Document:

Exhibit 10.3

 

2005 Short Term Cash Incentive Plan

(Effective May 19, 2005)

 

Subject to the achievement of
certain revenue, EBITDA and strategic goals for 2005, the following sets forth
the target cash bonus awards for each of the Company’s executive officers.

 

	
  Executive Officer

  	
   

  	
  Target Payout as a

  Percentage of Base Salary

  	
   

  
	
  Caren L.
  Mason

  President and Chief Executive Officer

  	
   

  	
  50

  	
  %

  
	
  Mark E. Paiz

  Chief Operating Officer

  	
   

  	
  35

  	
  %

  
	
  Paul E.
  Landers

  Senior Vice President,

  Finance & Administration,

  Chief Financial Officer and Secretary

  	
   

  	
  35

  	
  %

  
	
  Thomas J.
  Foley

  Chief Technology Officer

  	
   

  	
  35

  	
  %Exhibit 10.23

 

Arrangement

Albert L.
Lord

 

	
  Positions:

  	
  1)   Chairman,
  SLM Corporation Board of Directors

  
	
   

  	
  2)   Part-time
  (minimum 24 hours per week) non-officer employee of Sallie Mae, Inc.

  
	
   

  	
   

  
	
  Duties:

  	
  Duties
  of the Chairman of the Board as set forth in the Corporation’s by-laws and
  governance guidelines.

  
	
   

  	
   

  
	
   

  	
  Explore
  merger and acquisition opportunities; engage in government and public
  relations activities; direct charitable giving from The Sallie Mae Fund; and
  other strategic and representational duties as requested by the CEO.

  
	
   

  	
   

  
	
  Compensation:

  	
  May 05
  stock option grant of 300,000 options for three-years of service (no
  additional grants until 2008). Options vest at 120% of the grant price (for
  five trading days), exercisable for five years after separation from Board
  service. 2/3 of options are cancelled if not re-elected to the Board at
  May 2006 and 1/3 are cancelled if not re-elected to the Board at
  May 2007. Options granted prior to May 2005 continue to be subject
  to their original grant terms and conditions.

  
	
   

  	
  $100,000
  base salary.

  
	
   

  	
  Benefits
  for which part-time employees are eligible: health/dental, life, and
  disability insurances and pension/401(k) plan.

  
	
   

  	
  Matching
  gift program at Board member level.

  
	
   

  	
  Office
  and secretarial support

  
	
   

  	
  Personal
  use of corporate jet consistent with corporate reimbursement policy.

  
	
   

  	
  No
  payment of 2005 bonus.

  
	
   

  	
   

  
	
  Effective Date:

  	
  June 1,
  2005Exhibit 10.24

 

SLM
CORPORATION

INCENTIVE PLAN

 

Amended
and Restated May 19, 2005

 

SECTION 1.                                                                                PURPOSE OF PLAN

 

The purpose of the SLM Corporation Incentive Plan (“Plan”) is to enable
SLM Corporation (the “Corporation”) to attract, retain and motivate its employees
and to further align the interests of the Corporation’s employees with those of
the stockholders of the Corporation by providing for or increasing their
proprietary interest in the Corporation.

 

SECTION 2.                                                                                ADMINISTRATION OF THE
PLAN

 

2.1                       Composition of Committee. The Plan shall be administered by the
Board of Directors and/or by a committee of the Board of Directors of SLM
Corporation, as appointed from time to time by the Board of Directors (the “Committee”).
The Board of Directors shall fill vacancies on and from time to time may remove
or add members to the Committee. The Committee shall act pursuant to a majority
vote or unanimous written consent. Notwithstanding the foregoing, with respect
to any Award that is not intended to satisfy the conditions of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or Section 162(m)
of the Internal Revenue Code of 1986, as amended (the “Code”), the Committee
may appoint one or more separate committees (any such committee, a “Subcommittee”)
composed of one or more directors of the Corporation, (who may but need not be
members of the Committee) and may delegate to any such Subcommittee(s) the
authority to grant Awards, as defined in Section 5.1 hereof, under the
Plan to Employees, as defined in Section 4, to determine all terms of such
Awards, and/or to administer the Plan or any aspect of it. Any action by any
such Subcommittee within the scope of such delegation shall be deemed for all
purposes to have been taken by the Committee. The Committee may designate the
Secretary of the Corporation or other Corporation employees to assist the
Committee in the administration of the Plan, and may grant authority to such
persons to execute agreements evidencing Awards made under this Plan or other
documents entered into under this Plan on behalf of the Committee or the
Corporation.

 

2.2                       Powers of the Committee. Subject to the express provisions of
this Plan, the Committee shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of this Plan with
respect to the Awards over which such Committee has authority, including,
without limitation, the following:

 

(a)                        to prescribe, amend and rescind rules and
regulations relating to this Plan and to define terms not otherwise defined
herein; provided that, unless the Committee shall specify otherwise, for
purposes of this Plan (i) the term “fair market value” shall mean, as of
any date, the closing price for a Share, as defined in Section 3.1 hereof,
reported for that date on the composite tape for securities listed on the New
York Stock Exchange or, if no Shares traded on the New York Stock Exchange on
the date in question, then for the next preceding date for which Shares traded
on the New York Stock Exchange; and (ii) the term “Corporation” shall mean
SLM Corporation and its subsidiaries and affiliates, unless the context
otherwise requires;

 

(b)                       to determine the Employees to whom Awards
shall be granted hereunder and the timing of any such Awards;

 

(c)                        to determine the number of Shares subject
to Awards and the exercise or purchase price of such Shares;

 

(d)                       to establish and verify the extent of
satisfaction of any performance goals applicable to Awards;

 

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(e)                        to prescribe and amend the terms of the
agreements evidencing Awards made under this Plan (which need not be
identical);

 

(f)                          to determine whether, and the extent to
which, adjustments are required pursuant to Section 12 hereof;

 

(g)                       to interpret and construe this Plan, any rules and
regulations under the Plan and the terms and conditions of any Award granted
hereunder, and to make exceptions to any such provisions in good faith and for
the benefit of the Corporation; and

 

(h)                       to make all other determinations deemed
necessary or advisable for the administration of the Plan.

 

2.3                                 Determinations of the Committee. All decisions, determinations and
interpretations by the Committee or the Board regarding the Plan shall be final
and binding on all Employees and Participants, as defined in Section 4
hereof.  The Committee or the Board, as
applicable, shall consider such factors as it deems relevant, in its sole and
absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of
any officer of the Corporation or Employee and such attorneys, consultants and
accountants as it may select.

 

SECTION 3.                                                                                STOCK SUBJECT TO PLAN

 

3.1                       Aggregate Limits. Subject to adjustment as provided in Section 12,
at any time, the aggregate number of shares of the Corporation’s common stock,
$.20 par value (“Shares”), issued and issuable pursuant to all Awards granted
under this Plan shall not exceed 17,200,000; provided that no more than
2,000,000 of such Shares may be issued as Share Awards, as that term is defined
in Section 5.1.  The Shares subject
to the Plan may be either Shares reacquired by the Corporation, including
Shares purchased in the open market, or authorized but unissued Shares.

 

3.2                       Code Section 162(m) Limits. The aggregate number of Shares subject
to Options granted under this Plan during any calendar year to any one Employee
shall not exceed 1,000,000. The aggregate number of Shares issued or issuable
during any calendar year to any one Employee as Performance Stock Awards and
Restricted Stock Awards shall not exceed 100,000 Shares. The maximum amount
payable pursuant to that portion of an Incentive Bonus Award granted under this
Plan for any calendar year to any Employee that is intended to satisfy the
requirements for “performance based compensation” under Code Section 162(m)
shall not exceed five million dollars ($5,000,000).

 

Notwithstanding anything to the contrary in the Plan, the foregoing
limitations shall be subject to adjustment under Section 12 only to the
extent that such adjustment will not affect the status of any Award intended to
qualify as “performance based compensation” under Code Section 162(m).

 

3.3                       Issuance of Shares. For purposes of Section 3.1, the
aggregate number of Shares issued under this Plan at any time shall equal the
number of Shares actually issued upon exercise or settlement of an Award less
any Shares returned to the Corporation upon cancellation, expiration or
forfeiture of an Award and less any Shares delivered to the Corporation by or
on behalf of a Participant (either actually or by attestation) in payment or
satisfaction of the purchase price, exercise price or tax obligation of an
Award.

 

SECTION 4.                                                                                PERSONS ELIGIBLE UNDER PLAN

 

Only employees of the Corporation shall be eligible to be considered
for the grant of Awards under the Plan. For purposes of the administration of
Awards, the term “Employee” shall also include a former Employee or any person
(including any estate) who is a beneficiary of a former Employee. A “Participant”
is any Employee to whom an Award has been made and any person (including any
estate) to whom an Award has been assigned or transferred pursuant to Section 11.1.

 

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SECTION 5.                                                                                PLAN AWARDS

 

5.1                       Award Types. The following arrangements or benefits
are authorized under the Plan if their terms and conditions are not
inconsistent with the provisions of the Plan: Stock Options, Incentive Bonuses,
Performance Stock and Restricted Stock. Such arrangements and benefits are
sometimes referred to herein as “Awards.” Incentive Bonuses, Performance Stock
and Restricted Stock are also referred to as “Share Awards”. Each type of Award
is defined as follows:

 

Stock Options: A Stock Option is a right granted under Section 6
to purchase a number of Shares at such exercise price, at such times, and on
such other terms and conditions as are specified in or determined pursuant to
the agreement evidencing the Award (the “Option Agreement”). Options intended
to qualify as Incentive Stock Options (“ISOs”) pursuant to Code Section 422
and Options which are not intended to qualify as ISOs (“Non-qualified Options”)
may be granted under Section 6 as the Committee in its sole discretion
shall determine.

 

Incentive Bonus: An Incentive Bonus is a bonus opportunity awarded
under Section 7 pursuant to which an Employee may become entitled to
receive an amount based on satisfaction of such performance criteria as are
specified in the document evidencing the Award (the “Incentive Bonus Agreement”).

 

Performance Stock: Performance Stock is an award of Shares made under Section 8,
the grant, issuance, retention and/or vesting of which is subject to such
performance and other conditions as are expressed in the document evidencing
the Award (the “Performance Stock Agreement”).

 

Restricted Stock: Restricted Stock is an award of Shares made under Section 9,
the grant, issuance, retention and/or vesting of which is subject to certain
restrictions, as are appropriate in the document evidencing the Award (the “Restricted
Stock Agreement”).

 

5.2                       Grants of Awards. An Award may consist of one such
arrangement or benefit or two or more of them in tandem or in the alternative.

 

SECTION 6.                                                                                STOCK OPTION GRANTS

 

The Committee may grant an Option or provide for the grant of an
Option, either from time-to-time in the discretion of the Committee or
automatically upon the occurrence of specified events, including, without
limitation, the achievement of performance goals, the satisfaction of an event
or condition within the control of the recipient of the Award, within the
control of others or not within the person’s control.

 

6.1                       Option Agreement. Each Option Agreement shall contain
provisions regarding (a) the number of Shares which may be issued upon
exercise of the Option, (b) the purchase price of the Shares and the means
of payment for the Shares, (c) the term of the Option, (d) such terms
and conditions of exercisability as may be determined from time to time by the
Committee, (e) restrictions on the transfer of the Option and forfeiture
provisions, and (f) such further terms and conditions, in each case not
inconsistent with the Plan as may be determined from time to time by the
Committee. Option Agreements evidencing ISOs shall contain such terms and
conditions as may be necessary to comply with the applicable provisions of Section 422
of the Code.

 

6.2                       Option Price. The purchase price per Share of the
Shares subject to each Option granted under the Plan shall equal or exceed 100
percent of the fair market value of such Stock on the date the Option is
granted, except that in the case of Options granted to employees upon a merger
or acquisition, the purchase price may be higher or lower than the fair market
value of the Stock on the date the Option is granted if such purchase price is
required to assume or substitute options held by employees of the acquired
Corporation at the time of the acquisition.

 

6.3                       Option Term. The “Term” of each Option granted under
the Plan, including any ISOs, shall not exceed ten (10) years from the
date of its grant.

 

6.4                       Option Vesting. Options granted under the Plan shall be
exercisable at such time and in such installments during the period prior to
the expiration of the Option’s Term as determined by the

 

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Committee in its sole discretion, provided that no Option shall vest
earlier than one year from the date of grant, other than for reasons set forth
in Section 11.6 and Section 13. The Committee shall have the right to
make the timing of the ability to exercise any Option granted under the Plan
subject to such performance requirements as deemed appropriate by the
Committee. At any time after the grant of an Option the Committee may, in its
sole discretion, reduce or eliminate any restrictions surrounding any
Participant’s right to exercise all or part of the Option.

 

6.5                                 Option Exercise.

 

(a)                        Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect
to fractional Shares and the Committee may require, by the terms of the Option
Agreement, a partial exercise to include a minimum number of Shares.

 

(b)                       Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery to the representative of the
Corporation designated for such purpose by the Committee all of the following: (i) notice
of exercise in such form as the Committee authorizes specifying the number of
Shares to be purchased by the Participant, (ii) payment or provision for
payment of the exercise price for such number of Shares, (iii) such
representations and documents as the Committee, in its sole discretion, deems
necessary or advisable to effect compliance with all applicable provisions of
the Securities Act of 1933, as amended, and any other federal, state or foreign
securities laws or regulations, (iv) in the event that the Option shall be
exercised pursuant to Section 11.1 by any person or persons other than the
Employee, appropriate proof of the right of such person or persons to exercise
the Option, and (v) such representations and documents as the Committee,
in its sole discretion, deems necessary or advisable to provide for the tax
withholding pursuant to Section 14. Unless provided otherwise by the
Committee, no Participant shall have any right as a stockholder with respect to
any Shares purchased pursuant to any Option until the registration of Shares in
the name of such person, and no adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such Shares are so registered.

 

(c)                        Payment of Exercise Price. To the extent authorized by the
Committee, the exercise price of an Option may be paid in the form of one of
more of the following, either through the terms of the Option Agreement or at
the time of exercise of an Option: (i) cash or certified or cashiers’
check, (ii) Shares that have been held by the Participant for such period
of time as the Committee may specify, (iii) other property deemed
acceptable by the Committee, (iv) a reduction in the number of Shares or
other property otherwise issuable pursuant to such Option, (v) any
combination of (i) through (iv).

 

SECTION 7.                                                                                INCENTIVE BONUS

 

Each Incentive Bonus Award will confer upon the Employee the
opportunity to earn a payment tied to the level of achievement with respect to
one or more performance criteria established for a performance period of not
less than one year.

 

7.1                       Incentive Bonus Award. Each Incentive Bonus Award shall
contain provisions regarding (a) the target and maximum amount payable to
the Employee as an Incentive Bonus, (b) the performance criteria and level
of achievement versus these criteria which shall determine the amount of such
payment, (c) the period as to which performance shall be measured for
determining the amount of any payment, (d) the timing of any payment
earned by virtue of performance, (e) restrictions on the alienation or
transfer of the Incentive Bonus prior to actual payment, (f) forfeiture
provisions, and (g) such further terms and conditions, in each case not
inconsistent with the Plan as may be determined from time to time by the
Committee.

 

7.2                                 Performance Criteria. The Committee shall establish the
performance criteria and level of achievement versus these criteria, which
shall determine the maximum amount payable under an Incentive Bonus Award,
which criteria may be based on financial performance and/or personal
performance evaluations. The Committee may specify the percentage of the target
Incentive Bonus that is intended to satisfy the requirements for “performance-based
compensation” under Code Section 162(m). Notwithstanding anything to the
contrary herein, the performance criteria for any portion of an

 

4

 

Incentive Bonus that is intended by the Committee to satisfy the
requirements for “performance-based compensation” under Code Section 162(m)
shall be a measure based on one or more Qualifying Performance Criteria (as
defined in Section 11.2 hereof) selected by the Committee and specified at
the time the Incentive Bonus Award is granted. The Committee shall certify the
extent to which any Qualifying Performance Criteria has been satisfied, and the
amount payable as a result thereof, prior to payment of any Incentive Bonus
that is intended by the Committee to satisfy the requirements for “performance-based
compensation” under Code Section 162(m).

 

7.3                       Timing and Form of Payment. The Committee shall determine the
timing of payment of any Incentive Bonus. The Committee may provide for or,
subject to such terms and conditions as the Committee may specify, may permit a
Participant to elect for the payment of any Incentive Bonus to be deferred to a
specified date or event. The Committee may provide for a Participant to have
the option for his or her Incentive Bonus, or such portion thereof as the
Committee may specify, to be paid in whole or in part in Shares or Stock Units.

 

7.4                       Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the amount paid under an Incentive Bonus Award on account of
either financial performance or personal performance evaluations may be reduced
by the Committee on the basis of such further considerations as the Committee
in its sole discretion shall determine.

 

SECTION 8.                                                                                PERFORMANCE STOCK

 

Performance Stock consists of an award of Shares, the grant, issuance,
retention and/or vesting of which shall be subject to such performance
conditions and to such further terms and conditions as the Committee deems
appropriate.

 

8.1                       Performance Stock Award. Each Performance Stock Award shall
contain provisions regarding (a) the number of Shares subject to such
Award or a formula for determining such, (b) the performance criteria and
level of achievement versus these criteria which shall determine the number of
Shares granted, issued, retainable and/or vested, (c) the period as to
which performance shall be measured for determining achievement of performance,
provided that such period shall be no shorter than one year, (d) forfeiture
provisions, and (e) such further terms and conditions, in each case not
inconsistent with the Plan as may be determined from time to time by the Committee.

 

8.2                       Performance Criteria. The grant, issuance, retention and/or
vesting of each Performance Share shall be subject to such performance criteria
and level of achievement versus these criteria as the Committee shall
determine, which criteria may be based on financial performance and/or personal
performance evaluations. Notwithstanding anything to the contrary herein, the
performance criteria for any Performance Stock that is intended by the
Committee to satisfy the requirements for “performance-based compensation”
under Code Section 162(m) shall be a measure based on one or more
Qualifying Performance Criteria selected by the Committee and specified at the
time the Performance Stock Award is granted.

 

8.3                       Timing and Form of Payment. The Committee shall determine the
timing of payment of any Performance Stock Award. The Committee may provide for
or, subject to such terms and conditions as the Committee may specify, may
permit a Participant to elect for the payment of any Performance Stock to be
deferred to a specified date or event. The Committee may provide for a
Participant to have the option for his or her Performance Stock, or such
portion thereof as the Committee may specify, to be granted in whole or in part
in Shares or Stock Units.

 

8.4                       Discretionary Adjustments. Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under a Performance Stock Award on account of either financial
performance or personal performance evaluations may be reduced by the Committee
on the basis of such further considerations as the Committee in its sole
discretion shall determine.

 

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SECTION 9.                                                                                RESTRICTED STOCK

 

9.1                       Restricted Stock Award. Each Restricted Stock Award shall
contain provisions regarding (a) the number of Shares subject to such
Award or a formula for determining such, (b) the length of the restrictive
period over which the Restricted Stock Award shall vest or may ratably vest,
provided that such period shall be no shorter than three years, (c) forfeiture
provisions, and (d) such further terms and conditions, in each case not
inconsistent with the Plan as may be determined from time to time by the
Committee.

 

9.2.                    Timing and Form of Payment. The Committee shall determine the
timing of payment of any Restricted Stock Award. The Committee may provide for
or, subject to such terms and conditions as the Committee may specify, may
permit a Participant to elect for the payment of any Restricted Stock to be deferred
to a specified date or event. The Committee may provide for a Participant to
have the option for his or her Restricted Stock, or such portion thereof as the
Committee may specify, to be granted in whole or in part in Shares or Stock
Units.

 

9.3                       Discretionary Adjustments. The number of Shares granted, issued,
retainable and/or vested under a Restricted Stock Award may be reduced by the
Committee on the basis of such further considerations as the Committee in its
sole discretion shall determine.

 

SECTION 10.                                                                          STOCK UNITS

 

10.1                 Stock Units. A “Stock Unit” is a bookkeeping entry
representing an amount equivalent to the fair market value of one share of
Common Stock. Stock Units represent an unfunded and unsecured obligation of the
Corporation, except as otherwise provided for by the Committee.

 

10.2                 Grant of Stock Units. Stock Units may be issued upon exercise
of Options, or in payment and satisfaction of any Share Award.

 

10.3                 Settlement of Stock Units. Unless provided otherwise by the
Committee, settlement of Stock Units shall be made by issuance of Shares and
shall occur within 60 days after an Employee’s termination of employment for
any reason. The Committee may provide for Stock Units to be settled in cash (at
the election of the Corporation or the Participant, as specified by the
Committee) and to be made at such other times as it determines appropriate or
as it permits a Participant to choose. The amount of Shares, or other
settlement medium, to be so distributed may be increased by an interest factor
or by dividend equivalents, which may be valued as if reinvested in Shares.
Until a Stock Unit is settled, the number of shares of Shares represented by a
Stock Unit shall be subject to adjustment pursuant to Section 12.

 

SECTION 11.                                                                          OTHER PROVISIONS APPLICABLE TO AWARDS

 

11.1                 Transferability. Unless the agreement evidencing an
Award (or an amendment thereto authorized by the Committee) expressly states
that the Award is transferable as provided hereunder, no Award granted under
the Plan, nor any interest in such Award, may be sold, assigned, conveyed,
gifted, pledged, hypothecated or otherwise transferred in any manner prior to
the vesting or lapse of any and all restrictions applicable thereto, other than
by will or the laws of descent and distribution. The Committee may in its sole
discretion grant an Award or amend an outstanding Award to provide that the
Award is transferable or assignable to a member or members of the Employee’s “immediate
family,” as such term is defined under Exchange Act Rule 16a-1(e),
or to a trust for the benefit solely of a member or members of the Employee’s
immediate family, or to a partnership or other entity whose only owners are
members of the Employee’s family, provided that (i) no consideration is
given in connection with the transfer of such Award, and (2) following any
such transfer or assignment the Award will remain subject to substantially the
same terms applicable to the Award while held by the Employee, as modified as
the Committee in its sole discretion shall determine appropriate, and the
Participant shall execute an agreement agreeing to be bound by such terms.

 

11.2                 Qualifying Performance Criteria. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to
either the Corporation as a whole or to a

 

6

 

business unit or subsidiary, either individually, alternatively or in
any combination, and measured either annually or cumulatively over a period of
years, on an absolute basis or relative to a pre-established target, to
previous years’ results or to a designated comparison group, in each case as
specified by the Committee in the Award: (a) cash flow, (b) ”core
cash” earnings per share (including earnings before interest, taxes,
depreciation and amortization), (c) return on equity, (d) total
stockholder return, (e) return on capital, (f) return on assets or
net assets, (g) revenue, (h) ”core cash” income or net income, (i) ”core
cash” operating income or net operating income, (j) operating profit or net
operating profit, (k) operating margin, (l) return on operating revenue, (m)
market share, (n) loan volume and (o) overhead or other expense reduction. The
Committee may appropriately adjust any evaluation of performance under a
Qualifying Performance Criteria to exclude any of the following events that
occurs during a performance period: (i) asset write-downs, (ii) litigation
or claim judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other laws or provisions affecting reported results, (iv) accruals
for reorganization and restructuring programs, and (v) any extraordinary
non-recurring 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 Corporation’s annual report to
stockholders for the applicable year.

 

11.3                 Dividends. Unless otherwise provided by the Committee, no
adjustment shall be made in Shares issuable under Awards on account of cash
dividends that may be paid or other rights that may be issued to the holders of
Shares prior to their issuance under any Award. The Committee shall specify
whether dividends or dividend equivalent amounts shall be paid to any
Participant with respect to the Shares subject to any Award that have not
vested or been issued or that are subject to any restrictions or conditions on
the record date for dividends.

 

11.4                 Agreements Evidencing Awards. The Committee shall, subject to
applicable law, determine the date an Award is deemed to be granted, which for
purposes of this Plan shall not be affected by the fact that an Award is
contingent on subsequent stockholder approval of the Plan. The Committee or,
except to the extent prohibited under applicable law, its delegate(s) may
establish the terms of agreements evidencing Awards under this Plan and may,
but need not, require as a condition to any such agreement’s effectiveness that
such agreement be executed by the Participant and that such Participant agree
to such further terms and conditions as specified in such agreement. The grant
of an Award under this Plan shall not confer any rights upon the Participant
holding such Award other than such terms, and subject to such conditions, as
are specified in this Plan as being applicable to such type of Award (or to all
Awards) or as are expressly set forth in the Agreement evidencing such Award.

 

11.5                 Tandem Stock or Cash Rights. Either at the time an Award is granted
or by subsequent action, the Committee may, but need not, provide that an Award
shall contain as a term thereof, a right, either in tandem with the other
rights under the Award or as an alternative thereto, of the Participant to
receive, without payment to the Corporation, a number of Shares, cash or a
combination thereof, the amount of which is determined by reference to the
value of the Award.

 

11.6                 Termination of Employment. At the time of the grant of an Award,
the Committee may provide that upon an Award holder’s termination of employment
on account of death, Disability or Involuntary Termination, as those terms are
defined herein, all unvested Awards held by the Award holder shall vest. “Disability”
means total and permanent disability within the meaning of the Corporation’s
long-term disability policy applicable at the time to the Award holder, as may
be amended from time to time. “Involuntary Termination’ means termination of
employment due to job abolishment.

 

11.7                 Misconduct. At the time of the grant of an Award, the Committee
may provide that if the Award holder engages in Misconduct, as defined herein,
the Award, whether vested or unvested, is forfeited. Whether an Award holder has
engaged in Misconduct will be determined by the Corporation’s senior human
resources officer or his or her designee. Misconduct is defined as an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed to the
Corporation, breach of fiduciary duty or deliberate disregard of Corporation
rules; an unauthorized disclosure of any Corporation trade secret or
confidential information; any conduct constituting unfair competition; inducing
any customer of the Corporation to breach a contract with the Corporation or
any principal for whom the Corporation acts as

 

7

 

agent to terminate such agency relationship; or engaging in any other
act or conduct proscribed by the senior human resources officer as Misconduct.

 

SECTION 12.                                                                          CHANGES IN CAPITAL STRUCTURE

 

If the outstanding securities of the class then subject to this Plan
are increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or
shares or securities are distributed in respect of such outstanding securities,
in either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Corporation are sold, then, unless the terms of such transaction
shall provide otherwise, the Committee shall make appropriate and proportionate
adjustments in (i) the number and type of shares or other securities or
cash or other property that may be acquired pursuant to Awards theretofore
granted under this Plan and the exercise or settlement price of such Awards,
provided, however, that such adjustment shall be made in such a manner that
will not affect the status of any Award intended to qualify as an ISO under
Code Section 422 or as “performance based compensation” under Code Section 162(m),
and (ii) the maximum number and type of shares or other securities that
may be issued pursuant to such Awards thereafter granted under this Plan.

 

SECTION 13.                                                                          CHANGE OF CONTROL

 

13.1                 Effect of Change of Control. The Committee may through the terms of
the Award or otherwise provide that any or all of the following shall occur,
either immediately upon the Change of Control or a Change of Control
Transaction, or upon termination of the Employee’s employment within
twenty-four (24) months following a Change of Control or a Change of Control
Transaction: (a) in the case of an Option, the Participant’s ability to
exercise any portion of the Option not previously exercisable, (b) in the
case of an Incentive Bonus, the right to receive a payment equal to the target amount
payable or, if greater, a payment based on performance through a date
determined by the Committee prior to the Change of Control, and (c) in the
case of Shares issued in payment of any Incentive Bonus, and/or in the case of
Performance Stock or Stock Units, the lapse and expiration on any conditions to
the grant, issuance, retention, vesting or transferability of, or any other
restrictions applicable to, such Award. The Committee also may, through the
terms of the Award or otherwise, provide for an absolute or conditional
exercise, payment or lapse of conditions or restrictions on an Award which
shall only be effective if, upon the announcement of a Change of Control
Transaction, no provision is made in such Change of Control Transaction for the
exercise, payment or lapse of conditions or restrictions on the Award, or other
procedure whereby the Participant may realize the full benefit of the Award.

 

13.2                 Definitions. Unless the Committee or the Board shall
provide otherwise, “Change of Control” shall mean an occurrence of any of the
following events: (a) an acquisition (other than directly from the
Corporation) of any voting securities of the Corporation (the “Voting
Securities”) by any “person or group” (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) other than an employee benefit plan of the
Corporation, immediately after which such Person has “Beneficial Ownership”
(within the meaning of Rule 13d-3 under the Exchange Act) of more
than fifty percent (50%) of the combined voting power of the Corporation’s then
outstanding Voting Securities; (b) approval by the stockholders of (i) a
merger, consolidation or reorganization involving the Corporation, unless the
Corporation resulting from such merger, consolidation or reorganization (the “Surviving
Corporation”) shall adopt or assume this Plan and a Participant’s Awards under
the Plan and either (A) the stockholders of the Corporation immediately
before such merger, consolidation or reorganization own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power of the Surviving
Corporation in substantially the same proportion as their ownership immediately
before such merger, consolidation or reorganization, or (B) at least a
majority of the members of the Board of Directors of the Surviving Corporation
were directors of the Corporation immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization, or (ii) a
complete liquidation or dissolution of the Corporation; or (c) such other
events as the Committee or the Board from time to time may specify. “Change of
Control Transaction” shall include

 

8

 

any tender offer, offer, exchange offer, solicitation, merger,
consolidation, reorganization or other transaction which is intended to or
reasonably expected to result in a change of control.

 

SECTION 14.                                                                          TAXES

 

14.1                 Withholding Requirements. The Committee may make such provisions
or impose such conditions as it may deem appropriate for the withholding or
payment by the Employee or Participant, as appropriate, of any taxes which it
determines are required in connection with any Awards granted under this Plan,
and a Participant’s rights in any Award are subject to satisfaction of such
conditions.

 

14.2                 Payment of Withholding Taxes. Notwithstanding the terms of Section 14.1
hereof, the Committee may provide in the agreement evidencing an Award or
otherwise that all or any portion of the taxes required to be withheld by the
Corporation or, if permitted by the Committee, desired to be paid by the
Participant, in connection with the exercise of a Non-qualified Option or the
exercise, vesting, settlement or transfer of any other Award shall be paid or,
at the election of the Participant, may be paid by the Corporation withholding
Shares otherwise issuable or subject to such Award, or by the Participant
delivering previously owned Shares, in each case having a fair market value
equal to the amount required or elected to be withheld or paid. Any such
elections are subject to such conditions or procedures as may be established by
the Committee and may be subject to disapproval by the Committee.

 

SECTION 15.                                                                          AMENDMENTS OR TERMINATION

 

The Board may amend, alter or discontinue the Plan or any agreement
evidencing an Award made under the Plan, but no such amendment shall, without
the approval of the shareholders of the Corporation:

 

(a)               materially increase the number of shares that may be
issued under the Plan;

 

(b)              permit granting of stock options at less than fair
market value;

 

(c)               reduce or adjust downward the exercise price of
outstanding options, whether through amendment, cancellation or replacement
grants, or any other means;

 

(d)              impair the rights of any award holder without his or
her consent;

 

(e)               change the class of individuals eligible for the Plan

 

(f)                 extend the term of the Plan; and

 

(g)              otherwise amend the Plan in any manner if not
permitted to do so by law or the NYSE listing requirements without shareholder
approval.

 

SECTION 16.                                                                          COMPLIANCE WITH OTHER LAWS AND
REGULATIONS.

 

The Plan, the grant and exercise of Awards thereunder, and the
obligation of the Corporation to sell, issue or deliver Shares under such
Awards, shall be subject to all applicable federal, state and foreign laws, rules and
regulations and to such approvals by any governmental or regulatory agency as
may be required. The Corporation shall not be required to register in a
Participant’s name or deliver any Shares prior to the completion of any
registration or qualification of such Shares under any federal, state or
foreign law or any ruling or regulation of any government body which the
Committee shall, in its sole discretion, determine to be necessary or
advisable. This Plan is intended to constitute an unfunded arrangement for a
select group of management or other key employees.

 

No Option shall be exercisable unless a registration statement with
respect to the Option is effective or the Corporation has determined that such
registration is unnecessary. Unless the Awards and Shares covered by this Plan
have been registered under the Securities Act of 1933, as amended, or the
Corporation has determined that such registration is unnecessary, each person
receiving an Award

 

9

 

and/or Shares pursuant to any Award may be required by the Corporation
to give a representation in writing that such person is acquiring such Shares
for his or her own account for investment and not with a view to, or for sale
in connection with, the distribution of any part thereof.

 

SECTION 17.                                                                          OPTION GRANTS BY SUBSIDIARIES

 

In the case of a grant of an option to any eligible Employee employed
by a subsidiary, such grant may, if the Committee so directs, be implemented by
the Corporation issuing any subject shares to the subsidiary, for such lawful
consideration as the Committee may determine, upon the condition or
understanding that the subsidiary will transfer the shares to the option holder
in accordance with the terms of the option specified by the Committee pursuant
to the provisions of the Plan. Notwithstanding any other provision hereof, such
option may be issued by and in the name of the subsidiary and shall be deemed
granted on such date as the Committee shall determine.

 

SECTION 18.                                                                          NO RIGHT TO COMPANY EMPLOYMENT

 

Nothing in this Plan or as a result of any Award granted pursuant to
this Plan shall confer on any individual any right to continue in the employ of
the Corporation or interfere in any way with the right of the Corporation to
terminate an individual’s employment at any time. The Award agreements may
contain such provisions as the Committee may approve with reference to the
effect of approved leaves of absence.

 

SECTION 19.                                                                          EFFECTIVENESS AND EXPIRATION OF PLAN

 

The Plan shall be effective on May 13, 2004. All Awards granted
under this Plan are subject to, and may not be exercised before, the approval
of this Plan by the stockholders prior to the first anniversary date of the
effective date of the Plan, by the affirmative vote of the holders of a
majority of the outstanding shares of the Corporation present, or represented
by proxy, and entitled to vote, at a meeting of the Corporation’s stockholders
or by written consent in accordance with the laws of the State of Delaware;
provided that if such approval by the stockholders of the Corporation is not
forthcoming, all Awards previously granted under this Plan shall be void. No
Awards shall be granted pursuant to the Plan after May 31, 2009.

 

SECTION 20.                                                                          NON-EXCLUSIVITY OF THE PLAN

 

Neither the adoption of the Plan by the Board nor the submission of the
Plan to the stockholders of the Corporation for approval shall be construed as
creating any limitations on the power of the Board or the Committee to adopt
such other incentive arrangements as it or they may deem desirable, including
without limitation, the granting of restricted stock or stock options otherwise
than under the Plan, and such arrangements may be either generally applicable
or applicable only in specific cases.

 

SECTION 21.                                                                          GOVERNING LAW

 

This Plan and any agreements hereunder shall
be interpreted and construed in accordance with the laws of the State of
Delaware and applicable federal law. The Committee may provide that any dispute
as to any Award shall be presented and determined in such forum as the
Committee may specify, including through binding arbitration. Any reference in
this Plan or in the agreement evidencing any Award to a provision of law or to
a rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.

 

10

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