and in accordance with Section 15 of the Plan.

 

** 6.7****         Reload Stock Options.**  The Committee may, in its sole discretion,provide in any Award Agreement in respect of any Non-Qualified Stock Optionthat if the Participant delivers shares of the Company’s Common Stock alreadyowned by such Participant for at least six (6) months in full or partialpayment of the exercise price of such Non-Qualified Stock Option, the Participantshall automatically (subject to the limitations contained in Section 4.2) andimmediately thereupon be granted a Reload Stock Option to purchase that numberof shares of Common Stock delivered by the Participant to the Company (on suchterms as the Committee may prescribe under and in accordance with the Plan).

 

** 6.8****         Tandem Grants.**  If Non-Qualified Stock Options and StockAppreciation Rights are granted in tandem, as designated in the relevant AwardAgreements, the right of a Participant to exercise any such tandemNon-Qualified Stock Option shall terminate to the extent that the shares ofCommon Stock subject to such Non-Qualified Stock Option are used to calculateamounts or shares receivable upon the exercise of the related tandem StockAppreciation Right.

 

**7.****             Stock Appreciation Rights.**

 

** 7.1****         Terms and Conditions.**  The grant of Stock Appreciation Rights under the Plan shall besubject to the terms and conditions set forth in this Section 7 and anyadditional terms and conditions, not inconsistent with the express terms andprovisions of the Plan, as the Committee shall set forth in the relevant AwardAgreement.

 

** 7.2****         Stock Appreciation Rights.**  A Stock Appreciation Right is an Awardgranted with respect to a specified number of shares of Common Stock entitlinga Participant to receive an amount equal to the excess of the Fair Market Valueof a share of Common Stock on the date of exercise over the Fair Market Valueof a share of Common Stock on the date of grant of the Stock AppreciationRight, multiplied by the number of shares of Common Stock with respect to whichthe Stock Appreciation Right shall have been exercised.

 

** 7.3****         Grant.**  A Stock Appreciation Right may be granted inaddition to any other Award under the Plan or in tandem with or independent ofa Non-Qualified Stock Option.

 

** 7.4****         Date of Exercisability.**  Unless otherwise provided in theParticipant’s employment agreement or the Award Agreement in respect of anyStock Appreciation Right, a Stock Appreciation Right may be exercised by aParticipant, in accordance with and subject to all of the proceduresestablished by the Committee, in whole or in part at any time and from time totime during its specified term. Notwithstanding the preceding sentence, in no event shall a StockAppreciation Right be exercisable (a) prior to the date which is six (6) monthsafter the date on which the Stock Appreciation Right was granted, (b) prior tothe exercisability of any Non-Qualified Stock Option with which it is grantedin tandem or (c) if the Fair Market Value of the Common Stock on the date ofsuch exercise does not exceed the Fair Market Value of the Common Stock on thedate of grant of such Stock Appreciation Rights.  The Committee may also provide, as set forth in the relevantAward Agreement and without limitation, that some Stock Appreciation Rightsshall be automatically exercised on one or more dates specified therein by theCommittee.

 

** 7.5****         Form of Payment.**  Upon exercise of a Stock Appreciation Right,payment may be made in cash, in Restricted Shares or in shares of unrestrictedCommon Stock, or in any combination thereof, as the Committee, in its solediscretion, shall determine and provide in the relevant Award Agreement.

 

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** 7.6****         Tandem Grant. **The right of a Participant toexercise a tandem Stock Appreciation Right shall terminate to the extent suchParticipant exercises the Non-Qualified Stock Option to which such StockAppreciation Right is related.  Subjectto the limitations set forth in Section 7.4 of the Plan, any Stock AppreciationRight granted in tandem with a Stock Option shall be exercisable and lapseaccording to the same vesting schedule and lapse rules established for suchtandem Stock Option.

 

**8.**             **Restricted Shares.**

 

** 8.1****         Terms and Conditions**.  Grants of Restricted Shares shall be subjectto the terms and conditions set forth in this Section 8 and any additionalterms and conditions, not inconsistent with the express terms and provisions ofthe Plan, as the Committee shall set forth in the relevant AwardAgreement.  Restricted Shares may begranted alone or in addition to any other Awards under the Plan.  Subject to the terms of the Plan, theCommittee shall determine the number of Restricted Shares to be granted to aParticipant and the Committee may provide or impose different terms andconditions on any particular Restricted Shares grant made to anyParticipant.  With respect to eachParticipant receiving an Award of Restricted Shares, there shall be issued astock certificate (or certificates) in respect of such Restricted Stock.  Such stock certificate(s) shall beregistered in the name of such Participant, shall be accompanied by a stockpower duly executed by such Participant, and shall bear, among other requiredlegends, a legend substantially in the following form:

 

“Thetransferability of this certificate and the shares of stock represented herebyare subject to the terms and conditions (including, without limitation,forfeiture events) contained in the Steinway Musical Instruments, Inc. Amendedand Restated 1996 Stock Plan and an Award Agreement entered into between theregistered owner hereof and Steinway Musical Instruments, Inc.  Copies of such Plan and Award Agreement areon file in the office of the Secretary of Steinway Musical Instruments, Inc.,800 South Street, Suite 305, Waltham, Massachusetts 02453.  Steinway Musical Instruments, Inc. willfurnish to the recordholder of the certificate, without charge and upon writtenrequest at its principal place of business, a copy of such Plan and AwardAgreement.  Steinway MusicalInstruments, Inc. reserves the right to refuse to record the transfer of thiscertificate until all such restrictions are satisfied, all such terms arecomplied with and all such conditions are satisfied.”

 

Such stock certificate evidencing such sharesshall, in the sole discretion of the Committee, be deposited with and held incustody by the Company until the restrictions thereon shall have lapsed and allof the terms and conditions applicable to such grant shall have been satisfied.

 

** 8.2**         **Restricted Share Grants.**  A grant of Restricted Shares is an Award ofshares of Common Stock granted to a Participant, subject to such restrictions,terms and conditions as the Committee deems appropriate, including, withoutlimitation, (a) restrictions on the sale, assignment, transfer, hypothecationor other disposition of such shares, (b) the requirement that the Participantdeposit such shares with the Company while such shares are subject to suchrestrictions, and (c) the requirement that such shares be forfeited upontermination of employment for specified reasons within a specified period oftime or for other reasons.

 

** 8.3****         Restriction Period.**  In accordance with Sections 8.1 and 8.2 ofthe Plan and unless otherwise determined by the Committee (in its solediscretion) at any time and from time to time, Restricted Shares shall onlybecome unrestricted and vested in the Participant in accordance with suchvesting schedule relating to the service performance restriction applicable tosuch Restricted Shares, if any, as the Committee may establish in the relevantAward Agreement (the “Restriction Period”). Notwithstanding the preceding sentence, in no event shall theRestriction Period be less than one (1) year 

 

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after the date of grant.  During the Restriction Period, such stockshall be and remain unvested and a Participant may not sell, assign, transfer,pledge, encumber or otherwise dispose of or hypothecate such Award.  Upon satisfaction of the vesting scheduleand any other applicable restrictions, terms and conditions, the Participantshall be entitled to receive payment of the Restricted Shares or a portionthereof, as the case may be, as provided in Section 8.4 of the Plan.

 

** 8.4****         Payment of Restricted Share Grants**.  After the satisfaction and/or lapse of therestrictions, terms and conditions established by the Committee in respect of agrant of Restricted Shares, a new certificate, without the legend set forth inSection 8.1 of the Plan, for the number of shares of Common Stock which are nolonger subject to such restrictions, terms and conditions shall, as soon aspracticable thereafter, be delivered to the Participant.

 

** 8.5****         Stockholder Rights.**  A Participant shall have, with respect tothe shares of Common Stock underlying a grant of Restricted Shares, all of therights of a stockholder of such stock (except as such rights are limited orrestricted under the Plan or in the relevant Award Agreement).  Any stock dividends paid in respect ofunvested Restricted Shares shall be treated as additional Restricted Shares andshall be subject to the same restrictions and other terms and conditions thatapply to the unvested Restricted Shares with respect to which such stockdividends are issued.

 

**9.****             Performance Units.**

 

** 9.1****         Terms and Conditions.**  Performance Units shall be subject to theterms and conditions set forth in this Section 9 and any additional terms andconditions, not inconsistent with the express provisions of the Plan, as theCommittee shall set forth in the relevant Award Agreement.

 

** 9.2****         Performance Unit Grants.**  A Performance Unit is an Award of units(with each unit representing such monetary amount as is designated by theCommittee in the Award Agreement) granted to a Participant, subject to suchterms and conditions as the Committee deems appropriate, including, withoutlimitation, the requirement that the Participant forfeit such units (or aportion thereof) in the event certain performance criteria or other conditionsare not met within a designated period of time.

 

** 9.3****         Grants.**  Performance Units may be granted alone or inaddition to any other Awards under the Plan. Subject to the terms of the Plan, the Committee shall determine thenumber of Performance Units to be granted to a Participant and the Committeemay impose different terms and conditions on any particular Performance Unitsgranted to any Participant.

 

** 9.4****         Performance Goals and PerformancePeriods.**  Participantsreceiving a grant of Performance Units shall only earn into and be entitled topayment in respect of such Awards if the Company and/or the Participantachieves certain pre-determined and objective performance goals (the“Performance Goals”) during and in respect of a designated performance period(the “Performance Period”).  ThePerformance Goals and the Performance Period shall be established by theCommittee, in its sole discretion.  TheCommittee shall establish Performance Goals for each Performance Period priorto, or as soon as practicable after, the commencement of such PerformancePeriod.  The Committee shall alsoestablish a schedule or schedules for Performance Units setting forth theportion of the Award which will be earned or forfeited based on the degree ofachievement, or lack thereof, of the Performance Goals at the end of therelevant Performance Period.  In settingPerformance Goals and until otherwise determined by the Committee, theperformance goal or goals shall be the attainment of one or more of any oftotal stockholder return, return on equity, net earnings growth, sales orrevenue growth, objective comparisons to peer companies or cash flow.  Such performance measures shall be definedas to their respective components and meaning by the Committee (in its solediscretion).  Performance Units,performance-based Restricted Shares, and certain other stock-based awardssubject to performance

 

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criteria may be intended to be“qualified performance-based compensation” within the meaning of Section 162(m)of the Code and, if so intended, shall be paid solely on account of theattainment of one or more preestablished, objective performance goals withinthe meaning of such section and the regulations thereunder.

 

**9.5**          **Payment of Units.**  With respect to each Performance Unit, theParticipant shall, if the applicable Performance Goals have been achieved, orpartially achieved, as determined by the Committee in its sole discretion, bythe Company during the relevant Performance Period, be entitled to receivepayment in an amount equal to the designated value of each Performance Unittimes the number of such units so earned. Payment in settlement of earned Performance Units shall be made as soonas practicable following the conclusion of the respective Performance Period incash, in unrestricted Common Stock, or in Restricted Shares, or in anycombination thereof, as the Committee in its sole discretion, shall determineand provide in the relevant Award Agreement. Notwithstanding the above, the payout of any such Award to a “coveredemployee” (as defined in Section 162(m) of the Code) may be reduced, but notincreased, based on the degree of attainment of other performance criteria orotherwise in the sole discretion of the Committee.

 

**10.**          **Deferral Elections/Tax Reimbursements/DividendEquivalents.**  TheCommittee may permit a Participant to elect to defer receipt of any payment ofcash or any delivery of shares of Common Stock that would otherwise be due tosuch Participant by virtue of the exercise, earn out or settlement of any Awardmade under the Plan.  If any suchelection is permitted, the Committee shall establish rules and procedures forsuch deferrals, including, without limitation, the payment or crediting ofreasonable interest on such deferred amounts credited in cash, and the paymentor crediting of dividend equivalents in respect of deferrals credited in unitsof Common Stock.  The Committee may alsoprovide in the relevant Award Agreement for a tax reimbursement cash payment tobe made by the Company in favor of any Participant in connection with the taxconsequences resulting from the grant, exercise, settlement or earn out of anyAward made under the Plan.  In additionto the provisions of Section 8.5 of the Plan, Awards of Stock Options, and/orStock Appreciation Rights, may, in the sole discretion of the Committee and ifprovided for in the relevant Award Agreement, earn dividend equivalents.  In respect of any such Award which isoutstanding on a dividend record date for Common Stock, the Participant shallbe credited with an amount equal to the amount of cash or stock dividends thatwould have been paid on the shares of Common Stock covered by such Award hadsuch covered shares been issued and outstanding on such dividend recorddate.  The Committee shall establishsuch rules and procedures governing the crediting of such dividend equivalents,including, without limitation, the amount, the timing, form of payment andpayment contingencies and/or restrictions of such dividend equivalents, as itdeems appropriate or necessary.

 

**11.**          **Maximum Yearly Awards.**  The maximum annual Award amounts in thisSection 11 are subject to adjustment under Section 14.2 and are subject to thePlan maximum under Section 4.2.

 

**11.1****        Performance-Based Awards.**  All Participants in the aggregate may notreceive in any calendar year Performance Units, performance-based RestrictedShares and other stock-based Awards subject to performance criteria exceeding,in the aggregate, seventy-five percent (75%) of the Maximum Shares.  The maximum amount payable in respect ofsuch Awards in any calendar year may not exceed seventy-five percent (75%) ofthe Maximum Shares (or the then equivalent Fair Market Value thereof) in theaggregate to all Participants and thirty-three percent (33%) of the MaximumShares (or the then equivalent Fair Market Value thereof) in the case of anyindividual Participant.

 

**11.2**        **Stock Options and SARs.**  All Participants in the aggregate may notreceive in any calendar year Awards of Stock Options and Stock AppreciationRights, in the aggregate, exceeding seventy-five percent (75%) of the MaximumShares.  Each individual Participant maynot receive in any

 

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calendar year Awards of StockOptions and Stock Appreciation Rights exceeding thirty-three percent (33%) ofthe Maximum Shares.

 

**12.**          **Termination of Employment.**

 

** 12.1****       General**.  Subject to the terms and conditions ofSection 15 of the Plan, if, and to the extent that, the terms and conditionsunder which an Award may be exercised, vested, earned out or settled after aParticipant’s termination of employment for any particular reason shall nothave been set forth (a) in the relevant Award Agreement, by and as determinedby the Committee in its sole discretion, or (b) in the Participant’s employmentagreement, if any, the following terms and conditions shall apply asappropriate and as not inconsistent with the terms and conditions, if any,contained in such Award Agreement and/or employment agreement:

 

**12.1.1**  **Options/SARs.**  Except as otherwise provided in this Section 12.1.1, if aParticipant’s employment with the Company and its Subsidiaries is terminatedfor any reason, such Participant’s rights, if any, to exercise any then exercisableStock Options and/or Stock Appreciation Rights, if any, shall terminate ninety(90) days after the date of such termination (but not beyond the term of anysuch option and/or stock appreciation right as determined under Sections 6.4and 7.4) and upon such date the Participant (and such Participant’s estate,designated beneficiary or other legal representative) shall forfeit any rightsor interests in or with respect to any such Stock Options or Stock AppreciationRights.  The Committee, in its solediscretion, may determine that any such Participant’s Stock Options and/orStock Appreciation Rights, if any, to the extent exercisable immediately priorto any termination of employment (other than a termination due to death,Retirement or Disability), may remain exercisable for an additional specifiedtime period after such ninety (90) day or shorter period expires (subject toany other applicable terms and provisions of the Plan (and any rules orprocedures thereunder) and the relevant Award Agreement).  If any termination of employment is due todeath, Retirement or Disability, a Participant (and such Participant’s estate,designated beneficiary or other legal representative, as the case may be) shallhave the right, subject to the applicable terms and provisions of the Plan (andany rules or procedures thereunder) and the relevant Award Agreement, toexercise such Stock Options and/or Stock Appreciation Rights, if any, at anytime within the two (2) year period following such termination due to death,Retirement or Disability (but not beyond the term of any such option and/orstock appreciation right as determined under Sections 6.4 and 7.4).

 

**12.1.2** **Restricted Shares.**  If a Participant’s employment with theCompany and its Subsidiaries is terminated for any reason (including, withoutlimitation, Disability, Retirement or death) prior to the actual or deemed(under Section 15 of the Plan) satisfaction and/or lapse of the restrictions,terms and conditions applicable to a grant of Restricted Shares, such RestrictedShares shall immediately be cancelled and the Participant (and suchParticipant’s estate, designated beneficiary or other legal representative)shall forfeit any rights or interests in and with respect to any suchRestricted Shares.  Notwithstanding theimmediately preceding sentence, the Committee, in its sole discretion, maydetermine, prior to or within ninety (90) days after the date of suchtermination, that all or a portion of any such Participant’s Restricted Sharesshall not be so cancelled and forfeited.

 

**12.1.3**  **Performance****Units.**  If a Participant’s employment with theCompany and its Subsidiaries is terminated for any reason (including, withoutlimitation, Disability, Retirement or death) prior to the actual or deemed(under Section 15 of the Plan) completion of any Performance Period, anyPerformance Units granted in respect of such Performance Period shall, if andto the extent the relevant Performance Goals for such Performance Period havenot been actually or so deemed achieved as of the date of such termination,immediately be cancelled

 

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and theParticipant (and such Participant’s estate, designated beneficiary or otherlegal representative) shall forfeit any rights or interests in and with respectto any such Performance Units. Notwithstanding the immediately preceding sentence, the Committee, inits sole discretion may determine, prior to or within ninety (90) days afterthe date of such termination, that all or a portion of any such Participant’sPerformance Units shall not be so cancelled and forfeited.

 

**12.1.4 Disposition of Subsidiary.**  For purposes of the Plan, a sale (or otherdisposition) by the Company of any Subsidiary shall be deemed to constitute atermination of employment (for reasons other than as a result of death,Retirement or Disability) of all of the Subsidiary’s employees at the time suchsale (or other disposition) is consummated.

 

**13.**          **Non-transferability of Awards.**  No Award under the Plan or any AwardAgreement, and no rights or interests herein or therein, shall or may beassigned, transferred, sold, exchanged, encumbered, pledged or otherwisehypothecated or disposed of by a Participant or any beneficiary(ies) of anyParticipant, except by testamentary disposition by the Participant or the lawsof descent and distribution.  No suchinterest shall be subject to execution, attachment or similar legal process,including, without limitation, seizure for the payment of the Participant’sdebts, judgments, alimony or separate maintenance.  During the lifetime of a Participant, Stock Options and StockAppreciation Rights are exercisable only by the Participant.

 

**14.**          **Changes in Capitalization and Other Matters.**

 

**14.1**        **No Corporate Action Restriction.**  The existence of the Plan, any AwardAgreement and/or the Awards granted hereunder shall not limit, affect orrestrict in any way the right or power of the Board or the stockholders of theCompany to make or authorize (a) any adjustment, recapitalization,reorganization or other change in the Company’s or any Subsidiary’s capitalstructure or its business, (b) any merger, consolidation or change in theownership of the Company or any Subsidiary, (c) any issue of bonds, debentures,capital, preferred or prior preference stocks ahead of or affecting theCompany’s or any Subsidiary’s capital stock or the rights thereof, (d) anydissolution or liquidation of the Company or any Subsidiary, (e) any sale ortransfer of all or any part of the Company’s or any Subsidiary’s assets or business,or (f) any other corporate act or proceeding by the Company or anySubsidiary.  No Participant, beneficiaryor any other person shall have any claim against any member of the Board or theCommittee, the Company or any Subsidiary, or any employees, officers or agentsof the Company or any subsidiary, as a result of any such action.

 

**14.2**        **Recapitalization Adjustments.**  In the event of any change in capitalizationaffecting the Common Stock of the Company, including, without limitation, astock dividend or other distribution, stock split, reverse stock split,recapitalization, consolidation, subdivision, split-up, spin-off, split-off,combination or exchange of shares or other form of reorganization orrecapitalization, or any other change affecting the Common Stock, the Committeeshall authorize and make such proportionate adjustments, if any, as theCommittee deems appropriate to reflect such change, including, withoutlimitation, with respect to the aggregate number of shares of the Common Stockfor which Awards in respect thereof may be granted under the Plan, the maximumnumber of shares of the Common Stock which may be granted or awarded to anyParticipant, the number of shares of the Common Stock covered by eachoutstanding Award, and the exercise price or other price per share of CommonStock in respect of outstanding Awards.

 

**14.3**        **Certain Mergers.**

 

**14.3.1**  If the Company enters into or is involved inany merger, reorganization or other business combination with any person orentity (such merger, reorganization or other business

 

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combination to be referred toherein as a “Merger Event”) and as a result of any such Merger Event theCompany will not be or is not the surviving corporation, a Participant shall beentitled to receive, as of the date of the consummation of the transactionscontemplated in the agreement evidencing the Merger Event (the “Closing Date”)and with respect to both exercisable and unexercisable Stock Options and/orStock Appreciation Rights (but only to the extent not previously exercised),substitute stock options and/or stock appreciation rights in respect of theshares of the surviving corporation on such terms and conditions, as to thenumber of shares, pricing and otherwise, which shall substantially preserve thevalue, rights and benefits of any affected Stock Options or Stock AppreciationRights granted hereunder as of the date of the consummation of the MergerEvent; provided, however, that in lieu of such substituteoptions, the surviving corporation may assume (by operation of law orotherwise) any outstanding Stock Options and/or Stock Appreciation Rights.

 

**14.3.2**  Notwithstanding anything to the contrary inthis Section 14.3, if any Merger Event occurs, the Company shall have the rightto pay to each affected Participant an amount in cash or certified check equalto the excess of the Fair Market Value of the Common Stock underlying anyaffected unexercised Stock Options or Stock Appreciation Rights as of theClosing Date (whether then exercisable or not) over the aggregate exerciseprice of such unexercised Stock Options and/or Stock Appreciation Rights, asthe case may be.

 

**14.3.3** Upon receipt by any affected Participant ofany such cash, certified check or substitute stock options or stockappreciation rights as a result of any such Merger Event, such Participant’saffected Stock Options and/or Stock Appreciation Rights for which such cash,certified check or substitute awards was received shall be thereupon cancelledwithout the need for obtaining the consent of any such affected Participant.

 

**14.3.4**  The foregoing adjustments and the manner ofapplication of the foregoing provisions, including, without limitation, theissuance of any substitute stock options and/or stock appreciation rights,shall be determined in good faith by the Committee in its sole discretion.  Any such adjustment may provide for theelimination of fractional shares without compensation.

 

**15.**          **Change of Control.**

 

**15.1**        **Acceleration of Awards Vesting.**  Anything in the Plan to the contrarynotwithstanding, if a Change of Control of the Company occurs (a) all StockOptions and/or Stock Appreciation Rights then unexercised and outstanding shallbecome fully vested and exercisable as of the date of the Change of Control,(b) all restrictions, terms and conditions applicable to all Restricted Sharesthen outstanding shall be deemed lapsed and satisfied as of the date of theChange of Control, and (c) the Performance Period shall be deemed completed andall Performance Units shall be deemed to have been fully earned as of the dateof the Change of Control.  Theimmediately preceding sentence shall apply to only those Participants (i) whoare employed by the Company and/or one of its Subsidiaries as of the date ofthe Change of Control, or (ii) to whom Section 15.3 below is applicable.

 

**15.2**        **Payment After Change of Control.**  Within thirty (30) days after a Change ofControl occurs, (a) the holder of an Award of Restricted Shares shall receive anew certificate for such shares without the legend set forth in Section 8 ofthe Plan, and (b) the holder of Performance Units shall receive payment of thevalue of such grants in cash.

 

**15.3**        **Termination as a Result of a Change of Control.**  Anything in the Plan to the contrarynotwithstanding, if a Change of Control occurs and if the Participant’semployment is terminated before such Change of Control and it is reasonablydemonstrated by the Participant that such employment termination (a) was at therequest, directly or indirectly, of a third party who has taken stepsreasonably calculated to effect the Change of Control, or (b) otherwise arosein connection with or in anticipation of 

 

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the Change of Control, then forpurposes of this Section 15, the Change of Control, for purposes of thatParticipant, shall be deemed to have occurred immediately prior to suchParticipant’s employment termination.

 

**15.4**        **Change of Control.**  For the purpose of the Plan, a “Change ofControl” shall be deemed to have occurred if Kyle R. Kirkland and Dana D.Messina collectively do not have, directly or indirectly, voting control of atleast 50% of the voting securities of the Company, or any successor thereto,entitled to vote generally in the election of directors.

 

**16.**          **Amendment, Suspension and Termination.**

 

**16.1**        **In General.**  The Board may suspend or terminate the Plan (or any portionthereof) at any time and may amend the Plan at any time and from time to timein such respects as the Board may deem advisable to insure that any and allAwards conform to or otherwise reflect any change in applicable laws orregulations, or to permit the Company or the Participants to benefit from anychange in applicable laws or regulations, or in any other respect the Board maydeem to be in the best interests of the Company or any Subsidiary.  No such amendment, suspension or terminationshall materially adversely affect the rights of any Participant under anyoutstanding Stock Options, Stock Appreciation Rights, Performance Units orRestricted Share grants, without the consent of such Participant.

 

**16.2**        **Award Agreements.**  The Committee may (in its sole discretion)amend or modify at any time and from time to time the terms and provisions ofany outstanding Stock Options, Stock Appreciation Rights, Performance Units orRestricted Share grants, in any manner to the extent that the Committee underthe Plan or any Award Agreement could have initially determined therestrictions, terms and provisions of such Stock Options, Stock AppreciationRights, Performance Units and/or Restricted Share grants, including, withoutlimitation, changing or accelerating (a) the date or dates as of which suchStock Options or Stock Appreciation Rights shall become exercisable, (b) the dateor dates as of which such Restricted Share grants shall become vested, or (c)the performance period or goals in respect of any Performance Units.  No such amendment or modification shall,however, materially adversely affect the rights of any Participant under anysuch Award without the consent of such Participant.

 

**17.****          Miscellaneous.**

 

**17.1**        **Tax Withholding.**  The Company shall have the right to deductfrom any payment or settlement under the Plan, including, without limitation,the exercise of any Stock Option or Stock Appreciation Right, or the delivery,transfer or vesting of any Common Stock or Restricted Shares, any federal,state, local or other taxes of any kind which the Committee, in its solediscretion, deems necessary to be withheld to comply with the Code and/or anyother applicable law, rule or regulation. If the Committee, in its sole discretion, permits shares of Common Stockto be used to satisfy any such tax withholding, such Common Stock shall be valuedbased on the Fair Market Value of such stock as of the date the tax withholdingis required to be made, such date to be determined by the Committee.  The Committee may establish rules limitingthe use of Common Stock to meet withholding requirements by Participants whoare subject to Section 16 of the Exchange Act.

 

**17.2**        **No Right to Employment.**  Neither the adoption of the Plan, thegranting of any Award, nor the execution of any Award Agreement, shall conferupon any employee, consultant or advisor of the Company or any Subsidiary anyright to continued employment with or engagement by the Company or anySubsidiary, as the case may be, nor shall it interfere in any way with theright, if any, of the Company or any Subsidiary to terminate the employment orengagement of any employee, consultant or advisor at any time for any reason.

 

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**17.3**        **Unfunded Plan.**  The Plan shall be unfunded and the Companyshall not be required to segregate any assets in connection with any Awardsunder the Plan.  Any liability of theCompany to any person with respect to any Award under the Plan or any AwardAgreement shall be based solely upon the contractual obligations that may becreated as a result of the Plan or any such award or agreement.  No such obligation of the Company shall bedeemed to be secured by any pledge of, encumbrance on, or other interest in,any property or asset of the Company or any Subsidiary.  Nothing contained in the Plan or any AwardAgreement shall be construed as creating in respect of any Participant (orbeneficiary thereof or any other person) any equity or other interest of anykind in any assets of the Company or any Subsidiary or creating a trust of anykind or a fiduciary relationship of any kind between the Company, anySubsidiary and/or any such Participant, any beneficiary thereof or any otherperson.

 

**17.4**        **Payments to a Trust.**  The Committee is authorized to cause to beestablished a trust agreement or several trust agreements or similararrangements from which the Committee may make payments of amounts due or tobecome due to any Participants under the Plan.

 

**17.5**        **Other Company Benefit and Compensation Programs.**  Payments and other benefits received by aParticipant under an Award made pursuant to the Plan shall not be deemed a partof a Participant’s compensation for purposes of the determination of benefitsunder any other employee welfare or benefit plans or arrangements, if any,provided by the Company or any Subsidiary unless expressly provided in suchother plans or arrangements, or except where the Board expressly determines inwriting that inclusion of an Award or portion of an Award should be included toaccurately reflect competitive compensation practices or to recognize that anAward has been made in lieu of a portion of competitive annual base salary orother cash compensation.  Awards underthe Plan may be made in addition to, in combination with, or as alternativesto, grants, awards or payments under any other plans or arrangements of theCompany or its Subsidiaries.  Theexistence of the Plan notwithstanding, the Company or any Subsidiary may adoptsuch other compensation plans or programs and additional compensationarrangements as it deems necessary to attract, retain and motivate employees orconsultants and advisors.

 

**17.6        Listing,Registration and Other Legal Compliance.**  No Awards or shares of the Common Stockshall be required to be issued or granted under the Plan unless legal counselfor the Company shall be satisfied that such issuance or grant will be in compliancewith all applicable federal and state securities laws and regulations and anyother applicable laws or regulations. The Committee may require, as a condition of any payment or shareissuance, that certain agreements, undertakings, representations, certificatesand/or information, as the Committee may deem necessary or advisable, beexecuted or provided to the Company to assure compliance with all suchapplicable laws or regulations. Certificates for shares of the Restricted Shares and/or Common Stockdelivered under the Plan may be subject to such stock-transfer orders and suchother restrictions as the Committee may deem advisable under the rules,regulations, or other requirements of the Securities and Exchange Commission,any stock exchange upon which the Common Stock is then listed, and anyapplicable federal or state securities law. In addition, if, at any time specified herein (or in any Award Agreementor otherwise) for (a) the making of any Award, or the making of anydetermination, (b) the issuance or other distribution of Restricted Sharesand/or Common Stock, or (c) the payment of amounts to or through a Participantwith respect to any Award, any law, rule, regulation or other requirement ofany governmental authority or agency shall require either the Company, anySubsidiary or any Participant (or any estate, designated beneficiary or otherlegal representative thereof) to take any action in connection with any suchdetermination, any such shares to be issued or distributed, any such payment,or the making of any such determination, as the case may be, shall be deferreduntil such required action is taken.

 

**17.7**        **Award Agreements.**  Each Participant receiving an Award underthe Plan shall enter into an Award Agreement with the Company in a formspecified by the Committee.  Each such

 

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Participant shall agree to therestrictions, terms and conditions of the Award set forth therein and in thePlan.

 

**17.8**        **Designation of Beneficiary.**  Each Participant to whom an Award has beenmade under the Plan may designate a beneficiary or beneficiaries to exerciseany option or to receive any payment which under the terms of the Plan and therelevant Award Agreement may become exercisable or payable on or after theParticipant’s death.  At any time, andfrom time to time, any such designation may be changed or cancelled by theParticipant without the consent of any such beneficiary.  Any such designation, change or cancellationmust be on a form provided for that purpose by the Committee and shall not beeffective until received by the Committee. If no beneficiary has been designated by a deceased Participant, or ifthe designated beneficiaries have predeceased the Participant, the beneficiaryshall be the Participant’s estate.  Ifthe Participant designates more than one beneficiary, any payments under thePlan to such beneficiaries shall be made in equal shares unless the Participanthas expressly designated otherwise, in which case the payments shall be made inthe shares designated by the Participant.

 

**17.9**        **Leaves of Absence/Transfers.**  The Committee shall have the power topromulgate rules and regulations and to make determinations, as it deemsappropriate, under the Plan in respect of any leave of absence from the Companyor any Subsidiary granted to a Participant. Without limiting the generality of the foregoing, the Committee maydetermine whether any such leave of absence shall be treated as if theParticipant has terminated employment with the Company or any suchSubsidiary.  If a Participant transferswithin the Company, or to or from any Subsidiary, such Participant shall not bedeemed to have terminated employment as a result of such transfers.

 

**17.10**      **Loans.** Subject to applicable law, the Committee may provide, pursuant to Planrules, for the Company or any Subsidiary to make loans to Participants tofinance the exercise price of any Stock Options, as well as the withholdingobligation under Section 17.1 of the Plan and/or the estimated or actual taxespayable by the Participant as a result of the exercise of such Stock Option andthe Committee may prescribe the terms and conditions of any such loan.

 

**17.11**      **Governing Law.**  The Plan and all actions taken thereundershall be governed by and construed in accordance with the laws of the State ofDelaware, without reference to the principles of conflict of laws thereof.  Any titles and headings herein are forreference purposes only, and shall in no way limit, define or otherwise affectthe meaning, construction or interpretation of any provisions of the Plan.

 

**17.12**      **Effective Date.**  The Plan, as amended and restated herein,shall be effective (the “Effective Date”) upon the later to occur of (a) itsadoption by the Board and (b) the approval of the Plan by the Company’sstockholders in accordance with Sections 162(m) and 422 of the Code.

 

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