Document:

Exhibit

10.8.1

 

EXTENSION

 

OF

 

EMPLOYMENT AGREEMENT

 

EXTENSION  AGREEMENT, this 16th day of December 2002, by and

between FIRSTBANK (Bank), a federally chartered stock savings bank and its

parent holding company ACCESS ANYTIME BANCORP., INC. (Company) and Don K.

Padgett (Officer).

 

The

Officer is Executive Vice President, Chief Lending Officer, and a Director of

the Bank and has been duly elected to these positions.  Also, the Officer is President and a

Director of the Company and has been duly elected to these positions.

 

Effective January 1, 2003,

the Bank/Company and the Officer desires to amend an EMPLOYMENT AGREEMENT dated

the 16th day of February, 2002, page 1 (one) Section 3 (three), Position and Responsibilities to read

...... “Officer to serve as President, Chief Executive Officer, Chief Lending

Officer and Director of the Bank and President of the Company”.

 

Effective

January 1, 2003, the Bank/Company and the Officer desires to amend an

EMPLOYMENT AGREEMENT dated the 16th day of February, 2002, page 2

(Two) Section 4 (four), Compensation, (a)

Salary – From $110,000 to $130,000 annually.

 

Effective January 1, 2003,

the Bank/Company and the Officer desires to amend an EMPLOYMENT AGREEMENT dated

the 16th day of February, 2002, page 2 (two) Section 3 (three), Position and Responsibilities, (a) Major Duties and Responsibilities ..... add:  (iii) 

coordinate the efforts of the Bank/Company’s lending activities through

guidance and leadership of mortgage, commercial and consumer lending.  Maintain oversight of Controllers

preparation of financial plans, budgets, personnel, operations and supervisor

of manager’s delegated responsibilities for same.

 

Effective

January 1, 2003, the Bank/Company and the Officer desires to amend an

EMPLOYMENT AGREEMENT dated the 16th day of February, 2002, page 1

(one) Section 2 (two), Term to

read ..... shall continue for a period of three years through December 31,

2005.

 

This EXTENSION AGREEMENT

herewith incorporates all other terms and conditions of an EMPLOYMENT AGREEMENT

dated the 16th day of February, 2002, by and between the

Bank/Company and the Officer.

 

	

  FIRSTBANK

  	

  ACCESS ANYTIME BANCORP, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  BY:

  	

  \s\

  Robert Chad Lydick

  	

   

  	

  BY:

  

  	

  \s\

  Robert Chad Lydick

  	

   

  
	

   

  	

  Robert

  “Chad” Lydick, Chairman

  	

   

  	

  Robert

  “Chad” Lydick, Member

  
	

   

  	

  Board

  of Directors

  	

   

  	

  Board

  of Directors

  
	

   

  	

   

  	

   

  
	

  OFFICER

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  BY:

  	

  \s\

  Don K. Padgett

  	

   

  	

   

  
	

   

  	

  Don K. Padgett

  	

   

  
							

 

1Exhibit 10.12.3

 

RESOLUTION

02-18

 

FIRSTBANK

(the “Bank”)

 

AMENDMENT

NO 3

TO THE

EXECUTIVE SAVINGS PLAN FOR FIRSTBANK

(ALSO

KNOWN AS ACCESS ANYTIME BANCORP, INC.)

 

THIS AMENDMENT is

approved and adopted by FIRSTBANK on this 19th day of December 2002.

 

RECITALS

 

A.            FIRSTBANK (also known as Access Anytime BanCorp, Inc.)

(the “Bank”), executed the Executive Savings Plan for FIRSTBANK or Access

Anytime BanCorp, Inc. (the “Plan”), effective June 1, 1998, in order to provide

a means for select highly compensated and management employees to defer a

portion of their compensation and to encourage them to provide additional

financial security for the future.

 

B.                                     Section 10.2 of the Plan provides in part

as follows

 

“the Plan may be amended from time to time in any respect

whatever by resolution of the board of directors of the Bank specifying such

amendment...”

 

C.                                     The Bank now desires to amend the Plan.

 

AMENDMENT

 

The Bank hereby amends

the Plan as follows:

 

1.                                       All references under the Plan to “First

Performance Builder: shall be deemed references to the FIRSTBANK Profit Sharing

and Employee Stock Ownership Plan.

 

2.                                       The second sentence of Section 3.1(A) of

the Plan hereby is amended to read in its entirety as follows:

 

Salary Deferral Contributions when combined with salary

deferral reductions elected by the participant under the First Performance

Builder as of the first day of the Plan year, of any amount of the

participant’s compensation for the applicable payroll period and are matched by

Employer contributions, if any, for the plan year to the extent specified in

 

 

Section 4.1 hereof are referred to herein as “Matched

Salary Deferral Contributions”.

 

3.                                       Delete the third sentence of Section

3.1(A) of the Plan.

“Salary Deferral

contributions that are, when combined with salary deferrals under the First

Performance Builder, in excess of 6% of the Participant’s compensation for the

applicable payroll period are referred to herein as “Unmatched Salary Deferral

Contributions”.

 

4.                                       This amendment to the Plan shall be effective

as of December 1, 2002.

 

5.                                       Any inconsistent provisions of the Plan

shall be read consistent with this amendment.

 

6.                                       Except as amended above, the Bank hereby

affirms and readopts each and every other provision of the Plan.

 

	

  \s\ Kathy Allenberg

  	

   

  	

  \s\ Norman R. Corzine

  	

   

  
	

  Corporate Secretary

  	

   

  	

  Chairman of the Board

  	

   

  

 

 

IN WITNESS WHEREOF, the

Bank has executed this amendment as of the date first mentioned above.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

  FIRSTBANK

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  By:

  	

  \s\ Ken Huey, Jr.

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

  Title:

  	

  President

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

  ATTEST:

  	

  \s\ Kathy Allenberg

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Corporate SecretaryEXHIBIT
10.05

 

LEHMAN BROTHERS HOLDINGS INC.

1994 MANAGEMENT OWNERSHIP PLAN

As amended through November 19, 2002

 

SECTION 1 — PURPOSE

 

The purpose of this Plan is to strengthen Lehman
Brothers Holdings Inc. (the “Company”) by providing an incentive to its officers,
employees, consultants and directors and thereby encouraging them to devote
their abilities to increase shareholder value and to sustain excellence.  It is intended that this be achieved by
extending to Eligible Individuals of the Company and its subsidiaries an added
long-term incentive for high levels of performance and unusual efforts through
the grant of Incentive Stock Options, Non-qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units
and Performance Shares (as each term is hereinafter defined).

 

SECTION 2 — ADMINISTRATION

 

2.1  The Plan shall be
administered by the Committee which shall hold meetings at such times as may be
necessary for the proper administration of the Plan.  The Committee shall keep minutes of its meetings.  A quorum shall consist of not less than
three members of the Committee and a majority of a quorum may authorize any
action.  Any decision or determination
reduced to writing and signed by a majority of all of the members shall be as
fully effective as if made by a majority vote at a meeting duly called and
held.  Each member of the Committee
shall be a Disinterested Director.  No
member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder.  The Company
hereby agrees to indemnify each member of the Committee as permitted by
applicable law, for any liability incurred in connection with defending against,
responding to, negotiation for the settlement of or otherwise dealing with any
claim, cause of action or dispute of any kind arising in connection with any
actions in administering this Plan or in authorizing or denying authorization
to any transaction hereunder.

 

2.2  Subject to the express
terms and conditions set forth herein, the Committee shall have the power from
time to time to:

 

(a)                                  determine
those individuals to whom Options shall be granted under the Plan and the
number of Incentive Stock Options and/or Non-qualified Stock Options to be
granted to each Eligible Individual and to prescribe the terms and conditions
(which need not be identical) of each Option, including the purchase price per
Share subject to each Option, and make any amendment or modification to any
Agreement consistent with the terms of the Plan; and

 

(b)                                  select
those Eligible Individuals to whom Awards shall be granted under the Plan and
to determine the number of Stock Appreciation Rights, Performance Units,
Performance Shares, and/or Shares of Restricted Stock or Restricted Stock Units
to be granted pursuant to each Award, the terms and conditions of each Award,
including the restrictions or performance criteria relating to such Units or
Shares, the maximum value of each Performance Unit and Performance Share and
make any amendment or modification to any Agreement consistent with the terms
of the Plan.

 

2.3  Subject to the express
terms and conditions set forth herein, the Committee shall have the power from
time to time:

 

(a)                                  to
construe and interpret the Plan and the Options and Awards granted thereunder
and to establish, amend and revoke rules and regulations for the administration
of the Plan, including, but not limited to, correcting any defect or supplying
any omission, or reconciling any inconsistency in the Plan or in any Agreement,
in the manner and to the extent it shall deem necessary or advisable to make
the Plan fully effective;

 

 

(b)                                  to
determine the duration and purposes for leaves of absence which may be granted
to an Optionee or Grantee on an individual basis without constituting a
termination of employment or service for purposes of the Plan; and

 

(c)                                  to
resolve all questions of interpretation arising under or in connection with the
administration of the Plan, to  exercise
its discretion with respect to the powers and rights granted to it as set forth
in the Plan, and generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.

 

2.4  All decisions and
determinations by the Committee in the exercise of the powers conferred upon it
under the Plan shall be final, binding and conclusive upon the Company, its
Subsidiaries, Eligible Individuals, Optionees, Grantees and all other persons
having any interest therein.

 

SECTION 3 — STOCK SUBJECT TO THE
PLAN

 

3.1  The maximum number of
Shares that may be made the subject of Options and Awards granted under the
Plan (other than Restricted Stock Units to be granted to Non-employee Directors
pursuant to Section 9.4) is 33,000,000 for all Eligible Individuals.  The maximum number of Shares that may be
made the subject of Restricted Stock Units to be granted to Non-employee Directors
pursuant to Section 9.4 is 300,000. 
Upon a Change in Capitalization the maximum number of Shares available
on an aggregate and Eligible Individual basis shall be adjusted in number and
kind pursuant to Section 11.  The
Company shall reserve for the purposes of the Plan, out of its authorized but unissued
Shares or out of Shares held in the Company’s treasury, or partly out of each,
such number of Shares as shall be determined by the Board.  The maximum number of Shares available for
Options Stock Appreciation Rights or other Awards that may be granted to an
Eligible Individual shall not exceed 3,300,000 over the life of the Plan.

 

3.2  Upon the granting of an
Option or an Award, the number of Shares available under Section 3.1 for
the granting of further Options and Awards shall be reduced as follows:

 

(a)                                  In
connection with the granting of an Option or an Award (other than the granting
of a Performance Unit denominated in dollars), the number of Shares shall be
reduced by the number of Shares in respect of which the Option or Award is
granted or denominated.

 

(b)                                  Notwithstanding
Section 3.2(a), the exercise of a Stock Appreciation Right granted in
tandem with an Option shall be treated, for purposes of this Section 3,
solely as though the Option had been exercised through the purchase of Shares,
with the result that the number of Shares shall be reduced by the number of
Shares so purchased.  No other reduction
in the number of Shares shall be made on account of such Stock Appreciation
Right exercise.

 

(c)                                  In
connection with the granting of a Performance Unit denominated in dollars, the
number of Shares shall be reduced by an amount equal to the quotient of (i) the
dollar amount in which the Performance Unit is denominated, divided by (ii) the
Fair Market Value of a Share on the date the Performance Unit is granted.

 

3.3  Whenever any outstanding
Option or Award or portion thereof expires, is canceled or is otherwise
terminated for any reason without having been exercised or payment having been
made in respect of the entire Option or Award, the Shares allocable to the
expired, canceled or otherwise terminated portion of the Option or Award shall
again be available for grant pursuant to Options or Awards granted hereunder to
the fullest extent permitted by Rule 16b-3 under the Exchange Act.  In addition, during the period that any
Options and Awards remain outstanding under the Plan, the Committee may make
good faith adjustments upon a Change in Capitalization with respect to the
number of Shares attributable to such Options and Awards for purposes of calculating
the maximum number of Shares available for the granting of future Options and
Awards under the Plan, provided that following such adjustments the exemptions
provided pursuant to Rule 16b-3 under the Exchange Act, and the exceptions
provided pursuant to Section 162(m) of the Code, will not be adversely
affected thereby.

 

2

 

SECTION 4 — OPTION GRANTS FOR
ELIGIBLE INDIVIDUALS

 

4.1  Authority of Committee.  Subject to the provisions of the Plan, the
Committee shall have full and final authority to select those Eligible
Individuals who will receive Options, the terms and conditions of which shall
be set forth in an Agreement; provided, however, that no person
shall receive any Incentive Stock Options unless he or she is an employee of
the Company, a Parent or a Subsidiary at the time the Incentive Stock Option is
granted.

 

4.2  Purchase Price.  The purchase price or the manner in which
the purchase price is to be determined for Shares under each Option shall be
determined by the Committee and set forth in the Agreement; provided, however,
that the purchase price per Share under each Incentive Stock Option shall not
be less than 100% of the Fair Market Value of a Share on the date the Incentive
Stock Option is granted (110% in the case of an Incentive Stock Option granted
to a Ten-Percent Stockholder) and the purchase price per Share under each
Non-qualified Stock Option shall not be less than 100% of the Fair Market Value
of a Share on the date the Non-qualified Stock Option is granted.

 

4.3  Maximum Duration.  Options granted hereunder shall be for such
term as the Committee shall determine, provided that an Incentive Stock Option
shall not be exercisable after the expiration of ten (10) years from the date
it is granted (five (5) years in the case of an Incentive Stock Option granted
to a Ten-Percent Stockholder) and a Non-qualified Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted.  The Committee may, subsequent to the
granting of any Option, extend the term thereof but in no event shall the term
as so extended exceed the maximum term provided for in the preceding sentence.

 

4.4  Vesting. 
Each Option shall become exercisable in such
installments (which need not be equal) and at such times as may be designated
by the Committee and set forth in the Agreement.  To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the Option expires. 
The Committee may accelerate the exercisability of any Option or portion
thereof at any time.

 

4.5  $100,000 Limitation.  If the aggregate Fair
Market Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during a calendar year (under
all plans of the Company and its Parents and Subsidiaries) exceeds $100,000,
such Incentive Stock Options shall be treated, to the extent of such excess, as
Non-qualified Stock Options.  For
purposes of the preceding sentence, the Fair Market Value of the Shares shall
be determined at the time the Incentive Stock Options covering such Shares were
granted.

 

SECTION 5 — TERMS AND CONDITIONS
APPLICABLE TO ALL OPTIONS

 

5.1  Method of Exercise.  The exercise of an Option
shall be made only by a written notice delivered in person, by facsimile
transmission or by mail to the Secretary of the Company at the Company’s
principal executive office, specifying the number of Shares to be purchased and
accompanied, at the time of exercise or as otherwise permitted by the
Committee, by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. 
The purchase price for any Shares purchased pursuant to the exercise of
an Option shall be paid in full upon such exercise (or as otherwise permitted
by the Committee) by any one or a combination of the following:  (i) in cash (in any form of currency
acceptable to the Committee), (ii) transferring Shares to the Company upon such
terms and conditions as determined by the Committee or (iii) transferring
Awards to the Company if permitted by, and upon such terms and conditions as
determined by, the Committee.  Notwithstanding
the foregoing, the Committee shall have discretion to determine at the time of
grant of each Option or at any later date (up to and including the date of
exercise) the form of payment acceptable in respect of the exercise of such
Option.  Pursuant to procedures
established by the Committee, the written notice pursuant to this
Section 5.1 may also provide instructions from the Optionee to the Company
that upon receipt of the purchase price in cash from the Optionee’s broker or
dealer, designated as such on the written notice, in payment for any Shares
purchased pursuant to the exercise of an Option, the Company shall issue such
Shares directly to the designated broker or dealer.  Any Shares transferred to the Company as payment of the purchase
price under an Option shall be valued at their Fair Market Value on the date of
exercise of such Option.  If requested
by the Committee, the Optionee shall deliver the Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Agreement to the Optionee.  No fractional Shares (or cash in lieu
thereof) shall be issued

 

3

 

upon exercise of an Option and the number of Shares that may be
purchased upon exercise shall be rounded to the nearest number of whole Shares.

 

5.2  Rights of Optionees.  No Optionee shall be
deemed for any purpose to be the owner of any Shares subject to any Option
unless and until (i) the Option shall have been exercised pursuant to the terms
thereof, (ii) the Company shall have issued and delivered the Shares to the
Optionee and (iii) the Optionee’s name shall have been entered as a stockholder
of record on the books of the Company. 
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares.

 

5.3  Limited Rights.  An Optionee may, in the discretion of the
Committee, have the right (a “Limited Right”) to surrender the Option or any
portion thereof to the Company within 30 days following a Change in
Control and to receive from the Company in exchange therefor a cash payment in
an amount equal to (a) the number of unexercised Shares under the Option
which are being surrendered multiplied by (b) the excess of (i) the
greater of (A) the highest price per Share paid in connection with the
Change in Control or (B) the highest Fair Market Value per Share in the
90 day period preceding such Change in Control, over (ii) the
purchase price of the Option as set forth in the Agreement.

 

SECTION 6 — STOCK APPRECIATION
RIGHTS

 

6.1  Authority of Committee.  The Committee may, in its
discretion, either alone or in connection with the grant of an Option, grant
Stock Appreciation Rights in accordance with the Plan and the terms and
conditions of which shall be set forth in an Agreement.  If granted in connection with an Option, a
Stock Appreciation Right shall cover the same number of Shares covered by the
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 6.1, be subject to the same
terms and conditions as the related Option.

 

6.2  Time of Grant.  A Stock Appreciation Right may be granted (i)
at any time if unrelated to an Option, or (ii) if related to an Option, either
at the time of grant, or at any time thereafter during the term of the Option.

 

6.3  Stock Appreciation Right Related to an
Option.

 

(a)                                  Exercise.  Subject to Section 6.7, a Stock
Appreciation Right granted in connection with an Option shall be exercisable at
such time or times and only to the extent that the related Option is
exercisable, and will not be transferable except to the extent the related
Option may be transferable.

 

(b)                                  Amount
Payable.  Upon the exercise of a
Stock Appreciation Right related to an Option and subject to the provisions of
Section 6.6, the Grantee shall be entitled to receive an amount determined
by multiplying (A) the excess of the Fair Market Value of a Share on the date
of exercise of such Stock Appreciation Right over the per Share purchase price
under the related Option, by (B) the number of Shares as to which such Stock
Appreciation Right is being exercised. 
Notwithstanding the foregoing, the Committee may limit in any manner the
amount payable with respect to any Stock Appreciation Right by including such a
limit in the Agreement evidencing the Stock Appreciation Right at the time it
is granted.

 

(c)                                  Treatment
of Related Options and Stock Appreciation Rights Upon Exercise.  Upon the exercise of a Stock
Appreciation Right granted in connection with an Option, the Option shall be
canceled to the extent of the number of Shares as to which the Stock
Appreciation Right is exercised, and upon the exercise of an Option granted in
connection with a Stock Appreciation Right or the surrender of such Option
pursuant to Section 6.5, the Stock Appreciation Right shall be canceled to
the extent of the number of Shares as to which the Option is exercised or
surrendered.

 

6.4(a)                 Stock
Appreciation Right Unrelated to an Option. 
The Committee may grant to Eligible Individuals Stock Appreciation
Rights unrelated to Options.  Stock
Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 6.7), vesting and
duration as the Committee shall determine, but in no event shall they have a term
of greater than ten (10) years.  The
Committee may accelerate the exercisability of any Stock Appreciation Right at

 

4

 

any time.  Upon
exercise of a Stock Appreciation Right unrelated to an Option, the Grantee
shall be entitled to receive an amount determined by multiplying (A) the excess
of the Fair Market Value of a Share on the date of exercise of such Stock
Appreciation Right over the Fair Market Value of a Share on the date the Stock
Appreciation Right was granted, by (B) the number of Shares as to which the
Stock Appreciation Right is being exercised. 
Notwithstanding the foregoing, the Committee may limit in any manner the
amount payable with respect to any Stock Appreciation Right by including such a
limit in the Agreement evidencing the Stock Appreciation Right at the time it
is granted.

 

(b)                                  Limited
SAR Rights.  A Grantee may, in the
discretion of the Committee, have the right (a “Limited SAR Right”) to
surrender the Stock Appreciation Right or any portion thereof to the Company
within 30 days following a Change in Control and to receive from the Company in
exchange therefor a cash payment in an amount equal to (a) the number of Shares
under the Stock Appreciation Right which are being exercised, multiplied by (b)
the excess of (i) the greater of (A) the highest price per Share paid in
connection with the Change in Control or (B) the highest Fair Market Value per
Share in the 90 day period preceding such Change in Control, over (ii) the Fair
Market Value of a Share on the date the Stock Appreciation Right was granted as
set forth in the Agreement.

 

6.5  Method of Exercise.  Stock Appreciation Rights
shall be exercised by a Grantee only by a written notice delivered in person,
by facsimile transmission, or by mail to the Secretary of the Company at the
Company’s principal executive office, specifying the number of Shares with
respect to which the Stock Appreciation Right is being exercised.  If requested by the Committee, the Grantee
shall deliver the Agreement evidencing the Stock Appreciation Right being
exercised and the Agreement evidencing any related Option to the Secretary of
the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Grantee.

 

6.6  Form of Payment.  Payment of the amount determined under Sections
6.3(b) or 6.4 may be made in the discretion of the Committee, solely in whole
Shares in a number determined at their Fair Market Value on the date preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in
a combination of cash and Shares.  If
the Committee decides to make full payment in Shares and the amount payable
results in a fractional Share, payment for the fractional Share will be made in
cash.

 

6.7  Restrictions.  In the case of any Grantee who may be subject
to liability under Section 16(b) of the Exchange Act, no Stock
Appreciation Right may be exercised before the date six (6) months after the
date it is granted.

 

SECTION 7 — RESTRICTED STOCK

 

7.1  Grant. 
The Committee may grant to Eligible Individuals Awards
of Restricted Stock, and may issue Shares of Restricted Stock in payment of
vested Performance Units (as hereinafter provided in Section 8.2), which
shall be evidenced by an Agreement between the Company and the Grantee.  Each Agreement shall contain such
restrictions, terms and conditions as the Committee may, in its discretion,
determine and (without limiting the generality of the foregoing) such
Agreements may require that an appropriate legend be placed on Share
certificates.  Awards of Restricted
Stock shall be subject to the terms and provisions set forth below in this
Section 7.

 

7.2  Rights of Grantee.  Shares of Restricted Stock granted pursuant to
an Award hereunder shall be issued in the name of the Grantee as soon as
reasonably practicable after the Award is granted provided that the Grantee has
executed an Agreement evidencing the Award, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require as a condition to the issuance of
such Shares.  If a Restricted Stock
Award Agreement, appropriate blank stock powers and such other documents which
the Committee may require are not executed by the Grantee within the time
period prescribed by the Committee at the time the Award is granted, the Award
shall be null and void.  At the
discretion of the Committee, Shares issued in connection with a Restricted
Stock Award shall be deposited together with the stock powers with an escrow
agent (which may be the Company) designated by the Committee.  Unless the Committee determines otherwise
and as set forth in the Agreement, upon delivery of the Shares to the escrow
agent, the Grantee shall have all of the rights of a stockholder with respect
to such Shares, including the right to vote the Shares and to receive all
dividends or other distributions paid or made with respect to the Shares.

 

5

 

7.3  Non-transferability.  Until any restrictions
upon the Shares of Restricted Stock Awarded to a Grantee shall have lapsed in
the manner set forth in Section 7.4, such Shares shall not be sold,
transferred or  otherwise disposed of
and shall not be pledged or otherwise hypothecated, nor shall they be delivered
to the Grantee.

 

7.4  Lapse of Restrictions.  Restrictions upon Shares
of Restricted Stock awarded hereunder shall lapse at such time or times on such
terms and conditions as the Committee may determine, which restrictions shall
be set forth in the Agreement evidencing the Award.

 

7.5  Treatment of Dividends.  At the time the Award of
Shares of Restricted Stock is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividends, or a specified portion
thereof, declared or paid on such Shares by the Company shall be, at the
discretion of the Committee, (i) paid in cash to the Grantee or (ii) deferred
until the lapsing of the restrictions imposed upon such Shares and held by the
Company for the account of the Grantee until such time.  In the event that payment of dividends is to
be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Shares of
Restricted Stock) or held in cash.  If
deferred dividends are to be held in cash, there may be credited at the end of
each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its discretion,
may determine.  Payment of deferred
dividends in respect of Shares of Restricted Stock (whether held in cash or as
additional Shares of Restricted Stock), together with interest accrued thereon,
if any, shall be made upon the lapsing of restrictions imposed on the Shares in
respect of which the deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.

 

7.6  Delivery of Shares.  Upon the lapse of the
restrictions on Shares of Restricted Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares, free of
all restrictions hereunder.  Notwithstanding
the preceding, the Committee may withhold sufficient Shares to pay taxes.

 

SECTION 8 — PERFORMANCE AWARDS

 

8.1  Performance Objectives.  Performance objectives for
Performance Awards may be expressed in terms of (i) earnings per Share, (ii)
pre-tax profits, (iii) net earnings or net worth, (iv) absolute and/or relative
return on equity or assets, (v) any combination of the foregoing, or (vi) any
other standard or standards deemed appropriate by the Committee at the time the
Award is granted.  Performance
objectives may be in respect of the performance of the Company and its
Subsidiaries (which may be on a consolidated basis), a Subsidiary or a
Division.  Performance objectives may be
absolute and/or relative and may be expressed in terms of a progression within
a specified range.  Prior to the end of
a Performance Cycle, with respect to any Eligible Individual the deductibility
of whose Performance Award will not, in the reasonable belief of the Committee,
be subject to Section 162(m) of the Code, the Committee may, in its discretion,
adjust the performance objectives to reflect a Change in Capitalization, a
change in the book tax rate of the Company or any Subsidiary or any other event
which may materially affect the performance of the Company, a Subsidiary or a
Division, including, but not limited to, market conditions or a significant
acquisition or disposition of assets or other property by the Company, a
Subsidiary or a Division.  With respect
to any Eligible Individual the deductibility of whose compensation may, in the
reasonable belief of the Committee, be subject to Section 162(m) of the
Code, the Committee shall exercise the discretion conferred upon it in the
preceding sentence in such manner as shall be approved by the Company’s
auditors and will not result in loss of deductibility under such
Section 162(m).  Notwithstanding
the foregoing, the Committee shall, in such manner as shall be approved by the
Company’s auditors, adjust the performance objectives for all Grantees to whom Performance
Units have been granted to offset the impact of any change in the applicable
corporate tax rate under the Code.

 

8.2  Performance Units.  The Committee, in its discretion, may grant
Awards of Performance Units to Eligible Individuals, the terms and conditions
of which shall be set forth in an Agreement between the Company and the
Grantee.  Performance Units may be
denominated in Shares or a specified dollar amount and, contingent upon the
attainment of specified performance objectives within the Performance Cycle,
represent the right to receive payment as provided in Section 8.2(b) of
(i) in the case of Share-denominated Performance Units, the Fair Market Value
of a Share on the date the Performance Unit was granted, the date the
Performance Unit became vested or any other date specified by the Committee,
(ii) in the case of dollar-denominated Performance Units, the specified dollar
amount or (iii) a percentage (which may be more than 100%) of the amount
described in clause (i) or (ii) depending on the

 

6

 

level of performance objective attainment; provided, however,
that the Committee may at the time a Performance Unit is granted, specify a
maximum amount payable in respect of a vested Performance Unit.  Each Agreement shall specify the number of
the Performance Units to which it relates, the performance objectives which
must be satisfied in order for the Performance Units to vest and the
Performance Cycle within which such objectives must be satisfied.

 

(a)                                  Vesting
and Forfeiture.  A Grantee shall
become vested with respect to the Performance Units to the extent that the
performance objectives set forth in the Agreement are satisfied for the
Performance Cycle.

 

(b)                                  Payment
of Awards.  Payment to Grantees in
respect of vested Performance Units shall be made within sixty (60) days after
the last day of the Performance Cycle to which such Award relates unless the
Agreement evidencing the Award provides for the deferral of payment, in which
event the terms and conditions of the deferral shall be set forth in the
Agreement.  Such payments may be made
entirely in Shares valued at their Fair Market Value as of the last day of the
applicable Performance Cycle or such other date specified by the Committee,
entirely in cash, or in such combination of Shares and cash as the Committee in
its discretion shall determine at any time prior to such payment; provided,
however, that if the Committee in its discretion determines to make such
payment entirely or partially in Shares of Restricted Stock or Restricted Stock
Units, the Committee must determine the extent to which such payment will be in
Shares of Restricted Stock or Restricted Stock Units and the terms of such
Restricted Stock or Restricted Stock Units at the time the Award is granted.

 

8.3  Performance Shares.  The Committee, in its
discretion, may grant Awards of Performance Shares to Eligible Individuals, the
terms and conditions of which shall be set forth in an Agreement between the
Company and the Grantee.  Performance
Shares shall be denominated in Shares or Restricted Stock Units, as determined
by the Committee.  Awards of Performance
Shares shall be subject to the following terms and provisions:

 

(a)                                  Rights
of Grantee.  The Committee shall
provide at the time an Award of Performance Shares is made, the time or times
at which the actual Shares or Restricted Stock Units represented by such Award
shall be issued in the name of the Grantee, and the number of such Shares or
Restricted Stock Units so issuable at different levels of performance goal
attainment.

 

(b)                                  Non-transferability.  Until any restrictions upon the
Performance Shares awarded to a Grantee shall have lapsed in the manner set
forth in Section 8.3(d) such Performance Shares shall not be sold,
transferred or otherwise disposed of and shall not be pledged or otherwise
hypothecated, nor shall they be delivered to the Grantee.  The Committee may also impose such other
restrictions and conditions on the Performance Shares, if any, as it deems
appropriate.

 

(c)                                  Treatment
of Dividend Equivalents.  At the
time the Award of Performance Shares is granted, the Committee may, in its
discretion, determine that the Grantee shall have the right to receive payments
equivalent in value to dividends or other distributions paid or made with
respect to the underlying Shares (which may include, in the case of Performance
Shares denominated in Restricted Stock Units, the Shares underlying such
Restricted Stock Units) (“Dividend Equivalents”).  The payment to the Grantee of Dividend Equivalents, or a
specified portion thereof, shall be, at the discretion of the Committee, (i)
paid in cash to the Grantee or (ii) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and held by the Company for
the account of the Grantee until such time. 
In the event that payment of Dividend Equivalents is to be deferred, the
Committee shall determine whether such Dividend Equivalents are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash.  If deferred Dividend
Equivalents are to be held in cash, there may be credited at the end of each
year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee, in its discretion,
may determine.  Payment of deferred
Dividend Equivalents in respect of Performance Shares (with interest accrued
thereon, if any), shall be made upon the lapsing of restrictions imposed on the
Performance Shares in respect to which the deferred Dividend Equivalents were
paid, and any Dividend Equivalents deferred (together with any interest accrued
thereon) in respect of any Performance Shares shall be forfeited upon the
forfeiture of such Performance Shares.

 

7

 

(d)                                  Delivery
of Shares.  Upon the satisfaction of
the performance goals on Performance Shares awarded hereunder, the Committee
shall cause a stock certificate to be delivered to the Grantee with respect to
such Performance Shares, free of all restrictions hereunder.  Alternatively, if specified in the Award
Agreement, the Committee may determine that earned Performance Shares be
conveyed to a Grantee in the form of Restricted Stock Units and/or an amount of
cash sufficient to satisfy anticipated tax obligations to be incurred in
connection with such Shares.

 

8.4  Non-transferability.  No Performance Awards
shall be transferable by the Grantee otherwise than by will or the laws of
descent and distribution.

 

8.5  Modification.  Subject to the terms of the Plan, the Committee
may modify outstanding Performance Awards; provided, however,
that no modification may be made with respect to Performance Awards held by
Executive Officers (such term is as defined in the Exchange Act).  Notwithstanding the foregoing, no
modification of a Performance Award shall materially adversely alter or
materially impair any rights or obligations under the Agreement without the
Grantee’s consent.

 

SECTION 9 — RESTRICTED STOCK UNITS

 

9.1  Grant. 
The Committee may grant to Eligible Individuals Awards
of Restricted Stock Units which shall be evidenced by an Agreement between the
Company and the Grantee.  Each Agreement
shall contain such restrictions, terms and conditions as the Committee may, in
its discretion, determine in accordance with the following provisions of this
Section 9.  A Restricted Stock Unit
shall represent the right to receive one Share upon lapse of the conditions
established in the grant.

 

9.2  Lapse of Restrictions.  Restrictions upon
Restricted Stock Units awarded hereunder shall lapse at such time or times and
on such conditions as the Committee may determine, which restrictions shall be
set forth in the Agreement evidencing the Award.  Upon such lapse, all Shares represented by such Restricted Stock
Unit shall vest and be payable immediately.

 

9.3  Dividend Equivalents.  At the time the Award of
Restricted Stock Units is granted, the Committee may, in its discretion,
determine that the payment to the Grantee of dividend equivalents declared or
paid on Shares by the Company shall be (i) deferred until the lapsing of the
restrictions imposed on such Restricted Stock Units and (ii) held by the
Company for the account of the Grantee until such time.  In the event that the dividend equivalents
are to be deferred, the Committee shall determine whether such dividends are to
be reinvested in Shares (which shall be held as additional Restricted Stock
Units) or held in cash.  If deferred
dividends are to be held in cash, there may be credited at the end of the year
(or portion thereof) interest on the amount of the account at the beginning of
the year at a rate per annum as the Committee, in its discretion, may
determine. Payment of deferred dividends in respect of Restricted Stock Units
(whether held in cash or as additional Restricted Stock Units), together with
interest accrued thereon, if any, shall be made upon the lapsing of
restrictions imposed on the Restricted Stock Units in respect of which the
deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Restricted Stock Units shall be
forfeited upon the forfeiture of such Restricted Stock Unit.

 

9.4  Units and Options for Non-employee
Directors.  Notwithstanding
anything to the contrary in the Plan, Restricted Stock Units and Options shall
be granted to Non-employee Directors of the Company in accordance with the
following provisions.  Each Non-employee
Director shall receive 2,500 Restricted Stock Units on the day of the Company’s
annual meeting for each year that the Plan is in effect.  At the election of each Non-employee
Director, Options in an amount equal to three times the number of Restricted
Stock Units paid, may be paid in place of the Restricted Stock Units.  The Options shall have a ten year term, an
exercise price equal to Fair Market Value on the date of payment and shall
become exercisable in one-third increments on the first, second and third
anniversaries of the date of payment. 
Restricted Stock Units shall vest immediately upon grant.  As of each date a dividend or other
distribution is paid or made on Shares, each Non-employee Director holding
Restricted Stock Units shall be credited with a number of additional Restricted
Stock Units equal to the product of (A) the dividend or other distribution paid
on one Share, multiplied by (B) the number of Restricted Stock Units held by
the Non-employee Director, divided by (C) the closing price of one Share on the
New York Stock Exchange on such date. 
Such additional Restricted Stock Units shall vest immediately.  In the event a Non-employee Director’s
service terminates, all Options shall

 

8

 

become immediately exercisable and remain exercisable through their
scheduled term.  Restricted Stock Units
are payable in shares upon termination of a Non-employee Director’s service on
the Board.

 

SECTION 10 — EFFECT OF A TERMINATION OF EMPLOYMENT

 

The Agreement evidencing the grant of each Option and
each Award shall set forth the terms and conditions applicable to such Option
or Award upon a termination or change in the status of the employment of the
Optionee or Grantee by the Company, a Subsidiary or a Division (including a
termination or change by reason of the sale of a Subsidiary or a Division), as
the Committee may, in its discretion, determine at the time the Option or Award
is granted or thereafter; provided, however, that the Committee
shall have no such discretion with respect to Restricted Stock Units granted to
Non-employee Directors pursuant to Section 9.4, the Agreements evidencing
which shall contain the provisions regarding termination described in such
Section.

 

SECTION 11 — ADJUSTMENT UPON CHANGES IN CAPITALIZATION

 

(a)                                  In
the event of a Change in Capitalization, the Committee shall conclusively
determine the appropriate adjustments, if any, to the (i) maximum number and
class of Shares or other stock or securities with respect to which Options or
Awards may be granted under the Plan or to any individual, and (ii) the number
and class of Shares or other stock or securities which are subject to
outstanding Options or Awards granted under the Plan, and the purchase price
therefor, if applicable; provided, however, that with respect to
Restricted Stock Units granted to Non-employee Directors pursuant to
Section 9.4, any such adjustments shall be made only as necessary to
maintain the proportionate interest of each Non-employee Director in Shares and
preserve, without exceeding, the value of such Restricted Stock Units.

 

(b)                                  Any
such adjustment in the Shares or other stock or securities subject to
outstanding Incentive Stock Options (including any adjustments in the purchase
price) shall be made in such manner as not to constitute a modification as
defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.

 

(c)                                  If,
by reason of a Change in Capitalization, a Grantee of an Award shall be
entitled to or an Optionee shall be entitled to exercise an Option with respect
to, new, additional or different shares of stock or securities, such new,
additional or different shares shall thereupon be subject to all of the
conditions, restrictions and performance criteria which were applicable to the
Shares subject to the Award or Option, as the case may be prior to such Change
in Capitalization.

 

(d)                                  The
Committee shall apply this Section 11 in a manner consistent with the
preservation of the Company’s tax deduction for the payment or exercise of
Awards under Section 162(m) of the Code.

 

SECTION 12
— TERMINATION
AND AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS

 

(a)                                  The
Plan shall terminate on the day preceding the tenth anniversary of the date of
its adoption by the Board and no Option or Award may be granted
thereafter.  The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan or any Option or Award; provided, however,
that:

 

(i)            No such amendment,
modification, suspension or termination shall materially impair or materially
adversely alter any Options or Awards theretofore granted under the Plan,
except with the consent of the Optionee or Grantee, nor shall any amendment,
modification, suspension or termination deprive any Optionee or Grantee of any
Shares which he or she may have acquired through or as a result of the Plan;
and

 

(ii)        To the extent
necessary to comply with Rule 16b-3 of the Exchange Act and the rules and
regulations promulgated thereunder, or to preserve the Company’s tax deduction
for the payment or exercise of Awards under Section 162(m) of the Code, no
amendment shall be effective unless approved by the stockholders of the Company
in accordance with applicable law and regulations.

 

9

 

(b)                                  Notwithstanding
the above, the Committee shall not have the right to modify any outstanding
Award to the extent such restriction is necessary to preserve the Company’s tax
deduction for the payment or exercise of Awards under Section 162(m) of
the Code.

 

SECTION 13 — NON-EXCLUSIVITY OF THE PLAN

 

The adoption of the Plan by the Board shall not be
construed as amending, modifying or rescinding any previously approved
incentive arrangement or as creating any limitations on the power of the Board
to adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.

 

SECTION 14 — LIMITATION OF
LIABILITY

 

As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall
be construed to:

 

(i)                                    give
any person any right to be granted an Option or Award other than at the sole
discretion of the Committee;

 

(ii)                                give
any person any rights whatsoever with respect to Shares except as specifically
provided in the Plan;

 

(iii)                            limit
in any way the right of the Company to terminate the employment of any person
at any time; or

 

(iv)                               be
evidence of any agreement or understanding, expressed or implied, that the
Company will employ any person at any particular rate of compensation or for
any particular period of time.

 

SECTION 15 — REGULATIONS AND
OTHER APPROVALS; GOVERNING LAW

 

15.1  Except as to matters of
federal law, this Plan and the rights of all persons claiming hereunder shall
be construed and determined in accordance with the laws of the State of
Delaware without giving effect to conflicts of law principles.

 

15.2  The obligation of the
Company to sell or deliver Shares with respect to Options and Awards granted
under the Plan shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee.

 

15.3  The Plan is intended to
comply with Rule 16b-3 promulgated under the Exchange Act and the Committee
shall interpret and administer the provisions of the Plan or any Agreement in a
manner consistent therewith.  Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.

 

15.4  The Board may make such
changes in the Plan or any Awards as may be necessary or appropriate to comply
with the rules and regulations of any government authority, or to obtain for
Eligible Individuals granted Incentive Stock Options any tax benefits under the
applicable provisions of the Code and regulations promulgated thereunder.

 

15.5  Each Option and Award is
subject to the requirement that, if at any time the Committee determines, in
its discretion, that the listing, registration or qualification of Shares
issuable pursuant to the Plan is required by any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option or Award or the issuance of Shares, no Options or
Awards shall be granted or payment made or Shares issued, in whole or in part,

 

10

 

unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the
Committee.

 

15.6  Notwithstanding anything
contained in the Plan or any Agreement to the contrary, in the event that the
disposition of Shares acquired pursuant to the Plan is not covered by a then
current registration statement under the Securities Act of 1933, as amended,
and is not otherwise exempt from such registration, such Shares shall be
restricted against transfer to the extent required by the Securities Act of
1933, as amended, and Rule 144 or other regulations thereunder.  The Committee may require any individual
receiving Shares pursuant to an Option or Award granted under the Plan, as a
condition precedent to receipt of such Shares, to represent and warrant to the
Company in writing that the Shares acquired by such individual are acquired
without a view to any distribution thereof and will not be sold or transferred
other than pursuant to an effective registration thereof under said Act or
pursuant to an exemption applicable under the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder.  The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.

 

15.7  Awards granted under the
Plan to persons which the Committee reasonably believes may be subject to
Section 162(m) of the Code will not be exercisable, and compensation under
the Plan will not be paid, unless and until any necessary shareholder approvals
shall have been obtained and the Committee has certified as to the attainment
of any applicable performance goals, in each case to the extent required under
said Section 162(m).

 

SECTION 16 — MISCELLANEOUS

 

16.1  Multiple Agreements.  The terms of each Option
or Award may differ from other Options or Awards granted under the Plan at the
same time, or at some other time.  The
Committee may also grant more than one Option or Award to a given Eligible
Individual during the term of the Plan in addition to Options or Awards
previously granted to that Eligible Individual.

 

16.2  Withholding of Taxes.

 

(a)                                  The
Company shall have the right to deduct from any distribution of cash to any
Optionee or Grantee, an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld (the
“Withholding Taxes”) with respect to any Option or Award.  If an Optionee or Grantee is to experience a
taxable event in connection with the receipt of Shares pursuant to an Option
exercise or payment of an Award, the Optionee or Grantee shall pay the
Withholding Taxes to the Company prior to the issuance, or release from escrow,
of such Shares.  In satisfaction of the
obligation to pay Withholding Taxes to the Company, the Optionee or Grantee may
make a written election, which may be accepted or rejected in the discretion of
the Committee, to have withheld a portion of the Shares then issuable to him or
her having an aggregate Fair Market Value, on the date preceding the date of
such issuance, equal to the Withholding Taxes, provided that the Committee
shall accept such an election in respect of an Optionee subject to
Section 16(b) of the Exchange Act only if such election complies with Rule
16b-3 under the Exchange Act.

 

(b)                                  If
an Optionee makes a disposition, within the meaning of Section 424(c) of
the Code and regulations promulgated thereunder, of any Share or Shares issued
to such Optionee pursuant to the exercise of an Incentive Stock Option within
the two-year period commencing on the day after the date of the grant or within
the one-year period commencing on the day after the date of transfer of such
Share or Shares to the Optionee pursuant to such exercise, the Optionee shall,
within ten (10) days of such disposition, notify the Company thereof, by
delivery of written notice to the Company at its principal executive office.

 

16.3  Non-transferability.  No Option, Stock
Appreciation Right, Performance Unit denominated in Stock or Restricted Stock
Unit granted hereunder shall be transferable by the Optionee or Grantee to whom
granted otherwise than by will or the laws of descent and distribution or
pursuant to a “qualified domestic relations order,” as defined by the Code or
title I of ERISA, or the rules thereunder, and an Award may be exercised during
the lifetime of such Optionee or Grantee only by the Optionee or Grantee, or
his or her guardian or legal representative. 
The terms of

 

11

 

such Award shall be final, binding and conclusive upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee
or Grantee.

 

16.4  Acceleration of Awards.  The Committee may
accelerate vesting, exercisability or lapse of restrictions on all or any
portion of any Award at any time, other than with respect to:

 

(a)                                  Awards
of Restricted Stock Units to Non-employee Directors pursuant to
Section 9.4, vesting of which may be accelerated only under such
circumstances as will not cause such persons to fail to be “disinterested
persons,” within the meaning of Rule 16b-3 under the Exchange Act; and

 

(b)                                  Awards
other than Options or Stock Appreciation Rights, to the extent that such
acceleration would jeopardize, under Section 162(m) of the Code, the
Company’s tax deduction otherwise available for the payment or exercise of the
Awards.

 

SECTION 17 — EFFECTIVE DATE

 

The effective date of the Plan shall be the date of
its adoption by the Board, subject only to (i) the approval by the affirmative
vote of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote at a meeting of stockholders duly held in
accordance with the applicable laws of the State of Delaware or (ii) subject to
any other such means of approval which shall satisfy the Exchange Act, within
twelve (12) months of such adoption.

 

SECTION 18 — DEFINITIONS

 

For purpose of the Plan:

 

18.1  “Agreement” means the written agreement
between the Company and an Optionee or Grantee or the written document
furnished to an Optionee or Grantee by the Company evidencing the grant of an
Option or Award and setting forth the terms and conditions thereof.

 

18.2  “Award” means a grant of
Incentive Stock Options, Non-qualified Stock Options, Restricted Stock,
Restricted Stock Units, Stock Appreciation Rights, Performance Awards or any or
all of them.

 

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

 

18.4  “Change in Capitalization”
means any increase or reduction in the number of Shares, or any change
(including, but not limited to, a change in value) in the Shares or exchange of
Shares for a different number or kind of shares or other securities of the
Company, by reason of a reclassification, recapitalization, merger,
consolidation, reorganization, spin-off, split-up, issuance of warrants or
rights or debentures, stock dividend, stock split or reverse stock split, cash
dividend, property dividend, combination or exchange of shares, repurchase of
shares, change in corporate structure or otherwise.

 

18.5  “Change in Control” shall
mean the occurrence during the term of the Plan of:

 

(a)                                  An
acquisition (other than directly from the Company) of any voting securities of
the Company (the “Voting Securities”) by any “Person” (as the term person is
used for purposes of Section 13(d) or 14(d) of the Exchange Act)
immediately after which such Person has “Beneficial Ownership” (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%)
or more of the combined voting power of the Company’s then outstanding Voting
Securities; provided, however, in determining whether a Change in
Control has occurred, Voting Securities which are acquired in a “Non-Control
Acquisition” (as hereinafter defined) shall not constitute an acquisition which
would cause a Change in Control.  A
“Non-Control Acquisition” shall mean an acquisition by (i) an employee
benefit plan (or a trust forming a part thereof or a trustee thereof acting
solely in its capacity as trustee) maintained by (A) the Company or
(B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is owned, directly or
indirectly, by the

 

12

 

Company (for purposes of this definition, a
“Subsidiary”), (ii) the Company or its Subsidiaries, or (iii) any
Person in connection with a “Non-Control Transaction” (as hereinafter defined).

 

(b)                                  The
individuals who, as of the effective date of the 1994 initial public trading in
Company Shares, are members of the Board (the “Incumbent Board”), ceasing for
any reason to constitute at least two-thirds of the members of the Board;
provided, however, that if the election, or nomination for election by the Company’s
common stockholders, of any new director was approved by a vote of at least
two-thirds of the Incumbent Board, such new director shall, for purposes of
this Plan, be considered as a member of the Incumbent Board; provided further,
however, that no individual shall be considered a member of the Incumbent Board
if such individual initially assumed office as a result of either an actual or
threatened “Election Contest” (as described in Rule 14a-11 promulgated under
the 1934 Act or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a ”Proxy
Contest”) including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or

 

(c)                                  Approval
by stockholders of the Company of:

 

(i)            A merger,
consolidation or reorganization involving the Company, unless such merger,
consolidation or reorganization is a “Non-Control Transaction”; i.e.,
meets each of the requirements described in (A), (B), and (C) below:

 

(A)  the stockholders of the
Company, immediately before such merger, consolidation or reorganization, own,
directly or indirectly immediately following such merger, consolidation or
reorganization, at least seventy percent (70%) of the combined voting power of
the outstanding voting securities of the corporation resulting from such merger
or consolidation or reorganization (the “Surviving Corporation”) in
substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization;

 

(B)  the individuals who were
members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization constitute
at least two-thirds of the members of the board of directors of the Surviving
Corporation immediately following the consummation of such merger,
consolidation or reorganization; and

 

(C)  no Person other than the
Company, any Subsidiary, any employee benefit plan (or any trust forming a part
thereof or a trustee thereof acting solely in its capacity as trustee)
maintained by the Company, the Surviving Corporation, or any Subsidiary, or any
Person who, immediately prior to such merger, consolidation or reorganization
had Beneficial Ownership of thirty percent (30%) or more of the then
outstanding Voting Securities has Beneficial Ownership of thirty percent (30%)
or more of the combined voting power of the Surviving Corporation’s then
outstanding voting securities immediately following the consummation of such
merger, consolidation or reorganization.

 

(ii)        A complete liquidation
or dissolution of the Company; or

 

(iii)    An agreement for the sale
or other disposition of all or substantially all of the assets of the Company
to any Person (other than a transfer to a Subsidiary).

 

Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the “Subject Person”)
acquired Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares Beneficially Owned by
the Subject Persons, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of Voting
Securities by the Company, and after such share acquisition by the Company, the
Subject Person becomes the Beneficial Owner of any additional Voting Securities
which increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control shall occur.

 

13

 

18.6  “Code” means the Internal
Revenue Code of 1986, as amended.

 

18.7  “Committee” means a committee consisting of
at least three (3) Disinterested Directors appointed by the Board to administer
the Plan and to perform the functions set forth herein.  The authority of the Committee to administer
the Plan may be delegated to a subcommittee composed exclusively of two or more
individuals who are “outside directors,” within the meaning of
Section 162(m) of the Code, and proposed or final Treasury Regulations
issued thereunder, to the extent required to satisfy the provisions of that
Section; provided, however, that at all times such subcommittee
shall satisfy the applicable requirements of Rule 16b-3 under the Exchange
Act.  References to the Committee herein
refer to such subcommittee to the extent of such a delegation.

 

18.8  “Company” means Lehman
Brothers Holdings Inc.

 

18.9  “Disability” means a
physical or mental infirmity which impairs the Optionee’s or Grantee’s ability
to perform substantially his or her duties for a period of one hundred eighty
(180) consecutive days.

 

18.10  “Disinterested Director”
means a director of the Company who is “disinterested” within the meaning of
Rule 16b-3 under the Exchange Act.

 

18.11  “Dividend Equivalents” has
the meaning ascribed to it in Section 8.3(c).

 

18.12  “Division” means any of
the operating units or divisions of the Company designated as a Division by the
Committee.

 

18.13  “Eligible Individual”
means any officer, salaried or commission employee, consultant and Non-employee
Director of the Company or a Subsidiary, designated by the Committee as
eligible to receive Awards subject to the conditions set forth herein.

 

18.14  “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.

 

18.15  “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

18.16  “Fair Market Value” on any
date means the closing price of the Shares on such date on the principal
national securities exchange on which such Shares are listed or admitted to
trading (or, if such exchange is not open on such date, the immediately
preceding date on which such exchange is open), the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as
quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published bid or asked quotations with respect to Shares on
such date, the Fair Market Value shall be the value established by the
Committee in good faith and, in the case of an Incentive Stock Option, in
accordance with Section 422 of the Code. 
Notwithstanding the foregoing, for Awards and Options granted before
the  commencement of initial 1994
regular way public trading in Shares, Fair Market Value of the Shares means the
closing price on the first day on which initial 1994 regular way public trading
in the Shares commences.

 

18.17  “Grantee” means a person
to whom an Award has been granted under the Plan.

 

18.18  “Incentive Stock Option”
means an Option satisfying the requirements of Section 422 of the Code and
designated by the Committee as an Incentive Stock Option.

 

18.19  “Non-employee Director”
means a director of the Company who is not an employee of the Company or any
Subsidiary.

 

18.20  “Non-qualified Stock
Option” means an Option which is not an Incentive Stock Option.

 

18.21  “Option” means an
Incentive Stock Option, a Non-qualified Stock Option, or both of them, as the
context requires.

 

18.22  “Optionee” means a person
to whom an Option has been granted under the Plan.

 

14

 

18.23  “Parent” means any
corporation which is a parent corporation (within the meaning of
Section 424(e) of the Code) with respect to the Company.

 

18.24  “Performance Awards” means Performance
Units, Performance Shares or either or both of them.

 

18.25  “Performance Cycle” means
the time period specified by the Committee at the time a Performance Award is
granted during which the performance of the Company, a Subsidiary or a Division
will be measured.

 

18.26  “Performance Shares” means
Shares issued or transferred to an Eligible Individual under Section 8.3
hereof.

 

18.27  “Performance Unit” means
Performance Units granted to an Eligible Individual under Section 8.2
hereof.

 

18.28  “Plan” means the Lehman
Brothers Holdings Inc. 1994 Management Ownership Plan.

 

18.29  “Restricted Stock” means
Shares issued or transferred to an Eligible Individual pursuant to
Section 7 hereof.

 

18.30  “Restricted Stock Unit”
means an Award granted to an Eligible Individual to receive payment upon the
lapse of all restrictions in the form of Shares as provided for in
Section 9 hereof.

 

18.31  “Shares” means the common
stock, par value $.10 per share, of the Company.

 

18.32  “Stock Appreciation Right”
means a right to receive all or some portion of the increase in the value of
the Shares as provided in Section 6 hereof.

 

18.33  “Subsidiary” means any
corporation which is a subsidiary corporation (within the meaning of
Section 424(f) of the Code) with respect to the Company.

 

18.34  “Successor Corporation”
means a corporation, or a parent or subsidiary thereof within the meaning of
Section 424(a) of the Code, which issues or assumes a stock option in a
transaction to which Section 424(a) of the Code applies.

 

18.35  “Ten-Percent Stockholder”
means an Eligible Individual, who, at the time an Incentive Stock Option is to
be granted to him or her, owns (within the meaning of Section 422(b)(6) of
the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company, or of a Parent or a
Subsidiary.

 

15

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