Document:

ex10_1.htm

     

    Exhibit
      10.1

     

    Adopted
      May 4, 2007

    
 

     

    SECURITY
      CAPITAL ASSURANCE LTD
AMENDED AND RESTATED

    ANNUAL
      INCENTIVE COMPENSATION PLAN

     

    SECTION
      1.           Purpose.

     

    Security
      Capital Assurance Ltd (the “Company”) has established this Annual Incentive
      Compensation Plan (the “Plan”) in order to provide the Company with an
      additional means to attract and retain executive officers by providing them
      with
      an opportunity to earn annual incentive compensation, contingent on the
      achievement of certain performance goals, as an incentive and reward for their
      contributions to the growth, profitability and success of the Company from
      year
      to year.

     

    The
      Company intends that compensation payable under the Plan will constitute
“qualified performance-based compensation” under Section 162(m) of the Code (as
      hereinafter defined).  The Plan shall be interpreted and construed in
      a manner consistent with such intent.

     

    SECTION
      2.          Definitions.

     

    2.1.  “Award”
      means the amount of incentive compensation to which a Participant is entitled
      for each Plan Year as determined by the Committee pursuant to Sections 4 and
      5
      of the Plan.

     

    2.2.  “Board”
      means the Company’s Board of Directors.

     

    2.3.  “Code”
      means the Internal Revenue Code of 1986, as amended, including applicable
      regulations thereunder.

     

    2.4.  “Committee”
      means the Compensation Committee of the Board, which shall be comprised solely
      of at least two persons who, to the extent required to satisfy the exception
      for
      performance-based compensation under Section 162(m) of the Code, are “outside
      directors” within the meaning of such section.  However, no act of the
      Committee shall be void or deemed to be without authority due to the failure
      of
      a member to meet any qualification requirement at the time the action is
      taken.

     

    2.5.  “Determination
      Date” means the day not later than the 90th day of
      a Plan Year
      or such other date by which the Committee may establish performance goals for
      a
      Plan Year without causing an Award to be treated as other than performance-based
      compensation under Section 162(m) of the Code.

     

    2.6.  “Eligible
      Employee” means any executive officer (as that term is defined in Rule 3b-7
      under the Securities Exchange Act of 1934, as amended) or other key executive
      of
      the Company or its subsidiaries.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    2.7.  “Participant”
      means an Eligible Employee who has been selected by the Committee to potentially
      receive an Award for a given Plan Year, subject to achievement of one or more
      performance goals and satisfaction of other conditions under the Plan or
      specified by the Committee.

     

    2.8.  “Plan
      Year” means the fiscal year of the Company or such other period established by
      the Committee.

     

    SECTION
      3.           Administration.

     

    The
      Plan
      shall be administered by the Committee.  The Committee shall have the
      authority to establish performance goals for the awarding of Awards for each
      Plan Year; to determine the Participants for each Plan Year; to determine
      whether performance goals for each Plan Year have been achieved; to authorize
      payment of Awards under the Plan, including determining the form and timing
      of
      payment and any conditions (such as further service requirements) that will
      apply to such payment; to adopt, alter and repeal such administrative rules,
      guidelines and practices governing the Plan as it shall deem advisable; and
      to
      interpret the terms and provisions of the Plan.  All determinations
      made by the Committee with respect to the Plan and Awards thereunder shall
      be
      final and binding on all persons, including the Company and all Eligible
      Employees.

     

    SECTION
      4.           Determination
      of Awards.

     

    The
      amount of a Participant’s Award for any Plan Year shall be an amount not greater
      than $3,000,000, which amount shall be determined based on the achievement
      of
      one or more performance goals established by the Committee with respect to
      a
      Participant.  Performance goals may vary as among Participants and
      shall be based upon one or more of the following criteria, as the Committee
      may
      deem appropriate:  appreciation in value of the Company’s common
      stock; total shareholder return; earnings per share; operating income; net
      income; pretax earnings; pretax earnings before interest, depreciation and
      amortization; pro forma net income; return on equity; return on designated
      assets; return on capital; economic value created or economic profit; earnings
      per share and/or growth thereof; book value; adjusted book value; revenues;
      expenses (including expense ratio); loss ratio; new business production; capital
      markets and/or acquisition transactions; investment programs initiated;
      operating profit margin; operating cash flow; free cash flow; cash flow return
      on investment; operating margin; and net profit margin.  Performance
      goals may be expressed as absolute goals, goals compared to past performance,
      goals compared to the performance of a published or special index or benchmark
      deemed applicable by the Committee, or otherwise as determined by the
      Committee.  The performance goals may be determined by reference to
      the performance of the Company and/or a subsidiary or affiliate of the Company,
      or of a division or unit of any of the foregoing.  No later than the
      Determination Date for a Plan Year, the Committee shall designate (i) the
      Participants for such Plan Year, (ii) the performance goals for such Plan Year
      and (iii) the corresponding Award amounts payable to each Participant under
      the
      Plan upon achievement of such performance goals and satisfaction of other
      conditions under the Plan or specified by the Committee.  So long as
      an Award is fully contingent upon a measure of performance as specified in
      this
      Section 4, the Committee may consider other measures of performance or other
      circumstances in its exercise of discretion (“negative discretion”) to reduce
      the final Award.  The Committee may specify at the time
      an

     

    
      
        
        

      

      
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    Award
      opportunity is authorized or at any other time such other performance measures
      or other terms upon which it will exercise negative discretion.

     

    SECTION
      5.           Payment
      of Award.

     

    An
      Award
      (if any) to a Participant for a Plan Year shall be paid following the end of
      the
      Plan Year; provided, however, that the Committee shall have first
      certified in writing (i) that the applicable performance goal or goals with
      respect to such Participant for such Plan Year were satisfied and the level
      of
      the attainment of such goal or goals, (ii) that all other material terms upon
      which payment of the Award is conditioned were satisfied and (iii) the amount
      of
      each Participant’s Award.  The Committee, unless it determines
      otherwise, may exercise negative discretion to reduce the amount that would
      otherwise be payable under an Award by reason of the applicable performance
      goal’s having been achieved.  Payments will be in cash, subject to any
      conditions the Committee may impose; provided, however, that the
      Committee may also provide that an Award will be paid in whole or in part in
      shares of the Company’s common shares or other Company common share-based
      awards, including restricted shares, restricted share units or other share
      awards, if and to the extent that shares are available under a separate equity
      compensation plan of the Company and permitted to be granted in connection
      with
      such incentive awards, in any case with an aggregate fair market value at the
      time of payment not to exceed $3,000,000.   If a Participant dies
      after the end of a Plan Year but before receiving payment of any Award, the
      amount of such Award shall be paid to a designated beneficiary or, if no
      beneficiary has been designated, to the Participant’s estate, in the form of a
      lump sum payment in cash as soon as practicable after the Award for the Plan
      Year has been determined and certified in accordance with this Section
      5.  Notwithstanding the foregoing, the Committee may determine, by
      separate agreement with any Participant or otherwise, that all or a portion
      of
      an Award for a Plan Year shall be payable to the Participant upon the
      Participant’s death, disability or termination of employment with the Company or
      its subsidiaries, or upon a change of control of the Company, during the Plan
      Year.

     

    SECTION
      6.           Non-transferability.

     

    No
      Award
      or rights under this Plan may be transferred or assigned other than by will
      or
      by the laws of descent and distribution.

     

    SECTION
      7.           Amendments
      and Termination.

     

    The
      Board
      may terminate the Plan at any time and may amend it from time to time, provided,
      however, that no termination or amendment of the Plan shall materially and
      adversely affect the rights of a Participant or a beneficiary with respect
      to a
      previously certified Award except with the written consent of such Participant
      or beneficiary.  Amendments to the Plan may be made without
      shareholder approval except as required to satisfy Section 162(m) of the
      Code.

     

    SECTION
      8.  General
      Provisions.

     

    8.1.  Nothing
      set forth in this Plan shall prevent the Board or the Committee from adopting
      other or additional compensation arrangements.  Neither the adoption
      of the Plan or any Award hereunder shall confer upon any person any right to
      continued employment.

     

    8.2.  No
      member
      of the Board or the Committee, nor any officer or employee of the Company acting
      on behalf of the Board or the Committee, shall be personally liable for
      any

     

    
      
        
        

      

      
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    action,
      determination or interpretation taken or made with respect to the Plan, and
      all
      members of the Board or the Committee and all officers or employees of the
      Company acting on their behalf shall, to the extent permitted by law, be fully
      indemnified and protected by the Company in respect of any such action,
      determination or interpretation.

     

    8.3.  The
      Committee is authorized to make adjustments in the terms and conditions of,
      and
      the criteria included in, the authorization of Awards and performance goals
      in
      recognition of unusual or nonrecurring events, including stock splits, stock
      dividends, reorganizations, mergers, consolidations, large, special and
      non-recurring dividends, and acquisitions and dispositions of businesses and
      assets, affecting the Company and its subsidiaries or any business unit thereof,
      or the financial statements of the Company or any subsidiary, or in response
      to
      changes in applicable laws, regulations, accounting principles, tax rates and
      regulations or business conditions or in view of the Committee’s assessment of
      the business strategy of the Company, any subsidiary or affiliate or business
      unit thereof, performance of comparable organizations, economic and business
      conditions, and any other circumstances deemed relevant; provided,
      however, that no such adjustment shall be authorized or made if and to the
      extent that the existence or exercise of such authority would cause an Award
      potentially grantable hereunder to fail to qualify as “performance-based
      compensation” under Section 162(m) of the Code.

     

    8.4.  The
      Company shall deduct from any payment in settlement of a Participant’s Award or
      other payment to the Participant any Federal, state, or local withholding or
      other tax or charge which the Company is then required to deduct under
      applicable law with respect to the Award.

     

    8.5.  The
      validity, construction, and effect of the Plan and any rules and regulations
      or
      document hereunder shall be determined in accordance with the laws (including
      those governing contracts) of New York, without giving effect to principles
      of
      conflicts of laws.

     

    SECTION
      9.           Effective
      Date of Plan; Shareholder Approval

     

    The
      original plan became effective as of August 1, 2006.  The Company
      currently intends that this Amended and Restated Annual Incentive Compensation
      Plan will be submitted for approval by its shareholders prior to the first
      regularly scheduled meeting of shareholders of the Company that occurs more
      than
      twelve months after consummation of the initial public offering of the common
      shares of the Company.  The Company also currently intends that the
      Plan will subsequently be submitted for reapproval of shareholders no later than
      the first meeting of shareholders that occurs in the fifth year following the
      year in which shareholders of the Company previously approved the
      Plan.

     

    

    
      
        
        

      

      
        -4-ex10_2.htm

     

    Exhibit
      10.2

     

     

    Adopted
      May 4, 2007

    
 

    SECURITY
      CAPITAL ASSURANCE LTD

    AMENDED
      AND RESTATED

    2006
      LONG TERM INCENTIVE AND SHARE AWARD PLAN

    

    

    
      	
              1.  

            	
              Purposes.

            

    

     

    The
      purposes of the Amended and Restated 2006 Long Term Incentive and Share Award
      Plan are to advance the interests of Security Capital Assurance Ltd and its
      shareholders by providing a means to attract, retain, and motivate employees,
      consultants and directors of the Company, its subsidiaries and affiliates,
      to
      provide for competitive compensation opportunities, to encourage long term
      service, to recognize individual contributions and reward achievement of
      performance goals, and to promote the creation of long term value for
      shareholders by aligning the interests of such persons with those of
      shareholders.

     

    
      	
              2.  

            	
              Definitions.

            

    

     

    For
      purposes of the Plan, the following terms shall be defined as set forth
      below:

     

    (a)  “Affiliate”
      means any entity other than the Company and its Subsidiaries that is designated
      by the Board or the Committee as a participating employer under the Plan;
provided, however, that the Company directly or indirectly owns at
      least 20% of the combined voting power of all classes of stock of such entity
      or
      at least 20% of the ownership interests in such entity.

     

    (b)  “Award”
      means any Option, SAR, Restricted Share, Restricted Share Unit, Performance
      Share, Performance Unit, Dividend Equivalent, or Other Share-Based Award granted
      to an Eligible Person under the Plan.

     

    (c)  “Award
      Agreement” means any written agreement, contract, or other instrument or
      document evidencing an Award.

     

    (d)  “Beneficiary”
      means the person, persons, trust or trusts which have been designated by an
      Eligible Person in his or her most recent written beneficiary designation filed
      with the Company to receive the benefits specified under this Plan upon the
      death of the Eligible Person, or, if there is no designated Beneficiary or
      surviving designated Beneficiary, then the person, persons, trust or trusts
      entitled by will or the laws of descent and distribution to receive such
      benefits.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -2-

      

    

    

     

    (f)  “Code”
      means the Internal Revenue Code of 1986, as amended from time to
      time.  References to any provision of the Code shall be deemed to
      include successor provisions thereto and regulations thereunder.

     

    (g)  “Committee”
      means the Compensation Committee of the Board, or such other Board committee
      (which may include the entire Board) as may be designated by the Board to
      administer the Plan; provided, however, that, unless otherwise
      determined by the Board, the Committee shall consist of two or more directors
      of
      the Company, each of whom is a “non-employee director” within the meaning of
      Rule 16b-3 under the Exchange Act, to the extent applicable, and each of whom
      is
      an “outside director” within the meaning of Section 162(m) of the Code, to
      the extent applicable; provided, further, that the mere fact that
      the Committee shall fail to qualify under either of the foregoing requirements
      shall not invalidate any Award made by the Committee which Award is otherwise
      validly made under the Plan.

     

    (h)  “Company”
      means Security Capital Assurance Ltd, a corporation organized under the laws
      of
      Bermuda, or any successor corporation.

     

    (i)  “Director”
      means a member of the Board who is not an employee of the Company, a Subsidiary
      or an Affiliate.

     

    (j)  “Dividend
      Equivalent” means a right, granted under Section 5(g), to receive cash, Shares,
      or other property equal in value to dividends paid with respect to a specified
      number of Shares.  Dividend Equivalents may be awarded on a
      free-standing basis or in connection with another Award, and may be paid
      currently or on a deferred basis.

     

    (k)  “Eligible
      Person” means (i) an employee or consultant of the Company, a Subsidiary or an
      Affiliate, including any director who is an employee, or (ii) a
      Director.  Notwithstanding any provisions of this Plan to the
      contrary, an Award may be granted to an employee, consultant or Director, in
      connection with his or her hiring or retention prior to the date the employee,
      consultant or Director first performs services for the Company, a Subsidiary
      or
      an Affiliate; provided, however, that any such Award shall not
      become vested or exercisable prior to the date the employee, consultant or
      Director first performs such services.

     

    (l)  “Exchange
      Act” means the Securities Exchange Act of 1934, as amended from time to
      time.  References to any provision of the Exchange Act shall be deemed
      to include successor provisions thereto and regulations thereunder.

     

    (m)  “Fair
      Market Value” means, with respect to Shares or other property, the fair market
      value of such Shares or other property determined by such methods or procedures
      as shall be established from time to time by the Committee.  If the
      Shares are listed on any established stock exchange or a national market system,
      unless otherwise determined by the Committee in good faith, the Fair Market
      Value of Shares shall mean the mean between the high

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -3-

      

    

    and
      low
      selling prices per Share on the date (or, if the Shares were not traded on
      that
      day, the next preceding day that the Shares were traded) on the principal
      exchange or market system on which the Shares are traded, as such prices are
      officially quoted on such exchange.

     

    (n)  “ISO”
      means any Option intended to be and designated as an incentive stock option
      within the meaning of Section 422 of the Code.

     

    (o)  “NQSO”
      means any Option that is not an ISO.

     

    (p)  “Option”
      means a right, granted under Section 5(b), to purchase Shares.

     

    (q)  “Other
      Share-Based Award” means a right, granted under Section 5(h), that relates to or
      is valued by reference to Shares.

     

    (r)  “Participant”
      means an Eligible Person who has been granted an Award under the
      Plan.

     

    (s)  “Performance
      Share” means a performance share granted under Section 5(f).

     

    (t)  “Performance
      Unit” means a performance unit granted under Section 5(f).

     

    (u)  “Plan”
      means this Amended and Restated 2006 Long Term Incentive and Share Award
      Plan.

     

    (v)  “Restricted
      Shares” means an Award of Shares under Section 5(d) that may be subject to
      certain restrictions and to a risk of forfeiture.

     

    (w)  “Restricted
      Share Unit” means a right, granted under Section 5(e), to receive Shares or cash
      at the end of a specified deferral period.

     

    (x)  “Rule
      16b-3” means Rule 16b-3, as from time to time in effect and applicable to the
      Plan and Participants, promulgated by the Securities and Exchange Commission
      under Section 16 of the Exchange Act.

     

    (y)  “SAR”
or
      “Share Appreciation Right” means the right, granted under Section 5(c), to be
      paid an amount measured by the difference between the exercise price of the
      right and the Fair Market Value of Shares on the date of exercise of the right,
      with payment to be made in cash, Shares, or property as specified in the Award
      or determined by the Committee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
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    (z)  “Shares”
      means common shares, $0.01 par value per share, of the Company, and such other
      securities as may be substituted for Shares pursuant to Section 4(c)
      hereof.

     

    (aa)  “Subsidiary”
      means any corporation (other than the Company) in an unbroken chain of
      corporations beginning with the Company if each of the corporations (other
      than
      the last corporation in the unbroken chain) owns shares possessing 50% or more
      of the total combined voting power of all classes of stock in one of the other
      corporations in the chain.

     

    (bb)  “Termination
      of Service” means the termination of the Participant’s employment, consulting
      services or directorship with the Company, its Subsidiaries and its Affiliates,
      as the case may be.  A Participant employed by a Subsidiary of the
      Company or one of its Affiliates shall also be deemed to incur a Termination
      of
      Service if the Subsidiary of the Company or Affiliate ceases to be such a
      Subsidiary or an Affiliate, as the case may be, and the Participant does not
      immediately thereafter become an employee or director of, or a consultant to,
      the Company, another Subsidiary of the Company or an
      Affiliate.  Temporary absences from employment because of illness,
      vacation or leave of absence and transfers among the Company and its
      Subsidiaries and Affiliates shall not be considered a Termination of
      Service.

     

    
      	
              3.  

            	
              Administration.

            

    

     

    (a)  Authority
      of the Committee.  The Plan shall be administered by the
      Committee, and the Committee shall have full and final authority to take the
      following actions, in each case subject to and consistent with the provisions
      of
      the Plan:

     

    (i)  to
      select
      Eligible Persons to whom Awards may be granted;

     

    (ii)  to
      designate Affiliates;

     

    (iii)  to
      determine the type or types of Awards to be granted to each Eligible
      Person;

     

    (iv)  to
      determine the type and number of Awards to be granted, the number of Shares
      to
      which an Award may relate, the terms and conditions of any Award granted under
      the Plan (including, but not limited to, any exercise price, grant price, or
      purchase price, any restriction or condition, any schedule for lapse of
      restrictions or conditions relating to transferability or forfeiture,
      exercisability, or settlement of an Award, and waiver or accelerations thereof,
      and waivers of performance conditions relating to an Award, based in each case
      on such considerations as the Committee shall determine), and all other matters
      to be determined in connection with an Award;

     

    (v)  to
      determine whether, to what extent, and under what circumstances an Award may
      be
      settled, or the exercise price of an Award may be paid, in cash,
      Shares,

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -5-

      

    

    other
      Awards, or other property, or an Award may be canceled, forfeited, exchanged,
      or
      surrendered;

     

    (vi)  to
      determine whether, to what extent, and under what circumstances cash, Shares,
      other Awards, or other property payable with respect to an Award will be
      deferred either automatically, at the election of the Committee, or at the
      election of the Eligible Person;

     

    (vii)  to
      prescribe the form of each Award Agreement, which need not be identical for
      each
      Eligible Person;

     

    (viii)  to
      adopt,
      amend, suspend, waive, and rescind such rules and regulations and appoint such
      agents as the Committee may deem necessary or advisable to administer the
      Plan;

     

    (ix)  to
      correct any defect or supply any omission or reconcile any inconsistency in
      the
      Plan and to construe and interpret the Plan and any Award, rules and
      regulations, Award Agreement, or other instrument hereunder;

     

    (x)  to
      accelerate the exercisability or vesting of all or any portion of any Award
      or
      to extend the period during which an Award is exercisable;

     

    (xi)  to
      determine whether uncertificated Shares may be used in satisfying Awards and
      otherwise in connection with the Plan; and

     

    (xii)  to
      make
      all other decisions and determinations as may be required under the terms of
      the
      Plan or as the Committee may deem necessary or advisable for the administration
      of the Plan.

     

    (b)  Manner
      of Exercise of Committee Authority.  The Committee shall have sole
      discretion in exercising its authority under the Plan.  Any action of
      the Committee with respect to the Plan shall be final, conclusive, and binding
      on all persons, including the Company, Subsidiaries, Affiliates, Eligible
      Persons, any person claiming any rights under the Plan from or through any
      Eligible Person, and shareholders.  The express grant of any specific
      power to the Committee, and the taking of any action by the Committee, shall
      not
      be construed as limiting any power or authority of the
      Committee.   The Committee may delegate to other members of the
      Board or officers or managers of the Company or any Subsidiary or Affiliate
      the
      authority, subject to such terms as the Committee shall determine, to perform
      administrative functions and, with respect to Awards granted to persons not
      subject to Section 16 of the Exchange Act, to perform such other functions
      as
      the Committee may determine, to the extent permitted under Rule 16b-3 (if
      applicable) and applicable law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -6-

      

    

    

     

    (c)  Limitation
      of Liability.  Each member of the Committee shall be entitled to,
      in good faith, rely or act upon any report or other information furnished to
      him
      or her by any officer or other employee of the Company or any Subsidiary or
      Affiliate, the Company’s independent certified public accountants, or other
      professional retained by the Company to assist in the administration of the
      Plan.  No member of the Committee, and no officer or employee of the
      Company acting on behalf of the Committee, shall be personally liable for any
      action, determination, or interpretation taken or made in good faith with
      respect to the Plan, and all members of the Committee and any officer or
      employee of the Company acting on their behalf shall, to the extent permitted
      by
      law, be fully indemnified and protected by the Company with respect to any
      such
      action, determination, or interpretation.

     

    (d)  Limitation
      on Committee’s Discretion.  Anything in this Plan to the contrary
      notwithstanding, in the case of any Award which is intended to qualify as
“performance-based compensation” within the meaning of Section 162(m)(4)(C) of
      the Code, if the Award Agreement so provides, the Committee shall have no
      discretion to increase the amount of compensation payable under the Award to
      the
      extent such an increase would cause the Award to lose its qualification as
      such
      performance-based compensation.

     

    (e)  No
      Option or SAR Repricing Without Shareholder Approval.  Except as
      provided in the first sentence of Section 4(c) hereof relating to certain
      antidilution adjustments, unless the approval of shareholders of the Company
      is
      obtained, Options and SARs issued under the Plan shall not be amended to lower
      their exercise price, Options and SARs issued under the Plan will not be
      exchanged for other Options or SARs with lower exercise prices, and no other
      action shall be taken with respect to Options or SARs that would be treated
      as a
      repricing under the rules of the principal stock exchange on which the Shares
      are listed.

     

    (f)  Limitation
      on Committee’s Authority under 409A.  Anything in this Plan to the
      contrary notwithstanding, the Committee’s authority to modify outstanding Awards
      shall be limited to the extent necessary so that the existence of such authority
      does not (i) cause an Award that is not otherwise deferred compensation subject
      to Section 409A of the Code to become deferred compensation subject to Section
      409A of the Code or (ii) cause an Award that is otherwise deferred compensation
      subject to Section 409A of the Code to fail to meet the requirements prescribed
      by Section 409A of the Code.

     

    
      	
              4.  

            	
              Shares
                Subject to the Plan.

            

    

     

    (a)  Subject
      to adjustment as provided in Section 4(c) hereof, the total number of Shares
      reserved for issuance in connection with Awards under the Plan shall be
      6,598,182.  No Award may be granted if the number of Shares to which
      such Award relates, when added to the number of Shares previously issued under
      the Plan, exceeds the number of Shares reserved under the applicable provisions
      of the preceding sentence.  If any Awards are forfeited, canceled,
      terminated, exchanged or surrendered or such Award is settled in cash
      or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -7-

      

    

    otherwise
      terminates without a distribution of Shares to the Participant, any Shares
      counted against the number of Shares reserved and available under the Plan
      with
      respect to such Award shall, to the extent of any such forfeiture, settlement,
      termination, cancellation, exchange or surrender, again be available for Awards
      under the Plan.  Upon the exercise of any Award granted in tandem with
      any other Awards, such related Awards shall be canceled to the extent of the
      number of Shares as to which the Award is exercised.

     

    (b)  Subject
      to adjustment as provided in Section 4(c) hereof, the maximum number of Shares
      (i) with respect to which Options or SARs may be granted during a calendar
      year to any Eligible Person under this Plan shall be 500,000 Shares, and
      (ii) with respect to which Performance Shares, Performance Units,
      Restricted Shares or Restricted Share Units intended to qualify as
      performance-based compensation within the meaning of Section 162(m)(4)(C)
      of the Code may be granted during a calendar year to any Eligible Person under
      this Plan
      shall be 500,000 Shares.

     

    (c)  In
      the
      event that the Committee shall determine that any dividend in Shares,
      recapitalization, Share split, reverse split, reorganization, merger,
      consolidation, spin-off, combination, repurchase, share exchange, extraordinary
      distribution or other similar corporate transaction or event, affects the Shares
      such that an adjustment is appropriate in order to prevent dilution or
      enlargement of the rights of Eligible Persons under the Plan, then the Committee
      shall make such equitable changes or adjustments as it deems appropriate and,
      in
      such manner as it may deem equitable, (i) adjust any or all of (x) the number
      and kind of shares which may thereafter be issued under the Plan, (y) the number
      and kind of shares, other securities or other consideration issued or issuable
      in respect of outstanding Awards, and (z) the exercise price, grant price,
      or
      purchase price relating to any Award, or (ii) provide for a distribution of
      cash
      or property in respect of any Award; provided, however, in each
      case that, with respect to ISOs, such adjustment shall be made in accordance
      with Section 424(a) of the Code, unless the Committee determines otherwise;
      provided further, however, that no adjustment shall be made pursuant to
      this Section 4(c) that causes any Award that is not otherwise deferred
      compensation subject to Section 409A of the Code to be treated as deferred
      compensation pursuant to Section 409A of the Code.  In addition, the
      Committee is authorized to make adjustments in the terms and conditions of,
      and
      the criteria and performance objectives, if any, included in, Awards in
      recognition of unusual or non-recurring events (including, without limitation,
      events described in the preceding sentence) affecting the Company or any
      Subsidiary or Affiliate or the financial statements of the Company or any
      Subsidiary or Affiliate, or in response to changes in applicable laws,
      regulations, or accounting principles; provided, however, that, if
      an Award Agreement specifically so provides, the Committee shall not have
      discretion to increase the amount of compensation payable under the Award to
      the
      extent such an increase would cause the Award to lose its qualification as
      performance-based compensation for purposes of Section 162(m)(4)(C) of the
      Code
      and the regulations thereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -8-

      

    

    

     

    (d)  Any
      Shares distributed pursuant to an Award may consist, in whole or in part, of
      authorized and unissued Shares or treasury Shares including Shares acquired
      by
      purchase in the open market or in private transactions.

     

    
      	
              5.  

            	
              Specific
                Terms of Awards.

            

    

     

    (a)  General.  Awards
      may be granted on the terms and conditions set forth in this Section
      5.  In addition, the Committee may impose on any Award or the exercise
      thereof, at the date of grant or thereafter (subject to Section 9(d)), such
      additional terms and conditions, not inconsistent with the provisions of the
      Plan, as the Committee shall determine, including terms regarding forfeiture
      of
      Awards or continued exercisability of Awards in the event of Termination of
      Service by the Eligible Person.

     

    (b)  Options.  The
      Committee is authorized to grant Options, which may be NQSOs or ISOs, to
      Eligible Persons on the following terms and conditions:

     

    (i)  Exercise
      Price.  The exercise price per Share purchasable under an Option
      shall be determined by the Committee; provided, however, that the
      exercise price per Share of an Option shall not be less than the Fair Market
      Value of a Share on the date of grant of the Option.  The Committee
      may, without limitation, set an exercise price that is based upon achievement
      of
      performance criteria if deemed appropriate by the Committee.

     

    (ii)  Option
      Term.  The term of each Option shall be determined by the
      Committee; provided, however, that such term shall not be longer
      than ten years from the date of grant of the Option.

     

    (iii)  Time
      and Method of Exercise.  The Committee shall determine at the date
      of grant or thereafter the time or times at which an Option may be exercised
      in
      whole or in part (including, without limitation, upon achievement of performance
      criteria if deemed appropriate by the Committee), the methods by which such
      exercise price may be paid or deemed to be paid (including, without limitation,
      broker-assisted exercise arrangements), the form of such payment (including,
      without limitation, cash, Shares or other property), and the methods by which
      Shares will be delivered or deemed to be delivered to Eligible
      Persons.

     

    (iv)  Early
      Exercise.  The Committee may provide at the time of grant or any
      time thereafter, in its sole discretion, that any Option shall be exercisable
      with respect to Shares that otherwise would not then be exercisable, provided
      that, in connection with such exercise, the Participant enters into a form
      of
      Restricted Share agreement approved by the Committee with respect to Shares
      received on exercise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -9-

      

    

    

     

    (v)  ISOs.  The
      terms of any ISO granted under the Plan shall comply in all respects with the
      provisions of Section 422 of the Code, including but not limited to the
      requirement that the ISO shall be granted within ten years from the earlier
      of
      the date of adoption or shareholder approval of the Plan.  ISOs may
      only be granted to employees of the Company or a Subsidiary.

     

    (c)  SARs.  The
      Committee is authorized to grant SARs (Share Appreciation Rights) to Eligible
      Persons on the following terms and conditions:

     

    (i)  Right
      to Payment.  A SAR shall confer on the Eligible Person to whom it
      is granted a right to receive with respect to each Share subject thereto, upon
      exercise thereof, the excess of (1) the Fair Market Value of one Share on the
      date of exercise over (2) the exercise price per Share of the SAR, as determined
      by the Committee as of the date of grant of the SAR (which shall not be less
      than the Fair Market Value per Share on the date of grant of the SAR and, in
      the
      case of a SAR granted in tandem with an Option, shall be equal to the exercise
      price of the underlying Option).

     

    (ii)  Other
      Terms.  The Committee shall determine, at the time of grant, the
      time or times at which a SAR may be exercised in whole or in part (which shall
      not be more than ten years after the date of grant of the SAR), the method
      of
      exercise, method of settlement, form of consideration payable in settlement,
      method by which Shares will be delivered or deemed to be delivered to Eligible
      Persons, whether or not a SAR shall be in tandem with any other Award, and
      any
      other terms and conditions of any SAR.  Unless the Committee
      determines otherwise, a SAR (1) granted in tandem with an NQSO may be granted
      at
      the time of grant of the related NQSO or at any time thereafter and (2) granted
      in tandem with an ISO may only be granted at the time of grant of the related
      ISO.

     

    (d)  Restricted
      Shares.  The Committee is authorized to grant Restricted Shares to
      Eligible Persons on the following terms and conditions:

     

    (i)  Issuance
      and Restrictions.  Restricted Shares shall be subject to such
      restrictions on transferability and other restrictions, if any, as the Committee
      may impose at the date of grant or thereafter, which restrictions may lapse
      separately or in combination at such times, under such circumstances (including,
      without limitation, upon achievement of performance criteria if deemed
      appropriate by the Committee), in such installments, or otherwise, as the
      Committee may determine.  Except to the extent restricted under the
      Award Agreement relating to the Restricted Shares, an Eligible Person granted
      Restricted Shares shall have all of the rights of a shareholder including,
      without limitation, the right to vote Restricted Shares and the right to receive
      dividends thereon.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -10-

      

    

    

     

    (ii)  Forfeiture.  Except
      as otherwise determined by the Committee, at the date of grant or thereafter,
      upon Termination of Service during the applicable restriction period, Restricted
      Shares and any accrued but unpaid dividends or Dividend Equivalents that are
      at
      that time subject to restrictions shall be forfeited; provided,
however, that the Committee may provide, by rule or regulation or
      in any
      Award Agreement, or may determine in any individual case, that restrictions
      or
      forfeiture conditions relating to Restricted Shares will be waived in whole
      or
      in part in the event of Termination of Service resulting from specified causes,
      and the Committee may in other cases waive in whole or in part the forfeiture
      of
      Restricted Shares.

     

    (iii)  Certificates
      for Shares.  Restricted Shares granted under the Plan may be
      evidenced in such manner as the Committee shall determine.  If
      certificates representing Restricted Shares are registered in the name of the
      Eligible Person, such certificates shall bear an appropriate legend referring
      to
      the terms, conditions, and restrictions applicable to such Restricted Shares,
      and, unless otherwise determined by the Committee, the Company shall retain
      physical possession of the certificate and the Participant shall deliver a
      stock
      power to the Company, endorsed in blank, relating to the Restricted
      Shares.

     

    (iv)  Dividends.  Dividends
      paid on Restricted Shares shall be either paid at the dividend payment date,
      or
      deferred for payment to such date, and subject to such conditions, as determined
      by the Committee, in cash or in restricted or unrestricted Shares having a
      Fair
      Market Value equal to the amount of such dividends. Unless otherwise determined
      by the Committee, Shares distributed in connection with a Share split or
      dividend in Shares, and other property distributed as a dividend, shall be
      subject to restrictions and a risk of forfeiture to the same extent as the
      Restricted Shares with respect to which such Shares or other property has been
      distributed.

     

    (v)  Early
      Exercise Options.  The Committee shall award Restricted Shares to
      a Participant upon the Participant’s early exercise of an Option under Section
      5(b)(iv) hereof.  Unless otherwise determined by the Committee, the
      lapse of restrictions with respect to such Restricted Shares shall occur on
      the
      same schedule as the exercisability of the Option for which the Restricted
      Shares were exercised.

     

    (e)  Restricted
      Share Units.  The Committee is authorized to grant Restricted
      Share Units to Eligible Persons, subject to the following terms and
      conditions:

     

    (i)  Award
      and Restrictions.  Delivery of Shares or cash, as the case may be,
      will occur upon expiration of the deferral period specified for Restricted
      Share
      Units by the Committee (or, if permitted by the Committee, as elected by the
      Eligible Person).  In addition, Restricted Share Units shall be
      subject to such restrictions as the Committee may impose, if any (including,
      without limitation, the achievement of performance cri-

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -11-

      

    

    teria
      if
      deemed appropriate by the Committee), at the date of grant or thereafter, which
      restrictions may lapse at the expiration of the deferral period or at earlier
      or
      later specified times, separately or in combination, in installments or
      otherwise, as the Committee may determine.

     

    (ii)  Forfeiture.  Except
      as otherwise determined by the Committee at the date of grant or thereafter,
      upon Termination of Service during the applicable deferral period or portion
      thereof to which forfeiture conditions apply (as provided in the Award Agreement
      evidencing the Restricted Share Units), or upon failure to satisfy any other
      conditions precedent to the delivery of Shares or cash to which such Restricted
      Share Units relate, all Restricted Share Units that are at that time subject
      to
      deferral or restriction shall be forfeited; provided, however,
      that the Committee may provide, by rule or regulation or in any Award Agreement,
      or may determine in any individual case, that restrictions or forfeiture
      conditions relating to Restricted Share Units will be waived in whole or in
      part
      in the event of Termination of Service resulting from specified causes, and
      the
      Committee may in other cases waive in whole or in part the forfeiture of
      Restricted Share Units.

     

    (iii)  Dividend
      Equivalents.  Unless otherwise determined by the
      Committee at the date of grant, Dividend Equivalents on the specified number
      of
      Shares covered by a Restricted Share Unit shall be either (A) paid with respect
      to such Restricted Share Unit at the dividend payment date in cash or in
      restricted or unrestricted Shares having a Fair Market Value equal to the amount
      of such dividends, or (B) deferred with respect to such Restricted Share Unit
      and the amount or value thereof automatically deemed reinvested in additional
      Restricted Share Units or other Awards, as the Committee shall determine or
      permit the Participant to elect.

     

    (f)  Performance
      Shares and Performance Units.  The Committee is authorized to
      grant Performance Shares or Performance Units or both to Eligible Persons on
      the
      following terms and conditions:

     

    (i)  Performance
      Period.  The Committee shall determine a performance period (the
“Performance Period”) of one or more years or other periods and shall determine
      the performance objectives for grants of Performance Shares and Performance
      Units.  Performance objectives may vary from Eligible Person to
      Eligible Person and shall be based upon the performance criteria as the
      Committee may deem appropriate.  The performance objectives may be
      determined by reference to the performance of the Company, or of a Subsidiary
      or
      Affiliate, or of a division or unit of any of the
      foregoing.  Performance Periods may overlap and Eligible Persons may
      participate simultaneously with respect to Performance Shares and Performance
      Units for which different Performance Periods are prescribed.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -12-

      

    

    

     

    (ii)  Award
      Value.  At the beginning of a Performance Period, the Committee
      shall determine for each Eligible Person or group of Eligible Persons with
      respect to that Performance Period the range of number of Shares, if any, in
      the
      case of Performance Shares, and the range of dollar values, if any, in the
      case
      of Performance Units, which may be fixed or may vary in accordance with such
      performance or other criteria specified by the Committee, which shall be paid
      to
      an Eligible Person as an Award if the relevant measure of Company performance
      for the Performance Period is met.

     

    (iii)  Significant
      Events.  If during the course of a Performance Period there shall
      occur significant events as determined by the Committee which the Committee
      expects to have a substantial effect on a performance objective during such
      period, the Committee may revise such objective; provided,
however, that, if an Award Agreement so provides, the Committee shall
      not
      have any discretion to increase the amount of compensation payable under the
      Award to the extent such an increase would cause the Award to lose its
      qualification as performance-based compensation for purposes of Section
      162(m)(4)(C) of the Code and the regulations thereunder.

     

    (iv)  Forfeiture.  Except
      as otherwise determined by the Committee, at the date of grant or thereafter,
      upon Termination of Service during the applicable Performance Period,
      Performance Shares and Performance Units for which the Performance Period was
      prescribed shall be forfeited; provided, however, that the
      Committee may provide, by rule or regulation or in any Award Agreement, or
      may
      determine in an individual case, that restrictions or forfeiture conditions
      relating to Performance Shares and Performance Units will be waived in whole
      or
      in part in the event of Terminations of Service resulting from specified causes,
      and the Committee may in other cases waive in whole or in part the forfeiture
      of
      Performance Shares and Performance Units.

     

    (v)  Payment.  Each
      Performance Share or Performance Unit may be paid in whole Shares, or cash,
      or a
      combination of Shares and cash either as a lump sum payment or in installments,
      all as the Committee shall determine, at the time of grant of the Performance
      Share or Performance Unit or otherwise, commencing as soon as practicable after
      the end of the relevant Performance Period.

     

    (g)  Dividend
      Equivalents.  The Committee is authorized to grant Dividend
      Equivalents to Eligible Persons.  The Committee may provide, at the
      date of grant or thereafter, that Dividend Equivalents shall be paid or
      distributed when accrued or shall be deemed to have been reinvested in
      additional Shares, or other investment vehicles as the Committee may specify;
      provided, however, that, unless otherwise determined by the
      Committee, Dividend Equivalents (other than freestanding Dividend Equivalents)
      shall be subject to all conditions and restrictions of any underlying Awards
      to
      which they relate.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -13-

      

    

    

     

    (h)  Other
      Share-Based Awards.  The Committee is authorized, subject to
      limitations under applicable law, to grant to Eligible Persons such other Awards
      that may be denominated or payable in, valued in whole or in part by reference
      to, or otherwise based on, or related to, Shares, as deemed by the Committee
      to
      be consistent with the purposes of the Plan, including, without limitation,
      unrestricted shares awarded purely as a “bonus” and not subject to any
      restrictions or conditions, other rights convertible or exchangeable into
      Shares, purchase rights for Shares, Awards with value and payment contingent
      upon performance of the Company or any other factors designated by the
      Committee, and Awards valued by reference to the performance of specified
      Subsidiaries or Affiliates.  The Committee shall determine the terms
      and conditions of such Awards at date of grant or thereafter.  Shares
      delivered pursuant to an Award in the nature of a purchase right granted under
      this Section 5(h) shall be purchased for such consideration, paid for at such
      times, by such methods, and in such forms, including, without limitation, cash,
      Shares, notes or other property, as the Committee shall
      determine.  Cash awards, as an element of or supplement to any other
      Award under the Plan, shall also be authorized pursuant to this Section
      5(h).

     

    (i)           Directors’
      Deferral.

     

    (i)           Each
      Director may make a written irrevocable election before the beginning of a
      calendar year to defer payment of all or fifty percent (50%) of the cash
      compensation otherwise payable as his or her annual retainer fees for service
      as
      a Director for the calendar year.  Notwithstanding the foregoing, a
      Director who is first elected or appointed to the Board may make a written
      irrevocable deferral election under this Section 5(i) within thirty (30)
      days after the date of such election or appointment to the Board in respect
      of
      annual retainer fees for services to be performed by the Director subsequent
      to
      the election.  Deferral elections made hereunder shall remain in
      effect for all future calendar years until changed in writing, which change
      shall apply prospectively to the calendar year beginning after the date of
      the
      written change of election.  Elections shall be made hereunder when
      delivered in writing to the person designated from time to time by the Company
      to receive the elections.

     

    (ii)           All
      compensation which a Director elects to defer pursuant to this Section 5(i)
      shall be credited in the form of Share units in the name of the Director, and
      such Share units shall be considered Other Share-Based Awards under this
      Plan.  Each such Share unit shall represent the right to receive one
      Share at the time set forth in Section 5(i)(iv) below.  The number of
      Share units so credited will be equal to the number of Shares having an
      aggregate Fair Market Value on the date the compensation would otherwise have
      been paid equal to the amount by which the Director’s cash compensation was
      reduced pursuant to the deferral election.  All Share units credited
      under this Section 5(i) will be vested in full at all times.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -14-

      

    

    

     

    (iii)           As
      of each date on which a cash dividend is paid on Shares, there shall be granted
      to each Director a number of additional Share units (including fractional Share
      units) determined by (i) multiplying the amount of such dividend per Share
      by
      the number of Share units, if any, held by the Director, and (ii) dividing
      the total so determined by the Fair Market Value of a Share on the date of
      payment of such cash dividend.

     

    (iv)           Shares
      subject to each Share unit shall be distributed (in the form of one Share for
      each Share unit) in a single lump sum at the time of the Director’s Termination
      of Service.  In the event of a Change in Control prior to a Director’s
      Termination of Service, Shares subject to each Share unit shall be distributed
      (in the form of one Share for each Share unit) in a single lump sum at the
      time
      of the Change in Control.

     

    
      	
              6.  

            	
              Certain
                Provisions Applicable to
                Awards.

            

    

     

    (a)  Stand-Alone,
      Additional, Tandem and Substitute Awards.  Awards granted under
      the Plan may, in the discretion of the Committee, be granted to Eligible Persons
      either alone or in addition to, in tandem with, or in exchange or substitution
      for, any other Award granted under the Plan or any award granted under any
      other
      plan or agreement of the Company, any Subsidiary or Affiliate, or any business
      entity to be acquired by the Company or a Subsidiary or Affiliate, or any other
      right of an Eligible Person to receive payment from the Company or any
      Subsidiary or Affiliate.  Awards may be granted in addition to or in
      tandem with such other Awards or awards, and may be granted either as of the
      same time as, or a different time from, the grant of such other Awards or
      awards.  Subject to the provisions of Section 3(e) hereof
      prohibiting Option and SAR repricing without shareholder approval, the per
      Share
      exercise price of any Option, or grant price of any SAR, which is granted in
      connection with the substitution of awards granted under any other plan or
      agreement of the Company or any Subsidiary or Affiliate, or any business entity
      to be acquired by the Company or any Subsidiary or Affiliate, shall be
      determined by the Committee, in its discretion.

     

    (b)  Term
      of Awards.  The term of each Award granted to an Eligible Person
      shall be for such period as may be determined by the Committee; provided,
however, that in no event shall the term of any Option or SAR exceed
      a
      period of ten years from the date of its grant (or, in the case of ISOs, such
      shorter period as may be applicable under Section 422 of the Code).

     

    (c)  Form
      of Payment Under Awards.  Subject to the terms of the Plan and any
      applicable Award Agreement, payments to be made by the Company or a Subsidiary
      or Affiliate upon the grant, maturation, or exercise of an Award may be made
      in
      such forms as the Committee shall determine at the date of grant or thereafter,
      including, without limitation, cash, Shares, notes or other property, and may
      be
      made in a single payment or transfer, in installments, or on a deferred
      basis.  The Committee may make rules relating to installment or
      de-

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -15-

      

    

    ferred
      payments with respect to Awards, including the rate of interest to be credited
      with respect to such payments, and the Committee may require deferral of payment
      under an Award if, in the sole judgment of the Committee, it may be necessary
      in
      order to avoid nondeductibility of the payment under Section 162(m) of the
      Code.

     

    (d)  Nontransferability.  Unless
      otherwise set forth by the Committee in an Award Agreement, Awards shall not
      be
      transferable by an Eligible Person except by will or the laws of descent and
      distribution (except pursuant to a Beneficiary designation) and shall be
      exercisable during the lifetime of an Eligible Person only by such Eligible
      Person or his guardian or legal representative.  An Eligible Person’s
      rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise
      encumbered, and shall not be subject to claims of the Eligible Person’s
      creditors.

     

    (e)  Noncompetition.  The
      Committee may, by way of the Award Agreements or otherwise, establish such
      other
      terms, conditions, restrictions and/or limitations, if any, of any Award,
      provided they are not inconsistent with the Plan, including, without limitation,
      the requirement that the Participant not engage in competition with, solicit
      customers or employees of, or disclose or use confidential information of the
      Company or its Affiliates.

     

    
      	
              7.  

            	
              Performance
                Awards.

            

    

     

    (a)  Performance
      Awards Granted to Covered Employees.  If the Committee determines
      that an Award (other than an Option or SAR) to be granted to an Eligible Person
      should qualify as “performance-based compensation” for purposes of Section
      162(m) of the Code, the grant, vesting, exercise and/or settlement of such
      Award
      (each, a “Performance Award”) shall be contingent upon achievement of
      preestablished performance goals and other terms set forth in this Section
      7(a).

     

    (i)  Performance
      Goals Generally.  The performance goals for such
      Performance Awards shall consist of one or more business criteria and a targeted
      level or levels of performance with respect to each of such criteria, as
      specified by the Committee consistent with this Section 7(a).  The
      performance goals shall be objective and shall otherwise meet the requirements
      of Section 162(m) of the Code and regulations thereunder (including Treasury
      Regulation 1.162-27 and successor regulations thereto), including the
      requirement that the level or levels of performance targeted by the Committee
      result in the achievement of performance goals being “substantially
      uncertain.”  The Committee may determine that such Performance Awards
      shall be granted, vested, exercised and/or settled upon achievement of any
      one
      performance goal or that two or more of the performance goals must be achieved
      as a condition to grant, vesting, exercise and/or settlement of such Performance
      Awards.  Performance goals may differ for Performance Awards granted
      to any one Participant or to different Participants.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -16-

      

    

    

     

    (ii)  Business
      Criteria.  One or more of the following business criteria
      for the Company, on a consolidated basis, and/or for specified Subsidiaries
      or
      Affiliates or other business units or lines of business of the Company shall
      be
      used by the Committee in establishing performance goals for such Performance
      Awards: (1) earnings per share (basic or fully diluted); (2) revenues; (3)
      earnings, before or after taxes, from operations (generally or specified
      operations), or before or after interest expense, depreciation, amortization,
      incentives, or extraordinary or special items; (4) cash flow, free cash flow,
      cash flow return on investment (discounted or otherwise), net cash provided
      by
      operations, or cash flow in excess of cost of capital; (5) return on net assets,
      return on assets, return on investment, return on capital, return on equity;
      (6)
      economic value added; (7) operating margin or operating expense; (8) net income;
      (9) Share price or total stockholder return; (10) book value or adjusted book
      value; (11) expense ratio; (12) operating income; and (13) strategic business
      criteria, consisting of one or more objectives based on meeting specified market
      penetration, geographic business expansion goals, cost targets, customer
      satisfaction, supervision of litigation and information technology, and goals
      relating to acquisitions or divestitures of Subsidiaries, Affiliates or joint
      ventures.  The targeted level or levels of performance with respect to
      such business criteria may be established at such levels and in such terms
      as
      the Committee may determine, in its discretion, including in absolute terms,
      as
      a goal relative to performance in prior periods, or as a goal compared to the
      performance of one or more comparable companies or an index covering multiple
      companies.

     

    (iii)  Performance
      Period; Timing for Establishing Performance Goals; Per-Person
      Limit.  Achievement of performance goals in respect of
      such Performance Awards shall be measured over a performance period, as
      specified by the Committee.  A performance goal shall be established
      not later than the earlier of (A) 90 days after the beginning of any performance
      period applicable to such Performance Award or (B) the time 25% of such
      performance period has elapsed.   In all cases, the maximum
      Performance Award of any Participant shall be subject to the limitation set
      forth in Section 4(b) or 7(a)(v), as applicable.

     

    (iv)  Settlement
      of Performance Awards; Other Terms.  Settlement of such
      Performance Awards shall be in cash, Shares, other Awards or other property,
      in
      the discretion of the Committee.  The Committee may, in its
      discretion, reduce the amount of a settlement otherwise to be made in connection
      with such Performance Awards, but may not exercise discretion to increase any
      such amount payable to the Participant in respect of a Performance Award subject
      to this Section 7(a).  Any settlement which changes the form of
      payment from that originally specified shall be implemented in a manner such
      that the Performance Award and other related Awards do not, solely for that
      reason, fail to qualify as “performance-based compensation” for purposes of
      Section 162(m) of the Code.  The Committee shall specify the
      circum­stances in which such

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -17-

      

    

    Performance
      Awards shall be paid or forfeited in the event of Termination of Service of
      the
      Participant or other event (including a Change in Control) prior to the end
      of a
      performance period or settlement of such Performance Awards.

     

    (v)  Maximum
      Annual Cash Award.  The maximum amount payable upon settlement of
      a cash-settled Performance Unit (or other cash-settled Award) granted under
      this
      Plan for any calendar year to any Eligible Person that is intended to satisfy
      the requirements for “performance-based compensation” under Section 162(m) of
      the Code shall not exceed $3,000,000.

     

    (b)  Written
      Determinations.  Determinations by the Committee as to
      the establishment of performance goals, the amount potentially payable in
      respect of Performance Awards, the level of actual achievement of the specified
      performance goals relating to Performance Awards and the amount of any final
      Performance Award shall be recorded in writing in the case of Performance Awards
      intended to qualify under Section 162(m) of the
      Code.  Specifi­cally, the Committee shall certify in writing, in a
      manner conforming to applicable regulations under Section 162(m), prior to
      settlement of each such Award, that the performance objective relating to the
      Performance Award and other material terms of the Award upon which settlement
      of
      the Award was conditioned have been satisfied.

     

    
      	
              8.  

            	
              Change
                in Control Provisions.

            

    

     

    (a)  Acceleration
      of Exercisability and Lapse of Restrictions.  Unless otherwise
      provided by the Committee at the time of the Award grant, in the event of a
      Change in Control, (i) all outstanding Awards pursuant to which the
      Participant may have rights the exercise of which is restricted or limited,
      shall become fully exercisable at the time of the Change in Control, and
      (ii) unless the right to lapse of restrictions or limitations is waived or
      deferred by a Participant prior to such lapse, all restrictions or limitations
      (including risks of forfeiture and deferrals) on outstanding Awards subject
      to
      restrictions or limitations under the Plan shall lapse, and all performance
      criteria and other conditions to payment of Awards under which payments of
      cash,
      Shares or other property are subject to conditions shall be deemed to be
      achieved or fulfilled and shall be waived by the Company at the time of the
      Change in Control.

     

    (b)  Definition
      of Change in Control.  For purposes of this Plan, “Change in
      Control” shall mean:.

     

    (i)  the acquisition
      by any individual, entity or group (within the meaning
      of Section 13(d)(3) or 14(d)(2) of
      the Exchange Act (a “Person”), of beneficial ownership
      (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35%
      or
      more of either (1) the then outstanding shares of common stock of the Company
      (the “Outstanding Company Common Stock”) or (2) the combined voting power of the
      then outstanding voting securities of the Company entitled to vote generally
      in
      the election of

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -18-

      

    

    directors
      (the “Outstanding Company Voting
      Securities”); provided, however, that the
      following acquisitions shall not constitute a Change in Control: (i) any
      acquisition directly from the Company (other than by exercise of a conversion
      privilege); (ii) any acquisition by the Company or any of its Subsidiaries;
      (iii) any acquisition by any employee benefit plan (or
      related trust) sponsored or maintained by the Company or any of its
      Subsidiaries; (iv) any acquisition by any corporation with respect to which,
      following such acquisition, more than 60% of, respectively, the then outstanding
      shares of common stock of such corporation and the combined voting power of
      the
      then outstanding voting securities of such corporation entitled to vote
      generally in the election of directors is then beneficially owned, directly
      or
      indirectly, by all or substantially all of the individuals and entities who
      were
      the beneficial owners, respectively, of the outstanding Company Common Stock
      and
      Outstanding Company Voting Securities immediately prior to such acquisition
      in
      substantially the same proportions as their ownership, immediately prior to
      such
      acquisition, of the Outstanding Company Common Stock and Outstanding Company
      Voting Securities, as the case may be (unless a Person’s ownership of the
      acquiring corporation results in that Person indirectly owning 35% or more
      of
      the Outstanding Company Common Stock or Outstanding Company Voting Securities);
      or (v) any acquisition by XL Capital Ltd or its wholly-owned subsidiaries
      unless, at any time after the Effective Date and prior to such acquisition,
      XL
      Capital Ltd and its subsidiaries own less than 35% of the Outstanding Company
      Voting Securities;

     

    (ii)  during
      any period of two consecutive years, individuals who, as of the beginning of
      such period, constitute the Board (the “Incumbent Board”) cease for any reason
      to constitute at least a majority of the Board; provided, however,
      that any individual becoming a director subsequent to the beginning of such
      period whose election, or nomination for election by the Company's shareholders,
      was approved by a vote of at least a majority of the directors then comprising
      the Incumbent Board shall be considered as though such individual were a member
      of the Incumbent Board, but excluding, for this purpose, any such individual
      whose initial assumption of office occurs as a result of either an actual or
      threatened election contest (as such terms are used in Rule 14a-11 of Regulation
      14A promulgated under the Exchange Act);

     

    (iii)  consummation
      of a reorganization, scheme of arrangement, merger,  consolidation or
      similar transaction (collectively, a “Transaction”), in each case, with respect
      to which all or substantially all of the individuals and entities who were
      the
      beneficial owners, respectively, of the Outstanding Company Common Stock and
      outstanding Company Voting Securities immediately prior to such Transaction,
      do
      not, following such Transaction, beneficially own, directly or indirectly,
      more
      than 60% of, respectively, the then outstanding shares of common stock and
      the
      combined voting power of the then outstanding voting securities entitled to
      vote
      generally in the election of directors, as the case may be, of the corporation
      resulting from such Transaction in

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -19-

      

    

    substantially
      the same proportions as their ownership, immediately prior to such Transaction,
      of the Outstanding Company Common Stock and Outstanding Company Voting
      Securities, as the case may be;

     

    (iv)  consummation
      of a sale or other disposition of all or substantially all of the assets of
      the
      Company, other than to a corporation with respect to which following such sale
      or other disposition, more than 60% of, respectively, the then outstanding
      shares of common stock of such corporation and the combined voting power of
      the
      then outstanding voting securities of such corporation entitled to vote
      generally in the election of directors is then beneficially owned, directly
      or
      indirectly, by all or substantially all of the individuals and entities who
      were
      the beneficial owners, respectively, of the Outstanding Company Common Stock
      and
      Outstanding Company Voting Securities immediately prior to such sale or other
      disposition in substantially the same proportions as their ownership,
      immediately prior to such sale or other disposition, of the Outstanding Company
      Common Stock and Outstanding Company Voting Securities, as the case may be;
      or

     

    (v)  approval
      by the shareholders of the Company of a complete liquidation or dissolution
      (or
      similar transaction) of the Company.

     

    Notwithstanding
      the foregoing, in the case of an Award that constitutes deferred compensation
      subject to Section 409A of the Code, the definition of “Change in Control” set
      forth above shall not apply, and the term “Change in Control” shall instead mean
      a “change in the ownership or effective control” of the Company or “in the
      ownership of a substantial portion of the assets” of the Company within the
      meaning of Section 409A(a)(2)(A)(v) of the Code and the regulations and guidance
      issued thereunder, but only to the extent this substitute definition is
      necessary in order for the Award to comply with the requirements prescribed
      by
      Section 409A of the Code.

     

    
      	
              9.  

            	
              General
                Provisions.

            

    

     

    (a)  Compliance
      with Legal and Trading Requirements.  The Plan, the granting and
      exercising of Awards thereunder, and the other obligations of the Company under
      the Plan and any Award Agreement, shall be subject to all applicable federal,
      state and foreign laws, rules and regulations, and to such approvals by any
      stock exchange, regulatory or governmental agency as may be
      required.  The Company, in its discretion, may postpone the issuance
      or delivery of Shares under any Award until completion of such stock exchange
      or
      market system listing or registration or qualification of such Shares or any
      required action under any state, federal or foreign law, rule or regulation
      as
      the Company may consider appropriate, and may require any Participant to make
      such representations and furnish such information as it may consider appropriate
      in connection with the issuance or delivery of Shares in compliance with
      applicable laws, rules and regulations.  No provisions of the Plan
      shall be interpreted or

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -20-

      

    

    construed
      to obligate the Company to register any Shares under federal, state or foreign
      law.  The Shares issued under the Plan may be subject to such other
      restrictions on transfer as determined by the Committee.

     

    (b)  No
      Right to Continued Employment or Service.  Neither the Plan nor
      any action taken thereunder shall be construed as giving any employee,
      consultant or director the right to be retained in the employ or service of
      the
      Company or any of its Subsidiaries or Affiliates, nor shall it interfere in
      any
      way with the right of the Company or any of its Subsidiaries or Affiliates
      to
      terminate any employee’s, consultant’s or director’s employment or service at
      any time.

     

    (c)  Taxes.  The
      Company or any Subsidiary or Affiliate is authorized to withhold from any Award
      granted, any payment relating to an Award under the Plan, including from a
      distribution of Shares, or any payroll or other payment to an Eligible Person,
      amounts of withholding and other taxes due in connection with any transaction
      involving an Award, and to take such other action as the Committee may deem
      advisable to enable the Company and Eligible Persons to satisfy obligations
      for
      the payment of withholding taxes and other tax obligations relating to any
      Award.  This authority shall include authority to withhold or receive
      Shares or other property and to make cash payments in respect thereof in
      satisfaction of an Eligible Person’s tax obligations; provided,
however, that the amount of tax withholding to be satisfied by
      withholding Shares shall be limited to the minimum amount of taxes, including
      employment taxes, required to be withheld under applicable Federal, state and
      local law.

     

    (d)  Changes
      to the Plan and Awards.  The Board may amend, alter, suspend,
      discontinue, or terminate the Plan or the Committee’s authority to grant Awards
      under the Plan without the consent of shareholders of the Company or
      Participants, except that any such amendment or alteration shall be subject
      to
      the approval of the Company’s shareholders (i) to the extent such shareholder
      approval is required under the rules of any stock exchange or automated
      quotation system on which the Shares may then be listed or quoted, or (ii)
      as it
      applies to ISOs, to the extent such shareholder approval is required under
      Section 422 of the Code; provided, however, that, without the
      consent of an affected Participant, no amendment, alteration, suspension,
      discontinuation, or termination of the Plan may materially and adversely affect
      the rights of such Participant under any Award theretofore granted to him or
      her.  The Committee may waive any conditions or rights under, amend
      any terms of, or amend, alter, suspend, discontinue or terminate, any Award
      theretofore granted, prospectively or retrospectively; provided,
however, that, without the consent of a Participant, no amendment,
      alteration, suspension, discontinuation or termination of any Award may
      materially and adversely affect the rights of such Participant under any Award
      theretofore granted to him or her.

     

    (e)  No
      Rights to Awards; No Shareholder Rights.  No Eligible Person or
      employee shall have any claim to be granted any Award under the Plan, and there
      is no obliga-

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -21-

      

    

    tion
      for
      uniformity of treatment of Eligible Persons and employees.  No Award
      shall confer on any Eligible Person any of the rights of a shareholder of the
      Company unless and until Shares are duly issued or transferred to the Eligible
      Person in accordance with the terms of the Award.

     

    (f)  Unfunded
      Status of Awards.  The Plan is intended to constitute an
“unfunded” plan for incentive compensation.  With respect to any
      payments not yet made to a Participant pursuant to an Award, nothing contained
      in the Plan or any Award shall give any such Participant any rights that are
      greater than those of a general creditor of the Company; provided,
however, that the Committee may authorize the creation of trusts or
      make
      other arrangements to meet the Company’s obligations under the Plan to deliver
      cash, Shares, other Awards, or other property pursuant to any Award, which
      trusts or other arrangements shall be consistent with the “unfunded” status of
      the Plan unless the Committee otherwise determines with the consent of each
      affected Participant.

     

    (g)  Nonexclusivity
      of the Plan.  Neither the adoption of the Plan by the Board nor
      its submission to the shareholders of the Company for approval shall be
      construed 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 options and other awards otherwise than under the
      Plan, and such arrangements may be either applicable generally or only in
      specific cases.

     

    (h)  Not
      Compensation for Benefit Plans.  No Award payable under this Plan
      shall be deemed salary or compensation for the purpose of computing benefits
      under any benefit plan or other arrangement of the Company for the benefit
      of
      its employees, consultants or directors unless the Company shall determine
      otherwise.

     

    (i)  No
      Fractional Shares.  No fractional Shares shall be issued or
      delivered pursuant to the Plan or any Award.  The Committee shall
      determine whether cash, other Awards, or other property shall be issued or
      paid
      in lieu of such fractional Shares or whether such fractional Shares or any
      rights thereto shall be forfeited or otherwise eliminated.

     

    (j)  Governing
      Law.  The validity, construction, and effect of the Plan, any
      rules and regulations relating to the Plan, and any Award Agreement shall be
      determined in accordance with the laws of New York without giving effect to
      principles of conflict of laws thereof.

     

    (k)  Effective
      Date; Plan Termination.  The Plan became effective as of August 1,
      2006, (the “Effective Date”).  The Plan shall terminate as to future
      awards on the date which is ten (10) years after the Effective
      Date.

     

    (l)  Section
      409A .   It is intended that the Plan and Awards issued
      thereunder will comply with Section 409A of the Code (and any regulations and
      guidelines issued

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        -22-

      

    

    thereunder)
      to the extent the Awards are subject thereto, and the Plan and such Awards
      shall
      be interpreted on a basis consistent with such intent.  The Plan and
      any Award Agreements issued thereunder may be amended in any respect deemed
      by
      the Board or the Committee to be necessary in order to preserve compliance
      with
      Section 409A of the Code.

     

    (m)  Titles
      and Headings.  The titles and headings of the sections in the Plan
      are for convenience of reference only.  In the event of any conflict,
      the text of the Plan, rather than such titles or headings, shall
      control.

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