Document:

exv4w9

 

Exhibit 4.9

 

 

MOTORCAR PARTS OF
AMERICA, INC.

LONG TERM INCENTIVE PLAN

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	SECTION 1	 	GENERAL PROVISIONS RELATING TO PLAN GOVERNANCE, COVERAGE AND BENEFITS	 	 	1	 
	 	 	
1.1
	 	PURPOSE
	 	 	1	 
	 	 	
1.2
	 	DEFINITIONS
	 	 	1	 
	 	 	
1.3
	 	ADMINISTRATION
	 	 	4	 
	 	 	
1.4
	 	SHARES OF COMMON STOCK SUBJECT TO THE PLAN
	 	 	5	 
	 	 	
1.5
	 	PARTICIPATION
	 	 	5	 
	 	 	
1.6
	 	INCENTIVE AWARDS
	 	 	5	 
	 	 	
1.7
	 	MAXIMUM INDIVIDUAL RIGHTS
	 	 	6	 
	SECTION 2	 	STOCK OPTIONS AND STOCK APPRECIATION RIGHTS	 	 	6	 
	 	 	
2.1
	 	GRANT OF OPTIONS
	 	 	6	 
	 	 	
2.2
	 	OPTION TERMS
	 	 	6	 
	 	 	
2.3
	 	OPTION EXERCISES
	 	 	7	 
	 	 	
2.4
	 	STOCK APPRECIATION RIGHTS
	 	 	7	 
	 	 	
2.5
	 	SUPPLEMENTAL PAYMENT ON EXERCISE OF NON-QUALIFIED

STOCK OPTIONS OR STOCK APPRECIATION RIGHTS
	 	 	8	 
	SECTION 3	 	RESTRICTED STOCK	 	 	9	 
	 	 	
3.1
	 	AWARD OF RESTRICTED STOCK
	 	 	9	 
	 	 	
3.2
	 	RESTRICTIONS
	 	 	9	 
	 	 	
3.3
	 	RESTRICTION PERIOD
	 	 	10	 
	 	 	
3.4
	 	DELIVERY OF SHARES OF COMMON STOCK
	 	 	10	 
	 	 	
3.5
	 	SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK
	 	 	10	 
	 	 	
3.6
	 	PROVISIONS APPLICABLE TO SECTION 162(m) PARTICIPANTS
	 	 	10	 
	SECTION 4	 	PERFORMANCE UNITS AND PERFORMANCE SHARES	 	 	11	 
	 	 	
4.1
	 	PERFORMANCE BASED AWARDS
	 	 	11	 
	 	 	
4.2
	 	SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS

OR PERFORMANCE SHARES
	 	 	12	 
	 	 	
4.3
	 	PROVISIONS APPLICABLE TO SECTION 162(m) PARTICIPANTS
	 	 	12	 
	SECTION 5	 	PROVISIONS RELATING TO PLAN PARTICIPATION	 	 	13	 
	 	 	
5.1
	 	PLAN CONDITIONS
	 	 	13	 
	 	 	
5.2
	 	TRANSFERABILITY
	 	 	13	 
	 	 	
5.3
	 	RIGHTS AS A STOCKHOLDER
	 	 	14	 

i

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 	 	

	 	 	
5.4
	 	LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
	 	 	14	 
	 	 	
5.5
	 	CHANGE IN STOCK AND ADJUSTMENTS
	 	 	14	 
	 	 	
5.6
	 	TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND

RETIREMENT
	 	 	15	 
	 	 	
5.7
	 	CHANGES OF CONTROL
	 	 	16	 
	 	 	
5.8
	 	AMENDMENTS TO INCENTIVE AWARDS
	 	 	17	 
	 	 	
5.9
	 	EXCHANGE OF INCENTIVE AWARDS
	 	 	18	 
	 	 	
5.10
	 	FINANCING
	 	 	18	 
	SECTION 6	 	MISCELLANEOUS	 	 	18	 
	 	 	
6.1
	 	EFFECTIVE DATE AND GRANT PERIOD
	 	 	18	 
	 	 	
6.2
	 	FUNDING
	 	 	18	 
	 	 	
6.3
	 	WITHHOLDING TAXES
	 	 	19	 
	 	 	
6.4
	 	CONFLICTS WITH PLAN
	 	 	19	 
	 	 	
6.5
	 	NO GUARANTEE OF TAX CONSEQUENCES
	 	 	19	 
	 	 	
6.6
	 	SEVERABILITY
	 	 	19	 
	 	 	
6.7
	 	GENDER, TENSE AND HEADINGS
	 	 	19	 
	 	 	
6.8
	 	AMENDMENT AND TERMINATION
	 	 	19	 
	 	 	
6.9
	 	SECTION 280G PAYMENTS
	 	 	19	 
	 	 	
6.10
	 	GOVERNING LAW
	 	 	20	 
	 	 	
6.11
	 	LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND

PERFORMANCE-BASED COMPENSATION
	 	 	20	 

ii

 

MOTORCAR PARTS OF AMERICA, INC.

LONG TERM INCENTIVE PLAN

SECTION 1

GENERAL PROVISIONS RELATING TO

PLAN GOVERNANCE, COVERAGE AND BENEFITS

     1.1 PURPOSE.

     The purpose of the Motorcar Parts of America, Inc. Long Term Incentive
Plan (the “Plan”) is to foster and promote the long-term financial success of
Motorcar Parts of America, Inc. (the “Company”) and materially increase the
value of the equity interests in the Company by: (a) encouraging the long-term
commitment of selected key employees (defined in Section 1.2(i) below), (b)
motivating superior performance of key employees by means of long-term
performance related incentives, (c) encouraging and providing key employees
with a formal program for obtaining an ownership interest in the Company, (d)
attracting and retaining outstanding key employees by providing incentive
compensation opportunities competitive with other major companies and (e)
enabling participation by key employees in the long-term growth and financial
success of the Company. The Plan provides for payment of various forms of
incentive compensation and, accordingly, is not intended to be a plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended, and
shall be administered accordingly.

     1.2 DEFINITIONS.

     The following terms shall have the meanings set forth below:

          (a) APPRECIATION. The difference between the exercise price per share of
the Common Stock subject to a Stock Appreciation Right (SAR) and the Fair
Market Value of a share of Common Stock on the date of exercise of the SAR.

          (b) BOARD. The Board of Directors (or equivalent governing authority) of
the Company.

          (c) CHANGE OF CONTROL. Any of the events described in and subject to
SECTION 5.7.

          (d) CODE. The Internal Revenue Code of 1986, as amended.

          (e) COMPENSATION COMMITTEE OR COMMITTEE. The Committee, which shall be
comprised of two or more members of the Board, each of whom is both a
“non-employee director” as defined by Rule 16b-3 of the Exchange Act and an
“outside director” for purposes of Section 162(m) of the Code, who shall be
appointed by the Board to administer the Plan,
which Board shall have the power to fill vacancies on the Committee
arising by resignation, death, removal or otherwise. In the absence of a
Committee, reference thereto shall be to the Board.

 

 

          (f) COMMON STOCK. Company Common Stock, par value $.01 per share, which
the Company is authorized to issue or may in the future be authorized to issue.

          (g) COMPANY.
Motorcar Parts of America, Inc. and any successor
corporation.

          (h) DISABILITY. Any complete and permanent disability as defined in
Section 22(e)(3) of the Code and determined in accordance with the procedures
set forth in the regulations, thereunder.

          (i) EMPLOYEE. Any common-law employee of the Company, Parent or
Subsidiary, who, in the opinion of the Committee, is one of a select group of
executive officers, other officers or other key management personnel of the
Company, Parent or Subsidiary who is in a position to contribute materially to
the continued growth and development and to the continued financial success of
the Company, Parent or Subsidiary, including executive officers and officers
who are members of the Board and including consultants and advisors.

          (j) EXCHANGE ACT. The Securities and Exchange Act of 1934, as amended.

          (k) FAIR MARKET VALUE. The closing sales price of Common Stock as
reported or listed on a national securities exchange on any relevant date for
valuation, or, if there is no such sale on such date, the applicable prices as
so reported on the nearest preceding date upon which such sale took place. In
the event the shares of Common Stock are not listed on a national securities
exchange, the Fair Market Value of such shares shall be determined by the
Committee in its sole discretion.

          (l) GRANTEE. Any Employee who in the opinion of the Committee performs
significant services for the benefit of the Company and who is granted an
Incentive Award under the Plan.

          (m) INCENTIVE AWARD. Any incentive award, individually or collectively,
as the case may be, including any Stock Option, Stock Appreciation Right,
Restricted Stock Award, Performance Unit, or Performance Share, as well as any
Supplemental Payment, granted under the Plan.

          (n) INCENTIVE AWARD AGREEMENT. The written agreement entered into between
the Company and the Grantee pursuant to which an Incentive Award shall be made
under the Plan.

          (o) INCENTIVE STOCK OPTION. A stock option which is intended to qualify
as an Incentive Stock Option under Section 422 of the Code and which shall be
granted by the Committee to a Grantee under the Plan.

          (p) INVOLUNTARY TERMINATION. The termination of a Grantee’s employment by
the Company other than for death, Disability, Retirement, Terminated for Cause,
Termination for Good Reason, or in the event of a Change of Control (as defined
in SECTION 5.7(a) below).

          (q) NON-QUALIFIED STOCK OPTION. A stock option granted by the Committee
to a Grantee under the Plan, which shall not qualify as an Incentive Stock
Option.

2

 

          (r) OPTION. A Non-Qualified Stock Option or Incentive Stock Option
granted by the Committee to a Grantee under the Plan.

          (s) PARENT. Any corporation (whether now or hereafter existing) which
constitutes a “parent” of the Company, as defined in Section 424(e) of the
Code.

          (t) PERFORMANCE PERIOD. A period of time determined by the Committee over
which performance is measured for the purpose of determining a Grantee’s right
to and the payment value of any Performance Units or Performance Shares.

          (u) PERFORMANCE SHARE OR PERFORMANCE UNIT. An Incentive Award
representing a contingent right to receive cash or shares of Common Stock
(which may be Restricted Stock) at the end of a Performance Period and which,
in the case of Performance Shares, is denominated in Common Stock, and, in the
case of Performance Units, is denominated in cash values.

          (v) PLAN.
The Motorcar Parts of America, Inc. Long Term Incentive
Plan, as hereinafter amended from time to time.

          (w) RESTRICTED STOCK. Shares of Common Stock issued or transferred to a
Grantee subject to the Restrictions set forth in SECTION 3.2 hereof.

          (x) RESTRICTED STOCK AWARD. An authorization by the Committee to issue or
transfer Restricted Stock to a Grantee.

          (y) RESTRICTION PERIOD. The period of time determined by the Committee
during which Restricted Stock is subject to the restrictions under the Plan.

          (z) RETIREMENT. The termination of employment by the Company, Parent or
Subsidiary constituting retirement as determined by the Committee.

          (aa) SECTION 162(m) PARTICIPANT. Any Employee designated by the Committee
as an Employee whose compensation for the fiscal year in which the Employee is
so designated or a future fiscal year may be subject to the limit on deductible
compensation imposed by Section 162(m) of the Code.

          (bb) STOCK APPRECIATION RIGHT or SAR. A Stock Appreciation Right
described in SECTION 2.4 hereof.

          (cc) SUBSIDIARY. Any corporation (whether now or hereafter existing)
which constitutes a “subsidiary” of the Company, as defined in Section 424(f)
of the Code.

          (dd) SUPPLEMENTAL PAYMENT. Any amounts described in SECTIONS 2.5, 3.5
and/or 4.2 dedicated to payment of any income taxes that are payable on an
Incentive Award as determined by the Committee.

          (ee) TERMINATED FOR CAUSE. An Employee shall be deemed Terminated for
Cause if he or she is terminated as a result of a breach of his or her written
employment agreement (or consulting or advisory contract), in the event one
exists, or if the Committee determines that such Employee is being terminated
as a result of misconduct, dishonesty, disloyalty,

3

 

disobedience or action that
might reasonably injure the Company, Parent or Subsidiary or their business
interests or reputation.

          (ff) TERMINATION FOR GOOD REASON. The resignation of an Employee shall be
deemed to be a Termination for Good Reason if Employee’s resignation is within
two years of a Change of Control as defined in SECTION 5.7, caused by and
within ninety (90) days of the following: (i) without the express written
consent of Employee, any duties that are assigned that are materially
inconsistent with Employee’s position, duties and status with the Company at
the time of the Change of Control; (ii) any action by the Company that results
in a material diminution in the position, duties or status of Employee with the
Company at the time of the Change of Control or any transfer or proposed
transfer of Employee for any extended period to a location outside his
principal place of employment at the time of the Change of Control without his
consent, except for a transfer or proposed transfer for strategic reallocations
of the personnel reporting to Employee; (iii) the base annual salary of
Employee, as the same may hereafter be increased from time to time, is reduced;
or (iv) without limiting the generality or effect of the foregoing, the Company
fails to comply with any of its material obligations hereunder.

     1.3 ADMINISTRATION.

          (a) COMMITTEE POWERS. The Plan shall be administered by the Committee,
which shall have full power and authority to: (i) designate Grantees; (ii)
determine the Incentive Awards to be granted to a Grantee and whether such
Incentive Awards are to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code; (iii) subject to SECTION 1.4 of the Plan,
determine the Common Stock (or securities convertible into Common Stock) to be
covered by Incentive Awards and in connection therewith, to reserve shares of
Common Stock as needed in order to cover grants of Incentive Awards; (iv)
determine the terms and conditions of any Incentive Award; provided however,
that the terms and conditions of Incentive Awards intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall include, but not limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m)(4)(C) of the
Code; (v) determine whether, to what extent, and under what circumstances
Incentive Awards may be settled or exercised in cash, Common Stock, other
securities, or other property, or cancelled, substituted, forfeited or
suspended, and the method or methods by which Incentive Awards may be settled,
exercised, cancelled, substituted, forfeited or suspended; (vi) interpret and
administer the Plan and any instrument or agreement relating to, or Incentive
Award made under, the Plan; (vii) establish, amend, suspend or waive such rules
and guidelines as the Committee shall deem necessary or appropriate for
administration of the Plan;
(viii) appoint such agents as it shall deem appropriate for the
administration of the Plan; provided however, that the Committee shall not
delegate any of the power or authority set forth in (i) through (vii) above;
and (ix) make any other determination and take any other action that it deems
necessary or desirable for such administration. No member of the Committee
shall vote or act upon any matter relating solely to himself. All
designations, determinations, interpretations and other decisions with respect
to the Plan or any Incentive Award shall be within the sole discretion of the
Committee and shall be final, conclusive and binding upon all persons,
including the Company, Parent or Subsidiary, any Grantee, any holder or
beneficiary of any Incentive Award, any owner of an equity interest in the
Company and any Employee.

          (b) NO LIABILITY. No member of the Committee shall be liable for any
action or determination made in good faith by the Committee with respect to
this Plan or any Incentive

4

 

Award under this Plan, and, to the fullest extent
permitted by the Company’s Articles of Incorporation and Bylaws, the Company
shall indemnify each member of the Committee.

          (c) MEETINGS. The Committee shall designate a chairman from among its
members, who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
such times and places as shall be determined by the Committee. The Committee
may take any action otherwise proper under the Plan by the affirmative vote,
taken with or without a meeting, of a majority of its members.

     1.4 SHARES OF COMMON STOCK SUBJECT TO THE PLAN.

          (a) COMMON STOCK AUTHORIZED. Subject to adjustment under SECTION 5.5, the
aggregate number of shares of Common Stock available for granting Incentive
Awards under the Plan shall be equal to 1,200,000 shares of Common Stock. If
any Incentive Award shall expire or terminate for any reason, without being
exercised or paid, shares of Common Stock subject to such Incentive Award shall
again be available for grant in connection with grants of subsequent Incentive
Awards, subject to the limitations of SECTION 1.7.

          (b) COMMON STOCK AVAILABLE. The Common Stock available for issuance or
transfer under the Plan shall be made available from such shares reserved under
the Plan, from such shares now or hereafter held by the Company or from such
shares to be purchased or acquired by the Company. The Common Stock available
for issuance or transfer under the Plan, if applicable, shall be made available
from shares now or hereafter held by the Company or from such shares to be
purchased or acquired by the Company. No fractional shares shall be issued
under the Plan; payment for fractional shares shall be made in cash.

          (c) INCENTIVE AWARD ADJUSTMENTS. Subject to the limitations set forth in
SECTIONS 1.7, 5.6 and 6.8, the Committee may make any adjustment in the
exercise price or the number of shares subject to any Incentive Award, or any
other terms of any Incentive Award. Such adjustment shall be made by amending,
substituting or canceling and re-granting such Incentive Award with the
inclusion of terms and conditions that may differ from the terms and conditions
of the original Incentive Award. If such action is effected by amendment, the
effective date of such amendment shall be the date of the original grant.

     1.5 PARTICIPATION.

          (a) ELIGIBILITY. The Committee shall from time to time designate those
Employees, if any, to be granted Incentive Awards under the Plan, the type of
awards granted, the number of shares, options, rights or units, as the case may
be, which shall be granted to each such Employee and any other terms or
conditions relating to the awards as it may deem appropriate, consistent with
the provisions of the Plan. An Employee who has been granted an Incentive
Award may, if otherwise eligible, be granted additional Incentive Awards at any
time.

          (b) NO NON-EMPLOYEE BOARD PARTICIPATION. In no event may any member of
the Board who is not an Employee be granted an Incentive Award under the Plan.

5

 

     1.6 INCENTIVE AWARDS.

     The forms of Incentive Awards under this Plan are Stock Options, Stock
Appreciation Rights and Supplemental Payments as described in SECTION 2,
Restricted Stock and Supplemental Payments as described in SECTION 3, and
Performance Units or Performance Shares and Supplemental Payments as described
in SECTION 4.

     1.7 MAXIMUM INDIVIDUAL RIGHTS.

     To the extent required by Section 162(m) of the Code, shares subject to
Options which are canceled continue to be counted against the maximum number of
shares an individual may receive and if, after grant of an Option, the price of
shares subject to such Option is reduced, the transaction will be treated as a
cancellation of the Option and a grant of a new Option and both the Option
deemed to be canceled and the Option deemed to be granted will be counted
against the maximum number of shares an individual may receive. Furthermore,
to the extent required by Section 162(m) of the Code, if, after the grant of an
SAR, the base amount which Appreciation is calculated is reduced to reflect a
reduction in the Fair Market Value of the Company’s Common Stock, the
transaction will be treated as a cancellation of the SAR and a grant of a new
SAR and both the SAR deemed to be cancelled and the SAR deemed to be granted
will be counted against the maximum number of shares an individual may receive.

SECTION 2

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

     2.1 GRANT OF OPTIONS.

     The Committee is authorized to grant Options to Grantees in accordance
with the terms and conditions required pursuant to this Plan and with such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine.

     2.2 OPTION TERMS.

          (a) EXERCISE PRICE. The exercise price per share of Common Stock under
each Option shall be determined by the Committee; provided however, that, in
the case of an Option intended to qualify as an Incentive Stock Option or as
performance-based compensation as described in Section 162(m)(4)(C) of the
Code, such exercise price shall not be less than 100% of the Fair Market Value
per share of such stock on the date the Option is granted, as determined by the
Committee (110% in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder). For purposes of this SECTION 2.2, Ten-Percent
Stockholder shall mean an individual owning more than 10% of the total combined
voting power of all classes of stock of the Company, Parent or Subsidiary.

          (b) TERM. The Committee shall fix the term of each Option which, in the
case of an Incentive Stock Option, shall be not more than ten years from the
date of grant. In the event no term is fixed, such term shall be ten years
from the date of grant. The term shall be five years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder.

          (c) EXERCISE. The Committee shall determine the time or times at which an
Option may be exercised in whole or in part. The Committee may accelerate the
exercisability of

6

 

any Option or a portion thereof at any time. Notwithstanding
the foregoing, the Committee may, in its sole discretion, provide that all or
part of the Options received by a Grantee upon the exercise of a Non-Qualified
Stock Option shall be Restricted Stock subject to any or all of the
restrictions or conditions set forth in SECTION 3.2.

     2.3 OPTION EXERCISES.

          (a) METHOD OF EXERCISE. To purchase shares under any Option granted under
the Plan, Grantees must give notice in writing to the Company of their
intention to purchase and specify the number of shares of Common Stock as to
which they intend to exercise their Option. Upon the date or dates specified
for the completion of the purchase of the shares, the purchase price will be
payable in full. The purchase price may be paid in cash or an equivalent
acceptable to the Committee. At the discretion of the Committee, the exercise
price per share of Common Stock may be paid by the assignment and delivery to
the Company of shares of Common Stock owned by the Grantee or a combination of
cash and such shares equal in value to the exercise price. However, if the
Grantee acquired the stock to be surrendered directly or indirectly from the
Company, he must have owned the stock to be surrendered for at least six months
prior to tendering such stock for the exercise of an Option. Any shares so
assigned and delivered to the Company in payment or partial payment of the
purchase price shall be valued at the Fair Market Value on the exercise date.
In addition, at the request of the Grantee and to the extent permitted by
applicable law, the Company in its discretion may selectively approve a
“cashless exercise” arrangement with a brokerage firm under which such
brokerage firm, on behalf of the Grantee, shall pay to the Company the exercise
price of the Options being exercised, and the Company, pursuant to an
irrevocable notice from the Grantee, shall promptly deliver the shares being
purchased to such firm.

          (b) In the case of Incentive Stock Options, the terms and conditions of
such grants shall be subject to and comply with Section 422 of the Code and any
rules or regulations promulgated thereunder, including the requirement that the
aggregate Fair Market Value (determined as of date the date of grant) of the
Common Stock with respect to which Incentive Stock Options granted under this
Plan and all other option plans of the Company, the Parent and Subsidiary
become
exercisable by a Grantee during any calendar year shall not exceed
$100,000. To the extent that the limitation set forth in the preceding
sentence is exceeded for any reason (including the acceleration of the time for
exercise of an Option), the Options with respect to such excess amount shall be
treated as Non-Qualified Stock Options.

          (c) PROCEEDS. The proceeds received by the Company from the sale of
shares of Common Stock pursuant to Options exercised under the Plan will be
used for general purposes of the Company.

     2.4 STOCK APPRECIATION RIGHTS.

          (a) GENERAL PROVISIONS. The Committee may grant SARs in connection with
the grant of an Option (“Tandem SARs”) or independent of an Option
(“Independent SARs” or collectively with the Tandem SARs “SARs”). The
Committee, in its discretion, may determine whether an SAR is to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
and Incentive Agreements evidencing SARs intended to so qualify shall contain
such terms and conditions as may be necessary to meet the applicable provisions
of Section 162(m) of the Code.

7

 

               (b) TANDEM SARS. A Tandem SAR shall be issued in connection with the
granting of an Option. A Tandem SAR shall be exercisable only when and to the
extent the related Option is exercisable, and shall be subject to the
conditions applicable to such Option. When a Tandem SAR is exercised, the
Option to which it relates shall terminate to the extent of the number of
shares with respect to which the Tandem SAR is exercised. Similarly, when an
Option is exercised, the Tandem SAR relating to such Option shall terminate.
Any Tandem SAR that is outstanding on the last day of the term of the related
Option shall be automatically exercised on such date for cash without any
action by the Grantee. The exercise price per share of Common Stock subject to
a Tandem SAR shall be fixed in the Incentive Award Agreement and shall not be
less than one hundred percent (100%) of the Fair Market Value of a share of
Common Stock on the date of the grant of the Option to which the Tandem SAR
relates. Upon exercise of a Tandem SAR, the holder shall receive, for each
share with respect to which the Tandem SAR is exercised, an amount equal to the
Appreciation. The Appreciation shall be payable in cash, Common Stock, or a
combination of both, at the option of the Committee, and shall be paid within
30 calendar days of the exercise of the Tandem SAR.

               (c) INDEPENDENT SARS. An Independent SAR shall be unrelated to any Option
and shall have a term set by the Committee. An Independent SAR shall be
exercisable in such installments as the Committee may determine. An
Independent SAR shall cover such number of shares of Common Stock as the
Committee may determine. The exercise price per share of Common Stock subject
to each Independent SAR shall be set by the Committee, provided however, that
the exercise price per share of Common Stock subject to each Independent SAR,
that is intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code, shall not be less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock on the date of grant
of the Independent SAR, unless Incentive Agreements evidencing Independent SARs
intended to so qualify shall contain such other terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code.
Upon exercise of an Independent SAR, the holder shall receive, for each share
with respect to which the Independent
SAR is exercised, an amount equal to the Appreciation. The Appreciation
shall be payable in cash, Common Stock, or a combination of both, at the option
of the Committee, and shall be paid within 30 calendar days of the exercise of
the Independent SAR.

          2.5 SUPPLEMENTAL PAYMENT ON EXERCISE OF NON-QUALIFIED STOCK
OPTIONS OR STOCK APPRECIATION RIGHTS.

          The Committee, either at the time of grant or at the time of exercise of
any Non-Qualified Stock Option or SAR, may provide for a supplemental payment
(the “Supplemental Payment”) by the Company to the Grantee with respect to the
exercise of any Non-Qualified Stock Option or SAR. The Supplemental Payment
shall be in the amount specified by the Committee, which shall not exceed the
amount necessary to pay the income tax payable with respect to both the
exercise of the Non-Qualified Stock Option and/or SAR and the receipt of the
Supplemental Payment, assuming the holder is taxed at the maximum effective
income tax rate(s) applicable thereto. The Committee shall have the discretion
to grant Supplemental Payments that are payable solely in cash or Supplemental
Payments that are payable in cash, Common Stock, or a combination of both, as
determined by the Committee at the time of payment. The Supplemental Payment
shall be paid within 30 calendar days of the date of exercise of a
Non-Qualified Stock Option or SAR (or, if later, within 30 calendar days of the
date on which income is recognized for income tax purposes with respect to such
exercise).

8

 

SECTION 3

RESTRICTED STOCK

     3.1 AWARD OF RESTRICTED STOCK.

          (a) GRANT. In consideration of the performance of services by the
Grantee, shares of Restricted Stock may be awarded under this Plan by the
Committee on such terms and conditions and with such restrictions as the
Committee may from time to time approve, all of which may differ with respect
to each Grantee. Such Restricted Stock shall be awarded for no additional
consideration or such additional consideration as the Committee shall
determine.

          (b) IMMEDIATE TRANSFER WITHOUT IMMEDIATE DELIVERY OF RESTRICTED STOCK.
Each Restricted Stock Award will constitute an immediate transfer of the record
and beneficial ownership of the shares of Restricted Stock to the Grantee in
consideration of the performance of services, entitling such Grantee to all
voting and other ownership rights, but subject to the restrictions hereinafter
referred to. Each Restricted Stock Award may limit the Grantee’s dividend
rights during the Restriction Period in which the shares of Restricted Stock
are subject to a substantial risk of forfeiture and restrictions on transfer.
Shares of Common Stock awarded pursuant to a grant of Restricted Stock will be
held by the Company, or in trust or in escrow pursuant to an agreement
satisfactory to the Committee, as determined by the Committee, until such time
as the restrictions on transfer have expired. Any such trust or escrow shall
not be insulated from the claims of the general creditors of the Company in the
event of bankruptcy or insolvency of the Company.

     3.2 RESTRICTIONS.

          (a) RESTRICTIVE CONDITIONS. Restricted Stock awarded to a Grantee shall
be subject to the following restrictions until the expiration of the
Restriction Period: (i) the shares of Common Stock of the Company included in
the Restricted Stock Award shall be subject to one or more restrictions,
including without limitation, a restriction that constitutes a “substantial
risk of forfeiture” within the meaning of Section 83 of the Code and
regulations promulgated thereunder, and to the restrictions on transferability
set forth in SECTION 5.2; (ii) unless otherwise approved by the Committee, the
shares of Common Stock included in the Restricted Stock Award that are subject
to restrictions that are not satisfied at such time the Grantee ceases to be
employed by the Company shall be forfeited and all rights of the Grantee to
such shares shall terminate without further obligation on the part of the
Company when an Employee leaves the employ of the Company; and (iii) any other
restrictions that the Committee may determine in advance are necessary or
appropriate.

          (b) FORFEITURE OF RESTRICTED STOCK. If for any reason, the restrictions
imposed by the Committee upon Restricted Stock are not satisfied at the end of
the Restriction Period, any Restricted Stock remaining subject to such
restrictions shall thereupon be forfeited by the Grantee and re-acquired by the
Company.

          (c) REMOVAL OF RESTRICTIONS. The Committee shall have the authority to
remove any or all of the restrictions on the Restricted Stock, including the
restrictions under the Restriction Period, whenever it may determine that, by
reason of changes in applicable laws or other

9

 

changes in circumstances arising
after the date of the Restricted Stock Award, such action is appropriate.

     3.3 RESTRICTION PERIOD.

     The Restriction Period of Restricted Stock shall commence on the date of
grant and shall be established by the Committee in the Incentive Award
Agreement setting forth the terms of the award of Restricted Stock.

     3.4 DELIVERY OF SHARES OF COMMON STOCK.

     Subject to SECTION 6.3, at the expiration of the Restriction Period, a
stock certificate evidencing the Restricted Stock (to the nearest full share)
with respect to which the Restriction Period has expired with all restrictions
thereon having been satisfied shall be delivered without charge to the Grantee,
or his personal representative, free of all restrictions under the Plan.

     3.5 SUPPLEMENTAL PAYMENT ON VESTING OF RESTRICTED STOCK.

     The Committee, either at the time of grant or at the time of vesting of
Restricted Stock, may provide for a Supplemental Payment by the Company to the
holder in an amount specified by the Committee, which shall not exceed the
amount necessary to pay the income tax payable with respect to both the vesting
of the Restricted Stock and receipt of the Supplemental Payment, assuming the
Grantee is taxed at the maximum effective income tax rate(s) applicable
thereto. The Supplemental Payment shall be paid within 30 calendar days of
each date that Restricted Stock vests. The Committee shall have the discretion
to grant Supplemental Payments that are payable solely in cash
or Supplemental Payments that are payable in cash, Common Stock, or a
combination of both, as determined by the Committee at the time of payment.

     3.6 PROVISIONS APPLICABLE TO SECTION 162(M) PARTICIPANTS.

          (a) Notwithstanding anything in the Plan to the contrary, the Committee
may grant Restricted Stock to a Section 162(m) Participant the restrictions
with respect to which lapse upon the attainment of performance goals for the
Company which are related to one or more of the following business criteria:
(i) pre-tax income, (ii) operating income, (iii) cash flow, (iv) earnings per
share, (v) return on equity, (vi) return on invested capital or assets, (vii)
cost reductions or savings, (viii) funds from operations, (ix) appreciation in
the fair market value of Common Stock and (x) earnings before any one or more
of the following items: interest, taxes, depreciation or amortization.

          (b) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
Restricted Stock which may be granted to one or more Section 162(m)
Participants, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m)
of the Code), the Committee shall, in writing, (i) designate one or more
Section 162(m) Participants, (ii) select the performance goal or goals
applicable to the fiscal year or other designated fiscal period of service,
(iii) establish the various targets and amounts of Restricted Stock which may
be earned for such fiscal year or other designated fiscal period or period of
service and (iv) specify the relationship between performance goals and targets
and the amounts of Restricted Stock to be earned by each

10

 

Section 162(m)
Participant for such fiscal year or other designated fiscal period or period of
service. Following the completion of each fiscal year or other designated
fiscal period or period of service, the Committee shall certify in writing
whether the applicable performance targets have been achieved for such fiscal
year or other designated fiscal period of service. In determining the amount
earned by a Section 162(m) Participant, the Committee shall have the right to
reduce (but not to increase) the amount payable at a given level of performance
to take into account additional factors that the Committee may deem relevant to
the assessment of individual or corporate performance for the fiscal year or
other designated fiscal period or period of service.

SECTION 4

PERFORMANCE UNITS AND PERFORMANCE SHARES

     4.1 PERFORMANCE BASED AWARDS.

          (a) GRANT. The Committee is authorized to grant Performance Units and
Performance Shares to Grantees. The Committee may make grants of Performance
Units or Performance Shares in such manner that more than one Performance
Period is in progress concurrently. For each Performance Period, the Committee
shall establish the number of Performance Units or Performance Shares and the
contingent value of any Performance Units or
Performance Shares, which may vary depending on the degree to which
performance objectives established by the Committee are met.

          (b) PERFORMANCE CRITERIA. At the beginning of each Performance Period,
the Committee shall (i) establish for such Performance Period specific
financial or nonfinancial performance objectives as the Committee believes are
relevant to the Company’s overall business objectives; (ii) determine the value
of a Performance Unit or the number of shares under a Performance Share grant
relative to performance objectives; (iii) notify each Grantee in writing of the
established performance objectives and minimum, target, and maximum Performance
Unit or Share value for such Performance Period.

          (c) MODIFICATION. If the Committee determines in its sole discretion that
the established performance measures or objectives are no longer suitable to
Company objectives because of a change in the Company’s business operations,
corporate structure, capital structure, or other conditions the Committee deems
to be appropriate, the Committee may modify the performance measures and
objectives as considered appropriate.

          (d) PAYMENT. The basis for payment of Performance Units or Performance
Shares for a given Performance Period shall be the achievement of those
financial and nonfinancial performance objectives determined by the Committee
at the beginning of the Performance Period. If minimum performance is not
achieved for a Performance Period, no payment shall be made and all contingent
rights shall cease. If minimum performance is achieved or exceeded, the value
of a Performance Unit or Performance Share shall be based on the degree to
which actual performance exceeded the pre-established minimum performance
standards, as determined by the Committee. The amount of payment shall be
determined by multiplying the number of Performance Units or Performance Shares
granted at the beginning of the Performance Period times the final Performance
Unit or Performance Share value. Payments shall be made, in the discretion of
the Committee, solely

11

 

in cash or Common Stock, or a combination of cash and
Common Stock, following the close of the applicable Performance Period.

     4.2 SUPPLEMENTAL PAYMENT ON VESTING OF PERFORMANCE UNITS OR
PERFORMANCE SHARES.

     The Committee, either at the time of grant or at the time of vesting of
Performance Units or Performance Shares (other than Restricted Stock), may
provide for a Supplemental Payment by the Company to the holder in an amount
specified by the Committee which shall not exceed the amount necessary to pay
the income tax payable with respect to both the vesting of such Performance
Units or Performance Shares and receipt of the Supplemental Payment, assuming
the Grantee is taxed at the maximum effective income tax rate(s) applicable
thereto. The Supplemental Payment shall be paid within 30 days of each date
that such Performance Units or Performance Shares vest. The Committee shall
have the discretion to grant Supplemental Payments that are payable in cash,
Common Stock, or a combination of both, as determined by the Committee at the
time of payment.

     4.3 PROVISIONS APPLICABLE TO SECTION 162(M) PARTICIPANTS.

          (a) Notwithstanding anything in the Plan to the contrary, the Committee
may grant any Performance Units or Performance Shares described in this Section
4 to a Section 162(m)
Participant that vest or become exercisable or payable upon the attainment
of performance goals for the Company which are related to one or more of the
following business criteria: (i) pre-tax income, (ii) operating income, (iii)
cash flow, (iv) earnings per share, (v) return on equity, (vi) return on
invested capital or assets, (vii) cost reductions or savings, (viii) funds from
operations, (ix) appreciation in the fair market value of Common Stock and (x)
earnings before any one or more of the following items: interest, taxes,
depreciation or amortization.

          (b) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
Performance Units or Performance Shares described in this Section 4 which may
be granted to one or more Section 162(m) Participants, no later than ninety
(90) days following the commencement of any fiscal year in question or any
other designated fiscal period or period of service (or such other time as may
be required or permitted by Section 162(m) of the Code), the Committee shall,
in writing,(i) designate one or more Section 162(m) Participants, (ii) select
the performance goal or goals applicable to the fiscal year or other designated
fiscal period or period of service, (iii) establish the various targets and
bonus amounts which may be earned for such fiscal year or other designated
fiscal period or period of service and (iv) specify the relationship between
performance goals and targets and the amounts to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service. Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify in
writing whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.

12

 

SECTION 5

PROVISIONS RELATING TO PLAN PARTICIPATION

     5.1 PLAN CONDITIONS.

          (a) INCENTIVE AWARD AGREEMENT. Each Grantee to whom an Incentive Award is
granted under the Plan shall be required to enter into an Incentive Award
Agreement with the Company in a form provided by the Committee, which shall
contain certain specific terms, as determined by the Committee, with respect to
the Incentive Award and shall include provisions that the Grantee (i) shall not
disclose any trade or secret data or any other confidential information of the
Company acquired during employment by the Company or a Subsidiary, or after the
termination of employment or Retirement, (ii) shall abide by all the terms and
conditions of the Plan and such other terms and conditions as may be imposed by
the Committee, and (iii) shall not interfere with the employment of any other
Company employee. An Incentive Award may include a noncompetition agreement
with respect to the Grantee and/or such other terms and conditions, including,
without limitation, rights of repurchase or first refusal, not inconsistent
with the Plan, as shall be determined from time to time by the Committee.
Incentive Award Agreements evidencing Incentive Awards intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the
Code shall contain such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the Code.

          (b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan, Incentive Award
Agreement or any instrument executed pursuant to the Plan shall create any
employment rights (including without limitation, rights to continued
employment) in any Grantee or affect the right of the Company to terminate the
employment of any Grantee at any time for any reason whether before the
exercise date of any Option or during the Restriction Period of any Restricted
Stock or during the Performance Period of any Performance Unit or Performance
Share.

          (c) SECURITIES REQUIREMENTS. No shares of Common Stock will be issued or
transferred pursuant to an Incentive Award unless and until all then-applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction and by any stock
market or exchange upon which the Common Stock may be listed, have been fully
met. As a condition precedent to the issuance of shares pursuant to the grant
or exercise of an Incentive Award, the Company may require the Grantee to take
any reasonable action to meet such requirements. The Company shall not be
obligated to take any affirmative action in order to cause the issuance or
transfer of shares pursuant to an Incentive Award to comply with any law or
regulation described in the second preceding sentence.

     5.2 TRANSFERABILITY.

          (a) NON-TRANSFERABLE AWARD. Unless otherwise provided in an Incentive
Award Agreement, no Incentive Award and no right under the Plan, contingent or
otherwise, other than Restricted Stock as to which restrictions have lapsed,
shall be (i) assignable, saleable, or otherwise transferable by a Grantee
except by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order, or (ii) subject to any encumbrance, pledge
or charge of any nature. No transfer by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Committee shall
have been furnished with a copy of the

13

 

deceased Grantee’s will or such other
evidence as the Committee may deem necessary to establish the validity of the
transfer. Any attempted transfer in violation of this SECTION 5.2 shall be
void and ineffective for all purposes.

          (b) ABILITY TO EXERCISE RIGHTS. Only the Grantee or his guardian (if the
Grantee becomes Disabled), or in the event of his death, his legal
representative or beneficiary, may exercise Options, receive cash payments and
deliveries of shares, or otherwise exercise rights under the Plan. The
executor or administrator of the Grantee’s estate, or the person or persons to
whom the Grantee’s rights under any Incentive Award will pass by will or the
laws of descent or distribution, shall be deemed to be the Grantee’s
beneficiary or beneficiaries of the rights of the Grantee hereunder and shall
be entitled to exercise such rights as are provided hereunder.

     5.3 RIGHTS AS A STOCKHOLDER.

     Except as otherwise provided in any Incentive Award Agreement, a Grantee
of an Incentive Award or a transferee of such Grantee shall have no rights as a
stockholder with respect to any shares of Common Stock until such person
becomes a holder of record of such Common Stock. Except as otherwise provided
in SECTION 5.5, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities, or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued.

     5.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK.

     Prior to issuance and/or delivery of shares of Common Stock, the Company
shall consult with representatives of the Company, as appropriate, regarding
compliance with laws, rules and regulations that apply to such shares. If
necessary, the Company shall postpone the issuance and/or delivery of the
affected shares of Common Stock upon any exercise of an Incentive Award until
completion of such stock exchange listing, registration, or other qualification
of such shares under any state and/or federal law, rule or regulation as the
Company may consider appropriate, and may require any Grantee to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations. The Company shall not be obligated to
take any affirmative action in order to cause the issuance or transfer of
shares pursuant to an Incentive Award to comply with any law, rule or
regulation described in the immediately preceding sentence.

     5.5 CHANGE IN STOCK AND ADJUSTMENTS.

          (a) CHANGES IN CAPITALIZATION. In the event the outstanding shares of the
Common Stock, as constituted from time to time, shall be changed as a result of
a change in capitalization of the Company or a combination, merger, or
reorganization of the Company into or with any other corporation or any other
transaction with similar effects, then, for all purposes, references herein to
Common Stock or Restricted Stock shall mean and include all securities or other
property (other than cash) that holders of Common Stock are entitled to receive
in respect of Common Stock by reason of each successive aforementioned event,
which securities or other property (other than cash) shall be treated in the
same manner and shall be subject to the same restrictions as the underlying
Common Stock or Restricted Stock.

          (b) CHANGES IN LAW OR CIRCUMSTANCE. In the event of any change in
applicable laws or any change in circumstances which results in or would result
in any dilution of the

14

 

rights granted under the Plan, or which otherwise
warrants equitable adjustment because it interferes with the intended operation
of the Plan, then if the Committee shall, in its sole discretion, determine
that such change equitably requires an adjustment in the number or kind of
shares of stock or other securities or property theretofore subject, or which
may become subject, to issuance or transfer under the Plan or in the terms and
conditions of outstanding Incentive Awards, such adjustment shall be made in
accordance with such determination. Such adjustments may include without
limitation changes with respect to (i) the aggregate number of shares that may
be issued under the Plan, (ii) the number of shares subject to Incentive Awards
and (iii) the price per share for outstanding Incentive Awards. The Committee
shall give notice to each Grantee, and upon notice such adjustment shall be
effective and binding for all purposes of the Plan.

          (c) PROVISIONS APPLICABLE TO SECTION 162(m) PARTICIPANTS. With respect to
any Incentive Award granted to any Section 162(m) Participant that is intended
to qualify as performance-based compensation under Section 162(m)(4)(C), no
adjustment or action described in this Section 5.5 or in any other provision of
the Plan shall be authorized to the extent that such adjustment or action would
cause such Incentive Award to fail to so qualify under Section
162(m)(4)(C) or any successor provision thereto. Furthermore, no such
adjustment or action shall be authorized to the extent such adjustment or
action would result in short-swing profits liability under Section 16 or
violate the exemptive conditions of Rule 16b-3 unless the Committee determines
that the Option or other award is not to comply with such exemptive conditions.

     5.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT.

          (a) TERMINATION OF EMPLOYMENT. Subject to SECTION 3.2, if an Employee’s
employment with the Company, Parent or Subsidiary is terminated for any reason
whatsoever other than death, Disability, Retirement, Involuntary Termination or
Termination for Good Reason, any Incentive Award granted pursuant to the Plan
outstanding at the time and all rights thereunder shall wholly and completely
terminate, and unless otherwise established by the Committee, no further
vesting shall occur and the Employee shall be entitled to exercise his or her
rights with respect to the portion of the Incentive Award vested as of the date
of termination for a period of thirty (30) calendar days after such termination
date; provided however, that if an Employee is Terminated for Cause, such
Employee’s right to exercise the vested portion of his or her Incentive Award
shall terminate as of the date of termination of employment. In the event of
termination for death, Disability, Retirement, or Change of Control, an
Incentive Award may only be exercised as determined by the Committee and
provided in the Incentive Award Agreement. However, the following shall be
used as a general guideline.

          (b) RETIREMENT. Subject to SECTION 3.2, unless otherwise approved by the
Committee, upon Retirement of an Employee:

               (i) any nonvested portion of any outstanding Incentive Award shall
continue to vest after Retirement; and

               (ii) any vested Incentive Award shall expire on the earlier of (A) the
expiration date set forth in the Incentive Award Agreement with respect to such
Incentive Awards; or (B) the expiration of six (6) months after the date of
Retirement.

15

 

          (c) DISABILITY OR DEATH. Subject to SECTION 3.2, unless otherwise
approved by the Committee, upon termination of employment from the Company,
Parent or Subsidiary as a result of Disability or death:

               (i) any nonvested portion of any outstanding Incentive Award shall
continue to vest after Disability or death; and

               (ii) any vested Incentive Award shall expire upon the earlier of (A) the
expiration date set forth in the Incentive Award Agreement with respect to such
Incentive Awards; or (B) the first anniversary of such termination of such
employment as a result of Disability or death.

          (d) INVOLUNTARY TERMINATION. Subject to SECTION 3.2, unless otherwise
approved by the Committee, upon termination of employment from the Company,
Parent or Subsidiary as a result of Involuntary Termination (not Change of
Control):

               (i) any nonvested portion or any outstanding Incentive Award shall vest on
a pro-rated basis based upon the number of months the terminated Employee has
been employed within the applicable Performance Period or Term; and

               (ii) any vested Incentive Award shall expire upon the earlier of (A) the
expiration date set forth in the Incentive Award Agreement with respect to such
Incentive Awards or (B) the expiration of thirty (30) days after the date of
Termination.

          (e) CONTINUATION. Subject to the express provisions of the Plan and the
terms of any applicable Incentive Award Agreement, the Committee, in its
discretion, may provide for the continuation of any Incentive Award for such
period and upon such terms and conditions as are determined by the Committee in
the event that a Grantee ceases to be an employee.

     5.7 CHANGES OF CONTROL.

          (a) CHANGES OF CONTROL. In the event of Involuntary Termination or
Termination for Good Reason within two years after a Change of Control:

               (i) all Options and Stock Appreciation Rights then outstanding shall
become vested and immediately exercisable, notwithstanding any provision
therein for the exercise in installments;

               (ii) all restrictions and conditions of all Restricted Stock then
outstanding shall be deemed satisfied, and the Restriction Period with respect
thereto shall be deemed to have expired, as of the date of the Change of
Control; and

               (iii) to the extent determined by the Committee, all Performance Shares
and Performance Units shall become vested, deemed earned in full and promptly
paid to the Grantees without regard to payment schedules and notwithstanding
that the applicable performance cycle or retention cycle shall not have been
completed.

     For the purposes of this SECTION 5.7, a “Change of Control” shall mean a
change of control of a nature that would be required to be reported in response
to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange
Act as such Schedule, Regulation and Act were in effect on the date of adoption
of this Plan by the Board, assuming that such Schedule, Regulation and

16

 

Act
applied to the Company, provided that such change of control shall be deemed to
have occurred at such time as:

               (i) any “person” (as that term is used in SECTION 13(d) and 14(d)(2) of
the Exchange Act) (other than the Company or an affiliate of the Company)
becomes, directly or indirectly, the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act) of securities representing 30% or more of the
combined voting power for election of members of the Board of the then
outstanding voting securities of the Company or any successor of the Company;

               (ii) during any period of two (2) consecutive years or less, individuals
who at the beginning of such period constituted the Board of the Company cease,
for any reason, to constitute at least a majority of the Board, unless the
election or nomination for election of each new
member of the Board was approved by a vote of at least two-thirds of the
members of the Board then still in office who were members of the Board at the
beginning of the period;

               (iii) the equity holders of the Company approve any merger or
consolidation to which the Company is a party as a result of which the persons
who were equity holders of the Company immediately prior to the effective date
of the merger or consolidation (and excluding, however, any shares held by any
party to such merger or consolidation and their affiliates) shall have
beneficial ownership of less than 50% of the combined voting power for election
of members of the Board (or equivalent) of the surviving entity following the
effective date of such merger or consolidation; or

               (iv) the equity holders of the Company approve any merger or consolidation
as a result of which the equity interests in the Company shall be changed,
converted or exchanged (other than a merger with a wholly owned subsidiary of
the Company) or any liquidation of the Company or any sale or other disposition
of 50% or more of the assets or earnings power of the Company; provided
however, that no Change of Control shall be deemed to have occurred if, prior
to such time as a Change of Control would otherwise be deemed to have occurred,
the Board determines otherwise.

          (b) RIGHT OF CASH-OUT. If approved by the Board prior to or within thirty
(30) days after such time as a Change of Control shall be deemed to have
occurred, the Board shall have the right for a forty-five (45) day period
immediately following the date that the Change of Control is deemed to have
occurred to require all, but not less than all, Grantees to transfer and
deliver to the Company all Incentive Awards previously granted to Grantees in
exchange for an amount equal to the “cash value” (defined below) of the
Incentive Awards. Such right shall be exercised by written notice to all
Grantees. For purposes of this SECTION 5.7(b), the cash value of an Incentive
Award shall equal the sum of (i) all cash to which the Grantee would be
entitled upon settlement or exercise of such Incentive Award and (ii) the
excess of the “market value” (defined below) per share over the option price,
if any, multiplied by the number of shares subject to such Incentive Award.
For purposes of the preceding sentence, “market value” per share shall mean the
higher of (i) the average of the Fair Market Value per share on each of the
five trading days immediately following the date a Change of Control is deemed
to have occurred or (ii) the highest price, if any, offered in connection with
a Change of Control. The amount payable to each Grantee by the Company
pursuant to this SECTION 5.7(b) shall be in cash or by certified check and
shall be reduced by any taxes required to be withheld.

17

 

     5.8 AMENDMENTS TO INCENTIVE AWARDS.

     The Committee may waive any conditions or rights with respect to, or
amend, alter, suspend, discontinue, or terminate, any unexercised Incentive
Award theretofore granted, prospectively or retroactively, with the consent of
any relevant Grantee, subject to the limitations of SECTION 1.7.

     5.9 EXCHANGE OF INCENTIVE AWARDS.

     The Committee may, in its discretion, permit Grantees under the Plan to
surrender outstanding Incentive Awards in order to exercise or realize the
rights under other Incentive Awards, or in exchange for the grant of new
Incentive Awards or require holders of Incentive Awards to
surrender outstanding Incentive Awards as a condition precedent to the
grant of new Incentive Awards.

     5.10 FINANCING.

     The Company may extend and maintain, or arrange for the extension and
maintenance of, financing to any Grantee (including a Grantee who is a Director
of the Company) to purchase shares pursuant to exercise of an Incentive Award
on such terms as may be approved by the Committee in its sole discretion. In
considering the terms for extension or maintenance of credit by the Company,
the Committee shall, among other factors, consider the cost to the Company of
any financing extended by the Company.

SECTION 6

MISCELLANEOUS

     6.1 EFFECTIVE DATE AND GRANT PERIOD.

     This Plan shall become effective as of the date of Board approval (the
“Effective Date”). Unless sooner terminated by the Board, the Plan shall
terminate on October 31, 2013, unless extended. After the termination of the
Plan, no Incentive Awards may be granted under the Plan, but previously granted
awards shall remain outstanding in accordance with their applicable terms and
conditions.

     6.2 FUNDING.

     Except as provided under SECTION 3, no provision of the Plan shall require
the Company, for the purpose of satisfying any obligations under the Plan, to
purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets in a manner that
would provide any Grantee any rights that are greater than those of a general
creditor of the Company, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund if such action would provide any Grantee with
any rights that are greater than those of a general creditor of the Company.
Grantees shall have no rights under the Plan other than as unsecured general
creditors of the Company except that insofar as they may have become entitled
to payment of additional compensation by performance of services, they shall
have the same rights as other employees under applicable law. However, the
Company may establish a “Rabbi Trust” for purposes of securing the payment
pursuant to a Change of Control.

18

 

     6.3 WITHHOLDING TAXES.

     The Company shall have the right to (i) make deductions from any
settlement of an Incentive Award made under the Plan, including the delivery of
shares, or require shares or cash or both be withheld from any Incentive Award,
in each case in an amount sufficient to satisfy withholding of any federal,
state or local taxes required by law, or (ii) take such other action as may be
necessary or
appropriate to satisfy any such withholding obligations. The Committee
may determine the manner in which such tax withholding may be satisfied, and
may permit shares of Common Stock (rounded up to the next whole number) to be
used to satisfy required tax withholding based on the Fair Market Value of any
such shares of Common Stock, as of the delivery of shares or payment of cash in
satisfaction of the applicable Incentive Award.

     6.4 CONFLICTS WITH PLAN.

     In the event of any inconsistency or conflict between the terms of the
Plan and an Incentive Award Agreement, the terms of the Plan shall govern.

     6.5 NO GUARANTEE OF TAX CONSEQUENCES.

     Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to
any person participating or eligible to participate hereunder.

     6.6 SEVERABILITY.

     In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provision of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had never been included herein.

     6.7 GENDER, TENSE AND HEADINGS.

     Whenever the context requires such, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the Plan.

     6.8 AMENDMENT AND TERMINATION.

     The Plan may be amended or terminated at any time by the Board by the
affirmative vote of a majority of the members in office. The Plan, however,
shall not be amended, without prior written consent of each affected Grantee if
such amendment or termination of the Plan would adversely affect any material
vested benefits or rights of such person.

     6.9 SECTION 280G PAYMENTS.

     In the event that the aggregate present value of the payments to a Grantee
under the Plan, and any other plan, program, or arrangement maintained by the
Company constitutes an “excess parachute payment” (within the meaning of Code
Section 280G(b)(1)) and the excise tax on such payment would cause the net
parachute payments (after taking into account federal, state and local income
and excise taxes) to which the Grantee otherwise would be entitled to be less
than what the

19

 

Grantee would have netted (after taking into account federal,
state and local income taxes) had the present value of his total parachute
payments equaled $1.00 less than three times his “base amount” (within the
meaning of Code Section 280G(b)(3)(A)), the Grantee’s total “parachute
payments” (within the meaning of Code Section 280G(b)(2)(A) shall be reduced
(by the minimum possible
amount) so that their aggregate present value equals $1.00 less than three
times such base amount. For purposes of this calculation, it shall be assumed
that the Grantee’s tax rate will be the maximum marginal federal, state and
local income tax rate on earned income, with such maximum federal rate to be
computed with regard to Code Section 1(g), if applicable. In the event that
the Grantee and the Company are unable to agree as to the amount of the
reduction described above, if any, the Grantee shall select a law firm or
accounting firm from among those regularly consulted (during the twelve-month
period immediately prior to the change of control that resulted in the
characterization of the payments as parachute payments) by the Company
regarding federal income tax or employee benefit matters and such law firm or
accounting firm shall determine the amount of such reduction and such
determination shall be final and binding upon the Grantee and the Company.

     6.10 GOVERNING LAW.

     The Plan shall be construed in accordance with the laws of the State of
New York, except as superseded by federal law, and in accordance with
applicable provisions of the Code and regulations or other authority issued
thereunder by the appropriate governmental authority.

     6.11 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS AND
PERFORMANCE-BASED COMPENSATION.

     Notwithstanding any other provision of this Plan, this Plan, and any
Incentive Award granted to any individual who is then subject to Section 16 of
the Exchange Act, shall be subject to any additional limitations set forth in
any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
the Plan, and Incentive Awards granted hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule. Furthermore,
notwithstanding any other provision of this Plan, any Option, Stock
Appreciation Right or Performance Unit or Performance Share described in
Section 4 which is granted to a Section 162(m) Participant and is intended to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code shall be subject to any additional limitations set forth in Section
162(m) of the Code (including any amendment to Section 162(m) of the Code) or
any regulations or rulings issued thereunder that are requirements for
qualification as performance-based compensation as described in Section
162(m)(4)(C) of the Code, and this Plan shall be deemed amended to the extent
necessary to conform to such requirements.

20

 

     IN WITNESS WHEREOF, this Plan has been executed this      th day of      ,
2003, to be effective as of      , 2003.

	 	 	 	 	 
	 	 	

	 
	 	 	
By:	 	 
	 	 	 	 	

21<PAGE>

                                                                    EXHIBIT 4.3

                          SECOND SUPPLEMENTAL INDENTURE

                  SECOND SUPPLEMENTAL INDENTURE, dated as of August 29, 2003,
among Associated Materials Incorporated, a Delaware corporation (the "Company"),
Alside, Inc., a Delaware corporation ("Alside"), Wilmington Trust Company, as
trustee under the Indenture referred to below (the "Trustee"), and each of the
other Guarantors listed on Schedule A attached hereto ("Guarantors").

                                  WITNESSETH:

                  WHEREAS, the Company, AMI Management Company and the Trustee
heretofore executed and delivered an Indenture, dated as of April 23, 2002 (as
heretofore amended and supplemented, the "Indenture"), providing for the
issuance of the 9 3/4% Senior Subordinated Notes due 2012 (the "Securities")
(capitalized terms used herein but not otherwise defined have the meanings
ascribed thereto in the Indenture);

                  WHEREAS, Section 4.10 of the Indenture provides that each
domestic Restricted Subsidiary of the Company that guarantees or incurs any
Indebtedness under the Credit Agreement shall execute and deliver to the Trustee
a Guaranty Agreement, pursuant to which such Restricted Subsidiary shall
Guarantee payment of the Securities on the same terms and conditions as those
set forth in the Indenture;

                  WHEREAS, Section 9.01 of the Indenture provides that the
Company may amend the Indenture without notice to or consent of any
Securityholder to add guarantees with respect to the Securities, including any
Subsidiary Guaranties, or to secure the Securities;

                  WHEREAS, each of the Guarantors is a domestic Restricted
Subsidiary of the Company and has entered into agreements to guarantee the
Indebtedness under the Credit Agreement as provided therein;

                  WHEREAS, this Second Supplemental Indenture has been duly
authorized by all necessary corporate action on the part of each of the Company,
Alside and the Guarantors; and

                  WHEREAS, all conditions precedent to supplement the Indenture
have been met;

                  NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Company, Alside, the Guarantors and the Trustee mutually covenant and agree
for the equal and ratable benefit of the Holders as follows:

<PAGE>

                                    ARTICLE I

                                   Guaranties

                  Section 1.1. Subsidiary Guarantor. The definition of
"Subsidiary Guarantor" set forth in Section 1.01 of the Indenture is hereby
amended to read in its entirety as follows:

                  "Subsidiary Guarantor" means Alside, Inc. and each domestic
Subsidiary of the Company that executes this Indenture as a guarantor on the
Issue Date and each other domestic Subsidiary of the Company that thereafter
guarantees the Securities pursuant to the terms of this Indenture."

                  Section 1.2. Subsidiary Guaranty. Each of the Guarantors
hereby agrees, jointly and severally with all other Subsidiary Guarantors, to
guarantee the Company's Obligations under the Securities and the Indenture on
the terms and subject to the conditions set forth in Articles 11 and 12 of the
Indenture and to be bound by all other applicable provisions of the Indenture.

                  Section 1.3. Trustee's Acceptance. The Trustee hereby accepts
this Second Supplemental Indenture and agrees to perform the same under the
terms and conditions set forth in the Indenture.

                                   ARTICLE II

                                  Miscellaneous

                  Section 2.1. Effect of Second Supplemental Indenture. Upon the
execution and delivery of this Second Supplemental Indenture by the Company,
Alside, each of the Guarantors and the Trustee, the Indenture shall be
supplemented in accordance herewith, and this Supplemental Indenture shall form
a part of the Indenture for all purposes, and every Holder of Securities
heretofore or hereafter authenticated and delivered under the Indenture shall be
bound thereby.

                  Section 2.2. Indenture Remains in Full Force and Effect.
Except as supplemented hereby, all provisions in the Indenture shall remain in
full force and effect.

                  Section 2.3. Indenture and Second Supplemental Indenture
Construed Together. This Second Supplemental Indenture is an indenture
supplemental to and in implementation of the Indenture. The Indenture and this
Second Supplemental Indenture shall henceforth be read and construed together.

                  Section 2.4. Confirmation and Preservation of Indenture. The
Indenture as supplemented by this Second Supplemental Indenture is in all
respects confirmed and preserved.

                  Section 2.5. Conflict with Trust Indenture Act. If any
provision of this Second Supplemental Indenture limits, qualifies or conflicts
with any provision of the TIA that is required under the TIA to be part of and
govern any provision of this Second Supplemental

<PAGE>

Indenture, the provision of the TIA shall control. If any provision of this
Second Supplemental Indenture modifies or excludes any provision of the TIA that
may be so modified or excluded, the provision of the TIA shall be deemed to
apply to the Indenture as so modified or to be excluded by this Second
Supplemental Indenture, as the case may be.

                  Section 2.6. Severability. In case any provision in this
Second Supplemental Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

                  Section 2.7. Benefits of Supplemental Indenture. Nothing in
this Second Supplemental Indenture or the Securities, express or implied, shall
give to any Person, other than the parties hereto and thereto and their
successors hereunder and thereunder and the Holders of the Securities, any
benefit of any legal or equitable right, remedy or claim under the Indenture,
this Second Supplemental Indenture or the Securities.

                  Section 2.8. Successors. All agreements of the Company, Alside
and the Guarantors in this Second Supplemental Indenture shall bind its
successors. All agreements of the Trustee in this Second Supplemental Indenture
shall bind its successors.

                  Section 2.9. Certain Duties and Responsibilities of the
Trustee. In entering into this Second Supplemental Indenture, the Trustee shall
be entitled to the benefit of every provision of the Indenture and the
Securities relating to the conduct or affecting the liability or affording
protection to the Trustee, whether or not elsewhere herein so provided.

                  Section 2.10. Governing Law. This Second Supplemental
Indenture shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.

                  Section 2.11. Multiple Originals. The parties may sign any
number of copies of this Second Supplemental Indenture, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

                  Section 2.12. Headings. The Article and Section headings
herein are inserted for convenience of reference only, are not intended to be
considered a part hereof and shall not modify or restrict any of the terms or
provisions hereof.

                  Section 2.13. The Trustee. The Trustee shall not be
responsible in any manner for or in respect of the validity or sufficiency of
this Second Supplemental Indenture or for or in respect of the recitals
contained herein, all of which are made by the Company, Alside and the
Guarantors.

<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first written above.

                        ASSOCIATED MATERIALS INCORPORATED

                        By: /s/ D. Keith LaVanway
                            --------------------------------------------------
                            Name: D. Keith LaVanway
                            Title: Vice President-Chief Financial Officer,
                                   Treasurer and Secretary

                        ALSIDE, INC.

                        By: /s/ D. Keith LaVanway
                            --------------------------------------------------
                            Name: D. Keith LaVanway
                            Title: Vice President, Treasurer and Secretary

                        GENTEK HOLDINGS, INC.

                        By: /s/ D. Keith LaVanway
                            --------------------------------------------------
                            Name: D. Keith LaVanway
                            Title: Vice President-Chief Financial Officer,
                                   Treasurer and Secretary

                        GENTEK BUILDING PRODUCTS, INC.

                        By: /s/ D. Keith LaVanway
                            --------------------------------------------------
                            Name: D. Keith LaVanway
                            Title: Vice President-Chief Financial Officer,
                                  Treasurer and Secretary

<PAGE>

                        WILMINGTON TRUST COMPANY,
                                   as Trustee

                        By: /s/ Michael G. Oller, Jr.
                            ------------------------------------------------
                            Name: Michael G. Oller, Jr.
                            Title: Senior Financial Services Officer

<PAGE>

                                                                      Schedule A

                                   Guarantors

Gentek Holdings, Inc.

Gentek Building Products, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00064-of-00352.parquet"}]]