Document:

EX-10.1 A

 

EXHIBIT 10(a)

LIZ CLAIBORNE, INC. SECTION 162(m) LONG TERM PERFORMANCE
PLAN

		
	1	
    Purpose

     
The purpose of the Liz Claiborne, Inc. Section 162(m) Long
Term Performance Plan (the “Plan”) is to provide
incentives to certain senior officers in a manner designed to
reinforce the Company’s performance goals; to strengthen
the Company’s “pay for performance” ethic by
linking a significant portion of participants’ compensation
to the achievement of such goals; and to continue to attract,
motivate and retain high performing executives on a competitive
basis, while seeking to preserve for the Company’s benefit,
to the extent practicable, a tax deduction by the Company for
payments of incentive compensation to such executives through
payment of qualified “performance-based” compensation
within the meaning of section 162(m)(4)(C) of the Code.

		
	2	
    Definitions

     
The following terms have the meanings indicated unless a
different meaning is clearly required by the context:

		
	 	     
    (a) “Board of Directors” means the Board of
    Directors of the Company.
	 
	 	     
    (b) “Code” means the Internal Revenue Code of
    1986, as amended.
	 
	 	     
    (c) “Committee” means the Compensation Committee
    of the Board of Directors or a subcommittee thereof. The
    Committee at all times shall be composed of at least two
    directors of Liz Claiborne, Inc., and all members of the
    Committee shall be “outside directors” within the
    meaning of section 162(m) of the Code.
	 
	 	     
    (d) “Company” means Liz Claiborne, Inc. and its
    consolidated subsidiaries and affiliates.
	 
	 	     
    (e) “Participant” means an individual who has
    received a performance bonus under the Plan.

		
	3	
    Participation

     
An individual shall be eligible to participate in the Plan if he
or she (a) is an employee of Liz Claiborne, Inc. and
(b) has a base salary in excess of $400,000 per year
or is reasonably expected by the Committee to have compensation
in excess of $1.0 million.

		
	4	
    Performance Bonuses

     
The Committee, in its discretion, may grant performance bonuses
to eligible individuals. The granting of a performance bonus
shall entitle the recipient to receive a payment in cash, as
determined by the Committee and set forth in the Grant
Certificate, upon the achievement of specified performance goals
during a performance period established by the Committee. The
terms of performance bonuses, including the length of the
performance period and the performance goals, need not be
uniform and may vary from individual to individual.

		
	5	
    Performance Periods

     
Each performance period shall be for a period of at least one
year.

		
	6	
    Performance Goals

     
(a) Prior to the ninety-first (91st) day of the applicable
performance period or during such other period as may be
permitted under Section 162(m) of the Code, the Committee
shall establish one or more objective performance goals for each
recipient of a performance bonus with respect to such
performance period. Such performance goals shall be expressed in
terms of one or more of the following criteria:
(a) earnings (either in the aggregate or on a per-share
basis, reflecting dilution of shares as the Committee deems
appropriate and, if

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the Committee so determines, net of or including dividends);
(b) gross or net sales; (c) cash flow(s) (including
either operating or net cash flows); (d) financial return
ratios; (e) total shareholder return, shareholder return
based on growth measures or the attainment by the shares of a
specified value for a specified period of time, share price or
share price appreciation; (f) value of assets, return or
net return on assets, net assets or capital (including invested
capital); (g) adjusted pre-tax margin; (h) margins,
profits and expense levels; (i) dividends; (j) market
share, market penetration or other performance measures with
respect to specific designated products or product groups and/or
specific geographic areas; (k) reduction of losses, loss
ratios or expense ratios; (l) reduction in fixed costs;
(m) operating cost management; (n) cost of capital;
(o) debt reduction; (p) productivity improvements;
(q) inventory turnover measurements; or (r) customer
satisfaction based on specified objective goals or a
Company-sponsored customer survey. Each such performance goal
may (1) be expressed with respect to the Company as a whole
or with respect to one or more divisions or business units,
(2) be expressed on a pre-tax or after-tax basis,
(3) be expressed on an absolute and/or relative basis,
(4) employ comparisons with past performance of the Company
(including one or more divisions) and/or (5) employ
comparisons with the current or past performance of other
companies, and in the case of earnings-based measures, may
employ comparisons to capital, stockholders’ equity and
shares outstanding.

     
(b) To the extent applicable, the measures used in
performance goals set under the Plan shall be determined in
accordance with generally accepted accounting principles
(“GAAP”) and in a manner consistent with the methods
used in the Company’s regular reports on Forms 10-K
and 10-Q, without regard to any of the following, unless
otherwise determined by the Committee consistent with the
requirements of section 162(m)(4)(C) and the regulations
thereunder:

		
	 	     
    (i) all items of gain, loss or expense for a fiscal year
    that are related to special, unusual or non-recurring items,
    events or circumstances affecting the Company or the financial
    statements of the Company;
	 
	 	     
    (ii) all items of gain, loss or expense for a fiscal year
    that are related to (A) the disposal of a business or
    discontinued operations or (B) the operations of any
    business acquired by Company during the fiscal year; and
	 
	 	     
    (iii) all items of gain, loss or expense for a fiscal year
    that are related to changes in accounting principles or to
    changes in applicable law or regulations.

     
To the extent any objective performance goals are expressed
using any earnings or sales-based measures that require
deviations from GAAP, such deviations shall be at the discretion
of the Committee and established at the time the applicable
performance goals are established.

		
	7	
    Award Amounts

     
(a) At the time that a performance bonus is granted to a
Participant, the Committee shall establish a maximum bonus that
such Participant may receive under that performance bonus. The
maximum bonus shall be related to the Participant’s base
salary at the start of the performance period by a formula that
takes account of the degree of achievement of the goals set for
the Participant; provided, however, that the Committee shall
have absolute discretion to reduce the actual bonus payment that
would otherwise be payable to any Participant on the basis of
achievement of performance goals.

     
(b) The maximum award that may be paid to a Participant in
respect of a performance bonus shall be equal to
$5.0 million multiplied by the number of fiscal years of
the Company included in the applicable performance period.

		
	8	
    Payment of Performance Bonus

     
Performance bonuses shall be paid following the end of the
performance period at such time as bonuses are generally paid to
the Company’s other executive officers, but in no event
later than
21/2 months
after the end of the fiscal year during which the performance
period ends; provided, however, that no such payment shall be
made until the Committee has certified (in the manner prescribed
under applicable regulations under

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section 162(m) of the Code) that and the extent to which
the performance goals and any other material terms related to
the performance bonus were in fact satisfied.

     
In the event that the Committee determines that the
certification as to the achievement of the performance goals
with respect to a performance bonus was based on incorrect data
due to the fraudulent acts of the recipient of the performance
bonus, such recipient shall, upon written request from the
Committee, return to the Company the amounts received in payment
of such performance bonus.

		
	9	
    Death or Termination of Employment

     
Unless the Committee determines otherwise with respect to a
performance at the time such performance bonus is granted:

		
	 	     
    (a) In the event of the death of a Participant after the
    end of a performance period and prior to the payment of the
    performance bonus for such performance period, such payment
    shall be made to the representative of the Participant’s
    estate.
	 
	 	     
    (b) In the event of the disability, retirement or other
    termination of employment of a Participant after the end of a
    performance period and prior to the payment of the performance
    bonus for such performance period, the Committee, in its
    discretion, shall have the power to award to such Participant
    such performance bonus.
	 
	 	     
    (c) In the event of the death, disability, retirement or
    other termination of employment of a Participant during a
    performance period, the Committee, in its discretion, shall have
    the power to award to such Participant (or the representative of
    the Participant’s estate) an equitably prorated portion of
    the performance bonus which otherwise would have been earned by
    such Participant, to be paid at such time as the performance
    bonus would have been paid to the Participant if not for such
    event.

		
	10	
    Nontransferability

     
The right of a Participant or of any other person to a
performance bonus shall not be assigned, transferred, pledged or
encumbered in any manner and any attempted assignment, transfer,
pledge or encumbrance shall be null and void and of no force or
effect.

		
	11	
    Administrative Provisions

     
(a) The Plan shall be administered by the Committee. The
Committee shall have full, exclusive and final authority in all
determinations and decisions affecting the Plan and
Participants, including sole authority to interpret and construe
any provision of the Plan, to correct any defect, supply any
omission and reconcile any inconsistency in the Plan, to adopt
such rules and regulations for administering the Plan as it may
deem necessary or appropriate under the circumstances, and to
make any other determination it deems necessary or appropriate
for the administration of the Plan. Decisions of the Committee
shall be final and binding on all parties. All expenses of the
Plan shall be borne by the Company.

     
(b) Actions of the Committee shall be taken by the vote of
a majority of its members. Any action may be taken by a written
instrument signed by a majority of the Committee members, and
action so taken shall be fully as effective as if it had been
taken by a vote at a meeting.

     
(c) No member of the Committee shall be liable for any
action, omission, or determination relating to the Plan, and the
Company shall indemnify and hold harmless each member of the
Committee and each other director or employee of the Company or
its affiliates to whom any duty or power relating to the
administration or interpretation of the Plan has been delegated
against any cost or expense (including counsel fees, which fees
shall be paid as incurred) or liability (including any sum paid
in settlement of a claim with the approval of the Committee)
arising out of or in connection with any action, omission or
determination relating to the Plan, unless, in each case, such
action, omission or determination was taken or made by such
member, director or employee in bad faith and without reasonable
belief that it was in the best interests of the Company.

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	12	
    Amendment and Termination

     
The Board of Directors may at any time amend the Plan in any
fashion or terminate or suspend the Plan; provided that no
amendment shall be made which would cause bonuses payable under
the Plan to fail to qualify for the exemption from the
limitations of section 162(m) of the Code provided in
section 162(m)(4)(C) of the Code. Stockholder approval
shall be required with respect to any amendment to the Plan to
the extent required under section 162(m) of the Code. Upon
any termination of the Plan, all rights of a Participant with
respect to any performance period that has not ended on or prior
to the effective date of such termination shall become null and
void.

		
	13	
    Tax Withholding

     
All amounts required to be paid under the Plan shall be subject
to any required Federal, state, local and other applicable
withholdings or deductions.

		
	14	
    Miscellaneous

     
(a) The Plan was adopted by the Board of Directors on
January 20, 2005, subject to stockholder approval. No
payments may be made under the Plan until the Plan is approved
by the Company’s stockholders. If the Plan is approved by
the Company’s stockholders at their 2005 annual meeting, no
bonus will be payable hereunder in respect of any fiscal year
beginning after January 20, 2010.

     
(b) The Plan shall be governed by and construed in
accordance with the internal laws of the State of Delaware
applicable to contracts made, and to be wholly performed, within
such State, without regard to principles of choice of laws.

     
(c) Nothing contained in the Plan shall confer upon any
Participant or any other person any right with respect to the
continuation of employment by the Company or interfere in any
way with the right of the Company at any time to terminate such
employment or to increase or decrease the compensation payable
to the Participant from the rate in effect at the commencement
of a fiscal year or to otherwise modify the terms of such
Participant’s employment. No person shall have any claim or
right to participate in or receive any award under the Plan.

     
(d) Nothing contained in the Plan shall be deemed in any
way to limit or restrict the Company from making any award or
payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect,
except that a Participant who receives a performance bonus with
a one-year performance period shall not be eligible to
participate in the Company’s regular annual bonus program
for such year.

     
(e) Any section or other headings contained herein are for
the purpose of convenience only and are not intended to expand,
limit or otherwise define the contents of such subdivisions.

     
(f) Notwithstanding any other provision hereunder, if and
to the extent that the Committee determines the Company’s
Federal tax deduction in respect of an award hereunder may be
limited as a result of section 162(m) of the Code, the
Committee may delay such payment as provided below. In the event
the Committee determines to delay the payment of a bonus or any
portion thereof hereunder, the Committee shall credit the amount
of the award so delayed to a book account. The amount so
credited to the book account shall be adjusted to reflect gains
and losses that would have resulted from the investment of such
amount in any investment vehicle or vehicles selected by the
Committee. The amount credited to the Participant’s account
hereunder shall be paid to the Participant following the
Participant’s termination of employment or at such other
time or times as shall be determined by the Committee in
compliance with the requirements of Section 409A of the
Code. The Participant shall have no rights in respect of such
book account and the amount credited thereto shall not be
transferable by the Participant other than by will or laws of
descent and distribution; any book account created hereunder
shall represent only an unfunded unsecured promise by the
Company to pay the amount credited thereto to the Participant in
the future.

4EX-10.1 B

 

EXHIBIT 10(b)

LIZ CLAIBORNE, INC.

2005 STOCK INCENTIVE PLAN

ARTICLE I

General

1.1     Purpose

     
The Liz Claiborne, Inc. 2005 Stock Incentive Plan (the
“Plan”) is designed to provide certain key persons, on
whose initiative and efforts the successful conduct of the
business of Liz Claiborne, Inc. (the “Company”)
depends, and who are responsible for the management, growth and
protection of the business of the Company, with incentives to:
(a) enter into and remain in the service of the Company, a
Company subsidiary or a Company joint venture; (b) acquire
a proprietary interest in the success of the Company;
(c) maximize their performance; and (d) enhance the
long-term performance of the Company (whether directly or
indirectly through enhancing the long-term performance of a
Company subsidiary or a Company joint venture). The Plan is also
designed to provide certain “performance-based”
compensation to these key persons.

1.2     Administration

     
(a) Administration by Committee; Constitution of
Committee. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company
(the “Board”) or such other committee or subcommittee
as the Board may designate or as shall be formed by the
abstention or recusal of a non-Qualified Member (as defined
below) of such committee (the “Committee”). The
members of the Committee shall be appointed by, and serve at the
pleasure of, the Board. While it is intended that at all times
that the Committee acts in connection with the Plan, the
Committee shall consist solely of Qualified Members, the number
of whom shall not be less than two, the fact that the Committee
is not so comprised will not invalidate any grant hereunder that
otherwise satisfies the terms of the Plan. A “Qualified
Member” is both a “non-employee director” within
the meaning of Rule 16b-3 (“Rule 16b-3”)
promulgated under the Securities Exchange Act of 1934 (the
“1934 Act”) and an “outside director” within
the meaning of section 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code”). If the Committee
does not exist, or for any other reason determined by the Board,
the Board may take any action under the Plan that would
otherwise be the responsibility of the Committee.

     
(b) Committee’s Authority. The Committee shall
have the authority (i) to exercise all of the powers
granted to it under the Plan, (ii) to construe, interpret
and implement the Plan and any Grant Certificates executed
pursuant to Section 2.1, (iii) to prescribe, amend and
rescind rules and regulations relating to the Plan, including
rules governing its own operations, (iv) to make all
determinations necessary or advisable in administering the Plan,
(v) to correct any defect, supply any omission and
reconcile any inconsistency in the Plan, and (vi) to amend
the Plan to reflect changes in applicable law.

     
(c) Committee Action; Delegation. Actions of the
Committee shall be taken by the vote of a majority of its
members. Any action may be taken by a written instrument signed
by a majority of the Committee members, and action so taken
shall be fully as effective as if it had been taken by a vote at
a meeting. Notwithstanding the foregoing or any other provision
of the Plan, the Committee or, pursuant to Section 1.2(a),
the Board, may delegate to one or more officers of the Company
the authority to designate the individuals (other than such
officer(s)), among those eligible to receive awards pursuant to
the terms of the Plan, who will receive rights or options under
the Plan and the size of each such grant, to the fullest extent
permitted by Section 157 of the Delaware General
Corporation Law (or any successor provision thereto), provided
that the Committee shall itself grant awards to those
individuals who could reasonably be considered to be subject to
the insider trading provisions of section 16 of the 1934
Act or whose awards could reasonably be expected to be subject
to the deduction limitations of section 162(m) of the Code.

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(d) Determinations Final. The determination of the
Committee on all matters relating to the Plan or any Grant
Certificate (as defined below) shall be final, binding and
conclusive.

     
(e) Limit on Committee Members’ Liability. No
member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
award thereunder.

1.3     Persons Eligible for
Awards

     
The persons eligible to receive awards under the Plan are those
officers, non-employee directors, and executive, managerial,
professional or administrative employees of, and consultants to,
the Company, its subsidiaries and its joint ventures
(collectively, “key persons”) as the Committee in its
sole discretion shall select.

1.4     Types of Awards Under
Plan

     
Awards may be made under the Plan in the form of
(a) incentive stock options, (b) non-qualified stock
options, (c) stock appreciation rights, (d) dividend
equivalent rights, (e) restricted stock,
(f) restricted stock units, (g) unrestricted stock,
and (h) performance shares, all as more fully set forth in
Article II. The term “award” means any of the
foregoing. No incentive stock option may be granted to a person
who is not an employee of the Company on the date of grant.

1.5     Shares Available for
Awards

     
(a) Aggregate Number Available; Certificate Legends.
The total number of shares of common stock of the Company
(“Common Stock”) with respect to which awards may be
granted pursuant to the Plan shall not exceed 5,000,000
shares, of which no more than 2,000,000 of those shares in the
aggregate may be granted pursuant to restricted stock awards,
restricted stock unit awards, unrestricted stock awards or
performance shares. Shares issued pursuant to the Plan may be
authorized but unissued Common Stock, authorized and issued
Common Stock held in the Company’s treasury or Common Stock
acquired by the Company for the purposes of the Plan. The
Committee may direct that any stock certificate evidencing
shares issued pursuant to the Plan shall bear a legend setting
forth such restrictions on transferability as may apply to such
shares. Stock appreciation rights settled in shares of Common
Stock shall be counted in full against the number of shares
available for award under the Plan, regardless of the number of
exercise gain shares issued upon the settlement of the stock
appreciation right.

     
(b) Adjustment Upon Changes in Common Stock. Upon
certain changes in Common Stock, the number of shares of Common
Stock available for issuance with respect to awards that may be
granted under the Plan pursuant to Section 1.5(a), shall be
adjusted pursuant to Section 3.7(a).

     
(c) Certain Shares to Become Available Again. The
following shares of Common Stock shall again become available
for awards under the Plan: (i) any shares that are subject
to an award under the Plan and that remain unissued upon the
cancellation or termination of such award for any reason
whatsoever; (ii) any shares of restricted stock forfeited
pursuant to Section 2.7(e), provided that any dividends
paid on such shares are also forfeited pursuant to such
Section 2.7(e); and (iii) any shares in respect of
which a performance share award is settled for cash.

     
(d) Individual Limits. Except for the limits set
forth in this Section 1.5(d) and in Section 2.2(h), no
provision of this Plan shall be deemed to limit the number or
value of shares with respect to which the Committee may make
awards to any eligible person.

		
	 	     
    (i) Subject to adjustment as provided in
    Section 3.7(a), the total number of shares of Common Stock
    with respect to which awards may be granted to any one employee
    or consultant of the Company or a subsidiary during any one
    calendar year shall not exceed 1,000,000 shares. Stock options
    and stock appreciation rights granted and subsequently canceled
    or deemed to be canceled in a calendar year count against this
    limit even after their cancellation.

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    (ii) Director Limit. The maximum number of shares of
    Common Stock with respect to which awards may be granted to any
    non-employee director of the Company during any one calendar
    year is 5,000 shares.

1.6     Definitions of Certain
Terms

     
(a) The “Fair Market Value” of a share of Common
Stock on any day shall be the closing price on the New York
Stock Exchange as reported for such day in The Wall Street
Journal or, if no such price is reported for such day, the
average of the high bid and low asked price of Common Stock as
reported for such day. If no quotation is made for the
applicable day, the Fair Market Value of a share of Common Stock
on such day shall be determined in the manner set forth in the
preceding sentence using quotations for the next preceding day
for which there were quotations, provided that such quotations
shall have been made within the ten (10) business days
preceding the applicable day. Notwithstanding the foregoing, if
deemed necessary or appropriate by the Committee, the Fair
Market Value of a share of Common Stock on any day shall be
determined by the Committee. In no event shall the Fair Market
Value of any share of Common Stock be less than its par value.

     
(b) The term “incentive stock option” means an
option that is intended to qualify for special federal income
tax treatment pursuant to sections 421 and 422 of the Code
as now constituted or subsequently amended, or pursuant to a
successor provision of the Code, and which is so designated in
the applicable Grant Certificate. Any option that is not
specifically designated as an incentive stock option shall under
no circumstances be considered an incentive stock option. Any
option that is not an incentive stock option is referred to
herein as a “non-qualified stock option.”

     
(c) A grantee shall be deemed to have a “termination
of employment” upon (i) the date the grantee ceases to
be employed by, or to provide consulting services for, the
Company, any Company subsidiary or Company joint venture, or any
corporation (or any of its subsidiaries) which assumes the
grantee’s award in a transaction to which
section 424(a) of the Code applies; or (ii) the date
the grantee ceases to be a Board member, provided, however, that
in the case of a grantee (x) who is, at the time of
reference, both an employee or consultant and a Board member, or
(y) who ceases to be engaged as an employee, consultant or
Board member and immediately is engaged in another of such
relationships with the Company, any Company subsidiary or
Company joint venture, the grantee shall be deemed to have a
“termination of employment” upon the later of the
dates determined pursuant to subparagraphs (i) and
(ii) above. For purposes of clause (i) above, a
grantee who continues his or her employment or consulting
relationship with: (A) a Company subsidiary subsequent to
its sale by the Company, or (B) a Company joint venture
subsequent to the Company’s sale of its interests in such
joint venture, shall have a termination of employment upon the
date of such sale. The Committee may in its discretion determine
whether any leave of absence constitutes a termination of
employment for purposes of the Plan and the impact, if any, of
any such leave of absence on awards theretofore made under the
Plan.

     
(d) The terms “parent corporation” and
“subsidiary corporation” shall have the meanings given
them in sections 424(e) and (f) of the Code,
respectively.

     
(e) The term “employment” shall be deemed to mean
an employee’s employment with, or a consultant’s
provision of services to, the Company, any Company subsidiary or
any Company joint venture and each Board member’s service
as a Board member.

     
(f) The term “cause” in connection with a
termination of employment by reason of a dismissal for cause
shall, except as provided for in Section 3.8, mean:

		
	 	     
    (i) to the extent that there is an employment, severance or
    other agreement governing the relationship between the grantee
    and the Company, a Company subsidiary or a Company joint
    venture, which agreement contains a definition of
    “cause,” cause shall consist of those acts or
    omissions that would constitute “cause” under such
    agreement; and otherwise,

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    (ii) the grantee’s termination of employment by the
    Company or an affiliate on account of any one or more of the
    following:

		
	 	     
    (A) any failure by the grantee substantially to perform the
    grantee’s employment duties;
	 
	 	     
    (B) any excessive unauthorized absenteeism by the grantee;
	 
	 	     
    (C) any refusal by the grantee to obey the lawful orders of
    the Board or any other person or committee to whom the grantee
    reports;
	 
	 	     
    (D) any act or omission by the grantee that is or may be
    injurious to the Company, monetarily or otherwise;
	 
	 	     
    (E) any act by the grantee that is inconsistent with the
    best interests of the Company;
	 
	 	     
    (F) the grantee’s material violation of any of the
    Company’s policies, including, without limitation, those
    policies relating to discrimination or sexual harassment;
	 
	 	     
    (G) the grantee’s unauthorized (a) removal from
    the premises of the Company or an affiliate of any document (in
    any medium or form) relating to the Company or an affiliate or
    the customers or clients of the Company or an affiliate or
    (b) disclosure to any person or entity of any of the
    Company’s, or its affiliates’, confidential or
    proprietary information;
	 
	 	     
    (H) the grantee’s commission of any felony, or any
    other crime involving moral turpitude; and
	 
	 	     
    (I) the grantee’s commission of any act involving
    dishonesty or fraud, or any act that constitutes misconduct
    resulting in a restatement of the Company’s financial
    statements due to non-compliance with any financial reporting
    requirement within the meaning of Section 304 of the
    Sarbanes-Oxley Act of 2002.

     
Any rights the Company may have hereunder in respect of the
events giving rise to cause shall be in addition to the rights
the Company may have under any other agreement with a grantee or
at law or in equity. Any determination of whether a
grantee’s employment is (or is deemed to have been)
terminated for cause for purposes of the Plan or any award
hereunder shall be made by the Committee in its discretion. If,
subsequent to a grantee’s voluntary termination of
employment or involuntary termination of employment without
cause, it is discovered that the grantee’s employment could
have been terminated for cause, the Committee may deem such
grantee’s employment to have been terminated for cause. A
grantee’s termination of employment for cause shall be
effective as of the date of the occurrence of the event giving
rise to cause, regardless of when the determination of cause is
made.

ARTICLE II

Awards Under the Plan

2.1     Certificates Evidencing
Awards

     
Each award granted under the Plan (except an award of
unrestricted stock) shall be evidenced by a written certificate
(“Grant Certificate”) which shall contain such
provisions as the Committee may in its sole discretion deem
necessary or desirable. By accepting an award pursuant to the
Plan, a grantee thereby agrees that the award shall be subject
to all of the terms and provisions of the Plan and the
applicable Grant Certificate.

		
	2.2     	
    Grant of Stock Options, Stock Appreciation Rights and
    Dividend Equivalent Rights

     
(a) Stock Option Grants. The Committee may grant
incentive stock options and non-qualified stock options
(collectively, “options”) to purchase shares of Common
Stock from the Company, to such key persons, and in such amounts
and subject to such vesting and forfeiture provisions and other
terms and conditions, as the Committee shall determine in its
sole discretion, subject to the provisions of the Plan.

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(b) Stock Appreciation Right Grants; Types of Stock
Appreciation Rights. The Committee may grant stock
appreciation rights to such key persons, and in such amounts and
subject to such vesting and forfeiture provisions and other
terms and conditions, as the Committee shall determine in its
sole discretion, subject to the provisions of the Plan. The
terms of a stock appreciation right may provide that it shall be
automatically exercised for a cash payment upon the happening of
a specified event that is outside the control of the grantee and
that it shall not be otherwise exercisable. Stock appreciation
rights may be granted in connection with all or any part of, or
independently of, any option granted under the Plan. A stock
appreciation right granted in connection with a non-qualified
stock option may be granted at or after the time of grant of
such option. A stock appreciation right granted in connection
with an incentive stock option may be granted only at the time
of grant of such option.

     
(c) Nature of Stock Appreciation Rights. The grantee
of a stock appreciation right shall have the right, subject to
the terms of the Plan and the applicable Grant Certificate, to
receive from the Company a number of shares of Common Stock
(valued at their Fair Market Value on the date of exercise of
the stock appreciation right) equal to (i) the excess of
the Fair Market Value of a share of Common Stock on the date of
exercise of the stock appreciation right over the Fair Market
Value of a share of Common Stock on the date of grant (or over
the option exercise price if the stock appreciation right is
granted in connection with an option), multiplied by
(ii) the number of shares with respect to which the stock
appreciation right is exercised. Upon the exercise of a stock
appreciation right granted in connection with an option, the
number of shares subject to the option shall be reduced by the
number of shares with respect to which the stock appreciation
right is exercised. Upon the exercise of an option in connection
with which a stock appreciation right has been granted, the
number of shares subject to the stock appreciation right shall
be reduced by the number of shares with respect to which the
option is exercised. Stock appreciation rights settled in shares
of Common Stock shall be counted in full against the number of
shares available for award under the Plan, regardless of the
number of exercise gain shares issued upon the settlement of the
stock appreciation right.

     
(d) Option Exercise Price. Each Grant Certificate
with respect to an option shall set forth the amount (the
“option exercise price”) payable by the grantee to the
Company upon exercise of the option evidenced thereby. The
option exercise price per share shall be determined by the
Committee in its sole discretion; provided, however, that the
option exercise price shall be at least 100% of the Fair Market
Value of a share of Common Stock on the date the option is
granted, and provided further that in no event shall the option
exercise price be less than the par value of a share of Common
Stock.

     
(e) Exercise Period. Each Grant Certificate with
respect to an option or stock appreciation right shall set forth
the periods during which the award evidenced thereby shall be
exercisable, whether in whole or in part. Such periods shall be
determined by the Committee in its sole discretion; provided,
however, that no stock option (or a stock appreciation right
granted in connection with an incentive stock option) shall be
exercisable more than 7 years after the date of grant, and
provided further that, except as and to the extent that the
Committee may otherwise provide pursuant to Sections 2.5,
3.7 or 3.8, no option or stock appreciation right shall be
exercisable prior to the first anniversary of the date of grant.
(See the default exercise period provided for under
Sections 2.3(a) and (b).)

     
(f) Dividend Equivalent Rights. The Committee may in
its sole discretion include in any Grant Certificate with
respect to an option, stock appreciation right or performance
shares, a dividend equivalent right entitling the grantee to
receive amounts equal to the ordinary dividends that would be
paid, during the time such award is outstanding and unexercised,
on the shares of Common Stock covered by such award if such
shares were then outstanding. In the event such a provision is
included in a Grant Certificate, the Committee shall determine
whether such payments shall be made in cash or in shares of
Common Stock, whether they shall be conditioned upon the
exercise of the award to which they relate, the time or times at
which they shall be made, and such other vesting and forfeiture
provisions and other terms and conditions as the Committee shall
deem appropriate. Notwithstanding the foregoing, (i) no
dividend equivalent rights shall be conditioned on the exercise
of any option or stock appreciation right if and to the extent
that such dividend equivalent right would cause the compensation
represented by such option or stock appreciation right not to
constitute performance-based compensation under
section 162(m) of the Code and (ii) no dividend
equivalent right shall be granted to the extent such dividend
equivalent right shall result in the payment of any tax under
Section 409A of the Code.

5

 

     
(g) Incentive Stock Option Limitation: $100,000
Limitation. To the extent that the aggregate Fair Market
Value (determined as of the time the option is granted) of the
stock with respect to which incentive stock options are first
exercisable during any calendar year shall exceed $100,000, or
such higher amount as may be permitted from time to time under
section 422 of the Code, such options shall be treated as
non-qualified stock options.

     
(h) Incentive Stock Option Limitation: 10% Owners.
Notwithstanding the provisions of paragraphs (d) and (e) of
this Section 2.2, an incentive stock option may not be
granted under the Plan to an individual who, at the time the
option is granted, owns stock possessing more than 10% of the
total combined voting power of all classes of stock of his or
her employer corporation or of its parent or subsidiary
corporations (as such ownership may be determined for purposes
of section 422(b)(6) of the Code) unless (i) at the
time such incentive stock option is granted the option exercise
price is at least 110% of the Fair Market Value of the shares
subject thereto and (ii) the incentive stock option by its
terms is not exercisable after the expiration of 5 years
from the date it is granted.

		
	2.3     	
    Exercise of Options and Stock Appreciation Rights

     
Subject to the other provisions of this Article II, each
option or stock appreciation right granted under the Plan shall
be exercisable as follows:

     
(a) Beginning of Exercise Period. Unless the
applicable Grant Certificate otherwise provides, an option or
stock appreciation right shall become exercisable in three
installments of 25%, 25% and 50%, respectively, of the shares
subject to such option or stock appreciation right; the first
installment shall become exercisable on the first anniversary of
the date of grant and the remaining two installments shall
become exercisable, respectively, on the second and third
anniversaries of the date of grant.

     
(b) End of Exercise Period. Unless the applicable
Grant Certificate otherwise provides, once an installment
becomes exercisable, it shall remain exercisable until the
earlier of (i) the seventh anniversary of the date of grant
of the award or (ii) the expiration, cancellation or
termination of the award.

     
(c) Timing and Extent of Exercise. Unless the
applicable Grant Certificate otherwise provides, (i) an
option or stock appreciation right may be exercised from time to
time as to all or part of the shares as to which such award is
then exercisable and (ii) a stock appreciation right
granted in connection with an option may be exercised at any
time when, and to the same extent that, the related option may
be exercised.

     
(d) Notice of Exercise. An option or stock
appreciation right shall be exercised by the filing of a written
notice with the Company or the Company’s designated
exchange agent (the “exchange agent”), on such form
and in such manner as the Committee shall in its sole discretion
prescribe.

     
(e) Payment of Exercise Price. Any written notice of
exercise of an option shall be accompanied by payment for the
shares being purchased. Such payment shall be made: (i) by
certified or official bank check (or the equivalent thereof
acceptable to the Company or its exchange agent) for the full
option exercise price; or (ii) with the consent of the
Committee, by delivery of shares of Common Stock owned by the
grantee (whether acquired by option exercise or otherwise,
provided that if such shares were acquired pursuant to the
exercise of a stock option, they were acquired at least six
months prior to the option exercise date or such other period as
the Committee may from time to time determine) having a Fair
Market Value (determined as of the exercise date) equal to all
or part of the option exercise price and a certified or official
bank check (or the equivalent thereof acceptable to the Company
or its exchange agent) for any remaining portion of the full
option exercise price; or (iii) at the discretion of the
Committee and to the extent permitted by law, by such other
provision, consistent with the terms of the Plan, as the
Committee may from time to time prescribe.

     
(f) Delivery of Certificates Upon Exercise. Promptly
after receiving payment of the full option exercise price, or
after receiving notice of the exercise of a stock appreciation
right, the Company or its exchange agent shall, subject to the
provisions of Section 3.2, deliver to the grantee or to
such other person as may then have the right to exercise the
award, certificate or certificates for the shares of Common
Stock for which the award has been exercised. If the method of
payment employed upon option exercise so requires, and if
applicable law

6

 

permits, a grantee may direct the Company, or its exchange
agent, as the case may be, to deliver the stock certificate(s)
to the grantee’s stockbroker.

     
(g) No Stockholder Rights. No grantee of an option
or stock appreciation right (or other person having the right to
exercise such award) shall have any of the rights of a
stockholder of the Company with respect to shares subject to
such award until the issuance of a stock certificate to such
person for such shares. Except as otherwise provided in
Section 1.5(b), no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other
property) for which the record date is prior to the date such
stock certificate is issued.

		
	2.4     	
    Compensation in Lieu of Exercise of an Option

     
Upon written application of the grantee of an option, the
Committee may in its sole discretion determine to substitute,
for the exercise of such option, compensation to the grantee not
in excess of the difference between the option exercise price
and the Fair Market Value of the shares covered by such written
application on the date of such application. Such compensation
shall be in shares of Common Stock, and the payment thereof may
be subject to conditions, all as the Committee shall determine
in its sole discretion. In the event compensation is substituted
pursuant to this Section 2.4 for the exercise, in whole or
in part, of an option, the number of shares subject to the
option shall be reduced by the number of shares for which such
compensation is substituted.

		
	2.5     	
    Termination of Employment; Death Subsequent to a
    Termination of Employment

     
(a) General Rule. Except to the extent otherwise
provided in paragraphs (b), (c), (d) or (e) of this
Section 2.5 or Section 3.8, a grantee who incurs a
termination of employment may exercise any outstanding option or
stock appreciation right on the following terms and conditions:
(i) exercise may be made only to the extent that the
grantee was entitled to exercise the award on the termination of
employment date; and (ii) exercise must occur within three
months after termination of employment but in no event after the
original expiration date of the award.

     
(b) Dismissal for Cause; Resignation. If a grantee
incurs a termination of employment as the result of a dismissal
for cause or resignation without the Company’s prior
consent, all options and stock appreciation rights not
theretofore exercised shall terminate upon the commencement of
business on the date of the grantee’s termination of
employment.

     
(c) Retirement. If a grantee incurs a termination of
employment as the result of retirement, then any outstanding
option or stock appreciation right shall be exercisable on the
following terms and conditions: (i) exercise may be made
only to the extent that the grantee was entitled to exercise the
award on the termination of employment date; and
(ii) exercise must occur by the earlier of (A) the
third anniversary of such termination of employment, or
(B) the original expiration date of the award. For this
purpose “retirement” shall mean a grantee’s
termination of employment, under circumstances other than those
described in paragraph (b) above, on or after: (x) the
grantee’s 65th birthday, (y) the date on which the
grantee has attained age 60 and completed at least six
years of vesting service (within the meaning of the
Company’s 401(k) Savings and Profit Sharing Plan, as
it may be amended from time to time) or (z) if approved by
the Committee, on or after the grantee has completed at least
20 years of vesting service.

     
(d) Disability. If a grantee incurs a termination of
employment by reason of a disability (as defined below), then
any outstanding option or stock appreciation right shall be
exercisable on the following terms and conditions:
(i) exercise may be made only to the extent that the
grantee was entitled to exercise the award on the termination of
employment date; and (ii) exercise must occur by the
earlier of (A) the first anniversary of the grantee’s
termination of employment, or (B) the original expiration
date of the award. For this purpose “disability” shall
mean: (x) except in connection with an incentive stock
option, any physical or mental condition that would qualify a
grantee for a disability benefit under the long-term disability
plan maintained by the Company or, if there is no such plan, a
physical or mental condition that prevents the grantee from
performing the essential functions of the grantee’s
position (with or without reasonable accommodation) for a period
of six consecutive months and (y) in connection with an
incentive stock option, a disability described in

7

 

section 422(c)(6) of the Code. The existence of a
disability shall be determined by the Committee in its absolute
discretion.

     
(e) Death.

		
	 	     
    (i) Termination of Employment as a Result of
    Grantee’s Death. If a grantee incurs a termination of
    employment as the result of death, then any outstanding option
    or stock appreciation right shall be exercisable on the
    following terms and conditions: (A) exercise may be made
    only to the extent that the grantee was entitled to exercise the
    award on the date of death; and (B) exercise must occur by
    the earlier of (1) the first anniversary of the
    grantee’s termination of employment, or (2) the
    original expiration date of the award.
	 
	 	     
    (ii) Death Subsequent to a Termination of
    Employment. If a grantee dies subsequent to incurring a
    termination of employment but prior to the expiration of the
    exercise period with respect to a stock option or a stock
    appreciation right (as provided by paragraphs (a), (c),
    or (d) above), then the award shall remain exercisable
    until the earlier to occur of (A) the first anniversary of
    the grantee’s date of death or (B) the original
    expiration date of the award.
	 
	 	     
    (iii) Restrictions on Exercise Following Death. Any
    such exercise of an award following a grantee’s death shall
    be made only by the grantee’s executor or administrator or
    other duly appointed representative reasonably acceptable to the
    Committee, unless the grantee’s will specifically disposes
    of such award, in which case such exercise shall be made only by
    the recipient of such specific disposition. If a grantee’s
    personal representative or the recipient of a specific
    disposition under the grantee’s will shall be entitled to
    exercise any award pursuant to the preceding sentence, such
    representative or recipient shall be bound by all the terms and
    conditions of the Plan and the applicable Grant Certificate
    which would have applied to the grantee including, without
    limitation, the provisions of Sections 3.2 and 3.8 hereof.

     
(f) Special Rules for Incentive Stock Options. No
option that remains exercisable for more than three months
following a grantee’s termination of employment for any
reason other than death (including death within three months
after the termination of employment or within one year after a
termination due to disability) or disability, or for more than
one year following a grantee’s termination of employment as
the result of disability, may be treated as an incentive stock
option.

     
(g) Committee Discretion. The Committee, in the
applicable Grant Certificate, may waive or modify the
application of the foregoing provisions of this Section 2.5.

		
	2.6     	
    Transferability of Options and Stock Appreciation
    Rights

     
Except as otherwise provided in an applicable Grant Certificate
evidencing an option or stock appreciation right, during the
lifetime of a grantee, each option or stock appreciation right
granted to a grantee shall be exercisable only by the grantee,
and no option or stock appreciation right shall be assignable or
transferable otherwise than by will or by the laws of descent
and distribution. The Committee may, in any applicable Grant
Certificate evidencing an option (other than an incentive stock
option to the extent inconsistent with the requirements of
section 422 of the Code applicable to incentive stock
options), permit a grantee to transfer all or some of the
options to (A) the grantee’s spouse, children or
grandchildren (“Immediate Family Members”), (B) a
trust or trusts for the exclusive benefit of such Immediate
Family Members, or (C) other parties approved by the
Committee in its absolute discretion. Following any such
transfer, any transferred options shall continue to be subject
to the same terms and conditions as were applicable immediately
prior to the transfer.

		
	2.7     	
    Grant of Restricted Stock

     
(a) Restricted Stock Grants. The Committee may grant
restricted shares of Common Stock to such key persons, in such
amounts, and subject to such vesting and forfeiture provisions
and other terms and conditions as the Committee shall determine
in its sole discretion, subject to the provisions of the Plan.
Restricted stock awards may be made independently of or in
connection with any other award under the Plan.

8

 

A grantee of a restricted stock award shall have no rights with
respect to such award unless such grantee accepts the award
within such period as the Committee shall specify by accepting
delivery of a Grant Certificate in such form as the Committee
shall determine and, in the event the restricted shares are
newly issued by the Company, makes payment to the Company or its
exchange agent by certified or official bank check (or the
equivalent thereof acceptable to the Company) in an amount at
least equal to the par value of the shares covered by the award.

     
(b) Issuance of Stock Certificate(s). Promptly after
a grantee accepts a restricted stock award, the Company or its
exchange agent shall, at the Company’s option, issue to the
grantee a stock certificate or stock certificates for the shares
of Common Stock covered by the award or shall establish an
account evidencing ownership of the stock in uncertificated
form. Upon the issuance of such stock certificate(s), or
establishment of such account, the grantee shall have the rights
of a stockholder with respect to the restricted stock, subject
to: (i) the nontransferability restrictions and forfeiture
provision described in paragraphs (d) and (e) of this
Section 2.7; (ii) in the Committee’s discretion,
a requirement that any dividends paid on such shares shall be
held in escrow until all restrictions on such shares have
lapsed; and (iii) any other restrictions and conditions
contained in the applicable Grant Certificate.

     
(c) Custody of Stock Certificate(s). Unless the
Committee shall otherwise determine, any stock certificates
issued evidencing shares of restricted stock shall remain in the
possession of the Company until such shares are free of any
restrictions specified in the applicable Grant Certificate. The
Committee may direct that such stock certificate(s) bear a
legend setting forth the applicable restrictions on
transferability.

     
(d) Nontransferability. Shares of restricted stock
may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of except as otherwise specifically
provided in this Plan or the applicable Grant Certificate. The
Committee at the time of grant shall specify the date or dates
(which may depend upon or be related to a period of continued
employment with the Company, the attainment of performance goals
or other conditions or a combination of such conditions) on
which the nontransferability of the restricted stock shall
lapse, provided, however, that, subject to Section 2.11 of
the Plan and except to the extent based upon the attainment of
performance goals, the nontransferability shall not lapse in
full until the third anniversary of the grant date and no
portion of the nontransferability shall lapse before the first
anniversary of the grant date.

     
(e) Consequence of Termination of Employment. Except
as expressly provided in Section 3.8 or as may otherwise be
provided by the Committee at any time prior to a grantee’s
termination of employment, a grantee’s termination of
employment for any reason (including death) shall cause the
immediate forfeiture of all shares of restricted stock that have
not yet vested as of the date of such termination of employment.
All dividends paid on such shares also shall be forfeited,
whether by termination of any escrow arrangement under which
such dividends are held, by the grantee’s repayment of
dividends received directly, or otherwise.

		
	2.8     	
    Grant of Restricted Stock Units

     
(a) Restricted Stock Unit Grants. The Committee may
grant awards of restricted stock units to such key persons, in
such amounts, and subject to such terms and conditions as the
Committee shall determine in its discretion, subject to the
provisions of the Plan. Restricted stock units may be awarded
independently of or in connection with any other award under the
Plan. A grantee of a restricted stock unit award shall have no
rights with respect to such award unless such grantee accepts
the award within such period as the Committee shall specify by
accepting delivery of a Grant Certificate in such form as the
Committee shall determine. A grant of a restricted stock unit
entitles the grantee to receive a share of Common Stock on the
date that such restricted stock unit vests.

     
(b) Vesting. Restricted stock units may not be sold,
assigned, transferred, pledged or otherwise encumbered or
disposed of except as otherwise specifically provided in this
Plan or the applicable Grant Certificate. The Committee at the
time of grant shall specify the date or dates (which may depend
upon or be related to a period of continued employment with the
Company, the attainment of performance goals or other conditions
or a combination of such conditions) on which the restricted
stock units shall vest, provided, however, that, subject to
Section 2.11 and except to the extent based upon the
attainment of performance

9

 

goals, an award of restricted stock units shall not vest in full
until the third anniversary of the grant date and no portion of
the award shall vest before the first anniversary of the grant
date.

     
(c) Consequence of Termination of Employment. Except
as expressly provided in Section 3.8 or as may otherwise be
provided by the Committee at any time prior to a grantee’s
termination of employment, a grantee’s termination of
employment for any reason (including death) shall cause the
immediate forfeiture of all restricted stock units that have not
yet vested as of the date of such termination of employment.

		
	2.9     	
    Grant of Unrestricted Stock

     
The Committee may grant (or sell at a purchase price at least
equal to par value) shares of Common Stock free of restrictions
under the Plan, to such key persons and in such amounts and
subject to such forfeiture provisions as the Committee shall
determine in its sole discretion. Shares may be thus granted or
sold in respect of past services or other valid consideration,
provided, however, that any such awards to officers or directors
shall involve a number of shares determined by the Committee as
being reasonable and shall be identified as being granted in
lieu of salary or cash bonus.

		
	2.10     	
    Grant of Performance Shares

     
(a) Performance Share Grants. The Committee may
grant performance share awards to such key persons, and in such
amounts and subject to such vesting and forfeiture provisions
and other terms and conditions, as the Committee shall in its
sole discretion determine, subject to the provisions of the
Plan. Such an award shall entitle the grantee to acquire shares
of Common Stock, or to be paid the value thereof in cash, as the
Committee shall determine, if specified performance goals are
met. Performance shares may be awarded independently of, or in
connection with, any other award under the Plan. A grantee shall
have no rights with respect to a performance share award unless
such grantee accepts the award by accepting delivery of a Grant
Certificate at such time and in such form as the Committee shall
determine.

     
(b) Stockholder Rights. The grantee of a performance
share award will have the rights of a stockholder only as to
shares for which a stock certificate has been issued pursuant to
the award or for which an account has been established
evidencing ownership of the stock in uncertificated form and not
with respect to any other shares subject to the award.

     
(c) Consequence of Termination of Employment. Except
as expressly provided in Section 3.8 or as may otherwise be
provided by the Committee at any time prior to a grantee’s
termination of employment, the rights of a grantee of a
performance share award shall automatically terminate upon the
grantee’s termination of employment by the Company and its
subsidiaries for any reason (including death).

     
(d) Payment of Award. The grantee of a performance
share award shall receive the shares of Common Stock or cash
payment subject to such award as soon as practicable following
the satisfaction of the applicable performance goals, but in no
event later than
21/2 months
after the year in which the performance goals were satisfied.

     
(e) Tandem Grants; Effect on Exercise. Except as
otherwise specified by the Committee, (i) a performance
share award granted in tandem with an option may be exercised
only while the option is exercisable, (ii) the exercise of
a performance share award granted in tandem with any other award
shall reduce the number of shares subject to such other award in
the manner specified in the applicable Grant Certificate, and
(iii) the exercise of any award granted in tandem with a
performance share award shall reduce the number of shares
subject to the performance share award in the manner specified
in the applicable Grant Certificate.

     
(f) Nontransferability. Performance shares may not
be sold, assigned, transferred, pledged or otherwise encumbered
or disposed of except as otherwise specifically provided in this
Plan or the applicable Grant Certificate.

10

 

		
	2.11     	
    Committee Discretion with Respect to
    Nontransferability

     
If the Committee determines that it is in the best interests of
the Company, the Committee, in the applicable Grant Certificate,
may waive or modify the minimum periods of nontransferability
set forth in Sections 2.7(d) and 2.8(b) with respect
to an aggregate of 250,000 shares of Common Stock.

		
	2.12     	
    Right of Recapture

     
If at any time after the date on which a grantee has been
granted or become vested in an award pursuant to the achievement
of performance goals under this Article II or
Section 3.9, the Committee determines that the earlier
determination as to the achievement of the performance goals was
based on incorrect data and that in fact the performance goals
had not been achieved or had been achieved to a lesser extent
than originally determined, then (i) any award or portion
of an award granted based on such incorrect determination shall
be forfeited, (ii) any award or portion of an award that
became vested based on such incorrect determination shall be
deemed to be not vested, and (iii) any amounts paid to the
grantee based on such incorrect determination shall be paid by
the grantee to the Company upon notice from the Company.

ARTICLE III

Miscellaneous

		
	3.1     	
    Amendment of the Plan; Modification of Awards

     
(a) Amendment of the Plan. Subject to
Section 3.1(b), the Board may from time to time suspend,
discontinue, revise or amend the Plan in any respect whatsoever,
except that no such amendment shall materially impair any rights
or materially increase any obligations under any award
theretofore made under the Plan without the consent of the
grantee (or, upon the grantee’s death, the person having
the right to exercise the award). For purposes of this
Section 3.1, any action of the Board or the Committee that
in any way alters or affects the tax treatment of any award or
that in the sole discretion of the Board is necessary to prevent
an award from being subject to tax under Section 409A of
the Code shall not be considered to materially impair any rights
of any grantee.

     
(b) Stockholder Approval Requirement. Stockholder
approval shall be required with respect to any amendment to the
Plan (i) which increases the aggregate number of shares
which may be issued pursuant to incentive stock options or
changes the class of employees eligible to receive such options,
(ii) which otherwise materially increases the benefits
under the Plan, (iii) to the extent required by applicable
stock exchange rules, or (iv) to the extent the Board
determines that stockholder approval is necessary to enable
awards under the Plan to comply with Sections 422
or 162(m) of the Code.

     
(c) Modification of Awards. The Committee may cancel
any award under the Plan. The Committee also may amend any
outstanding Grant Certificate, including, without limitation, by
amendment which would: (i) accelerate the time or times at
which the award becomes unrestricted or vested or may be
exercised; (ii) waive or amend any goals, restrictions or
conditions set forth in the Grant Certificate; or
(iii) waive or amend the operation of Section 2.5 with
respect to the termination of the award upon termination of
employment, provided however, that no such amendment may lower
the exercise price of an outstanding option or stock
appreciation right. However, any such cancellation or amendment
(other than an amendment pursuant to Sections 3.7
or 3.8(b)) that materially impairs the rights or materially
increases the obligations of a grantee under an outstanding
award shall be made only with the consent of the grantee (or,
upon the grantee’s death, the person having the right to
exercise the award). Under no circumstances may the Committee
modify an award in a manner that would cause the award to be
subject to tax under Section 409A of the Code.

		
	3.2     	
    Consent Requirement

     
(a) No Plan Action without Required Consent. If the
Committee shall at any time determine that any Consent (as
hereinafter defined) is necessary or desirable as a condition
of, or in connection with, the granting

11

 

of any award under the Plan, the issuance or purchase of shares
or other rights thereunder, or the taking of any other action
thereunder (each such action being hereinafter referred to as a
“Plan Action”), then such Plan Action shall not be
taken, in whole or in part, unless and until such Consent shall
have been effected or obtained to the full satisfaction of the
Committee.

     
(b) Consent Defined. The term “Consent” as
used herein with respect to any Plan Action means (i) any
and all listings, registrations or qualifications in respect
thereof upon any securities exchange or under any federal, state
or local law, rule or regulation, (ii) any and all written
agreements and representations by the grantee with respect to
the disposition of shares, or with respect to any other matter,
which the Committee shall deem necessary or desirable to comply
with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement
that any such listing, qualification or registration be made and
(iii) any and all consents, clearances and approvals in
respect of a Plan Action by any governmental or other regulatory
bodies.

		
	3.3     	
    Nonassignability

     
Except as provided in Sections 2.5(e), 2.6, 2.7(d)
and 2.10(f): (a) no award or right granted to any
person under the Plan or under any Grant Certificate shall be
assignable or transferable other than by will or by the laws of
descent and distribution; and (b) all rights granted under
the Plan or any Grant Certificate shall be exercisable during
the life of the grantee only by the grantee or the
grantee’s legal representative.

		
	3.4     	
    Requirement of Notification of Election Under
    Section 83(b) of the Code

     
If any grantee shall, in connection with the acquisition of
shares of Common Stock under the Plan, make the election
permitted under section 83(b) of the Code (i.e., an
election to include in gross income in the year of transfer the
amounts specified in section 83(b)), such grantee shall
notify the Company of such election within 10 days of
filing notice of the election with the Internal Revenue Service,
in addition to any filing and notification required pursuant to
regulations issued under the authority of Code
section 83(b).

		
	3.5     	
    Requirement of Notification Upon Disqualifying Disposition
    Under Section 421(b) of the Code

     
Each grantee of an incentive stock option shall notify the
Company of any disposition of shares of Common Stock issued
pursuant to the exercise of such option under the circumstances
described in section 421(b) of the Code (relating to
certain disqualifying dispositions), within 10 days of such
disposition.

		
	3.6     	
    Withholding Taxes

     
(a) With Respect to Cash Payments. Whenever cash is
to be paid pursuant to an award under the Plan, the Company
shall be entitled to deduct therefrom an amount sufficient in
its opinion to satisfy all federal, state and other governmental
tax withholding requirements related to such payment.

     
(b) With Respect to Delivery of Common Stock.
Whenever shares of Common Stock are to be delivered pursuant to
an award under the Plan, the Company shall be entitled to
require as a condition of delivery that the grantee remit to the
Company an amount sufficient in the opinion of the Company to
satisfy all federal, state and other governmental tax
withholding requirements related thereto. With the approval of
the Committee, which the Committee shall have sole discretion
whether or not to give, the grantee may satisfy the foregoing
condition by electing to have the Company withhold from delivery
shares having a value equal to the amount of tax to be withheld.
Such shares shall be valued at their Fair Market Value as of the
date on which the amount of tax to be withheld is determined.
Fractional share amounts shall be settled in cash. Such a
withholding election may be made with respect to all or any
portion of the shares to be delivered pursuant to an award.

		
	3.7     	
    Adjustment Upon Changes in Common Stock

     
(a) Shares Available for Grants. In the event of any
change in the number of shares of Common Stock outstanding by
reason of any stock dividend or split, reverse stock split,
recapitalization, merger, consolidation,

12

 

combination or exchange of shares or similar corporate change,
the maximum number of shares of Common Stock with respect to
which the Committee may grant awards under Article II
hereof, as described in Section 1.5(a), and the individual
annual limit described in Section 1.5(d), shall be
appropriately adjusted by the Committee. In the event of any
change in the number of shares of Common Stock outstanding by
reason of any other event or transaction, the Committee may, but
need not, make such adjustments in the number and class of
shares of Common Stock with respect to which awards:
(i) may be granted under Article II hereof and
(ii) granted to any one employee of the Company or a
subsidiary during any one calendar year, in each case as the
Committee may deem appropriate, unless such adjustment would
cause any award that would otherwise qualify as performance
based compensation with respect to a “162(m) covered
employee” (as defined in Section 3.9(a)(i)), to cease
to so qualify.

     
(b) Outstanding Restricted Stock, Restricted Stock Units
and Performance Shares. Unless the Committee in its absolute
discretion otherwise determines, any securities or other
property (including dividends paid in cash) received by a
grantee with respect to a share of restricted stock, which has
not yet vested, as a result of any dividend, stock split,
reverse stock split, recapitalization, merger, consolidation,
combination, exchange of shares or otherwise, will not vest
until such share of restricted stock vests, and shall be
promptly deposited with the Company or other custodian
designated pursuant to Section 2.7(c) hereof.

     
The Committee may, in its absolute discretion, adjust any grant
of restricted stock units or performance shares payable in
shares of Common Stock, to reflect any dividend, stock split,
reverse stock split, recapitalization, merger, consolidation,
combination, exchange of shares or similar corporate change as
the Committee may deem appropriate to prevent the enlargement or
dilution of rights of grantees.

     
(c) Outstanding Options, Stock Appreciation Rights and
Dividend Equivalent Rights — Increase or Decrease in
Issued Shares Without Consideration. Subject to any required
action by the stockholders of the Company, in the event of any
increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares of
Common Stock or the payment of a stock dividend (but only on the
shares of Common Stock), or any other increase or decrease in
the number of such shares effected without receipt of
consideration by the Company, the Committee shall proportionally
adjust the number of shares of Common Stock subject to each
outstanding option and stock appreciation right, the exercise
price-per-share of Common Stock of each such option and stock
appreciation right and the number of any related dividend
equivalent rights.

     
(d) Outstanding Options, Stock Appreciation Rights and
Dividend Equivalent Rights — Certain Mergers.
Subject to any required action by the stockholders of the
Company, in the event that the Company shall be the surviving
corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of
Common Stock receive securities of another corporation), each
option, stock appreciation right and dividend equivalent right
outstanding on the date of such merger or consolidation shall
pertain to and apply to the securities which a holder of the
number of shares of Common Stock subject to such option, stock
appreciation right or dividend equivalent right would have
received in such merger or consolidation.

     
(e) Outstanding Options, Stock Appreciation Rights and
Dividend Equivalent Rights — Certain Other
Transactions. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or
substantially all of the Company’s assets, (iii) a
merger or consolidation involving the Company in which the
Company is not the surviving corporation or (iv) a merger
or consolidation involving the Company in which the Company is
the surviving corporation but the holders of shares of Common
Stock receive securities of another corporation and/or other
property, including cash, the Committee shall, in its absolute
discretion, have the power to:

		
	 	     
    (A) cancel, effective immediately prior to the occurrence
    of such event, each option and stock appreciation right
    (including each dividend equivalent right related thereto)
    outstanding immediately prior to such event (whether or not then
    exercisable), and, in full consideration of such cancellation,
    pay to the grantee to whom such option or stock appreciation
    right was granted an amount in cash, for each share of Common
    Stock subject to such option or stock appreciation right,
    respectively, equal to the excess of (x) the value, as
    determined by the Committee in its absolute discretion, of the
    property

13

 

		
	 	
    (including cash) received by the holder of a share of Common
    Stock as a result of such event over (y) the exercise price
    of such option or stock appreciation right; or
	 
	 	     
    (B) provide for the exchange of each option and stock
    appreciation right (including any related dividend equivalent
    right) outstanding immediately prior to such event (whether or
    not then exercisable) for an option on or stock appreciation
    right and dividend equivalent right with respect to, as
    appropriate, some or all of the property which a holder of the
    number of shares of Common Stock subject to such option or stock
    appreciation right would have received and, incident thereto,
    make an equitable adjustment as determined by the Committee in
    its absolute discretion in the exercise price of the option or
    stock appreciation right, or the number of shares or amount of
    property subject to the option, stock appreciation right or
    dividend equivalent right or, if appropriate, provide for a cash
    payment to the grantee to whom such option or stock appreciation
    right was granted in partial consideration for the exchange of
    the option or stock appreciation right.

     
(f) Outstanding Options, Stock Appreciation Rights and
Dividend Equivalent Rights — Other Changes. In the
event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in
Sections 3.7(c), (d) or (e) hereof, the Committee may, in
its absolute discretion, make such adjustments in the number and
class of shares subject to options, stock appreciation rights
and dividend equivalent rights outstanding on the date on which
such change occurs and in the per-share exercise price of each
such option and stock appreciation right as the Committee may
consider appropriate to prevent dilution or enlargement of
rights. In addition, if and to the extent the Committee
determines it is appropriate, the Committee may elect to cancel
each option and stock appreciation right (including each
dividend equivalent right related thereto) outstanding
immediately prior to such event (whether or not then
exercisable), and, in full consideration of such cancellation,
pay to the grantee to whom such option or stock appreciation
right was granted an amount in cash, for each share of Common
Stock subject to such option or stock appreciation right,
respectively, equal to the excess of (i) the Fair Market
Value of Common Stock on the date of such cancellation over
(ii) the exercise price of such option or stock
appreciation right.

     
(g) No Other Rights. Except as expressly provided in
the Plan, no grantee shall have any rights by reason of any
subdivision or consolidation of shares of stock of any class,
the payment of any dividend, any increase or decrease in the
number of shares of stock of any class or any dissolution,
liquidation, merger or consolidation of the Company or any other
corporation. Except as expressly provided in the Plan, no
issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock subject to an
award or the exercise price of any option or stock appreciation
right.

		
	3.8     	
    Change in Control

     
(a) Change in Control Defined. For purposes of this
Section 3.8, a “Change in Control” shall be
deemed to have occurred upon the happening of any of the
following events: (i) any “person,” including a
“group,” as such terms are defined in
sections 13(d) and 14(d) of the 1934 Act and the rules
promulgated thereunder, becomes the beneficial owner, directly
or indirectly, whether by purchase or acquisition or agreement
to act in concert or otherwise, of 35% or more of the
outstanding shares of Common Stock of the Company; (ii) the
sale of all or substantially all of the assets of the Company;
or (iii) the election or appointment during any 12-month
period of a majority of the members of the Board whose election
or appointment is not endorsed by a majority of the members of
the Board prior to the date of the appointment or election.

     
(b) Effect of a Change in Control. Upon the
occurrence of a Change in Control:

		
	 	     
    (i) to the extent permitted by law, the Committee may, in
    its sole discretion, amend any Grant Certificate in such manner
    as it deems appropriate, provided however, that no such
    amendment may lower the exercise price of an outstanding option
    or stock appreciation right; and
	 
	 	     
    (ii) if the grantee’s employment is terminated by the
    grantee without good reasons (as defined below in
    clause (c)) or by the Company (or any successor entity) for
    cause (as defined below in

14

 

		
	 	
    clause (d)), concurrent with or within one year following
    the Change in Control, then unless the applicable Grant
    Certificate explicitly provides otherwise, (1) the awards
    of the grantee shall at the time of such termination become
    fully vested and immediately exercisable, and (2) the
    grantee may exercise any outstanding option or stock
    appreciation right, until the earlier of (A) the original
    expiration date of the award and (B) the later of
    (x) the date provided for under the terms of
    Section 2.5 without reference to this
    Section 3.8(b)(ii) and (y) the first anniversary of
    the grantee’s termination of employment.

     
(c) For purposes of this Section 3.8, “good
reason” shall mean the following:

		
	 	     
    (i) to the extent that there is an employment, severance or
    other agreement governing the relationship between the grantee
    and the Company, a Company subsidiary or a Company joint
    venture, which agreement contains a definition of “good
    reason,” good reason shall consist of the events
    (regardless of whether any other reason, other than cause, for
    such termination exists or has occurred, including, without
    limitation, other employment) that would constitute “good
    reason” under such agreement; and otherwise,
	 
	 	     
    (ii) the occurrence of one or more of the following events
    (regardless of whether any other reason, other than cause, for
    such termination exists or has occurred, including, without
    limitation, other employment):

		
	 	     
    (A) failure to elect or reelect or otherwise maintain
    grantee in the offices or positions, or substantially equivalent
    offices or positions, of or with the Company, which grantee held
    immediately prior to the Change of Control;
	 
	 	     
    (B) a significant adverse change in the nature or scope of
    the authorities, powers, functions, duties or responsibilities
    attached to the position with the Company which the grantee held
    immediately prior to the Change in Control;
	 
	 	     
    (C) a reduction by the Company, without the grantee’s
    prior consent, in either (1) the grantee’s annual base
    salary immediately prior to the Change in Control or
    (2) the grantee’s target bonus opportunity (expressed
    as a percentage of grantee’s annual base salary)
    immediately prior to the Change in Control;
	 
	 	     
    (D) the Company’s requiring the grantee, without the
    grantee’s prior consent, to be based more than fifty
    (50) miles from the Company’s offices at which the
    grantee is based immediately prior to the Change in Control
    (excluding for this purpose required travel on the
    Company’s business to an extent substantially consistent
    with the grantee’s business travel obligations immediately
    prior to the Change in Control), or, in the event the grantee
    consents to any such relocation of his or her offices, the
    failure by the Company to provide the grantee with all of the
    benefits of the Company’s relocation policy as in effect
    immediately prior to the Change in Control;
	 
	 	     
    (E) the failure by the Company, without the grantee’s
    prior consent, to pay to the grantee any portion of the
    grantee’s current compensation (for purposes of this
    clause (v), “current compensation” shall mean the
    grantee’s annual base salary at the time of reference, plus
    the bonuses, if any, awarded to grantee pursuant to the
    Company’s cash incentive bonus plan), or to pay to the
    grantee any portion of any installment of deferred compensation
    under any deferred compensation program of the Company within
    twenty (20) days after request for payment by the grantee
    after such deferred compensation is due;
	 
	 	     
    (F) the failure by the Company to continue in effect any
    then ongoing compensation or benefit plan in which the grantee
    participates immediately prior to the Change in Control and
    which is significant to the grantee’s total compensation
    opportunity on either an annual or long-term basis, including,
    but not limited to, this Plan, any other long-term incentive
    plan of the Company, or any substitute plan for any of the
    foregoing adopted prior to the Change in Control, unless an
    equitable arrangement (embodied in an ongoing substitute or
    alternative plan) has been made with respect to such plan, or
    the failure by the Company to continue the grantee’s
    participation therein on a basis not significantly less
    favorable to grantee, in terms of the amount of the compensation
    opportunities

15

 

		
	 	
    so provided, to those provided to grantee immediately prior to
    the Change in Control. For the avoidance of doubt, without
    limiting the foregoing, the Company shall be deemed to have
    failed to continue the grantee’s participation in such
    plans on a basis not significantly less favorable to grantee in
    the event that grantee’s target long-term incentive
    compensation opportunity (expressed as a percentage of
    grantee’s base salary) subsequent to the Change of Control
    shall not equal or exceed his or her long-term incentive
    compensation opportunity (expressed as a percentage of
    grantee’s base salary) as in effect immediately prior to
    the Change in Control;
	 
	 	     
    (G) the failure by the Company to continue to provide the
    grantee with benefits comparable in the aggregate to those
    enjoyed by the grantee under the Company’s retirement, life
    insurance, medical, dental, health, accident and disability
    plans in which the grantee was participating immediately prior
    to the Change in Control;
	 
	 	     
    (H) the failure of the Company to obtain an agreement from
    any successor to assume and agree to perform the severance
    agreement between the grantee and the Company, if any, to the
    extent contemplated by the terms of any such agreement, prior to
    the effective date of any such succession, or, if such an
    agreement is so obtained, the failure of the Company, within
    three (3) business days after receiving a written request
    from the grantee for such agreement, to so provide such
    agreement; or
	 
	 	     
    (I) any purported termination of the grantee’s
    employment which is not effected pursuant to the methods set
    forth in the severance agreement between the grantee and the
    Company, if any.

     
The grantee’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or
failure to act constituting good reason hereunder.
Notwithstanding the foregoing, the occurrence of an event that
would otherwise constitute good reason hereunder shall cease to
be an event constituting good reason if the grantee does not
provide notice of termination to the Company within one hundred
eighty (180) days of the date that the grantee first
becomes aware of the occurrence of such event.

     
(d) Notwithstanding Section 1.6(f) and solely for
purposes of this Section 3.8, the term “cause”
shall mean the following:

		
	 	     
    (i) to the extent that there is an employment, severance or
    other agreement governing the relationship between the grantee
    and the Company, a Company subsidiary or a Company joint
    venture, which agreement contains a definition of
    “cause,” cause shall consist of those acts or
    omissions that would constitute “cause” under such
    agreement; and otherwise,
	 
	 	     
    (ii) the grantee’s termination of employment by the
    Company or an affiliate on account of any one or more of the
    following:

		
	 	     
    (A) grantee’s willful and intentional repeated failure
    or refusal, continuing after notice that specifically identifies
    the breach(es) complained of, to perform substantially his or
    her material duties, responsibilities and obligations (other
    than a failure resulting from grantee’s incapacity due to
    physical or mental illness or other reasons beyond the control
    of grantee), and which failure or refusal results in
    demonstrable direct and material injury to the Company;
	 
	 	     
    (B) any willful and intentional act or failure to act
    involving fraud, misrepresentation, theft, embezzlement,
    dishonesty or moral turpitude (collectively, “Fraud”)
    which results in demonstrable direct and material injury to the
    Company, or any act that constitutes misconduct resulting in a
    restatement of the Company’s financial statements due to
    material non-compliance with any financial reporting requirement
    within the meaning of Section 304 of The Sarbanes-Oxley Act
    of 2002;
	 
	 	     
    (C) conviction of (or a plea of nolo contendere to)
    an offense which is a felony in the jurisdiction involved or
    which is a misdemeanor in the jurisdiction involved but which
    involves Fraud; and

16

 

		
	 	     
    (D) the grantee’s complete inability to perform his or
    her material duties, responsibilities and obligations on account
    of a physical or mental incapacity or impairment for a period of
    more than 180 consecutive days or for an aggregate of
    240 days within a 360-day period, which incapacity or
    impairment continues for more than thirty (30) days after
    grantee’s receipt of written notice from the Company given
    after such 180 or 240 day period has run without
    grantee’s return, on a substantially full-time basis, to
    employment.

     
For purposes of determining whether cause exists, no act, or
failure to act, on grantee’s part shall be deemed
“willful” or “intentional” unless done, or
omitted to be done, by grantee in bad faith, and without
reasonable belief that his or her action or omission was in the
best interests of the Company. For purposes of clause
(D) above, a determination of grantee’s complete
inability to perform his or her material duties,
responsibilities and obligations will be made by a single
physician satisfactory to both grantee and the Company; provided
that if grantee and the Company cannot agree as to a single
physician, then each will select a physician and these two
together will select a third physician, whose determination will
be binding on grantee and the Company. Grantee shall have the
right to present to the Company and such physician such
information and arguments on grantee’s behalf as grantee
deems appropriate, including the opinion of grantee’s
personal physician.

     
Any rights the Company may have hereunder in respect of the
events giving rise to cause shall be in addition to the rights
the Company may have under any other agreement with a grantee or
at law or in equity. Any determination of whether a
grantee’s employment is (or is deemed to have been)
terminated for cause for purposes of the Plan or any award
hereunder shall be made by the Committee in its discretion. If,
subsequent to a grantee’s voluntary termination of
employment or involuntary termination of employment without
cause, it is discovered that the grantee’s employment could
have been terminated for cause, the Committee may deem such
grantee’s employment to have been terminated for cause. A
grantee’s termination of employment for cause shall be
effective as of the date of the occurrence of the event giving
rise to cause, regardless of when the determination of cause is
made.

		
	3.9     	
    Limitations Imposed by Section 162(m)

     
(a) Qualified Performance-Based Compensation. To the
extent the Committee determines it is desirable to grant an
award to an individual it anticipates might be a “162(m)
covered employee” (as defined below), with respect to which
award the compensation realized by the grantee will or may not
otherwise be deductible by operation of section 162(m) of
the Code, the Committee may, as part of its effort to have such
an award treated as “qualified performance-based
compensation” within the meaning of Code
section 162(m), make the granting and/or vesting of the
award subject to the attainment of one or more pre-established
objective performance goals during a performance period, as set
forth below.

		
	 	     
    (i) Covered Employees. An individual is a
    “162(m) covered employee” if, as of the last day of
    the Company’s taxable year for which the compensation
    related to an award would otherwise be deductible (without
    regard to section 162(m)), he or she is (A) the chief
    executive officer of the Company (or is acting in such capacity)
    or (B) one of the four highest compensated officers of the
    Company other than the chief executive officer. Whether an
    individual is described in either clause (A) or (B) above
    shall be determined in accordance with applicable regulations
    under section 162(m) of the Code.
	 
	 	     
    (ii) Performance Goals. Prior to the ninety-first
    (91st) day of the applicable performance period or during
    such other period as may be permitted under Section 162(m)
    of the Code, the Committee shall establish one or more objective
    performance goals with respect to such performance period. Such
    performance goals shall be expressed in terms of one or more of
    the following criteria: (a) earnings (either in the
    aggregate or on a per-share basis, reflecting dilution of shares
    as the Committee deems appropriate and, if the Committee so
    determines, net of or including dividends); (b) gross or
    net sales; (c) cash flow(s) (including either operating or
    net cash flows); (d) financial return ratios;
    (e) total shareholder return, shareholder return based on
    growth measures or the attainment by the shares of a specified
    value for a specified period of time, share price or share price
    appreciation; (f) value of assets,

17

 

		
	 	
    return or net return on assets, net assets or capital (including
    invested capital); (g) adjusted pre-tax margin;
    (h) margins, profits and expense levels;
    (i) dividends; (j) market share, market penetration or
    other performance measures with respect to specific designated
    products or product groups and/or specific geographic areas;
    (k) reduction of losses, loss ratios or expense ratios;
    (l) reduction in fixed costs; (m) operating cost
    management; (n) cost of capital; (o) debt reduction;
    (p) productivity improvements; (q) inventory turnover
    measurements; or (r) customer satisfaction based on
    specified objective goals or a Company-sponsored customer
    survey. Each such performance goal (A) may be expressed
    (1) with respect to the Company as a whole or with respect
    to one or more divisions or business units, (2) on a
    pre-tax or after-tax basis, (3) on an absolute and/or
    relative basis, and (B) may employ comparisons with past
    performance of the Company (including one or more divisions)
    and/or the current or past performance of other companies, and
    in the case of earnings-based measures, may employ comparisons
    to capital, stockholders’ equity and shares outstanding.
	 
	 	     
    To the extent applicable, the measures used in performance goals
    set under the Plan shall be determined in accordance with
    generally accepted accounting principles (“GAAP”) and
    in a manner consistent with the methods used in the
    Company’s regular reports on Forms 10-K and 10-Q, without
    regard to any of the following, unless otherwise determined by
    the Committee consistent with the requirements of
    Section 162(m)(4)(C) and the regulations thereunder:

		
	 	     
    (A) all items of gain, loss or expense for a fiscal year
    that are related to special, unusual or non-recurring items,
    events or circumstances affecting the Company or the financial
    statements of the Company;
	 
	 	     
    (B) all items of gain, loss or expense for a fiscal year
    that are related to (i) the disposal of a business or
    discontinued operations or (ii) the operations of any
    business acquired by Company during the fiscal year; and
	 
	 	     
    (C) all items of gain, loss or expense for a fiscal year
    that are related to changes in accounting principles or to
    changes in applicable law or regulations.

		
	 	     
     To the extent any objective performance goals are expressed
    using any earnings or sales-based measures that require
    deviations from GAAP, such deviations shall be at the discretion
    of the Committee and established at the time the applicable
    performance goals are established.
	 
	 	     
    (iii) Performance Period. The Committee in its sole
    discretion shall determine the length of each performance period.

     
(b) Nonqualified Deferred Compensation.
Notwithstanding any other provision hereunder, prior to a Change
in Control, if and to the extent that the Committee determines
the Company’s federal tax deduction in respect of an award
may be limited as a result of section 162(m) of the Code,
the Committee may take the following actions:

		
	 	     
    (i) With respect to options, stock appreciation rights or
    dividend equivalent rights, the Committee may delay the exercise
    or payment, as the case may be, in respect of such options,
    stock appreciation rights or dividend equivalent rights until a
    date that is within 30 days after the earlier to occur of
    (A) the grantee’s termination of employment and
    (B) the occurrence of a Change in Control. In the event
    that a grantee exercises an option, or stock appreciation right
    or would receive a payment in respect of a dividend equivalent
    right at a time when the grantee is a 162(m) covered employee,
    and the Committee determines to delay the exercise or payment,
    as the case may be, in respect of any such award, the Committee
    shall credit cash or, in the case of an amount payable in Common
    Stock, the Fair Market Value of the Common Stock, payable to the
    grantee to a book account. The grantee shall have no rights in
    respect of such book account and the amount credited thereto
    shall not be transferable by the grantee other than by will or
    laws of descent and distribution. The Committee may credit
    additional amounts to such book account as it may determine in
    its sole discretion. Any book account created hereunder shall
    represent only an unfunded, unsecured promise by the Company to
    pay the amount credited thereto to the grantee in the future.

18

 

		
	 	     
    (ii) With respect to restricted stock, restricted stock
    units, unrestricted stock or performance shares, the Committee
    may require the grantee to surrender to the Committee any Grant
    Certificates with respect to such awards, in order to cancel the
    awards of such restricted stock, restricted stock units,
    unrestricted stock and/or performance shares (and any related
    dividend equivalent rights). In exchange for such cancellation,
    the Committee shall credit to a book account a cash amount equal
    to the Fair Market Value of the shares of Common Stock subject
    to such awards. The amount credited to the book account shall be
    paid to the grantee within 30 days after the earlier to
    occur of (A) the grantee’s termination of employment
    and (B) the occurrence of a Change in Control. The grantee
    shall have no rights in respect of such book account and the
    amount credited thereto shall not be transferable by the grantee
    other than by will or laws of descent and distribution. The
    Committee may credit additional amounts to such book account as
    it may determine in its sole discretion. Any book account
    created hereunder shall represent only an unfunded, unsecured
    promise by the Company to pay the amount credited thereto to the
    grantee in the future.

		
	3.10     	
    Right of Discharge Reserved

     
Nothing in the Plan or in any Grant Certificate shall confer
upon any grantee the right to continue employment with the
Company or affect any right which the Company may have to
terminate such employment.

		
	3.11     	
    Nature of Payments

     
(a) Consideration for Services Performed. Any and
all grants of awards and issuances of shares of Common Stock
under the Plan shall be in consideration of services performed
for the Company by the grantee.

     
(b) Not Taken into Account for Benefits. All such
grants and issuances shall constitute a special incentive
payment to the grantee and shall not be taken into account in
computing the amount of salary or compensation of the grantee
for the purpose of determining any benefits under any pension,
retirement, profit-sharing, bonus, life insurance or other
benefit plan of the Company or under any agreement between the
Company and the grantee, unless such plan or agreement
specifically otherwise provides.

		
	3.12     	
    Non-Uniform Determinations

     
The Committee’s determinations under the Plan need not be
uniform and may be made by it selectively among persons who
receive, or who are eligible to receive, awards under the Plan
(whether or not such persons are similarly situated). Without
limiting the generality of the foregoing, the Committee shall be
entitled, among other things, to make non-uniform and selective
determinations, and to enter into non-uniform and selective
Grant Certificates, as to (a) the persons to receive awards
under the Plan, (b) the terms and provisions of awards
under the Plan, and (c) the treatment of leaves of absence
pursuant to Section 1.6(c).

		
	3.13     	
    Other Payments or Awards

     
Nothing contained in the Plan shall be deemed in any way to
limit or restrict the Company from making any award or payment
to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.

		
	3.14     	
    Headings

     
Any section, subsection, paragraph or other subdivision headings
contained herein are for the purpose of convenience only and are
not intended to expand, limit or otherwise define the contents
of such subdivisions.

		
	3.15     	
    Effective Date and Term of Plan

     
(a) Adoption; Stockholder Approval. The Plan was
adopted by the Board on March 15, 2005, subject to approval
by the Company’s stockholders. All awards under the Plan
prior to such stockholder approval are

19

 

subject in their entirety to such approval. If such approval is
not obtained prior to the first anniversary of the date of
adoption of the Plan, the Plan and all awards thereunder shall
terminate on that date.

     
(b) Termination of Plan. Unless sooner terminated by
the Board or pursuant to paragraph (a) above, the
provisions of the Plan respecting the grant of any award
pursuant to which shares of Common Stock will be granted shall
terminate on the tenth anniversary of the adoption of the Plan
by the Board, and no such awards shall thereafter be made under
the Plan. The provisions of the Plan respecting the conditioning
of the granting or vesting awards upon the achievement of
performance goals shall terminate on the fifth anniversary of
the adoption of the Plan by the Board. All awards made under the
Plan prior to the termination of the respective provisions shall
remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the
Plan and the applicable Grant Certificates.

		
	3.16     	
    Restriction on Issuance of Stock Pursuant to Awards

     
The Company shall not permit any shares of Common Stock to be
issued pursuant to Awards granted under the Plan unless such
shares of Common Stock are fully paid and non-assessable, within
the meaning of Section 152 of the Delaware General
Corporation Law, except as otherwise permitted by
Section 153(c) of the Delaware General Corporation Law.

		
	3.17     	
    Deferred Compensation

     
The Plan is intended to comply with the requirements of
Section 409A of the Code so as not to be subject to tax
under Section 409A, and shall be interpreted accordingly.
After final guidance is issued by the Internal Revenue Service
with respect to Section 409A, the Board will amend the Plan
as necessary to ensure compliance with Section 409A.

		
	3.18     	
    Governing Law

     
Except to the extent preempted by any applicable federal law,
the Plan will be construed and administered in accordance with
the laws of the State of Delaware, without giving effect to
principles of conflict of laws.

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