Document:

Executive Deferred Compensation Plan of 2005

Exhibit 10.2
    

    EXPRESS
      SCRIPTS, INC.

    

    EXECUTIVE
      DEFERRED COMPENSATION PLAN 

    OF
      2005

    

    (As
      effective January 1, 2005)

     

    
       

       

      

        
          	
                  TABLE
                    OF CONTENTS

                
	 	 	 	 
	 	 	 	
                  Page
                    No.

                
	 	 	 	 
	
                  1.

                	 	
                  PURPOSE...........................................................................................................................................................................................................

                	
                   
                    1

                
	 	 	 	 
	
                  2.

                	 	
                  DEFINITIONS...................................................................................................................................................................................................

                	
                   
                    1

                
	 	
                  2.1

                	 	
                  Accounting
                    Date.........................................................................................................................................................................................

                	
                   
                    1

                
	 	
                  2.2

                	 	
                  Basic
                    Company
                    Credit................................................................................................................................................................................

                	
                   
                    1

                
	 	
                  2.3

                	 	
                  Beneficiary....................................................................................................................................................................................................

                	
                   
                    1

                
	 	
                  2.4

                	 	
                  Board.............................................................................................................................................................................................................

                	
                   
                    1

                
	 	
                  2.5

                	 	
                  Business
                    Day...............................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.6

                	 	
                  Code..............................................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.7

                	 	
                  Committee
                    ...................................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.8

                	 	
                  Common
                    Stock.............................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.9

                	 	
                  Common
                    Stock
                    Fund...................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.10

                	 	
                  Company.......................................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.11

                	 	
                  Company
                    Credits.........................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.12

                	 	
                  Compensation..............................................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.13

                	 	
                  Compensation
                    Account(s).........................................................................................................................................................................

                	
                   
                    2

                
	 	
                  2.14

                	 	
                  Credit
                    Date....................................................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.15

                	 	
                  Deferred
                    Bonus............................................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.16

                	 	
                  Deferred
                    Compensation..............................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.17

                	 	
                  Disability.......................................................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.18

                	 	
                  Effective
                    Date...............................................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.19

                	 	
                  Election.........................................................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.20

                	 	
                  Employee......................................................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.21

                	 	
                  Fair
                    Market
                    Value........................................................................................................................................................................................

                	
                   
                    3

                
	 	
                  2.22

                	 	
                  In-Service
                    Account.....................................................................................................................................................................................

                	
                   
                    4

                
	 	
                  2.23

                	 	
                  Participant.....................................................................................................................................................................................................

                	
                   
                    4

                
	 	
                  2.24

                	 	
                  Past
                    Service
                    Credit......................................................................................................................................................................................

                	
                   
                    4

                
	 	
                  2.25

                	 	
                  Plan................................................................................................................................................................................................................

                	
                   
                    4

                
	 	
                  2.26

                	 	
                  Plan
                    Year.......................................................................................................................................................................................................

                	
                   
                    4

                
	 	
                  2.27

                	 	
                  Retirement.....................................................................................................................................................................................................

                	
                   
                    4

                
	 	
                  2.28

                	 	
                  Retirement
                    Account....................................................................................................................................................................................

                	
                   
                    4

                
	 	
                  2.29

                	 	
                  Service
                    Year..................................................................................................................................................................................................

                	
                   
                    5

                
	 	
                  2.30

                	 	
                  Special
                    Bonus..............................................................................................................................................................................................

                	
                   
                    5

                
	 	
                  2.31

                	 	
                  Stock
                    Unit(s)................................................................................................................................................................................................

                	
                   
                    5

                
	 	
                  2.32

                	 	
                  Termination..................................................................................................................................................................................................

                	
                   
                    5

                
	 	 	 	 	 
	
                  3.

                	
                  ADMINISTRATION...............................................................................................................................................................................................

                	
                   
                    5

                
	 	 	 	 	 
	
                  4.

                	
                  ELIGIBILITY.............................................................................................................................................................................................................

                	
                   
                    5

                
	 	 	 	 	 
	
                  5.

                	
                  PARTICIPANT
                    ACCOUNTS.................................................................................................................................................................................

                	
                   
                    6

                
	 	 	 	 	 
	
                  6.

                	
                  ELECTION
                    TO
                    PARTICIPATE..............................................................................................................................................................................

                	
                   
                    7

                
	 	
                  6.1

                	 	
                  In
                    General......................................................................................................................................................................................................

                	
                   
                    7

                
	 	
                  6.2

                	 	
                  Investment
                    Alternatives For Existing
                    Balances......................................................................................................................................

                	
                   
                    8

                
	 	 	 	 	 
	
                  7.

                	
                  COMPANY
                    CREDITS AND SPECIAL AND DEFERRED
                    BONUSES..............................................................................................................

                	
                   
                    8

                
	 	
                  7.1

                	 	
                  Vesting..........................................................................................................................................................................................................

                	
                   
                    8

                
	 	
                  7.2

                	 	
                  Forfeiture......................................................................................................................................................................................................

                	
                   
                    9

                
	 	 	 	 	 
	
                  8.

                	
                  DISTRIBUTION.......................................................................................................................................................................................................

                	
                   
                    9

                
	 	
                  8.1

                	 	
                  Retirement
                    Account....................................................................................................................................................................................

                	
                   
                    9

                
	 	
                  8.2

                	 	
                  In-Service
                    Account.....................................................................................................................................................................................

                	
                   
                    9

                
	 	
                  8.3

                	 	
                  Termination
                    or
                    Disability............................................................................................................................................................................

                	
                  10

                
	 	
                  8.4

                	 	
                  Death.............................................................................................................................................................................................................

                	
                  10

                
	 	
                  8.5

                	 	
                  Form
                    of
                    Distribution....................................................................................................................................................................................

                	
                  10

                
	 	 	 	 	 
	
                  9.

                	
                  FINANCIAL
                    HARDSHIP........................................................................................................................................................................................

                	
                  10

                
	 	 
	
                  10.

                	
                  BENEFICIARY
                    DESIGNATION.............................................................................................................................................................................

                	
                  11

                
	 	 
	
                  11.

                	
                  UNSECURED
                    GENERAL CREDITOR STATUS OF
                    EMPLOYEE.....................................................................................................................

                	
                  12

                
	 	 
	
                  12.

                	
                  SHARES;
                    ADJUSTMENTS IN EVENT OF CHANGES IN
                    CAPITALIZATION............................................................................................

                	
                  12

                
	 	 
	
                  13.

                	
                  INALIENABILITY
                    OF
                    BENEFITS.........................................................................................................................................................................

                	
                  12

                
	 	 
	
                  14.

                	
                  CLAIMS
                    PROCEDURE...........................................................................................................................................................................................

                	
                  12

                
	 	 
	
                  15.

                	
                  GOVERNING
                    LAW..................................................................................................................................................................................................

                	
                  15

                
	 	 
	
                  16.

                	
                  AMENDMENTS......................................................................................................................................................................................................

                	
                  15

                
	 	 
	
                  17.

                	
                  TIME
                    FOR
                    PAYMENT............................................................................................................................................................................................

                	
                  15

                
	 	 	 	 	 

        

      

      

      
        
          
            
               

            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
            

          

        

      

      EXPRESS
        SCRIPTS, INC.

      
        EXECUTIVE
          DEFERRED COMPENSATION PLAN OF 2005

        

        1. PURPOSE

         

            The
          purpose
          of this Express Scripts, Inc. Executive Deferred Compensation Plan of 2005
          (the
“Plan”) is to provide eligible key employees of the Company with an opportunity
          to defer compensation to be earned by them from the Company as a means
          of saving
          for retirement or other future purposes and to provide such employees with
          competitive retirement and capital accumulation benefits. In addition,
          the Plan
          is intended to provide eligible key employees additional incentive to remain
          employed by the Company and to attract certain executive-level
          employees.

         

            The
          Company
          previously adopted the Express Scripts, Inc. Executive Deferred Compensation
          Plan, as amended and restated effective January 1, 2003 (“Prior Plan”).
          Effective December 31, 2004, the Company amended the Prior Plan to cease
          future
          deferrals thereunder after December 31, 2004, and the Prior Plan is intended
          to
          be grandfathered for purposes of Section 409A of the Code. By this instrument,
          effective January 1, 2005, the Company intends to set forth in a separate
          document the terms of the Plan, which shall apply to amounts deferred or
          that
          first become vested hereunder after December 31, 2004. The Prior Plan and
          the
          Plan shall be considered one plan set forth in two separate
          documents.

         

        2. DEFINITIONS

         

            The
          following
          definitions shall be applicable throughout the Plan:

         

            2.1 Accounting
          Date.

         

            “Accounting
          Date” means each Business Day on which a calculation concerning a Participant's
          Compensation Account is performed, or as otherwise defined by the
          Committee.

         

            2.2 Basic
          Company Credit.

         

            “Basic
          Company Credit” means an amount, if any, credited to a Participant’s Retirement
          Account as described in Section 7.

         

            2.3 Beneficiary.

         

            “Beneficiary”
          means the person or persons designated by the Participant in accordance
          with
          Section 10, or if no person or persons are so designated, the estate of
          a
          deceased Participant.

         

            2.4 Board.

         

            “Board”
means
          the Board of Directors of Express Scripts, Inc. or its designee.

         

            2.5 Business
          Day.

         

            “Business
          Day” means a day on which the New York Stock Exchange is open for trading
          activity.

         

            2.6 Code.

         

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

         

            2.7 Committee.

         

            “Committee”
          means the Compensation Committee of the Board.

         

            2.8 Common
          Stock.

         

            “Common
          Stock” means the Common Stock, $0.01 par value, of Express Scripts,
          Inc.

         

            2.9 Common
          Stock Fund.

         

            “Common
          Stock
          Fund” means that investment option, approved by the Committee, in which a
          Participant's Compensation Accounts may be deemed to be invested and may
          earn
          income (or incur losses) based on a hypothetical investment in Common
          Stock.

         

            2.10 Company.

         

            “Company”
          means Express Scripts, Inc., its divisions, subsidiaries and
          affiliates.

         

            2.11 Company
          Credits.

         

            “Company
          Credits” means amounts credited as either Basic Company Credits or Past Service
          Credits by the Company to Compensation Accounts, in the sole discretion
          of the
          Committee, pursuant to Section 7.

         

            2.12 Compensation.

         

            “Compensation”
means
          all (a) salary, commissions, payments under the Company’s Annual Bonus Plan (but
          not expense or other reimbursement or allowances) currently payable by
          the
          Company to a Participant, and (b) compensation in the form of Common Stock
          which
          the Employee may elect to convert to Stock Units if permitted by, and in
          accordance with, the terms of the grant of such compensation. For purposes
          of
          this Plan, the Committee may determine the amounts that will be considered
          Compensation with respect to any Participant.

         

            2.13 Compensation
          Account(s).

         

            “Compensation
          Account(s)” means the Retirement Account and/or the In-Service
          Accounts.

         

            2.14 Credit
          Date.

         

            “Credit
          Date”
means each date on which Deferred Compensation is credited to Compensation
          Accounts in accordance with rules prescribed by the Committee.

         

            2.15 Deferred
          Bonus.

         

            “Deferred
          Bonus” means an amount, if any, designated as such by the Committee and credited
          to a Participant’s Compensation Account.

         

            2.16 Deferred
          Compensation.

         

            “Deferred
          Compensation” means the Compensation elected by the Participant to be deferred
          pursuant to the Plan.

         

            2.17 Disability.

         

            “Disability”
          means the Participant (a) is unable to engage in any substantial gainful
          activity by reason of any medically determinable physical or mental impairment
          that can be expected to result in death or can be expected to last for
          a
          continuous period of not less than 12 months, or (b) is, by reason of any
          medically determinable physical or mental impairment which can be expected
          to
          result in death or can be expected to last for a continuous period of not
          less
          than 12 months, receiving income replacement benefits for a period of not
          less
          than 3 months under an accident and health plan covering employees of the
          Company.

         

            2.18 Effective
          Date.

         

            “Effective
          Date” means the effective date of the Plan, January 1, 2005.

         

            2.19 Election.

         

            “Election”
          means a Participant's delivery of a written notice of election to the Committee
          or its designee electing to defer payment of a specified percentage of
          his or
          her Compensation (in accordance with rules prescribed by the Committee)
          either
          until Retirement, death or such other time as further permitted by the
          Committee.

         

            2.20 Employee.

         

            “Employee”
          means an individual classified by the Committee as a full-time, regular
          salaried
          employee of the Company.

         

            2.21 Fair
          Market Value.

         

            “Fair
          Market
          Value” means, as of any specified date, the closing sales price of a share of
          Common Stock, as reported on the Nasdaq National Market on that date (or,
          if
          there are no sales on that date, the last preceding date on which there
          was a
          sale), or, in the event the Common Stock is listed on a stock exchange,
          the
          closing sales price of a share of Common Stock, as reported on such exchange
          on
          that date (or, if there are no sales on that date, the last preceding date
          on
          which there was a sale). In the absence of any listing of the Common Stock
          on
          the Nasdaq National Market or on any established stock exchange, Fair Market
          Value means the fair market value of the Common Stock on any specified
          date as
          determined in good faith by the Committee.

         

            2.22 In-Service
          Account.

         

            “In-Service
          Account” means the account or accounts to which a Participant elects to
          contribute Deferred Compensation and, to the extent permitted in an award
          as
          described in Section 5, Special Bonuses and/or Deferred Bonuses, and from
          which,
          pursuant to Section 8.2, distributions are made. The portion of any In-Service
          Account which was not vested under the Prior Plan as of December 31, 2004
          shall
          be hypothetically transferred and credited to the In-Service Account under
          this
          Plan and shall be subject to the vesting provisions hereunder from the
          date
          first credited under the Prior Plan.

         

            2.23 Participant.

         

            “Participant”
          means an Employee selected by the Committee to be eligible to participate
          in the
          Plan.

         

            2.24 Past
          Service Credit.

         

            “Past
          Service
          Credit” means an amount, if any, credited to a Participant’s Retirement Account
          as described in Section 7.

         

            2.25 Plan.

         

            “Plan”
means
          this Express Scripts, Inc. Executive Deferred Compensation Plan of 2005,
          as
          amended from time to time.

         

            2.26 Plan
          Year.

         

            “Plan
          Year”
means the annual period commencing January 1 and ending the following December
          31.

         

            2.27 Retirement.

         

            “Retirement”
          means a Participant’s termination of employment after attaining age 55 and
          having a combination of full years of age plus Service Years totaling at
          least
          65.

         

            2.28 Retirement
          Account.

         

            “Retirement
          Account” means the account to which a Participant elects to contribute Deferred
          Compensation and to which Company Credits, Special Bonuses and/or Deferred
          Bonuses (subject to any election described in Section 5) are made, and
          from
          which, pursuant to Section 8.1, distributions are made. The portion of
          any
          Retirement Account which was not vested under the Prior Plan as of December
          31,
          2004 shall be hypothetically transferred and credited to the Retirement
          Account
          under this Plan and shall be subject to the vesting provisions hereunder
          from
          the date first credited under the Prior Plan.

         

            2.29 Service
          Year.

         

            “Service
          Year” means, as designated by the Committee, such year or portion thereof during
          which the services have been rendered by a Participant for which Compensation
          is
          payable.

         

            2.30 Special
          Bonus.

         

            “Special
          Bonus” means an amount, if any, designated as such by the Committee and credited
          to a Participant’s Compensation Account.

         

            2.31 Stock
          Unit(s).

         

            “Stock
          Unit(s)” means the share equivalents credited to the Common Stock Fund of a
          Participant's Compensation Account in accordance with Sections 5, 6 and
          7.

         

            2.32 Termination.

         

            “Termination”
          means termination of services as an Employee for any reason other than
          Retirement. Such determination of whether a Termination has occurred shall
          be
          made in a manner consistent with Section 409A of the Code and the regulations
          and other guidance issued thereunder to avoid adverse tax consequences
          thereunder. 

         

        3. ADMINISTRATION

         

            Full
          power
          and authority to construe, interpret and administer the Plan shall be vested
          in
          the Committee. This power and authority includes, but is not limited to,
          selecting which Employees are eligible to participate in the Plan, selecting
          Compensation eligible for deferral, selecting investment indices, establishing
          the level of Company Credits (if any) to the Plan, establishing deferral
          terms
          and conditions, receiving and approving beneficiary designation forms,
          and
          adopting modifications, amendments and procedures as may be deemed necessary,
          appropriate or convenient by the Committee. Decisions of the Committee
          shall be
          final, conclusive and binding upon all parties. The Committee, in its sole
          discretion, may delegate day-to-day administration of the Plan to an employee
          or
          employees of the Company or to a third-party administrator. The Committee
          may
          also rely on outside counsel, independent accountants or other consultants
          or
          advisors for advice and assistance in fulfilling its administrative duties
          under
          the Plan.

         

        4. ELIGIBILITY

         

            Employees
          at
          the vice-president level or higher shall be eligible to participate in
          the Plan
          commencing on the first date they are employed by the Company in such capacity;
          provided that if such date is on or after November 1 in any Plan Year or if
          such Employee already participates in a deferred compensation arrangement
          that
          would be aggregated with this Plan for purposes of Section 409A of the
          Code and
          the regulations and guidance issued thereunder, such Employee shall not
          be
          eligible to participate in the Plan until the following January 1. The
          Committee shall have the ability to impose restrictions on the eligibility
          of
          new Employees as it considers appropriate.

         

        5. PARTICIPANT
          ACCOUNTS

         

            Upon
          a
          Participant’s initial election to participate in the Plan, there shall be
          established a Retirement Account and an In-Service Account, as designated
          by the
          Participant, to which there shall be credited any Deferred Compensation
          on or
          after January 1, 2005 with respect to services performed subsequent to
          such
          election as of each Credit Date. In addition, Company Credits, if any,
          made
          pursuant to Section 7 shall be allocated to a Participant’s Retirement Account
          in accordance with rules prescribed by the Committee. Each such Compensation
          Account shall be credited (or debited) on each Accounting Date with income
          (or
          loss) based upon a hypothetical investment in any one or more of the investment
          options available under the Plan, as prescribed by the Committee for the
          particular Compensation credited, which may include a Common Stock Fund.
          A
          Participant shall make two separate investment elections, one with respect
          to
          his or her Retirement Account and one with respect to his or her In-Service
          Accounts; provided, however, that earnings and losses on Deferred Compensation
          which relates to Compensation which would have been paid (absent the Election)
          in Common Stock shall initially be measured by reference to a hypothetical
          investment in the Common Stock Fund and shall be further subject to the
          terms of
          the grant of such Compensation.

         

            A
          Participant’s Special Bonus and/or Deferred Bonus, if any, to the extent not yet
          deferred and vested under the Prior Plan as of December 31, 2004, shall
          be
          credited to the Participant’s Retirement Account, unless the Agreement or award
          providing for such bonus(es) provides that the Participant may elect to
          credit
          any or all of such amounts to his or her In-Service Account and the Participant
          so elects prior to the Plan Year in which such bonus(es) is earned and
          otherwise
          in accordance with rules prescribed by the Committee.

         

            Each
          Participant at any time may have no more than two In-Service Accounts under
          this
          Plan and the Prior Plan, in the aggregate.

         

            If
          all or any
          portion of a Participant’s Compensation Account(s) is measured by a hypothetical
          investment in the Common Stock Fund, that portion of the Participant’s
          Compensation Account(s) shall be credited on the first day of the calendar
          quarter following each Credit Date with Stock Units equal to the number
          of
          shares of Common Stock (including fractions of a share) that could have
          been
          purchased with the amount of such Deferred Compensation (plus earnings
          and less
          losses determined in accordance with the next sentence) at the Fair Market
          Value
          on such first day of such calendar quarter. For the period between such
          Credit
          Date and the first day of such calendar quarter, earnings and losses shall
          be
          measured by reference to a hypothetical investment selected by the Committee.
          As
          of any date for the payment of cash dividends on the Common Stock, the
          portion
          of the Participant’s Compensation Account(s) invested in the Common Stock Fund
          as of the dividend record date shall be credited with additional Stock
          Units
          calculated by dividing (i) the product of (a) the dollar value of the dividend
          declared in respect of a share of Common Stock multiplied by (b) the number
          of
          Stock Units credited to the Participant’s Compensation Account(s) as of the
          dividend record date by (ii) the Fair Market Value of a share of Common
          Stock on
          the dividend payment date.

         

        6. ELECTION
          TO PARTICIPATE

         

            6.1 In
          General.

         

            Any
          Employee
          selected by the Committee to participate in the Plan may elect to do so
          by
          delivering to the Committee or its designee an Election on a form prescribed
          by
          the Committee, designating the Compensation Account to which the Deferred
          Compensation is to be credited, electing the timing and form of distribution
          (if
          applicable), and setting forth the manner in which such Deferred Compensation
          shall be invested in accordance with Section 5. A Participant’s initial Election
          must be filed at such time as designated by the Committee, but in no event
          later
          than the day immediately preceding the first day of the Plan Year to which
          such
          Election relates. A Participant may submit a new Election for any subsequent
          year in order to change the election previously made. Such subsequent Election
          must be filed at such time as designated by the Committee, but in no event
          later
          than 15 days preceding the first day of the Plan Year to which such subsequent
          Election relates. If a specific election has not been made with respect
          to any
          Plan Year, the Election (if any) effective with respect to the immediately
          preceding Plan Year shall remain in effect. An effective Election may not
          be
          revoked or modified during a Plan Year with respect to that Plan
          Year.

         

            Subject
          to
          Section 4, newly employed or eligible Employees who are eligible to participate
          in the Plan may elect to participate for the current Plan Year within the
          first
          30 days after commencing employment or becoming eligible. Such election
          shall be
          effective on the first day of the month following the end of such 30-day
          period
          and shall apply only with respect to Compensation earned after the effective
          date of such election. Elections for subsequent Plan Years shall be made
          in
          accordance with the preceding paragraph.

         

            Notwithstanding
          anything herein to the contrary, for the Plan Year beginning January 1,
          2005, a
          Participant may elect to defer Compensation for such Plan Year by delivering
          to
          the Committee or its designee an Election on a form prescribed by the Committee
          on or before March 15, 2005 with respect to such Compensation that has
          not been
          paid or become payable at the time of delivery of such Election. Notwithstanding
          the provisos in Sections 8.1 and 8.2 or anything else herein to the contrary,
          a
          Participant may change an Election as to the timing and form of distribution
          (if
          applicable) under the Plan if such Election is filed no later than December
          31,
          2007 in accordance with the rules established by the Committee or its designee;
          provided, however, with respect to an Election on or after January 1, 2006
          and
          on or before December 31, 2006, the Election may change the time and form
          of
          distribution only with respect to amounts that would not otherwise be payable
          in
          2006 and may not cause an amount to be paid in 2006 that would not otherwise
          be
          payable in 2006; and, provided, further, with respect to an Election on
          or after
          January 1, 2007 and on or before December 31, 2007, the Election may change
          the
          time and form of distribution only with respect to amounts that would not
          otherwise be payable in 2007 and may not cause an amount to be paid in
          2007 that
          would not otherwise be payable in 2007.

         

            6.2 Investment
          Alternatives For Existing Balances.

         

            A
          Participant
          may elect to change an existing selection as to the investment alternatives
          in
          effect with respect to an existing Compensation Account (in increments
          prescribed by the Committee) as often, and with such restrictions, as determined
          by the Committee.

         

        7. COMPANY
          CREDITS AND SPECIAL AND DEFERRED BONUSES

         

            In
          the sole
          discretion of the Committee, in a given Plan Year the Company may credit
          a
          specified percentage of a Participant’s Compensation to the Participant’s
          Retirement Account as a Basic Company Credit. The Committee, in its sole
          discretion, may cause the Company to credit such Basic Company Credit for
          all or
          any portion of the Participants in the Plan in such Plan Year. Further,
          the
          Committee may cause the Company to credit a Deferred Bonus and/or a Special
          Bonus to recognize significant efforts by Plan Participants as the Committee,
          in
          its sole discretion, deems appropriate. In addition, the Committee may
          cause the
          Company to credit a Past Service Credit to recognize past service as the
          Committee, in its sole discretion, deems appropriate. Such Basic Company
          Credit,
          Past Service Credit, Special Bonus and Deferred Bonus, if any, shall be
          credited
          to a Participant’s Retirement Account (except as provided in any election
          described in Section 5) and shall be subject to the limitations determined
          appropriate by the Committee, including the limitation contained in Section
          8.3
          and the limitations described below in this Section 7.

         

            7.1 Vesting.

         

            A
          Participant’s Deferred Compensation shall be immediately one-hundred percent
          (100%) nonforfeitable upon being credited to such Participant’s Retirement or
          In-Service Account; provided, however, that Deferred Compensation which
          relates
          to restricted shares of Common Stock shall vest in accordance with the
          terms of
          the restricted stock agreement to which they relate.

         

            A
          Participant’s Basic Company Credit for a Plan Year shall become nonforfeitable
          three (3) years after the end of the Plan Year to which such Basic Company
          Credit relates.

         

            A
          Participant’s Past Service Credit shall be fifty-percent (50%) nonforfeitable
          upon being credited to his or her Retirement Account. The remaining
          fifty-percent (50%) shall become nonforfeitable as follows: one (1) year
          after
          the end of the Plan Year in which the Past Service Credit is credited to
          the
          Participant’s Retirement Account, the Participant shall be one-third (1/3)
          vested in the remaining fifty percent (50%); two (2) years after the end
          of the
          Plan Year in which the Past Service Credit is credited to the Participant’s
          Retirement Account, the Participant shall be two-thirds (2/3) vested in
          the
          remaining fifty percent (50%); and three (3) years after the end of the
          Plan
          Year in which the Past Service Credit is credited to the Participant’s
          Retirement Account, the Participant shall be one-hundred percent (100%)
          vested
          in the remaining fifty percent (50%). A Participant’s Special Bonus and/or
          Deferred Bonus shall become vested in accordance with the terms of the
          Agreement
          or award providing for such bonus(es).

         

            Upon
          a
          Participant’s Termination for any reason other than death, Disability or
          Retirement, he or she shall forfeit any nonvested benefits. Except as otherwise
          provided in an award, a Participant shall have a one-hundred percent (100%)
          nonforfeitable right to Basic Company Credits, Past Service Credits, Special
          Bonuses and Deferred Bonuses upon becoming eligible for Retirement or upon
          Termination due to death or Disability.

         

            7.2 Forfeiture.
          

         

            Upon
          a
          Participant’s Termination or Retirement, the Company reserves the right to
          withhold payment of a portion of a Participant’s Retirement Account attributable
          to Basic Company Credits, Past Service Credits, Special Bonuses and/or
          Deferred
          Bonuses made under Section 7 (and earnings thereon) in the event the Committee
          determines that the Participant has violated the Company’s standard
          noncompetition and nondisclosure agreement or any other employment agreement
          executed by the Participant, or otherwise acts against the interests of
          the
          Company, as determined by the Committee in its sole discretion.

         

         8. DISTRIBUTION

         

            8.1 Retirement
          Account.

         

            In
          the event
          of a Participant’s Retirement, the Participant’s Retirement Account shall be
          distributed at the time and in the manner elected by the Participant in
          his or
          her Election. If no Election is made by a Participant as to the timing
          of
          distribution or form of payment of his or her Retirement Account, upon
          the
          Participant’s Retirement such account shall be paid in a single lump sum. A
          Participant may change this election to provide for a later distribution
          date;
          provided, that such election is filed in accordance with rules established
          by
          the Committee, and (a) such election shall not take effect until at least
          12
          months after the date on which such election is properly filed, (b) the
          first
          payment with respect to which such election is made shall be deferred for
          a
          period of not less than 5 years from the date such payment would otherwise
          have
          been made, and (c) any election related to a payment that was otherwise
          to be
          made at a specified time may not be made less than 12 months prior to the
          date
          of the first scheduled payment. Subject to the foregoing, the Election
          most
          recently accepted by the Committee shall govern the payout of any benefits
          under
          the Plan.

         

            8.2 In-Service
          Account.

         

            Deferred
          Compensation, Special Bonuses and/or Deferred Bonuses credited to a
          Participant's In-Service Account shall be distributed at the time and in
          the
          manner elected by the Participant in his or her Election. A Participant
          may
          extend the deferral period by notifying the Company in accordance with
          the terms
          of the Plan and procedures established by the Committee. A previously elected
          deferral period for an In-Service Account may be extended only one time;
          provided, that such election is filed in accordance with rules established
          by
          the Committee, and (a) such election shall not take effect until at least
          12
          months after the date on which such election is properly filed, (b) the
          first
          payment with respect to which such election is made shall be deferred for
          a
          period of not less than 5 years from the date such payment would otherwise
          have
          been made, and (c) any election related to a payment that was otherwise
          to be
          made at a specified time may not be made less than 12 months prior to the
          date
          of the first scheduled payment. Subject to the foregoing, the Election
          most
          recently accepted by the Committee shall govern the payout of any benefits
          under
          the Plan.

         

            8.3 Termination
          or Disability.

         

            In
          the event
          of a Participant's Termination or Disability, the Participant's vested
          Compensation Accounts shall be distributed in a single lump sum to such
          Participant 30 days after his or her Termination or Disability. Upon
          Termination, all unvested amounts shall be immediately forfeited and removed
          from the Participant’s Accounts.

         

            8.4 Death.

         

            In
          the event
          of the Participant’s death (a) while in the employment of the Company or (b)
          after the Participant’s Termination but prior to the payment of such
          Participant’s Compensation Accounts pursuant to Section 8.3, the Company shall
          pay the following amounts to the Participant’s Beneficiary in a single lump sum
          30 days after the Participant’s date of death:

         

        	(1)
                  	
                the
                  remaining amounts, if any, in a Participant’s In-Service Account;
                  and

              

         

        	(2)
                  	
                the
                  amounts in the Participant’s Retirement
                  Account.

              

         

            In
          the event
          of the Participant’s death following Retirement, the Company shall pay the
          amount in the Participant’s Retirement Account to the Participant’s Beneficiary
          in the form and at the time elected by the Participant pursuant to Section
          6.1.

         

            8.5 Form
          of Distribution.

         

            Distribution
          of a Participant’s Compensation Accounts shall be made in cash; provided that,
          any amounts in a Participant’s Compensation Accounts invested in the Common
          Stock Fund shall be distributed to the Participant in whole shares of Common
          Stock with fractional shares paid in cash.

         

            When
          required, the Company shall withhold from any distribution of cash or Common
          Stock to a Participant or other person under this Plan an amount sufficient
          to
          cover any required withholding taxes, including the Participant’s social
          security and Medicare taxes (FICA) and federal, state and local income
          tax with
          respect to income arising from payment of the Award. The Company shall
          have the
          right to require the payment of any such taxes before issuing any Common
          Stock
          comprising a part of such distribution. In lieu of all or any part of a
          cash
          payment from a person receiving Common Stock under this Plan, the Committee
          may
          permit a person to cover all or any part of the required withholdings,
          and to
          cover any additional withholdings up to the amount needed to cover the
          person’s
          full FICA and federal, state and local income tax with respect to income
          arising
          from payment the Common Stock portion of such distribution, through a reduction
          of the numbers of shares of Common Stock delivered to such person or a
          delivery
          or tender to the Company of other shares of Common Stock held by such person,
          in
          each case valued in the same manner as used in computing the withholding
          taxes
          under applicable laws. 

         

        9. FINANCIAL
          HARDSHIP

         

            Upon
          the
          written request of a Participant or a Participant's legal representative
          and a
          finding that continued deferral will result in an unforeseeable financial
          emergency to the Participant, the Committee (in its sole discretion) may
          authorize (a) the payment of all or a part of a Participant's Compensation
          Accounts representing Deferred Compensation and earnings thereon in a single
          lump sum prior to his or her ceasing to be a Participant, or (b) a Participant
          to cease contributing Deferred Compensation to the Plan during a Plan Year.
          It
          is intended that the Committee's determinations as to whether the Participant
          has suffered an “unforeseeable financial emergency” shall be made consistent
          with the requirements under Section 409A of the Code and the regulations
          and
          guidance thereunder. An “unforeseeable financial emergency” means a severe
          financial hardship to the Participant, the Participant’s spouse, the
          Participant’s beneficiary or the Participant’s dependent (as defined in Code
          Section 152, without regard to Sections 152(b), (b)(2) and (d)(1)(B));
          loss of
          the Participant’s property due to casualty; or other similar extraordinary and
          unforeseeable circumstances arising as a result of events beyond the control
          of
          the Participant. Any amounts distributed with respect to an emergency shall
          not
          exceed the amounts necessary to satisfy such emergency plus amounts necessary
          to
          pay taxes reasonably anticipated as a result of the distribution, after
          taking
          into account the extent to which such hardship is or may be relieved by
          the
          cancellation of the Participant’s deferral election under this Plan or through
          reimbursement or compensation by insurance or otherwise or by liquidation
          of the
          Participant’s assets (to the extent the liquidation of such assets would not
          itself cause severe financial hardship). The Committee may adopt procedures
          for
          determining when a hardship situation exists, including the use of independent
          advisors to make such determinations.

         

            Any
          Participant receiving a hardship distribution may have no further amounts
          deferred under this Plan for a period of one year from the date of such
          distribution, and any subsequent deferral may only begin at the beginning
          of a
          subsequent Plan Year and in accordance with the procedures in Section 6.
          The
          Participant shall not repay to the Company amounts distributed pursuant
          to this
          Section 9.

         

        10. BENEFICIARY
          DESIGNATION

         

            A
          Participant
          may designate one or more persons (including a trust) to whom or to which
          payments are to be made if the Participant dies before receiving distribution
          of
          all amounts due under the Plan. A Beneficiary designation made under the
          Prior
          Plan shall apply to this Plan, unless subsequently changed as provided
          herein. A
          Participant may, at any time, elect to change the designation of a Beneficiary.
          A designation of Beneficiary will be effective only after the signed designation
          of Beneficiary is filed with the Committee or its designee while the Participant
          is alive and will cancel all designations of Beneficiary signed and filed
          earlier, including any designations of Beneficiary made under the Prior
          Plan. If
          the Participant fails to designate a Beneficiary as provided above or if
          all of
          a Participant's Beneficiaries predecease him or her and he or she fails
          to
          designate a new Beneficiary, the remaining unpaid amounts shall be paid
          in one
          lump sum to the estate of such Participant. If all Beneficiaries of the
          Participant die after the Participant but before complete payment of all
          amounts
          due hereunder, the remaining unpaid amounts shall be paid in one lump sum
          to the
          estate of the last to die of such Beneficiaries.

         

        11. UNSECURED
          GENERAL CREDITOR STATUS OF EMPLOYEE

         

            The
          payments
          to Participants and their Beneficiaries hereunder shall be made from the
          general
          corporate assets of the Company. No person shall have any interest in any
          such
          assets by virtue of the provisions of this Plan. The Company's obligation
          hereunder shall be an unfunded and unsecured promise to pay money in the
          future.
          To the extent that any person acquires a right to receive payments from
          the
          Company under the provisions hereof, such right shall be no greater than
          the
          right of any unsecured general creditor of the Company; no such person
          shall
          have nor acquire any legal or equitable right, interest or claim in or
          to any
          property or assets of the Company. Any accounts maintained under this Plan
          shall
          be hypothetical in nature and shall be maintained for bookkeeping purposes
          only.
          Neither the Plan nor any account shall hold any actual funds or
          assets.

         

        12. SHARES;
          ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION

         

            An
          aggregate
          of 100,000 split-adjusted shares of Common Stock were initially allocated
          to the
          Prior Plan and reserved for the distribution of Compensation Accounts as
          described in Section 8.5 thereof. An additional 750,000 shares were
          subsequently allocated to the Prior Plan, subject to adjustment under
          Section 12 thereof. Any shares allocated under the terms of the Prior Plan
          shall be deemed allocated under this Plan since the Prior Plan and this
          Plan are
          considered one plan set forth in two separate documents. The Company may,
          in its
          discretion, use shares held in the Treasury under this Plan in lieu of
          authorized but unissued shares of Common Stock. 

         

            In
          the event
          of any change in the outstanding Common Stock of the Company by reason
          of any
          stock split, share dividend, recapitalization, merger, consolidation,
          reorganization, combination, or exchange or reclassification of shares,
          split-up, split-off, spin-off, liquidation or other similar change in
          capitalization, or any distribution to common shareholders other than cash
          dividends, the number or kind of shares or Stock Units that may be credited
          under the Plan shall be automatically adjusted so that the proportionate
          interest of the Participants shall be maintained as before the occurrence
          of
          such event. Such adjustment shall be conclusive and binding for all purposes
          of
          the Plan.

         

        13. INALIENABILITY
          OF BENEFITS

         

            The
          interests
          of the Participants and their Beneficiaries under the Plan may not in any
          way be
          voluntarily or involuntarily transferred, alienated or assigned, nor subject
          to
          attachment, execution, garnishment or other such equitable or legal process.
          A
          Participant or Beneficiary cannot waive the provisions of this Section
          13.

         

        14. CLAIMS
          PROCEDURE 

         

            Any
          Participant, Beneficiary or any other person claiming benefits, eligibility,
          participation or any other right or interest under this Plan may file a
          written
          claim setting forth the basis of the claim with the Chief Executive Officer
          of
          the Company (“CEO”). A written notice of the CEO’s disposition of any such claim
          shall be furnished to the claimant within a reasonable time (not to exceed
          ninety (90) days) after the claim is received by the CEO. Notwithstanding
          the
          foregoing, the CEO may have additional time (not to exceed ninety (90)
          days) to
          decide the claim if special circumstances exist, provided that he advises
          the
          claimant, in writing and prior to the end of the initial ninety (90) day
          period,
          of the special circumstances giving rise to the need for additional time
          and the
          date on which he expects to decide the claim. If the claim is denied, in
          whole
          or in part, the notice of disposition shall include the specific reason
          for the
          denial, identify the specific provisions of the Plan upon which the denial
          is
          based, describe any additional material or information necessary to perfect
          the
          claim, explain why that material or information is necessary and describe
          the
          Plan’s review procedures, including the timeframes thereunder for a claimant
          to
          file a request for review and for the Committee to decide the claim. The
          notice
          shall also include a statement advising the claimant of his right to bring
          a
          civil action if his claim is denied, in whole or in part, upon review.
          

         

            Within
          sixty
          (60) days after receiving the written notice of the CEO’s disposition of the
          claim, the claimant may request, in writing, review by the Committee of
          the
          CEO’s decision regarding his claim. Upon written request, the claimant shall
          be
          entitled to a review meeting with the Committee to present reasons why
          the claim
          should be allowed. The claimant or his authorized representative may submit
          a
          written statement in support of his claim, together with such comments,
          information and material relating to the claim, as he deems necessary or
          appropriate. The claimant or his duly authorized representative shall be
          provided, upon request and free of charge, reasonable access to, and copies
          of,
          all documents, records and other information which are relevant to the
          claimant’s claim and its review. If the claimant does not request review within
          sixty (60) days after receiving written notice of the CEO’s disposition of the
          claim, the claimant shall be deemed to have accepted the CEO’s written
          disposition.

         

            The
          Committee
          shall make its decision on review and provide written notice thereof to
          the
          claimant within a reasonable time (not to exceed sixty (60) days) after
          the
          claim is received by the Committee. Notwithstanding the foregoing, the
          Committee
          may have additional time (not to exceed sixty (60) days) to decide the
          claim if
          special circumstances exist provided that the Committee advises the claimant,
          in
          writing, prior to the end of the initial sixty (60) day period, of the
          special
          circumstances giving rise to the need for additional time and the date
          on which
          it expects to decide the claim. In no event shall the Committee have more
          than
          one hundred twenty (120) days following its receipt of the claimant’s request
          for review to provide the claimant with written notice of its decision.
          The
          Committee shall have the right to request of and receive from claimant
          such
          additional information, documents or other evidence as the Committee may
          reasonably require. In the event that the Committee requests such additional
          information from the claimant, the period for making the benefit determination
          on review shall not take into account the period beginning on the date
          on which
          the Committee notifies the claimant in writing of the need for additional
          information and ending on the date on which the claimant responds to the
          request
          for additional information.

         

            If
          the claim
          is denied upon review, in whole or in part, the notice of disposition shall
          include the specific reason for the denial, identify the specific provision
          of
          the Plan upon which the denial is based, include a statement advising the
          claimant of his right to receive, upon written request and free of charge,
          reasonable access to and copies of all documents, records and other information
          which are relevant to the claimant’s claim and include a statement advising the
          claimant of his right to bring a civil action under Section 502(a) of the
          Act if
          his claim is denied, in whole or in part, upon review.

         

            Notwithstanding
          anything herein, if a claimant is denied a benefit because he or she is
          determined not to be disabled and he or she makes a claim pursuant to such
          denial, the provisions of this paragraph shall apply. Upon receipt of a
          claim,
          the reply period shall be forty-five (45) days. If, prior to the end of
          such
          45-day period, the claims reviewer determines that, due to matters beyond
          the
          control of the Plan, a decision cannot be rendered, the period for making
          the
          determination may be extended for up to thirty (30) days, and the claims
          reviewer shall notify the claimant, prior to the expiration of such 45-day
          period, of the circumstances requiring an extension and the date by which
          the
          Plan expects to render a decision. If, prior to the end of the first 30-day
          extension period, the claims reviewer determines that, due to matters beyond
          the
          control of the Plan, a decision cannot be rendered within that extension
          period,
          the period for making the determination may be extended for up to an additional
          thirty (30) days, and the claims reviewer shall notify the claimant, prior
          to
          the expiration of the first 30-day extension period, of the circumstances
          requiring the extension and the date by which the Plan expects to render
          a
          decision. In the case of any extension described in this paragraph, the
          notice
          of extension shall specifically explain the standards on which entitlement
          to a
          benefit is based, the unresolved issues that prevent a decision on the
          claim and
          the additional information needed to resolve those issues, and the claimant
          shall be afforded forty-five (45) days within which to provide the specified
          information. If information is requested, the period for making the benefit
          determination shall be tolled from the date on which notification of an
          extension is sent to the claimant until the date on which the claimant
          responds
          to the request for information. Within one hundred eighty (180) days after
          receiving the written notice of an adverse disposition of the claim, the
          claimant may request in writing, and shall be entitled to, a review of
          the
          benefit determination. In deciding an appeal of any adverse benefit
          determination that is based in whole or in part on a medical judgment,
          the Plan
          shall consult with a health care professional who has appropriate training
          and
          experience in the field of medicine involved in the medical judgment. Such
          health care professional shall be an individual who is neither an individual
          who
          was consulted in connection with the adverse benefit determination that
          is the
          subject of the appeal nor the subordinate of any such individual. The medical
          or
          vocational experts whose advice was obtained on behalf of the Plan in connection
          with the claimant’s adverse benefit determination will be identified to the
          claimant. If the claimant does not request a review within one hundred
          eighty
          (180) days after receiving written notice of the original’s disposition of the
          claim, the claimant shall be deemed to have accepted the original written
          disposition. A decision on review shall be rendered in writing by the Plan
          within a reasonable period of time, but ordinarily not later than forty-five
          (45) days after receipt of the claimant’s request for review by the Plan, unless
          the Plan determines that special circumstances require an extension of
          time for
          processing the claim. If the Plan determines that an extension of time
          for
          processing is required, written notice of the extension shall be furnished
          to
          the claimant prior to the termination of the initial forty-five (45) period.
          In
          no event shall such extension exceed a period of forty-five (45) days from
          the
          end of the initial period. The extension notice shall indicate the special
          circumstances requiring an extension of time and the date by which the
          Plan
          expects to render the determination on review. In the event the extension
          is due
          to a claimant’s failure to submit information necessary to decide the claim, the
          claimant shall be afforded forty-five (45) days within which to provide
          the
          specified information, and the period for making the benefit determination
          on
          review shall be tolled from the date on which notification of the extension
          is
          sent to the claimant until the date on which the claimant responds to the
          request for additional information.

         

            For
          purposes
          of this Section, a document, record or information will be considered “relevant’
if it (a) was relied upon by the CEO or Committee, as applicable, in making
          the
          benefit decision, (b) was submitted, considered or generated in the course
          of
          making such decision, even if it was not relied upon in making those decisions,
          or (c) demonstrates compliance with the administrative processes and safeguards
          established by the Plan to insure that the terms of the Plan have been
          followed
          and applied consistently.

         

            To
          the extent
          permitted by law, a decision on review by the Committee shall be binding
          and
          conclusive upon all persons whomsoever. Completion of the claims procedure
          described in this Section shall be a mandatory precondition that must be
          complied with prior to commencement of a legal or equitable action in connection
          with the Plan by a person claiming rights under the Plan, or by another
          person
          claiming rights through such a person. The Committee may, in its sole
          discretion, waive these procedures as a mandatory precondition to such
          an
          action.

         

        15. GOVERNING
          LAW

         

            The
          provisions of this plan shall be interpreted and construed in accordance
          with
          the laws of the State of Missouri, except to the extent preempted by Federal
          law.

         

        16. AMENDMENTS

         

            The
          Committee
          may amend, alter or terminate this Plan at any time without the prior approval
          of the Board; provided, however, that the Committee may not, without approval
          by
          the Board, materially increase the benefits accruing to Participants under
          the
          Plan.

         

        17. TIME
          FOR PAYMENT

         

            Notwithstanding
          anything herein to the contrary, in the event that a Participant is determined
          to be a specified employee in accordance with Section 409A of the Code
          and the
          regulations and other guidance issued thereunder for purposes of any payment
          on
          termination of employment under this Plan, such payment(s) shall be made
          or
          begin, as applicable, on the first payroll date which is more than six
          months
          following the date of separation from service, to the extent required to
          avoid
          the adverse tax consequences to the Participant under Section 409A of the
          Internal Revenue Code of 1986, as amended.

         

            All
          payments
          due and payable under the Plan on a fixed date shall be deemed to be made
          upon
          such fixed date if such payment is made on such date or a later date within
          the
          same calendar year or, if later, by the fifteenth day of the third calendar
          month following the specified date (provided the Participant is not entitled,
          directly or indirectly, to designate the taxable year of the payment).
          In
          addition, a payment is treated as made upon a fixed date under the Plan
          if the
          payment is made no earlier than 30 days before the designated payment date
          and
          the service provider is not permitted, directly or indirectly, to designate
          the
          taxable year of the payment. 

         

            IN
          WITNESS
          WHEREOF, this Plan is effective as of January 1, 2005.

         

                                                              

      

      
        
          	 	 	
                  
                      
                      EXPRESS SCRIPTS, INC.

                  

                

        

         

        
          	 	 	By:	
                    /s/ George
                    Paz                                                                               

                                                               
                    

                
	 	 	Title: 	  President, Chief Executive Officer
                  and ChairmanSpecial Long Term Incentive Awards for Named Executive Officers

    Exhibit
      10.3

    

    Summary
      of Special Equity Awards and Salary and Bonus Adjustments for Named Executive
      Officers

    

      

    Special
      Long Term Incentive Awards

    

    On
      May
      23, 2007, the Compensation Committee approved awards of certain special awards
      of performance shares and restricted stock to the Named Executive Officers,
      all
      of which were granted under the Company’s 2000 Long Term Incentive Plan, as
      follows:

     

    
      	
              Name

            	
              Title

            	
              Performance
                Shares

            	
              Shares
                of Restricted Stock

            
	
               
                George Paz

            	
               
                President, CEO & Chairman

            	
              2,846

            	
              1,729

            
	
               
                David Lowenberg

            	
               
                President, CuraScript

            	
              880

            	
              534

            
	
               
                Edward J. Stiften

            	
               
                Senior Vice President & CFO

            	
              828

            	
              503

            
	
               
                Thomas M. Boudreau

            	
               
                Senior Vice President & Chief Legal Officer

            	
              647

            	
              393

            
	
               
                Edward Ignaczak

            	
               
                Senior Vice President of Sales and Account Management

            	
              388

            	
              236

            

    

     

    Performance
      Shares. 
      The performance shares are settled in shares of the Company’s common stock (the
“Stock”) on a share-for-share basis.  The number of shares of Stock to be
      delivered upon settlement of the performance shares is determined based upon
      the
      Company’s performance over a set period versus a peer group of companies
      selected by the Compensation Committee.  

    

    Specifically,
      the number of shares issued in settlement of the performance share awards will
      depend on where the Company’s performance for the period from January 1, 2007
      through January 1, 2010 ranks in relation to the designated peer group in three
      equally-rated metrics:

    

    
      	·  	
              compound
                annual shareholder return (price appreciation plus reinvestment of
                monthly
                dividends and the compounding effect of dividends paid on reinvested
                dividends),

            

    

    
      	·  	
              compound
                annual growth in earnings per share (basic earnings per share before
                extraordinary items and discontinued operations),
                and

            

    

    
      	·  	
              average
                return on invested capital (income before extraordinary items (available
                for common stock) divided by total invested capital, which is the
                sum of
                total long-term debt, preferred stock, minority interest and total
                common
                equity).

            

    

    

    In
      order
      for any shares to be issued under the performance share awards, the Company’s
      composite performance must rank in at least the 40th percentile in relation
      to
      its peer group.  Assuming the Company’s composite performance for the
      performance period is at the 40th percentile, the actual shares of Stock issued
      will equal 35% of the award targeted for the Named Executive Officer; at the
      50th percentile, the actual shares of Stock issued will equal 100% of the award
      targeted for the Named Executive Officer; and at the 80th percentile, the actual
      shares of Stock issued will equal 250% of the award targeted for the Named
      Executive Officer, which is the maximum number of shares that can be
      awarded.  If the Company’s composite performance falls between these
      percentile rankings, the actual shares of Stock issued will be determined by
      interpolation.

    

    Realization
      of the performance share awards and their actual value, if any, will depend
      on
      the applicable targets being met and the market value of the Stock on the date
      the performance share awards are settled.

    

    The
      awards provide for certain rights in the event of termination of employment
      as a
      result of death, disability, retirement or termination by the Company without
      cause (as defined), but terminate in the event of termination of employment
      for
      any other reason prior to the last day of the performance period.
 Notwithstanding the foregoing, the awards provide that upon a change of
      control (as defined) prior to the last day of the performance period,
      participants who remain employed on the date of a change in control or who
      terminated earlier on account of death, disability or retirement will receive
      cash equal to the value of the Stock represented by the performance shares
      on
      the last trading day before the change in control, and that participants who
      were terminated earlier by the Company without cause will receive the cash
      value
      of a portion of the Stock represented by the performance shares on the last
      trading day before the change in control.

    

    The
      performance shares are subject to the terms of the 2000 LTIP and a Performance
      Share Agreement entered into with each participant.  The 2000 LTIP is
      listed as Exhibits 10.6, 10.7 and 10.8, and the form of award agreement is
      listed as Exhibit 10.4, to the Current Report on Form 8-K to which this Exhibit
      10.3 is attached and are hereby incorporated herein by this
      reference.

    

    Restricted
      Stock. 
      The shares of restricted stock awarded to the Named Executive Officers are
      initially subject to restrictions which prohibit the sale or transfer of the
      restricted stock.  The restrictions on the restricted stock lapse as to
      one-third of each award on February 22, 2008, February 22, 2009, and February
      22, 2010.  Holders are entitled to the same rights to dividends on and to
      vote shares of restricted stock as other shareholders.

    

    The
      restricted stock awards are subject to the terms and conditions of the 2000
      LTIP
      as well as a Restricted Stock Agreement entered into with each
      participant.  The 2000 LTIP is listed as Exhibits 10.6, 10.7 and 10.8, and
      the form of award agreement is listed as Exhibit 10.5, to the Current Report
      on
      Form 8-K to which this Exhibit 10.3 is attached and each are hereby incorporated
      herein by this reference.

    

    Salary
      and Bonus Potential Adjustments. 
      The
      Compensation Committee approved increases to the annual base salary for two
      of
      the Named Executive Officers, and adjustment to the target and maximum bonus
      potential for one in the Named Executive Officers, each in connection with
      such
      executives’ assumption of additional duties. The approved compensation
      adjustments are as follows:

    

    
      	·  	
              The
                base salary for Thomas M. Boudreau, Senior Vice President and Chief
                Legal
                Officer of the Company was increased from $440,000 to
                $465,000.

            

    

    
      	·  	
              The
                base salary for Edward Ignaczak, Senior Vice President of Sales and
                Account Management for the Company was increased from $311,000 to
                $350,000, and the target bonus for Mr. Ignaczak was increased from
                60% of
                base salary to 75% of base salary. The terms of the Company’s bonus awards
                are detailed in Exhibit 10.1 to the Company’s Current Report on Form 8-K
                filed March 1, 2007.

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