Document:

ex41tos807319_04282009.htm

    Exhibit
4.1

    

     

    
      
        
          	
                   

                   

                   

                   

                  
                    GenCorp
      Inc.

                    

                    2009
      Equity and Performance Incentive Plan

                     

                    
                      
      

                     

                  

                   

                   

                  
                    Approved
      by Shareholders on March 25, 2009

                     

                     

                  

                   

                   

                   

                   

                

        

      

    

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Table
of Contents

    

    
      
        
          
            	
                    Article
      1.

                  	
                    Establishment,
      Purpose, and Duration

                  	
                    1

                  
	
                    Article
      2.

                  	
                    Definitions

                  	
                    1

                  
	
                    Article
      3.

                  	
                    Administration

                  	
                    4

                  
	
                    Article
      4.

                  	
                    Shares
      Subject to the Plan and Maximum Awards

                  	
                    5

                  
	
                    Article
      5.

                  	
                    Eligibility
      and Participation

                  	
                    6

                  
	
                    Article
      6.

                  	
                    Options

                  	
                    7

                  
	
                    Article
      7.

                  	
                    Stock
      Appreciation Rights

                  	
                    8

                  
	
                    Article
      8.

                  	
                    Restricted
      Stock and Restricted Stock Units

                  	
                    10

                  
	
                    Article
      9.

                  	
                    Performance
      Units/Performance Shares

                  	
                    11

                  
	
                    Article
      10.

                  	
                    Cash-Based
      Awards and Other Stock-Based Awards

                  	
                    12

                  
	
                    Article
      11.

                  	
                    Performance
      Measures

                  	
                    13

                  
	
                    Article
      12.

                  	
                    Beneficiary
      Designation

                  	
                    14

                  
	
                    Article
      13.

                  	
                    Deferrals

                  	
                    15

                  
	
                    Article
      14.

                  	
                    Rights
      of Participants

                  	
                    15

                  
	
                    Article
      15.

                  	
                    Change
      in Control

                  	
                    15

                  
	
                    Article
      16.

                  	
                    Amendment,
      Modification, Suspension, and Termination

                  	
                    16

                  
	
                    Article
      17.

                  	
                    Withholding

                  	
                    16

                  
	
                    Article
      18.

                  	
                    Successors

                  	
                    17

                  
	
                    Article
      19.

                  	
                    General
      Provisions

                  	
                    17

                  

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    GenCorp
Inc.

    2009
Equity and Performance Incentive Plan

    

    ARTICLE 1.

    

    Establishment,
Purpose, and Duration

    

    1.1  Establishment.  GenCorp
Inc., an Ohio corporation (hereinafter referred to as the “Company”),
establishes an incentive compensation plan to be known as the 2009 Equity and
Performance Incentive Plan (hereinafter referred to as the “Plan”), as set forth
in this document.

    

    The Plan
permits the grant of Cash-Based Awards, Nonqualified Stock Options, Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units and Other Stock-Based
Awards.

    

    The Plan
shall become effective upon shareholder approval (the “Effective Date”) and
shall remain in effect as provided in Section 1.3 hereof.

    

    1.2  Purpose of the
Plan.  The purpose of the Plan is to promote the interests of
the Company and its shareholders by strengthening the Company’s ability to
attract, motivate, and retain Employees and Directors upon whose judgment,
initiative, and efforts the financial success and growth of the business of the
Company largely depend, and to provide an additional incentive for such
individuals through stock ownership and other rights that promote and recognize
the financial success and growth of the Company and create value for
shareholders.

    

    1.3  Duration of the
Plan.  Unless sooner terminated as provided herein, the Plan
shall terminate ten years from the Effective Date. After the Plan is terminated,
no Awards may be granted but Awards previously granted shall remain outstanding
in accordance with their applicable terms and conditions and the Plan’s terms
and conditions.

    

    ARTICLE 2.

    

    Definitions

    

    Whenever
used in the Plan, the following terms shall have the meanings set forth below,
and when the meaning is intended, the initial letter of the word shall be
capitalized.

    

    2.1  “Affiliate” shall have the
meaning ascribed to such term in Rule 12b-2 promulgated under the General
Rules and Regulations of the Exchange Act.

    

    2.2  “Annual Award Limit” or
“Annual Award Limits” have the meaning set forth in
Section 4.3.

    

    2.3  “Award” means, individually
or collectively, a grant under this Plan of Cash-Based Awards, Nonqualified
Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Stock Units, Performance Shares, Performance Units or Other
Stock-Based Awards, in each case subject to the terms of this Plan.

    

    2.4  “Beneficial Owner” or
“Beneficial Ownership” shall have the meaning ascribed to such term in
Rule 13d-3 promulgated under the General Rules and Regulations under the
Exchange Act.

    

    2.5  “Board” or “Board of Directors” means the Board of
Directors of the Company.

    

    2.6  “Cash-Based Award” means an
Award granted to a Participant as described in Article 10.

    

    2.7  “Change in Control” means a
Change in Control as defined in Article 15.

     

    
      
        
        

      

      
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    2.8  “Code” means the Internal
Revenue Code of 1986, as amended from time to time.

    

    2.9.  “Committee” means the
Organization and Compensation Committee of the Board, or any other committee
designated by the Board to administer this Plan. The members of the Committee
shall be appointed from time to time by and shall serve at the discretion of the
Board. The Committee shall consist of two or more directors who are Nonemployee
Directors and “Outside Directors” (as such term is defined in
Section 162(m) of the Code).

    

    2.10  “Company” means GenCorp Inc.,
an Ohio corporation, and any successor thereto as provided in Article 18
herein.

    

    2.11  “Consolidated Operating Earnings”
means the consolidated earnings before income taxes of the Company,
computed in accordance with generally accepted accounting principles, but shall
exclude the effects of Extraordinary Items.

    

    2.12  “Covered Employee” means a
Participant who is a “covered employee,” as defined in Section 162(m) of
the Code and the regulations promulgated under Section 162(m) of the Code,
or any successor statute.

    

    2.13  “Director” means a member of
the Board of Directors of the Company and/or any of its Affiliates and/or
Subsidiaries.

    

    2.14  “Effective Date” has the
meaning set forth in Section 1.1.

    

    2.15  “Employee” means any employee
of the Company, its Affiliates and/or Subsidiaries.

    

    2.16  “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time, or any successor
act thereto.

    

    2.17  “Extraordinary Items” means
(i) extraordinary, unusual and/or nonrecurring items of gain or loss;
(ii) gains or losses on the disposition of a business; (iii) changes
in tax or accounting regulations or laws; or (iv) the effect of a merger or
acquisition, all of which must be identified in the audited financial
statements, including footnotes, or Management Discussion and Analysis section
of the Company’s annual report.

    

    2.18  “Evidence of Award” means an
agreement, certificate, resolution or other type or form of writing or other
evidence approved by the Committee which sets forth the terms and conditions of
an Award. An Evidence of Award may be in any electronic medium, may be limited
to a notation on the books and records of the Company and, with the approval of
the Committee, need not be signed by a representative of the Company or a
Participant.

    

    2.19  “Fair Market Value” or “FMV”
means the last sales price reported for the Shares on the applicable date as
reported on the principal national securities exchange in the United States on
which it is then traded or The NASDAQ Stock Market (if the Shares are so
listed), or, if not so listed, the mean between the closing bid and asked prices
of publicly traded Shares in the over-the-counter market, or, if such bid and
asked prices shall not be available, as reported by any nationally recognized
quotation service selected by the Company, or as determined by the Committee in
a manner consistent with the provisions of the Code. If, however, the required
accounting standards used to account for equity Awards granted to Participants
are substantially modified subsequent to the Effective Date of the Plan such
that fair value accounting for such Awards becomes required, the Committee shall
have the ability to determine an Award’s FMV based on the relevant facts and
circumstances.

    

    2.20  “Full Value Award” means an
Award other than in the form of an Option or SAR, and which is settled by the
issuance of Shares.

     

    
      
        
        

      

      
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    2.21  “Freestanding SAR” means an
SAR that is granted independently of any Options, as described in
Article 7.

    

    2.22  “Grant Price” means the price
established at the time of grant of a SAR pursuant to Article 7, used to
determine whether there is any payment due upon exercise of the
SAR.

    

    2.23  “Incentive Stock Option”
means an Option that is intended to qualify as an “incentive stock
option” under Section 422 of the Code or any successor
provision.

    

    2.24  “Insider” shall mean an
individual who is, on the relevant date, an officer, Director, or more than ten
percent (10%) Beneficial Owner of any class of the Company’s equity securities
that is registered pursuant to Section 12 of the Exchange Act, as
determined by the Board in accordance with Section 16 of the Exchange
Act.

    

    2.25  “Net Income” means the
consolidated net income before taxes for the Plan Year, as reported in the
Company’s annual report to shareholders or as otherwise reported to
shareholders.

    

    2.26  “Nonemployee Director” has
the same meaning set forth in Rule 16b-3 promulgated under the Exchange
Act, or any successor definition adopted by the United States Securities and
Exchange Commission.

    

    2.27  “Nonqualified Stock Option”
means an Option that is not intended to meet the requirements of
Section 422 of the Code, or that otherwise does not meet such
requirements.

    

    2.28  “Operating Cash Flow” means
cash flow from operating activities as defined in Statement of Financial
Accounting Standards Number 95, Statement of Cash Flows.

    

    2.29  “Option” means the right to
purchase Shares granted to a Participant in accordance with Article 6.
Options granted under this Plan may be Nonqualified Stock Options, Incentive
Stock Option or a combination thereof.

    

    2.30  “Option Price” means the
price at which a Share may be purchased by a Participant pursuant to an
Option.

    

    2.31  “Other Stock-Based Award”
means an equity-based or equity-related Award not otherwise described by
the terms of this Plan, granted pursuant to Article 10.

    

    2.32  “Participant” means any
eligible person as set forth in Article 5 to whom an Award is
granted.

    

    2.33  “Performance-Based Compensation”
means compensation under an Award that satisfies the requirements of
Section 162(m) of the Code for deductibility of remuneration paid to
Covered Employees.

    

    2.34  “Performance Measures” means
measures as described in Article 11 on which the performance goals are
based and which are approved by the Company’s shareholders pursuant to this Plan
in order to qualify Awards as Performance-Based Compensation.

    

    2.35  “Performance Period” means
the period of time during which the performance goals must be met in order to
determine the degree of payout and/or vesting with respect to an
Award.

    

    2.36  “Performance Share” means an
Award granted to a Participant, as described in Article 9.

    

    2.37  “Performance Unit” means an
Award granted to a Participant, as described in Article 9.

     

    
      
        
        

      

      
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    2.38  “Period of Restriction” means
the period when Restricted Stock or Restricted Stock Units are subject to a
“substantial risk of forfeiture” within the meaning of Section 83 of the
Code (based on the passage of time, the achievement of performance goals, or
upon the occurrence of other events as determined by the Committee, in its
discretion), as provided in Article 8.

    

    2.39  “Person” shall have the
meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and
used in Sections 13(d) and 14(d) thereof, including a “group” as defined in
Section 13(d) thereof.

    

    2.40  “Plan” means the GenCorp Inc.
2009 Equity and Performance Incentive Plan.

    

    2.41  “Plan Year” means the
Company’s fiscal year that begins December 1 and ends
November 30.

    

    2.42  “Restricted Stock” means
Shares granted or sold to a Participant pursuant to Article 8 as to which
the Period of Restriction has not lapsed.

    

    2.43  “Restricted Stock Unit” means
a unit granted or sold to a Participant pursuant to Article 8 as to which
the Period of Restriction has not lapsed.

    

    2.44  “Section 409A Rules”
means the provisions of Section 409A of the Code and Treasury
Regulations and other Internal Revenue Service guidance promulgated
thereunder.

    

    2.45  “Share” means a share of
common stock of the Company, $.10 par value per share.

    

    2.46  “Stock Appreciation Right” or
“SAR” means an Award, designated as a SAR and granted pursuant to the terms of
Article 7 herein.

    

    2.47  “Subsidiary” means a
corporation, company or other entity (i) more than 50 percent (50%) of
whose outstanding shares or securities (representing the right to vote for the
election of directors or other managing authority) are, or (ii) which does
not have outstanding shares or securities (as may be the case in a partnership,
joint venture or unincorporated association), but more than 50 percent
(50%) of whose ownership interest representing the right generally to make
decisions for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by the Company, except that for purposes of determining
whether any person may be a Participant for purposes of any grant of Incentive
Stock Options, “Subsidiary” means any corporation in which at the time the
Company owns or controls, directly or indirectly, more than 50 percent
(50%) of the total combined voting power represented by all classes of stock
issued by such corporation.

    

    ARTICLE 3.

    

    Administration

    

    3.1  General.  The
Committee shall be responsible for administering the Plan, subject to this
Article 3 and the other provisions of the Plan. The act or determination of
a majority of the Committee shall be the act or determination of the Committee
and any decision reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority at a
meeting duly held. The Committee may employ attorneys, consultants, accountants,
agents, and other persons, any of whom may be an Employee, and the Committee,
the Company, and its officers and Directors shall be entitled to rely upon the
advice, opinions, or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee shall be final and
binding upon the Participants, the Company, and all other interested
persons.

     

    
      
        
        

      

      
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    3.2  Authority of the
Committee.  The Committee shall have full and exclusive
discretionary power to interpret the terms and the intent of the Plan and any
Evidence of Award or other agreement or document ancillary to or in connection
with the Plan, to determine eligibility for Awards and to adopt such rules,
regulations, forms, instruments, and guidelines for administering the Plan as
the Committee may deem necessary or proper. Such authority shall include, but
not be limited to, selecting Award recipients, establishing all Award terms and
conditions, including the terms and conditions set forth in an Evidence of
Award, and, subject to Article 16, adopting modifications and amendments to
the Plan or any Evidence of Award, including without limitation, any that are
necessary to comply with the laws of the countries and other jurisdictions in
which the Company, its Affiliates, and/or its Subsidiaries operate. In the event
that for any reason the Committee is unable to act or if the Committee at the
time of any grant, Award or other acquisition under the Plan does not consist of
two or more Nonemployee Directors, or if there shall be no such Committee, then
the Plan shall be administered by the Board, and references herein to the
Committee (except in the proviso to this sentence) shall be deemed to be
references to the Board.

    

    ARTICLE 4.

    

    Shares
Subject to the Plan and Maximum Awards

    

    4.1  Number of Shares
Available for Awards.

    

    (a) Subject
to adjustment as provided in Section 4.4 herein, the maximum number of
Shares available for issuance to Participants under the Plan (the “Share
Authorization”) shall be five hundred thousand (500,000) Shares, all of which
may be Incentive Stock Options;

    

    (b) Of
the Shares reserved for issuance under Section 4.1(a) of the Plan, no more
than two hundred fifty thousand (250,000) of the reserved Shares may be issued
pursuant to Full Value Awards.

    

    (c) Subject
to the limit set forth in Section 4.1(a) on the number of Shares that may
be issued in the aggregate under the Plan, the maximum number of Shares that may
be issued to Nonemployee Directors shall be fifty thousand (50,000) Shares, and
no Nonemployee Director may receive more than ten thousand (10,000) Shares in
any Plan Year.

    

    4.2  Share
Usage.  Shares covered by an Award shall only be counted as
used to the extent they are actually issued. Any Shares related to Awards which
terminate by expiration, forfeiture, cancellation, or otherwise without the
issuance of such Shares, are settled in cash in lieu of Shares, or are exchanged
with the Committee’s permission, prior to the issuance of Shares, for Awards not
involving Shares, shall be available again for grant under the Plan. Moreover,
if the Option Price of any Option granted under the Plan or the tax withholding
requirements with respect to any Award granted under the Plan are satisfied by
tendering Shares to the Company (by either actual delivery or by attestation),
or if an SAR is exercised, only the number of Shares issued, net of the Shares
tendered, if any, will be deemed delivered for purposes of determining the
maximum number of Shares available for delivery under the Plan and any Shares so
tendered shall again be available for issuance under the Plan. The maximum
number of Shares available for issuance under the Plan shall not be reduced to
reflect any dividends or dividend equivalents that are reinvested into
additional Shares or credited as additional Restricted Stock, Restricted Stock
Units, Performance Shares, or Stock-Based Awards. The Shares available for
issuance under the Plan may be authorized and unissued Shares, treasury Shares
or a combination thereof.

    

    4.3  Annual Award
Limits.  Subject to the terms of Section 4.1 hereof and
unless and until the Committee determines that an Award to a Covered Employee
shall not be designed to qualify as Performance-Based Compensation, the
following limits (each an “Annual Award Limit,” and, collectively, “Annual Award
Limits”) shall apply to grants of such Awards under the Plan:

    

    (a) Options:  The
maximum aggregate number of Shares subject to Options granted in any one Plan
Year to any one Participant shall be fifty thousand (50,000).

     

    
      
        
        

      

      
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    (b) Incentive Stock
Options:  The maximum aggregate number of Shares subject to
Incentive Stock Options granted under the Plan to any one Participant shall be
fifty thousand (50,000).

    

    (c) SARs:  The maximum
number of Shares subject to Stock Appreciation Rights granted in any one Plan
Year to any one Participant shall be fifty thousand (50,000).

    

    (d) Restricted Stock or Restricted Stock
Units:  The maximum aggregate grant with respect to Awards of
Restricted Stock or Restricted Stock Units in any one Plan Year to any one
Participant shall be fifty thousand (50,000).

    

    (e) Performance Units or Performance
Shares:  The maximum aggregate Award of Performance Units or
Performance Shares that any one Participant may receive in any one Plan Year
shall be fifty thousand (50,000) Shares, or equal to the value of fifty thousand
(50,000) Shares determined as of the date of vesting or payout, as
applicable.

    

    (f) Cash-Based
Awards:  The maximum aggregate amount awarded or credited with
respect to Cash-Based Awards to any one Participant in any one Plan Year may not
exceed the value of one hundred thousand dollars ($100,000) determined as of the
date of vesting or payout, as applicable.

    

    (g) Other Stock-Based
Awards.  The maximum aggregate grant with respect to other
Stock-Based Awards pursuant to Section 10.2 in any one Plan Year to any one
Participant shall be one hundred thousand (100,000) Shares.

    

    4.4  Adjustments in Authorized
Shares.  In the event of any corporate event or transaction
(including, but not limited to, a change in the shares of the Company or the
capitalization of the Company) such as a merger, consolidation, reorganization,
recapitalization, separation, stock dividend, stock split, reverse stock split,
split up, spin-off, or other distribution of stock or property of the Company,
combination of Shares, exchange of Shares, dividend in kind, or other like
change in capital structure or distribution (other than normal cash dividends)
to shareholders of the Company, or any similar corporate event or transaction,
the Committee, in its sole discretion, in order to prevent dilution or
enlargement of Participants’ rights under the Plan, shall substitute or adjust,
as applicable, the number and kind of Shares that may be issued under the Plan
or under particular forms of Awards, the number and kind of Shares subject to
outstanding Awards, the Option Price or Grant Price applicable to outstanding
Awards, the Annual Award Limits, and other value determinations applicable to
outstanding Awards.

    

    Except as
otherwise provided by Section 162(m) of the Code, the Committee, in its
sole discretion, may also make appropriate adjustments in the terms of any
Awards under the Plan to reflect or related to such changes or distributions and
to modify any other terms of outstanding Awards, including modifications of
performance goals and changes in the length of Performance Periods. The
determination of the Committee as to the foregoing adjustments, if any, shall be
conclusive and binding on Participants under the Plan.

    

    Subject
to the provisions of Article 16, without affecting the number of Shares
reserved or available hereunder, the Committee may authorize the issuance or
assumption of benefits under this Plan in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it may deem appropriate, subject to compliance with the
rules under Section 422 of the Code and the Section 409A Rules, where
applicable.

    

    ARTICLE 5.

    

    Eligibility
and Participation

    

    5.1  Eligibility.  Individuals
eligible to participate in this Plan include all Employees and Nonemployee
Directors.

     

    
      
        
        

      

      
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    5.2  Actual
Participation.  Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible individuals, those to
whom Awards shall be granted and shall determine, in its sole discretion, the
nature of, any and all terms permissible by law, and the amount of each Award.
In making this determination, the Committee may consider any factors it deems
relevant, including without limitation, the office or position held by a
Participant or the Participant’s relationship to the Company, the Participant’s
degree of responsibility for and contribution to the growth and success of the
Company or any Subsidiary or Affiliate, the Participant’s length of service,
promotions and potential.

    

    ARTICLE 6.

    

    Options

    

    6.1  Grant of
Options.  Subject to the terms and provisions of the Plan,
Options may be granted to Participants in such number, and upon such terms, and
at any time and from time to time as shall be determined by the Committee, in
its sole discretion.

    

    6.2  Evidence of
Award.  Each Option grant shall be evidenced by an Evidence of
Award that shall specify the Option Price, the maximum duration of the Option,
the number of Shares to which the Option pertains, the conditions upon which an
Option shall become vested and exercisable, and such other provisions as the
Committee shall determine which are not inconsistent with the terms of the
Plan.

    

    6.3  Option Price.  The
Option Price for each grant of an Option under this Plan shall be as determined
by the Committee and shall be specified in the Evidence of Award. The Option
Price may not be less than 100% of the Fair Market Value of the Shares on the
date of grant; provided, however, that an Option granted outside the United
States to a person who is a non-U.S. taxpayer may be granted with a Option
Price less than the Fair Market Value of the underlying Shares on the date of
grant if necessary to utilize a locally available tax advantage.

    

    6.4  Duration of
Options.  Except as otherwise provided in Section 422 of
the Code, each Option granted to a Participant shall expire at such time as the
Committee shall determine at the time of grant and specify in the Evidence of
Award; provided, however, that no Option shall be exercisable later than the
seventh (7th) anniversary date of its grant. Notwithstanding the foregoing, for
Options granted to Participants outside the United States who are
non-U.S. taxpayers, the Committee has the authority to grant Options that
have a term greater than seven (7) years.

    

    6.5  Exercise of
Options.  Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve and specify in the Evidence of
Award, which terms and restrictions need not be the same for each grant or for
each Participant. The Committee may provide in the Evidence of Award for the
acceleration of the vesting and exercisability of outstanding Options, in whole
or in part, as determined by the Committee in its sole discretion, in the event
of a Change in Control.

    

    6.6  Payment.  Options
granted under this Article 6 shall be exercised by the delivery of a notice
of exercise to the Company or an agent designated by the Company in a form
specified or accepted by the Committee, or by complying with any alternative
procedures which may be authorized by the Committee, setting forth the number of
Shares with respect to which the Option is to be exercised, accompanied by full
payment for the Shares.

    

    A
condition of the issuance of the Shares as to which an Option shall be exercised
shall be the payment of the Option Price. The Option Price of any Option shall
be payable to the Company in full either: (a) in cash or its equivalent;
(b) by tendering (either by actual delivery or attestation) previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the Option Price (provided that except as otherwise determined by the
Committee, the Shares that are tendered must have been held by the Participant
for at least six (6) months prior to their tender to satisfy the Option
Price or have been purchased on the open market); (c) by a combination of
(a) and (b); or (d) any other method approved or accepted by the
Committee in its sole discretion, including, without limitation, if the
Committee so determines, (i) a cashless (broker-assisted) exercise, or
(ii) a reduction in the number of Shares that would otherwise be issued by
such number of Shares having in the aggregate a Fair Market Value at the time of
exercise equal to the portion of the Option Price being so paid.

     

    
      
        
        

      

      
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    Subject
to any governing rules or regulations, as soon as practicable after receipt of
written notification of exercise and full payment (including satisfaction of any
applicable tax withholding), the Company shall deliver to the Participant
evidence of book entry Shares, or upon the Participant’s request, Share
certificates in an appropriate amount based upon the number of Shares purchased
under the Option(s).

    

    Unless
otherwise determined by the Committee, all payments under all of the methods
indicated above shall be paid in United States dollars.

    

    6.7  Restrictions on Share
Transferability.  The Committee may impose such restrictions on
any Shares acquired pursuant to the exercise of an Option granted under this
Article 6 as it may deem advisable and specify in the Evidence of Award,
including, without limitation, minimum holding period requirements, restrictions
under applicable federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, or
under any blue sky or state securities laws applicable to such
Shares.

    

    6.8  Termination of
Employment.  Each Participant’s Evidence of Award shall set
forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant’s employment or provision of
services to the Company, its Affiliates, its Subsidiaries, as the case may be.
Such provisions shall be determined in the sole discretion of the Committee,
shall be included in the Evidence of Award entered into with each Participant,
need not be uniform among all Options issued pursuant to this Article 6,
and may reflect distinctions based on the reasons for termination.

    

    6.9  Transferability of
Options.  Except as otherwise provided in a Participant’s
Evidence of Award or otherwise at any time by the Committee, no Option granted
under this Article 6 may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution or as otherwise required by law; provided that the
Board or Committee may permit further transferability, on a general or a
specific basis, and may impose conditions and limitations on any permitted
transferability. Further, except as otherwise provided in a Participant’s
Evidence of Award or otherwise at any time by the Committee, or unless the Board
or Committee decides to permit further transferability, all Options granted to a
Participant under this Article 6 shall be exercisable during his or her
lifetime only by such Participant. With respect to those Options, if any, that
are permitted to be transferred to another person, references in the Plan to
exercise or payment of the Option Price by the Participant shall be deemed to
include, as determined by the Committee, the Participant’s permitted
transferee.

    

    ARTICLE 7.

    

    Stock
Appreciation Rights

    

    7.1  Grant of
SARs.  Subject to the terms and conditions of the Plan, SARs,
including Freestanding SARs, may be granted to Participants at any time and from
time to time as shall be determined by the Committee.

    

    Subject
to the terms and conditions of the Plan, the Committee shall have complete
discretion in determining the number of SARs granted to each Participant and,
consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such SARs.

    

    The Grant
Price for each grant of a Freestanding SAR shall be determined by the Committee
and shall be specified in the Evidence of Award. The Grant Price may include
(but not be limited to) a Grant Price based on one hundred percent (100%) of the
FMV of the Shares on the date of grant, a Grant Price that is set at a premium
to the FMV of the Shares on the date of grant, or is indexed to the FMV of the
Shares on the date of grant, with the index determined by the Committee, in its
discretion to the extent consistent with the Section 409A
Rules.

     

    
      
        
        

      

      
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    7.2  SAR
Agreement.  Each SAR Award shall be evidenced by an Evidence of
Award that shall specify the Grant Price, the term of the SAR, and such other
provisions as the Committee shall determine.

    

    7.3  Term of SAR.  The
term of an SAR granted under the Plan shall be determined by the Committee, in
its sole discretion, and except as determined otherwise by the Committee and
specified in the SAR Evidence of Award, no SAR shall be exercisable later than
the seventh (7th) anniversary date of its grant. Notwithstanding the foregoing,
for SARs granted to Participants who are non-U.S. taxpayers, the Committee
has the authority to grant SARs that have a term greater than seven
(7) years.

    

    7.4  Exercise of Freestanding
SARs.  Freestanding SARs may be exercised upon whatever terms
and conditions the Committee, in its sole discretion, imposes and specifies in
the Evidence of Award. The Committee may provide in the Evidence of Award for
the earlier exercise of Freestanding SARS in the event of a Change in
Control.

    

    7.5.  Payment of SAR
Amount.  Upon the exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

    

    (a) The
excess of the Fair Market Value of a Share on the date of exercise over the
Grant Price; by

    

    (b) The
number of Shares with respect to which the SAR is exercised.

    

    At the
discretion of the Committee, the payment upon SAR exercise may be in cash,
Shares, or any combination thereof, or in any other manner approved by the
Committee in its sole discretion. The Committee’s determination regarding the
form of SAR payout shall be set forth in the Evidence of Award pertaining to the
grant of the SAR.

    

    7.6  Termination of
Employment.  Each Evidence of Award shall set forth the extent
to which the Participant shall have the right to exercise the SAR following
termination of the Participant’s employment with or provision of services to the
Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such
provisions shall be determined in the sole discretion of the Committee, shall be
included in the Evidence of Award entered into with Participants, need not be
uniform among all SARs issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination.

    

    7.7  Nontransferability of
SARs.  Except as otherwise provided in a Participant’s Evidence
of Award or otherwise at any time by the Committee, no SAR granted under the
Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution or
as otherwise required by law. Further, except as otherwise provided in a
Participant’s Evidence of Award or otherwise at any time by the Committee, all
SARs granted to a Participant under the Plan shall be exercisable during his or
her lifetime only by such Participant. With respect to those SARs, if any, that
are permitted to be transferred to another person, references in the Plan to
exercise of the SAR by the Participant or payment of any amount to the
Participant shall be deemed to include, as determined by the Committee, the
Participant’s permitted transferee.

    

    7.8  Other
Restrictions.  The Committee shall impose such other conditions
and/or restrictions on any Shares received upon exercise of a SAR granted
pursuant to the Plan as it may deem advisable or desirable. These restrictions
may include, but shall not be limited to, a requirement that the Participant
hold the Shares received upon exercise of a SAR for a specified period of
time.

     

    
      
        
        

      

      
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    ARTICLE 8.

    

    Restricted
Stock and Restricted Stock Units

    

    8.1  Grant of Restricted Stock or
Restricted Stock Units.  Subject to
the terms and provisions of the Plan, the Committee, at any time and from time
to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to
Participants in such amounts as the Committee shall determine. Restricted Stock
Units shall represent the right of a Participant to receive payment upon the
lapse of the Period of Restriction.

    

    8.2  Restricted Stock or Restricted Stock
Unit Agreement.  Each
Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an
Evidence of Award that shall specify the Period(s) of Restriction, the number of
Shares of Restricted Stock or the number of Restricted Stock Units granted, and
such other provisions as the Committee shall determine.

    

    8.3  Transferability.  Except
as provided in this Plan or an Evidence of Award, the Shares of Restricted Stock
and/or Restricted Stock Units granted herein may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated until the end of the
applicable Period of Restriction established by the Committee and specified in
the Evidence of Award (and in the case of Restricted Stock Units until the date
of delivery or other payment), or upon earlier satisfaction of any other
conditions, as specified by the Committee, in its sole discretion, and set forth
in the Evidence of Award or otherwise at any time by the Committee. All rights
with respect to the Restricted Stock and/or Restricted Stock Units granted to a
Participant under the Plan shall be available during his or her lifetime only to
such Participant, except as otherwise provided in an Evidence of Award or at any
time by the Committee.

    

    8.4  Other
Restrictions.  The Committee shall impose such other conditions
and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units
granted pursuant to the Plan as it may deem advisable including, without
limitation, a requirement that Participants pay a stipulated purchase price for
each Share of Restricted Stock or each Restricted Stock Unit, restrictions based
upon the achievement of specific performance goals, time-based restrictions on
vesting following the attainment of the performance goals, time-based
restrictions, and/or restrictions under applicable laws or under the
requirements of any stock exchange or market upon which such Shares are listed
or traded, or holding requirements or sale restrictions placed on the Shares by
the Company upon vesting of such Restricted Stock or Restricted Stock
Units.

    

    Except
with respect to a maximum of five percent (5%) of the Shares authorized in
Section 4.1(a), any Awards of Restricted Stock or Restricted Stock Units
which vest on the basis of the Participant’s continued employment with or
provision of service to the Company shall not provide for vesting which is any
more rapid than annual pro rata vesting over a three (3) year period and
any Awards of Restricted Stock or Restricted Stock Units which vest upon the
attainment of performance goals shall provide for a performance period of at
least twelve (12) months. The Committee may provide in the Evidence of
Award for immediate vesting of Restricted Stock or Restricted Stock Units, in
whole or in part, in the event of a Change in Control.

    

    To the
extent deemed appropriate by the Committee, the Company may retain the
certificates representing Shares of Restricted Stock in the Company’s possession
until such time as all conditions and/or restrictions applicable to such Shares
have been satisfied or lapse.

    

    Except as
otherwise provided in this Article 8, Shares of Restricted Stock covered by
each Restricted Stock Award shall become freely transferable by the Participant
after all conditions and restrictions applicable to such Shares have been
satisfied or lapse (including satisfaction of any applicable tax withholding
obligations), and Restricted Stock Units shall be paid in cash, Shares, or a
combination of cash and Shares as the Committee, in its sole discretion shall
determine.

     

    
      
        
        

      

      
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    8.5  Certificate
Legend.  In addition to any legends placed on certificates
pursuant to Section 8.4, each certificate representing Shares of Restricted
Stock granted pursuant to the Plan may bear a legend as determined by the
Committee in its sole discretion.

    

    8.6  Voting
Rights.  Unless otherwise determined by the Committee and set
forth in a Participant’s Evidence of Award, to the extent permitted or required
by law, as determined by the Committee, Participants holding Shares of
Restricted Stock granted hereunder may be granted the right to exercise full
voting rights with respect to those Shares during the Period of Restriction. A
Participant shall have no voting rights with respect to any Restricted Stock
Units granted hereunder.

    

    8.7  Termination of
Employment.  To the extent consistent with the
Section 409A Rules, each Evidence of Award shall set forth the extent to
which the Participant shall have the right to retain Restricted Stock and/or
Restricted Stock Units following termination of the Participant’s employment
with or provision of services to the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Evidence of Award
entered into with each Participant, need not be uniform among all Shares of
Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination.

    

    ARTICLE 9.

    

    Performance
Units/Performance Shares

    

    9.1  Grant of Performance
Units/Performance Shares.  Subject to the terms and provisions
of the Plan, the Committee, at any time and from time to time, may grant
Performance Units and/or Performance Shares to Participants in such amounts and
upon such terms as the Committee shall determine.

    

    9.2  Value of Performance
Units/Performance Shares.  Each Performance Unit shall have an
initial value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant. The Committee shall set performance goals in its
discretion as described in Section 11.4 which, depending on the extent to
which they are met, will determine the value and/or number of Performance
Units/Performance Shares that will be paid out to the Participant.

    

    9.3  Earning of Performance
Units/Performance Shares.  Subject to the terms of this Plan,
after the applicable Performance Period has ended, the holder of Performance
Units/Performance Shares shall be entitled to receive payout on the value and
number of Performance Units/Performance Shares earned by the Participant over
the Performance Period, to be determined as a function of the extent to which
the corresponding performance goals have been achieved.

    

    9.4  Form and Timing of Payment of
Performance Units/Performance Shares.  Payment of
earned Performance Units/Performance Shares shall be as determined by the
Committee and as evidenced in the Evidence of Award. Subject to the terms of the
Plan, the Committee, in its sole discretion, may pay earned Performance
Units/Performance Shares in the form of cash or in Shares (or in a combination
thereof) equal to the value of the earned Performance Units/Performance Shares
at the close of the applicable Performance Period, or as soon as practicable
after the end of the Performance Period. Any Shares may be granted subject to
any restrictions deemed appropriate by the Committee. The determination of the
Committee with respect to the form of payout of such Awards shall be set forth
in the Evidence of Award pertaining to the grant of the Award.

    

    9.5  Termination of
Employment.  To the extent consistent with the
Section 409A Rules and Section 162(m) of the Code, each Evidence of
Award shall set forth the extent to which the Participant shall have the right
to retain Performance Units and/or Performance Shares following termination of
the Participant’s employment with or provision of services to the Company, its
Affiliates, and/or its Subsidiaries, as the case may be. Such provisions shall
be determined in the sole discretion of the Committee, shall be included in the
Evidence of Award entered into with each Participant, need not be uniform among
all Awards of Performance Units or Performance Shares issued pursuant to the
Plan, and may reflect distinctions based on the reasons for
termination.

     

    
      
        
        

      

      
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    9.6  Nontransferability.  Except
as otherwise provided in a Participant’s Evidence of Award or otherwise at any
time by the Committee, Performance Units/Performance Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution or as otherwise required
by law. Further, except as otherwise provided in a Participant’s Evidence of
Award or otherwise at any time by the Committee, a Participant’s rights under
the Plan shall be exercisable during his or her lifetime only by such
Participant.

    

    ARTICLE 10.

    

    Cash-Based
Awards and Other Stock-Based Awards

    

    10.1  Grant of Cash-Based
Awards.  Subject to the terms and provisions of the Plan, the
Committee, at any time and from time to time, may grant Cash-Based Awards to
Participants in such amounts and upon such terms as the Committee may
determine.

    

    10.2  Other Stock-Based
Awards.  The Committee may grant other types of equity-based or
equity-related Awards not otherwise described by the terms of this Plan
(including the grant or offer for sale of unrestricted Shares) in such amounts
and subject to such terms and conditions, as the Committee shall determine. Such
Awards may involve the transfer of actual Shares to Participants, or payment in
cash or otherwise of amounts based on the value of Shares and may include,
without limitation, Awards designed to comply with or take advantage of the
applicable local laws of jurisdictions other than the United
States.

    

    10.3  Value of Cash-Based and Other
Stock-Based Awards.  Each Cash-Based Award shall specify a
payment amount or payment range as determined by the Committee. Each Other
Stock-Based Award shall be expressed in terms of Shares or units based on
Shares, as determined by the Committee. The Committee may design Cash-Based
Awards and Other Stock-Based Awards to qualify as Performance-Based Compensation
and may design Cash-Based Awards and Other Stock-Based Awards to not qualify as
Performance-Based Compensation. If the Committee exercises its discretion to
establish Cash-Based Awards and Other Stock-Based Awards as Performance-Based
Compensation, the number and/or value of Cash-Based Awards or Other Stock-Based
Awards that will be paid out to the Participant will depend on the extent to
which the Performance Measures are met.

    

    10.4  Payment of Cash-Based Awards and
Other Stock-Based Awards.  Payment,
if any, with respect to a Cash-Based Award or an Other Stock-Based Award shall
be made in accordance with the terms of the Award, in cash, Shares or a
combination thereof, as the Committee determines.

    

    10.5  Termination of
Employment.  The Committee shall determine the extent to which
the Participant shall have the right to receive Cash-Based Awards following
termination of the Participant’s employment with or provision of services to the
Company, its Affiliates, and/or its Subsidiaries, as the case may be. Such
provisions shall be determined in the sole discretion of the Committee, such
provisions may be included in an agreement entered into with each Participant,
but need not be uniform among all Awards of Cash-Based Awards issued pursuant to
the Plan, and may reflect distinctions based on the reasons for
termination.

    

    10.6  Nontransferability.  Except
as otherwise determined by the Committee, neither Cash-Based Awards nor Other
Stock-Based Awards may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise provided by the Committee, a
Participant’s rights under the Plan, if exercisable, shall be exercisable during
his or her lifetime only by such Participant. With respect to those Cash-Based
Awards or Other Stock-Based Awards, if any, that are permitted to be transferred
to another person, references in the Plan to exercise or payment of such Awards
by or to the Participant shall be deemed to include, as determined by the
Committee, the Participant’s permitted transferee.

     

    
      
        
        

      

      
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    ARTICLE 11.

    

    Performance
Measures

    

    11.1  Performance
Measures.  Unless and until the Committee proposes for
shareholder vote and the shareholders approve a change in the general
Performance Measures set forth in this Article 11, the performance goals
upon which the payment or vesting of an Award to a Covered Employee that is
intended to qualify as Performance-Based Compensation shall be limited to one or
more of the following Performance Measures:

    

    (a) Net
earnings or net income (before or after taxes and
interest/investments);

    

    (b) Earnings per
share;

    

    (c) Earnings per share
growth;

    

    (d) Net sales
growth;

    

    (e) Net
earnings or net income growth (before or after taxes and
interest/investment);

    

    (f) Net operating
profit;

    

    (g) Return
measures (including return on assets, capital, equity, or sales);

    

    (h) Cash
flow (including operating cash flow , free cash flow, and cash flow return on
capital);

    

    (i) Earnings
before or after taxes, interest, depreciation, and/or amortization;

    

    (j) Gross or operating margins or
growth thereof;

    

    (k) Productivity
ratios;

    

    (l) Share
price (including growth measures and total shareholder return);

    

    (m) Expense
targets;

    

    (n) Operating
efficiency;

    

    (o) Customer
satisfaction;

    

    (p) Revenue or Revenue
growth;

    

    (q) Operating profit
growth;

    

    (r) Working capital
targets;

    

    (s) Economic value
added;

    

    (t) Real estate management
objectives;

    

    (u) Sale or disposition of
assets; and

    

    (v) Acquisition of key
assets.

     

    
      
        
        

      

      
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    Any
Performance Measure(s) may be used to measure the performance of the Company,
Subsidiary, and/or Affiliate as a whole or any business unit of the Company,
Subsidiary, and/or Affiliate or any combination thereof, as the Committee may
deem appropriate, or any of the above Performance Measures as compared to the
performance of a group of comparable companies, or published or special index
that the Committee, in its sole discretion, deems appropriate, or the Company
may select Performance Measure (l) above as compared to various stock
market indices. The Committee also has the authority to provide for accelerated
vesting of any Award based on the achievement of performance goals pursuant to
the Performance Measures specified in this Article 11.

    

    11.2  Evaluation of
Performance.  The Committee may provide in any such Award that
any evaluation of performance may include or exclude any of the following events
that occurs during a Performance Period: (a) asset write-downs,
(b) litigation or claim judgments or settlements, (c) the effect of
changes in tax laws, accounting principles, or other laws or provisions
affecting reported results, (d) any reorganization and restructuring
programs, (e) extraordinary nonrecurring items as described in Accounting
Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s annual report to shareholders for the applicable year,
(f) acquisitions or divestitures and (g) foreign exchange gains and
losses. To the extent such inclusions or exclusions affect Awards to Covered
Employees, they shall be prescribed in a form that meets the requirements of
Section 162(m) of the Code for deductibility.

    

    11.3  Adjustment of Performance-Based
Compensation.  The terms of Awards that are designed to qualify
as Performance-Based Compensation, and that are held by Covered Employees, may
not be modified, except to the extent that after such modification the Award
would continue to constitute Performance-Based Compensation. The Committee shall
retain the discretion to reduce the amount of any payment under an Award that is
designed to qualify as Performance-Based Compensation that would otherwise be
payable to a Covered Employee, either on a formula or discretionary basis or any
combination, as the Committee determines.

    

    11.4  Committee
Discretion.  In the event that applicable tax and/or securities
laws change to permit Committee discretion to alter the governing Performance
Measures without obtaining shareholder approval of such changes, the Committee
shall have sole discretion to make such changes without obtaining shareholder
approval. In addition, in the event that the Committee determines that it is
advisable to grant Awards that shall not qualify as Performance-Based
Compensation, the Committee may make such grants without satisfying the
requirements of Section 162(m) of the Code and may base vesting on
Performance Measures other than those set forth in
Section 11.1.

    

    ARTICLE 12.

    

    Beneficiary
Designation

    

    Each
Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant’s death shall be paid
to the Participant’s estate.

    

    
      
        
        

      

      
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    ARTICLE 13.

    

    Deferrals

    

    To the
extent permitted by the Section 409A Rules, the Committee may permit or
require a Participant to defer such Participant’s receipt of the payment of cash
or the delivery of Shares that would otherwise be due to such Participant by
virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions
with respect to Restricted Stock or Restricted Stock Units, or the satisfaction
of any requirements or performance goals with respect to Performance Shares,
Performance Units, Cash-Based Awards or Other Stock-Based Awards. If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals,
consistent with the Section 409A Rules.

    

    ARTICLE 14.

    

    Rights of
Participants

    

    14.1  Employment.  Nothing
in the Plan or an Evidence of Award shall interfere with or limit in any way the
right of the Company, its Affiliates, and/or its Subsidiaries, to terminate any
Participant’s employment or service on the Board at any time or for any reason
not prohibited by law, nor confer upon any Participant any right to continue his
or her employment or service for any specified period of time.

    

    Neither
an Award nor any benefits arising under this Plan shall constitute an employment
contract with the Company, its Affiliates, and/or its Subsidiaries and,
accordingly, subject to Articles 3 and 16, this Plan and the benefits
hereunder may be terminated at any time in the sole and exclusive discretion of
the Committee without giving rise to any liability on the part of the Company,
its Affiliates, and/or its Subsidiaries.

    

    14.2  Participation.  No
individual shall have the right to be selected to receive an Award under this
Plan, or, having been so selected, to be selected to receive a future
Award.

    

    14.3  Rights as a
Shareholder.  Except as otherwise provided herein, a
Participant shall have none of the rights of a shareholder with respect to
Shares covered by any Award until the Participant becomes the record holder of
such Shares.

    

    ARTICLE 15.

    

    Change in
Control

    

    15.1  Change in
Control.  For purposes of this Plan, a “Change in Control”
shall mean the occurrence during the term of any of the following
events:

    

    (a) A
majority of the individuals constituting the Board is replaced during any
twelve-month period by directors whose appointment or election is not endorsed
by a majority of the members of the Board before the date of the appointment or
election, including without limitation as a result of a tender offer, proxy
contest, merger or similar transaction; or

    

    (b) All
or substantially all (meaning having a total gross fair market value at least
equal to 40% of the total gross fair market value of all of the Company’s assets
immediately before such acquisition or acquisitions) of the assets of the
Company are acquired by a Person (during a twelve-month period ending on the
date of the most recent acquisition by such Person); or

    

    (c) The
Company is merged, consolidated, or reorganized into or with another corporation
or entity during any twelve-month period, with the result that upon conclusion
of the transaction less than 51% of the outstanding securities entitled to vote
generally in the election of directors or other capital interests of the
surviving, resulting or acquiring corporation or entity are beneficially owned
(as that term is defined in Rule 13-d3 under the Exchange Act) by the
shareholders of the Company immediately prior to the completion of the
transaction; or

     

    
      
        
        

      

      
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    (d) Any
Person (other than the Company, its Affiliates, its Subsidiaries, any trustee or
other fiduciary holding securities under any employee benefit plan of the
Company, or any company owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of Common
Stock of the Company) acquires or has become, during the twelve-month period
ending on the date of the most recent acquisition by such Person, the Beneficial
Owner of securities representing 30% or more of the combined voting power of the
then-outstanding voting securities of the Company.

    

    ARTICLE 16.

    

    Amendment,
Modification, Suspension, and Termination

    

    16.1  Amendment, Modification, Suspension,
and Termination.  Subject
to Section 16.3 and 16.4, the Committee may, at any time and from time to
time, alter, amend, modify, suspend, or terminate the Plan and any Evidence of
Award in whole or in part; provided, however, that, without the prior approval
of the Company’s shareholders, Options issued under the Plan will not be
repriced, replaced, or regranted through cancellation, and no amendment of the
Plan shall be made without shareholder approval if shareholder approval is
required by law, regulation, or stock exchange rule.

    

    16.2  Adjustment of Awards Upon the
Occurrence of Certain Unusual or Nonrecurring
Events.  The Committee may make adjustments, consistent with
Section 162(m) of the Code and the Section 409A Rules, in the terms
and conditions of, and the criteria included in, Awards in recognition of
unusual or nonrecurring events (including, without limitation, the events
described in Section 4.4 hereof) affecting the Company or the financial
statements of the Company or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments
are appropriate in order to prevent unintended dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan. The
determination of the Committee as to the foregoing adjustments, if any, shall be
conclusive and binding on Participants under the Plan.

    

    16.3  Awards Previously
Granted.  Notwithstanding any other provision of the Plan to
the contrary, no termination, amendment, suspension, or modification of the Plan
or an Evidence of Award shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award except as required under the tax
laws.

    

    16.4  Compliance with the
Section 409A Rules.  It is the intention of the Board that
the Plan comply strictly with the Section 409A Rules and the Committee
shall exercise its discretion in granting Awards hereunder (and the terms of
such grants), accordingly. The Plan and any grant of an Award hereunder may be
amended from time to time as may be necessary or appropriate to comply with the
Section 409A Rules.

    

    ARTICLE 17.

    

    Withholding

    

    17.1  Tax
Withholding.  The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, the
minimum statutory amount to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.

    

    17.2  Share
Withholding.  With respect to withholding required upon the
exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock
and Restricted Stock Units, or upon the achievement of performance goals related
to Performance Shares, or any other taxable event arising as a result of an
Award granted hereunder, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum statutory total tax that could be
imposed on the transaction. All such elections shall be irrevocable, made in
writing, and signed by the Participant, and shall be subject to any restrictions
or limitations that the Committee, in its sole discretion, deems
appropriate.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    ARTICLE 18.

    

    Successors

    

    All
obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

    

    ARTICLE 19.

    

    General
Provisions

    

    19.1  Forfeiture
Events.

    

    (a) The
Committee may specify in an Evidence of Award that the Participant’s rights,
payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain specified
events, in addition to any otherwise applicable vesting or performance
conditions of an Award. Such events may include, but shall not be limited to,
termination of employment for cause, termination of the Participant’s provision
of services to the Company, Affiliate, and/or Subsidiary, violation of material
Company, Affiliate, and/or Subsidiary policies, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Company, its Affiliates, and/or its
Subsidiaries.

    

    (b) If
the Company is required to prepare an accounting restatement due to the material
noncompliance of the Company, as a result of misconduct, with any financial
reporting requirement under the securities laws, if the Participant knowingly or
grossly negligently engaged in the misconduct, or knowingly or grossly
negligently failed to prevent the misconduct, or if the Participant is one of
the persons subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the
amount of any payment in settlement of an Award earned or accrued during the
twelve-month period following the first public issuance or filing with the
United States Securities and Exchange Commission (whichever just occurred)
of the financial document embodying such financial reporting
requirement.

    

    19.2  Legend.  The
certificates for Shares may include any legend, which the Committee deems
appropriate in its sole discretion to reflect any restrictions on transfer of
such Shares.

    

    19.3  Gender and
Number.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

    

    19.4  Severability.  In
the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included. To the extent that any provision of this Plan
would prevent any Option that was intended to qualify as an Incentive Stock
Option from qualifying as such, that provision shall be null and void with
respect to such Option. Such provision, however, shall remain in effect for
other Options and there shall be no further effect on any provision of this
Plan.

    

    19.5  Requirements of
Law.  The granting of Awards and the issuance of Shares under
the Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required.

    

    19.6  Delivery of
Title.  The Company shall have no obligation to issue or
deliver evidence of title for Shares issued under the Plan prior
to:

    

    (a) Obtaining
any approvals from governmental agencies that the Company determines are
necessary or advisable; and

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    (b) Completion
of any registration or other qualification of the Shares under any applicable
national or foreign law or ruling of any governmental body that the Company
determines to be necessary or advisable.

    

    19.7  Inability to Obtain
Authority.  The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

    

    19.8  Investment
Representations.  The Committee may require any person
receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the person is acquiring the securities for his own account for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.

    

    19.9  Employees Based Outside of the
United States.  Notwithstanding
any provision of the Plan to the contrary, in order to comply with the laws in
other countries in which the Company, its Affiliates, and/or its Subsidiaries
operate or have Employees or Directors, the Committee, in its sole discretion,
shall have the power and authority to:

    

    (a) Determine
which Affiliates and Subsidiaries shall be covered by the Plan;

    

    (b) Determine
which Employees and/or Nonemployee Directors outside the United States are
eligible to participate in the Plan;

    

    (c) Modify
the terms and conditions of any Award granted to Employees and/or Nonemployee
Directors outside the United States to comply with applicable foreign
laws;

    

    (d) Establish
subplans and modify exercise procedures and other terms and procedures, to the
extent such actions may be necessary or advisable. Any subplans and
modifications to Plan terms and procedures established under this
Section 19.9 by the Committee shall be attached to this Plan document as
appendices; and

    

    (e) Take
any action, before or after an Award is made, that it deems advisable to obtain
approval or comply with any necessary local government regulatory exemptions or
approvals.

    

    Notwithstanding
the above, the Committee may not take any actions hereunder, and no Awards shall
be granted, that would violate applicable law.

    

    19.10  Uncertificated
Shares.  To the extent that the Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of such Shares may
be effected on a noncertificated basis, to the extent not prohibited by
applicable law or the rules of any stock exchange.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    19.11  Unfunded
Plan.  Participants shall have no right, title, or interest
whatsoever in or to any investments that the Company, and/or its Subsidiaries,
and/or Affiliates may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant, beneficiary, legal
representative, or any other person. To the extent that any person acquires a
right to receive payments from the Company, and/or its Subsidiaries, and/or
Affiliates under the Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company, a Subsidiary, or an Affiliate, as the
case may be. All payments to be made hereunder shall be paid from the general
funds of the Company, a Subsidiary, or an Affiliate, as the case may be and no
special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts except as expressly set forth in the
Plan. The Plan is not subject to ERISA.

    

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

    

    19.13  Retirement and Welfare
Plans.  Neither Awards made under the Plan nor Shares or cash
paid pursuant to such Awards will be included as “compensation” for purposes of
computing the benefits payable to any Participant under the Company’s or any
Subsidiary’s or Affiliate’s retirement plans (both qualified and non-qualified)
or welfare benefit plans unless such other plan expressly provides that such
compensation shall be taken into account in computing a participant’s
benefit.

    

    19.14  Nonexclusivity of the
Plan.  The adoption of this Plan shall not be construed as
creating any limitations on the power of the Board or Committee to adopt such
other compensation arrangements as it may deem desirable for any
Participant.

    

    19.15  No Constraint on Corporate
Action.  Nothing in this Plan shall be construed to:
(i) limit, impair, or otherwise affect the Company’s or a Subsidiary’s or
an Affiliate’s right or power to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
consolidate, or dissolve, liquidate, sell, or transfer all or any part of its
business or assets; or, (ii) limit the right or power of the Company or a
Subsidiary or an Affiliate to take any action which such entity deems to be
necessary or appropriate.

    

    19.16  Governing Law.  The
Plan and each Evidence of Award shall be governed by the laws of the State of
Ohio, excluding any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of the Plan to the substantive
law of another jurisdiction. Unless otherwise provided in the Evidence of Award,
recipients of an Award under the Plan are deemed to submit to the exclusive
jurisdiction and venue of the federal or state courts of Ohio, to resolve any
and all issues that may arise out of or relate to the Plan or any related
Evidence of Award.

     

    
      
        
        

      

      
        19c57393_ex10-1.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

EXHIBIT 10.1

 

April 27, 2009

Mr. William S. Sheridan 

Chief Financial
Officer, Executive Vice President 

Sotheby’s 

1334 York Avenue  

New York,
New York 10021 

Re:       Amendment to Severance Agreement

Dear Bill: 

     I write further to your conversation with Bill Ruprecht earlier this month to confirm what we have agreed with you in relation to your remuneration going forward in response to current challenges facing Sotheby’s business in
a difficult economy. As you are aware, Sotheby’s highly compensated executive employees are being asked to have their salary reduced as part of the Company’s initiatives to best position the organization to address these challenges.
Accordingly, upon your execution of this amendment to your Severance Agreement, which is dated as of August 3, 2006, as amended March 7, 2008 (the “Agreement”), your base salary will be reduced from $600,000 to $540,000 effective
May 1, 2009. This amendment is as follows:

Waivers 

     The Agreement permits you to
terminate your employment with the Company for “Good Reason” (as defined
in Exhibit A to the Agreement) for the following pertinent or potentially pertinent
 reasons (i) “failure by the Company to pay you a base salary of not less
 than $600,000”...or (ii) “any action by the Company that results
 in a material diminution in your position without your express consent. . .”. You
 agree to waive  irrevocably the right to terminate the Agreement and assert
 a separation for “Good Reason” along with any other rights you may
 have under the Agreement as a result of this salary reduction. You further agree
 that no portion of the salary  reduction is being deferred to any future date.

Amendments

	 	You agree that:
	 	 	 
	 	
1.        	
The definition of “Good Reason” stated
    in Exhibit A to the Agreement in clause (a), as amended on March 7, 2008,
    shall be deleted and replaced with the following:
  
	 

	 	 	“failure by the Company
        to pay you a base salary of not less than $540,000, reduction of
        your annual cash incentive bonus target below $350,000 under the
        Company’s annual incentive compensation program or reduction of
        your annual restricted stock unit incentive bonus target under the Company’s
        annual restricted stock unit incentive program below $350,000, with
        any such stock units awarded subject to the terms and conditions of the
    Sotheby’s Amended and Restated Stock Unit Plan (or successor plan);” 
	 	 	 
	 	2.      	The definition of “Good Reason” stated
        in Exhibit A to the Agreement will be amended to add in a separate paragraph
        after, “Provided, however, that the Company shall have thirty (30)
        days following receipt of notice from you of circumstances constituting
    Good Reason to correct such circumstances.”:
	 	 	 
	 	 	
“’Good Reason’ specifically
        shall not include the impact of any period of unpaid vacation that is
    mutually agreed upon by the parties, in their discretion.” 
	 	 	 
	 	3.      	Paragraph 1(a) subsection (a) of the
        Agreement shall be amended so that “base salary” shall mean
        your former salary of $600,000 for purposes of calculating the amount
        due to you from the date of notification by you to the Company that you
        are terminating employment for Good Cause (provided the Company does
        not cure such circumstances with the thirty day period) or the date of
        notification by the Company that it is terminating you without cause
    until the actual termination date.
	 	 	 
	 	4.      	Paragraph 1(a) of the Agreement shall
        be amended so that if you become eligible for severance under the Sotheby’s,
        Inc. Severance Plan, “base salary” for purposes of determining
        any amount due to you upon termination of employment, shall be calculated
    using your former base salary amount of $600,000.

     The Company will review these salary reductions in twelve months with the Compensation Committee of the Board of Directors to determine if business conditions warrant the reinstatement of all or part
of the salary decrease. 

     The Company is making arrangements with most of its benefits providers (other than worker’s compensation, short term disability, the Company’s 401(k) plan and the Company’s Deferred
Compensation plan) so that your level of benefits will remain commensurate with the amount of your former base salary of $600,000. 

     Except as amended hereby, the Agreement remains in full force and effect in accordance with its terms. 

 

     We greatly appreciate that you are accepting a reduction in compensation during this period of retrenchment for the company’s business in a difficult worldwide economic environment. 

     If this letter agreement correctly states the terms of your waivers and the amendments to the Agreement, please acknowledge where indicated below.    

 

	 	SOTHEBY’S
	 	 
	 	 
	 	By: /s/
          Susan Alexander  

                  Susan Alexander, 

                  Executive Vice President

                  and Worldwide Head 

                  of Human Resources 
	 	 

 

 

AGREED AND ACCEPTED AS OF

 THE DATE OF THIS LETTER: 

 

/s/ William S. Sheridan_____________________________
 WILLIAM S. SHERIDAN

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